This social consensus, however, requires constant tending. In the 1970s, Denmark's then overly generous lifetime social benefits collided with slow growth resulting from the OPEC oil shock. With the unemployment rate rising sharply, a taxpayer revolt broke out; the nationalist, antitax Progress Party became Denmark's second largest. When I visited Denmark in the late 1980s, to write an article on the faltering Scandinavian "third way," it was not clear whether the Danish model would survive. As late as 1993, the unemployment rate remained stuck at 12 percent.

In the early 1990s, a new Social Democratic government, under Prime Minister Poul Nyrup Rasmussen and Finance Minister Mogens Lykketoft, brokered macroeconomic and labor-market improvements in three rounds of reforms. Growth was restored, and the model was refined. They worked through a commission that drew on business, labor, academia, and the other major political parties, striking a series of compromises that were typically Danish.

At the time, some prime-age, able-bodied Danes were using unemployment and disability benefits to stay out of the labor force, often for life -- an embarrassment to the work ethic and a practice that was rendering the system unaffordable and undermining its legitimacy. The unions agreed to support a crackdown on abuses: the eligibility time for unemployment compensation was reduced from nine years to four and individualized reemployment plans were created that required the unemployed to meet regularly with counselors to seek new jobs, often in new occupations. (The labor movement's commitment, after all, is to facilitating and rewarding work, not idleness.) This brand of tough love forced many of Denmark's unemployed to seek and find jobs. And in return, the Danish government increased resources for highly customized training and temporary wage subsidies, with special provisions for workers under the age of 25. An unemployed Dane who reports to a job center can qualify for such opportunities as adult apprenticeships and university-level education. Denmark today has the world's highest percentage of workers, 47 percent, in some form of continuing education.