ABSTRACT
Many participants in the Danish debate, both inside and outside academia, have voiced the position that joining EMU would imply the destruction or at least a substantial reduction of the Danish welfare state. In this chapter, the main arguments in this context will be scrutinized. According to the present author, these arguments do not seem to be compelling. In his view, the EMU can basically be regarded as neutral in relation to the structure or the level of welfare state arrangements. The EMU works, however, as a barrier against grave policy mistakes which otherwise might indeed endanger a Nordic welfare state - and which in the past actually have brought the Danish one ‘to the brink of the abyss’. For instance Hardy Hansen, the former chairman of Specialarbejderforbundet i Danmark, a union which organizes unskilled and semi-skilled workers, was quoted as having said that EMU gives priority to market forces, at the expense of social justice for ordinary Danish citizens. The result would be the extension of user payments, privatization and reductions of social transfer payments.1 Arguments of his kind have been forwarded in many versions. The Danish EMU-critics have in particular pointed at the following elements in the construction of the European currency:
• price stability as the overarching guideline for monetary policy; • the restrictions on fiscal policy which the convergence criteria and the
Stability and Growth Pact imply; • the loss of the possibility to devalue the Danish crown, and last but not
least; • free capital movements across the national borders.
