2.5 Trillion in Coronavirus Cash Handouts | Denmark’s Approach to Avoiding Another Great Depression

"Fuck Corona" pictured outside a large

apartment complex in Aarhus on March 22nd.

Being an American living in one of the world’s most socialist countries during a global pandemic has been absolutely fascinating. Denmark has just announced a very aggressive plan to offset the economic downturn due to the coronavirus. To be clear they are not handing out loans, they are actually giving out cash— no strings attached. Basically the overall idea is to save the strong economy here, and after it is all over business theoretically should be able to resume business as usual.

On the Ground Situation

Currently Denmark has closed down universities, schools, public institutions, restaurants, museums, cinemas. No assembly of more than 10 people is allowed. The borders have been closed too. This is the situation in many countries right now, and we are prepared for stricter regulations coming down the pipe in the next press conference.

What Denmark is Actually Doing

Denmark is truly taking extreme measures to combat the financial crisis that it being felt around the world. Flemming Larsen, a professor at the Center for Labor Market Research at Denmark’s Aalborg University explained to the Atlantic,

In order to freeze said economy the government told private companies hit by the effects of the pandemic that it would pay 75 percent of their employees’ salaries to avoid mass layoffs. The plan could require the government to spend as much as 13 percent of the national economy in just three months. That is roughly the equivalent of a $2.5 trillion stimulus in the United States spread out over just 13 weeks.

A frozen economy means that money is still coming in and going out, as if nothing happened. Basically a week in January might not look that different from a week in March in ones bank account. And that is the goal. It is a quick fix, to bandaid up the economy through and through, in hopes that come mid April or May that we will open up our front doors and assume business as usual.

A max of $3,288 per month per person is available to private companies as long as they do not fire people. The company just has to notify the government that they are prepared to lay off 30% of their workforce or fire at least 50 employees, and the country has agreed then to pay 75% of the workers’ salaries. With the caveat, that these workers will agree not to work (hello quarantine and social distancing).

The philosophy is to help companies save their relationships with their employees. It would be much harder to fire everyone, incur the costs, and then spend time rebuilding and rehiring later down the road. This plan is available for three months, which the government is hoping by then the crisis will have passed.

Other Notable Monetary Safety Nets

• The state is guaranteeing 70 percent of new bank loans to companies.

• People on unemployment benefits do not have to continue submitting resumes and applying for jobs during this time. They will continue to get their checks.

• Depending on their loss of income, the government is agreeing to pay for fixed income costs for companies, such as rent and overhead.

• Spring business taxes for companies have been postponed until fall.

• All public employees will keep their salaries when sent home.
  

Reality Check

At 26, I have been talking to my friends here in Denmark, and they are all in the same situation. I do not know anyone who has been fired from their jobs. Basically, everyone is at home, doing their best to socially distance themselves. All of their jobs will be waiting for them when this quarantine lifts, and for now their normal paychecks are coming in. It is no wonder that this is the happiest country on earth...

It is still a stressful situation here, nonetheless. My best friend here in Randers is a nurse, and she is working overtime and is on the frontline fighting the virus. But at least Danes can go to sleep at night knowing that the majority of bills are paid and they will not be kicked out into the streets.

Of course, being married to a Dane and living in Denmark I have become accustomed to the socialist ideals here. But in a crisis, it is the only thing that makes since. Denmark is watching out for the little guys and worrying less about the big companies. I love the people-centered approach.

I believe the USA could learn from what we are seeing here. Instead of big bailouts for cruise lines and airlines, I would like to see the US dump trillions into the pockets of hard-working Americans. I know so many small businesses in the USA that could benefit from these safety nets. In this way, the government is also keeping people home and stopping the spread, two birds, one stone. Obviously, it is a huge bill to fit, but Denmark sees no other way.

Sources:

“Denmark Acts to Protect Economy from Coronavirus Impact.” Thelocal.dk, 13 Mar. 2020, www.thelocal.dk/20200313/denmark-moves-to-protect-economy-from-coronavirus-impact.

“Denmark Offers Companies $6bn in Coronavirus Cash Hand-Outs'.” Thelocal.dk, 18 Mar. 2020, www.thelocal.dk/20200318/denmark-to-cover-up-to-80-percent-of-companies-fixed

-costs-through-coronavirus-crisis.

Jensen, Mikkel. “Housing Assistance and Self-Employee Assistance: Here Is the Government Support Package for Business.” DR, 18 Mar. 2020, www.dr.dk/nyheder/penge/hjaelp-til-husleje-og-kompensation-til-selvstaendige-her-er-regeringens-stoettepakke.

Thompson, Derek.

“Denmark's Idea Could Help the World Avoid a Great Depression.” The Atlantic, Atlantic Media Company, 21 Mar. 2020, www.theatlantic.com/ideas/archive/2020/03/denmark-freezing-its-economy-should-us/608533/.

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