Getting to Switzerland

Matt Yglesias has a good post on Denmark.  He points out that Denmark has far higher taxes than the US, especially on the middle class.  He also points out that Denmark has much more efficient provision of public services.

Consider health care, which is almost 18% of US GDP, and more like 10% in Western Europe.  Now suppose the US moved to complete socialized medicine, without dramatically cutting the pay of doctors and nurses. Assume we also adopted the other aspects of the Danish social welfare model. Denmark’s government currently spends about 57% of GDP.  If the US tried to deliver the same services, without reducing costs from the current level, it would cost at least 65% of GDP.  It’s not possible to raise that much money without dramatically reducing total GDP—making us much poorer.

Matt points to some other examples of waste, such as the fact that transportation projects in America are far more expensive than in Denmark (or in the rest of Europe, for that matter).  So it might require even more than 65% of GDP. Democrats don’t tend to talk about this problem, because part of it is caused by their constituencies. And we know that when push comes to shove, they care more about public employees than social welfare programs (recall the education voucher debate.)

And of course Denmark is actually more capitalist than America, a point that Yglesias overlooked.

The fact that Bernie Sanders is being fundamentally dishonest about the nature of Scandinavian “socialism” does not mean that we shouldn’t try to emulate Danish policies.  I do view their system as superior to the US, because it’s more capitalist and more utilitarian.  But that’s a low bar—why not aim higher?

Matt shows a list of the happiest countries in the world, where Denmark comes in third.  It’s kind of a bizarre list (the US is at 15, squeezed between Mexico and Brazil.) But suppose you actually believe this stuff.  It’s worth noting that the US scores higher than every single large European country (over 40 million people); higher than Germany, France, Britain, Italy, Spain, Poland, Ukraine, Russia.  That suggests to me that the US policy regime is superior to the European policy regime.  Or any other large country regime, except . . . Mexico??

And let’s go one step further.  The very highest country in the happiness rankings is Switzerland.  Soon after Matt provides this ranking, he asks:

3) How did Denmark get to be so awesome?

Taxes. Denmark does it with really high taxes.

Taxes certainly explain the social benefits Matt discusses, but what about the happiness ranking?  Since the Swiss are much richer than the Danes and also seem happier, why not emulate Switzerland?  The Swiss have the smallest government in Western Europe (as a share of GDP), indeed even smaller than in the US.  So let’s shrink our government to be more like the Swiss.

When I mention this proposal to progressives they invariably say:

“Switzerland is a small homogenous country, its model is not applicable to the US.”

I then ask; so which model should the US copy?  And they respond:

“Denmark” or “Sweden”

I usually spend the next 10 minutes rolling on the floor laughing, before pointing out that at least Switzerland has four different languages.  They also have more immigrants than other European countries.

I wish we could have an honest debate.  The Dems could say, “We want to be more like Denmark.”  The GOP could say, “We want to be more like Switzerland.”  Then show American voters the taxes paid by the middle class in both countries, and the public services provided in both countries, and let them decide.

Unfortunately, the Dems don’t actually want us to be anything like Denmark, nor does the GOP want us to be anything like Switzerland.  Hence the debate over “big government” is all a sham.

HT:  TravisV



47 Responses to “Getting to Switzerland”

  1. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2015 at 11:56

    Since Yglesias also references the Sanandaji paper;

    let’s look at some of what it says about Denmark;

    ‘…the social democratic era in Denmark can be said to have begun in 1924. Between 1870 and 1924, Denmark had the 6th highest growth rate in the industrialised world.’

    I.e., when Denmark was a free market country, it became rich. But, after abandoning that;

    ‘Between 1924 and 2008, however, Denmark’s growth was only ranked 16th compared with other industrialised countries during the same period. As in Sweden, the social democrats in Denmark were initially pragmatic, implementing their policies slowly. The shift from low and moderate taxation to higher levels of taxation occurred around the 1970s. Again, much like Sweden, Denmark experienced strong growth until
    1970, but started to lag behind after the transition towards
    a large public sector….

    ‘…As late as 1960, tax revenues in the Nordic nations ranged between 25 per cent of GDP in Denmark to 32 per cent in Norway…. The policy shift towards bigger governments
    and higher taxes than other developed countries began
    during the 1960s and continued in the 1970s.

