The Danish election is tomorrow. One of the central themes in the incumbent campaign has been a proposed wealth tax. The fig leaf for this proposal was "smaller classrooms in the early grades", but that quickly fell off, and the debate centered on "inequality". And it's true that inequality is a problem in Denmark: There's not nearly enough!

I know that sounds sacrilegious. Even most of the business-friendly press and parties in Denmark dance around this topic. Which makes political sense because the word "inequality" leads most people to think of poverty and destitution. But that's not the reality in the little kingdom that could.

Denmark has an enormous state apparatus (half of GDP and a third of all workers!) that offers equal access to everything from health care to education and a million programs in between. It could surely be slimmed and trimmed, but on the whole, it works remarkably well. The average Dane is incredibly well cared for by any international standard (high-trust society, hurray!).

By those same standards, it's the 8th most equal country in the world on income, as measured by the Gini coefficient (0.28). But this is where the numbers start spellbinding the debate. Because the Danish Gini coefficient perversely "degrades" if new businesses succeed, as any time successful founders and high-paid employees earning incomes above the median "worsen" inequality. 

This is obviously nonsense. When the pie gets bigger, it gets better for all, as long as nobody is robbed of their existing slice.  Denmark should clearly want new successful businesses! It should love to see founders reap big rewards when the risks pay off. It should celebrate early employees making fortunes on stock grants. But all too often, it just doesn't.

Just to put it on a pin: Danes hate flashy cars with a passion that stretches back much further than the current green excuses. But buying a $300,000 Ferrari in Denmark is one of the most patriotic things you can possibly do! You'll end up paying almost three times the price for the privilege, and sending 2/3s of that to the treasury in taxes. Truly a contribution to the common cause worthy of admiration, not scorn! 

But because the debate around inequality is anchored in a fixed-pie paradigm, scorn is all you're likely to get. Anyone who does well in Denmark is immediately suspected of having succeeded at the expense of others. Probably through some form of nefarious exploitation, even if we can't prove what?! There is a core national politics of grievance and envy.

But, however human that may be, the future progress and prosperity of the country depends on rejecting this zero-sum delusional dogma. The Danish economy is currently doing well compared to the rest of the EU, but it's dangerously dependent on a handful of vintage corporations pulling the bulk of the load.

This simply has to change if the Danes wish to retain their high standards of living going forward. No corporation lasts forever. Novo Nordisk was Europe's most valuable company at the start of last year, now it's worth half that, and is out of the top ten. And who knows what the closing of the Hormuz Strait will do to Maersk. These two companies alone represent roughly a quarter of all Denmark's exports!

Meanwhile, new business formation just hit an all-time low. And only a tiny portion of the big employers in Denmark were created in the last thirty years. And thus, almost all the wealth that funds the highly-prized welfare state is coming from really old companies. Many of them over a hundred years old.

This is wonderful in many ways. The Danes should be rightfully proud to host Maersk (1904), Novo (1923), Vestas (1945), Lego (1932), and other international heavy-weights. But it can't rely on this aging corporate vintage to forever bear fruit for tomorrow.

Tomorrow needs to be tended to by planting new seeds. New companies. New growth. New capital. And that's just not going to happen if the Danish state declares itself at war with capital formation or accumulation. It should be so lucky to have more rich people, with more capital, and the talent to deploy it toward a better, shared future (or spend it on heavily-taxed Ferraris!).

The ballot boxes open tomorrow morning. It's predicted to be a close one. Fingers crossed for a prosperous choice.