Derek Thompson: Could you first give me a sense of what’s happening on the ground in Denmark? What do the streets look like?

Flemming Larsen: Denmark has nearly entirely closed down universities, schools, public institutions, restaurants, museums, cinemas. No assembly of more than 10 persons is allowed. The borders have been closed too.

Thompson: Denmark’s government has announced a very aggressive plan to help workers in the next few months. Tell me what it’s doing.

Larsen: Denmark’s government agreed to cover the cost of employees’ salaries at private companies as long as those companies do not fire people. If a company makes a notice saying that it has to either lay off 30 percent of their workers or fire at least 50 people, the state has agreed to take on 75 percent of workers’ salaries, up to $3,288 per month. (This would preserve the income for all employees earning up to $52,400 per year.)

The philosophy here is that the government wants companies to preserve their relationship with their workers. It’s going to be harder to have a strong recovery if companies have to spend time hiring back workers that have been fired. The plan will last for three months, after which point they hope things come back to normal.

Thompson: So the government is offering to pick up the tab for workers whose employment is threatened by the downturn. Couldn’t companies easily defraud the government and collect the money anyway?

Larsen: Maybe, but the workers compensated are not allowed to work in the period. Workers staying with the company do not receive the 75 percent compensation.

Thompson: Some American economists say the U.S. should copy Germany’s work-sharing plan, Kurzarbeit, in which workers’ hours are reduced and then the government takes on part of workers’ salaries. Is Denmark’s plan like that?

Larsen: Not exactly. In the German plan, the government and the employer share the cost of paying for work. Here, the government is paying companies for employees who are going home and not working. These workers are being paid a wage to do nothing. The government is saying: Lots of people are suddenly in danger of being fired. But if we have firing rounds, it will be very difficult to adapt later. This way, the company maintains their workforce under the crisis and people maintain their salaries. You are compensating people even though they have to go home.

Derek Thompson: The coronavirus will be a catastrophe for the poor

Thompson: I think I understand you, and I’m going to try to summarize, but tell me if this summary is wrong: Denmark is putting the economy into the freezer for three months. You’re saying: We know that all these people won’t be able to work for the next few months. It’s inevitable. Rather than do rounds of firing followed by rounds of hiring, which will delay the recovery, let’s throw the whole economy into a deep freezer, and when the virus winds down we can thaw it out and almost everybody will still be with the company they worked for in January.