    ‘…. In the UK in
    the mid 1950s, the proportion of national income taken in
    tax was higher than in any of the Scandinavian countries.
    As Nordic policies radicalised in the late 1960s, however,
    their tax rates soon overtook those of the UK. The early welfare state models, supported by moderate tax levels, were focused on providing services such as education, health care
    and infrastructure. With time, high taxes and generous
    welfare systems created a situation where a growing share
    of the general public became dependent on government welfare payments.’

  2. Gravatar of E. Harding E. Harding
    17. October 2015 at 12:00

    How about larger countries? The Left probably wants the U.S. to look more like Germany or France. What’s the equivalent conservative model? The U.S.? This is because the U.S. is the best country in the world.

  3. Gravatar of David Pinto David Pinto
    17. October 2015 at 12:02

    How about we don’t emulate other countries, and just be us (or US). Despite all the complaints, we do a pretty good job of helping the sick and the poor, while letting talented people thrive.

    I’ve studied baseball for many years, and there is no one right way to build a winning team. I suspect there is no one right way to build a country. In the US, you can live in Swiss like Texas or Denmark like Oregon, and still get the benefits of living in the US. Works for me.

  4. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2015 at 12:04

    More from the Sanandaji paper;

    ‘One study shows that as taxes rose between 1950 and
    1997, average annual working hours in Danish industry dropped by 32 per cent. This can be compared with a fall of
    17 per cent in Sweden and a marginal rise in hours worked
    in the US. Between 1950 and 1998 employment in Denmark
    grew by 600,000, due to population increase and the entry
    of women into the labour market. Despite this rise in the
    working population, the total number of hours worked actually fell by 10 per cent (Danish Employers’ Confederation
    1999). High taxes and generous welfare systems encourage
    individuals to work fewer hours, and less intensely, than
    they otherwise would.’

  5. Gravatar of E. Harding E. Harding
    17. October 2015 at 12:11

    -Unlike the Axis powers, Sweden never stopped catching up with the U.S., with it having a better 1990s, a better 2000s, and a better late 1960s:
    Denmark, however, like Greece, stopped substantial catch-up with the U.S. in 1973:

  6. Gravatar of Peter K. Peter K.
    17. October 2015 at 12:12

    This is what the Democrats want. This is what Republicans are blocking. (Imagine if Europe had better monetary policy?) Yglesias:

    “Danish mothers enjoy 18 weeks of guaranteed maternity leave at 100 percent of their ordinary pay. Danish students leave college free of debt. Everyone is covered by a national health insurance system and can take advantage of subsidized child care; plus, thanks to a generous welfare system, Denmark’s child poverty rate is about a quarter of America’s.

    Denmark is also an environmental model, a country in which 25 percent of electricity is generated by wind turbines; bicycles account for 40 percent of commuting trips in Copenhagen.

    In a world where Republicans routinely deride taxes and spending as job killers, income redistribution as the mother of indolence, and tax cuts as a growth miracle, quietly prosperous Denmark stands as a powerful counterexample.

    3) How did Denmark get to be so awesome?

    Taxes. Denmark does it with really high taxes.

    In the United States, state, local, and federal taxes combine to amount to about 25 percent of national income.

    In the more generous German welfare state, it’s more like 37 percent.

    In Denmark, it’s 49 percent.”

  7. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2015 at 12:12

    On page 49 of the Sanandaji paper;

    ‘A study published by the European Central Bank, for example, finds that Sweden is on the tip of the Laffer curve
    when it comes to average taxes on incomes. This means that increasing taxes further on labour would have such a damaging effect on the economy that revenues would not increase. Tax rates in Denmark and Finland are also shown to be close to this extreme case (Norway is not included in the analysis). For capital taxation, Denmark and Sweden are shown to be on the wrong side of the Laffer curve. This means that capital taxes in the two countries are so damaging that reducing them would actually lead to more money being collected by the tax authorities (Trabandt and Uhlig 2010).’

  8. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2015 at 12:17

    Continuing on page 49;

    ‘To understand why taxes can have such significantly
    negative effects on the economy, one can consider the situation of a Swedish worker paying the maximum marginal tax rate and consuming his earnings. A payroll tax of 32 per cent is paid on the gross wage. There is then an average municipal tax of 32 per cent and a state tax of 25 per cent. Finally, there is an average consumption tax of 21 per cent. A government report has calculated that the total effective marginal tax rate is 73 per cent. This is above the estimate of the top of the Laffer curve in the same report, indicating again that a lower tax rate could in fact lead to higher public revenues (Pirttilä and Selin 2011).

    A number of Danish studies point in the same direction.
    The think tank CEPOS in Copenhagen has, for example,
    calculated the effects of reducing the top marginal tax
    rate on labour from 56 to 40 per cent.2 The total effect of increased working hours among the affected groups would
    correspond to adding between 20,000 to 55,000 extra individuals to the labour force (Lundby Hansen 2011).’

  9. Gravatar of E. Harding E. Harding
    17. October 2015 at 12:20

    @ Peter K.

    -Point. Head. Over.

  10. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2015 at 12:28

    Sanandaji on inequality;

    ‘If we look at the European nations that have the most even
    income distributions, we do not only find the Nordic nations, but also Slovenia, the Czech Republic and Slovakia
    at the top …. The latter three countries certainly do
    not have a Nordic model. They have lower, and in the case of
    the Czech Republic flat, taxes. What they do have in common with the Nordic nations is homogeneous populations.

    ‘When the vast majority of the citizens of a country share the same culture, their incomes are likely to be more
    similar than in countries with big differences in culture.
    One of the reasons that children’s incomes are related
    to those of their parents is that general differences exist
    between subgroups within society.4 High levels of homogeneity are a key factor behind the high equality in the
    Nordic nations. It is also an important explanation for why
    income equality is so much harder to achieve in heterogeneous nations such as the US, or even the UK. Indeed, part of the increase in income inequality which has occurred in Scandinavian countries during the last few decades relates to the inflow of immigrants. Through immigration Nordic countries have become less homogeneous and thus more unequal.’

  11. Gravatar of Mike Rulle Mike Rulle
    17. October 2015 at 12:36

    Denmark has a population of about 5.5 million people, less than the average population of each of our 50 states (about 6.4 mil). Plus our ppp gdp per capita is about 15%-20% higher. We have high expenditure on healthcare because we have always had a highly convoluted set of regulations and taxes going back to WWII. We may also spend more due to high wealth even if ineffective. But to compare a country half the size of NJ to the whole of the US (in addition to cherry picking as you point out) simply makes no sense. Having said that, it is remarkable how inefficient we are. I always like to imagine if our “food system” were structured like our healthcare system. I do not believe healthcare is inherently different in any meaningful sense than any other industry. But our regulation of it is.

  12. Gravatar of TravisV TravisV
    17. October 2015 at 12:54

    I learned something new about Yglesias today:

    “I used to be a very angry person. As in, after a bad incident or two too many, I did cognitive behavioral therapy to adjust a rage addiction. I still get that old boiling blood feeling sometimes…..”

    I’m still a big Yglesias fan…..

  13. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    17. October 2015 at 13:10

    To his credit, Matt mentions that improving the quality of public services is more important than just increasing funding.


    I don’t really believe his tax values: the US taxes more than 25% of GDP (it’s better to look at expenditures as a fraction of GDP, anyway, as countries and politicians love to hide taxes in weird places; while spending is a bit easier to compare).

    I looked through the OECD table and noticed that Luxembourg had a tax rate of 19%. Now, we do pay low taxes over here, but nowhere as good as that. At 19%, we’d be significantly lower than US, while on spending it’s now on par (used to be lower than US, but has gone up recently). Digging through the numbers, it seems that VAT was not included, nor were things like the gas tax (although, that one is arguably paid largely by foreigners who come here to get cheap gas).


    In Northern Europe, highly-skilled immigration can also be a significant source of equality as you can import doctors and similar professionals from the poorer states who are willing to work for a just-above-average salary.

    Yes, college debt is an issue in America, but try telling a newly minted American MD that you’ll forgive his college debt, they just need to accept working at the same salary as a middle school teacher for the rest of their lives (oh, and the middle school teacher only work 30 hours per week). How many do you predict would take that deal?

    (Given that doctors are half of the 1%, a similar American openness to foreign doctors could go a long way to solving the domestic inequality problem, with the side benefit of decreasing health-care costs.)

  14. Gravatar of Jose Romeu Robazzi Jose Romeu Robazzi
    17. October 2015 at 13:31

    If I had to guess, I would say public governance in small countries is easier, poor performance will be noticed faster and there will be pressure for changes.

    In large countries that is more difficult, I think, the scale of services needed grow exponentially and it is hard to put effective governance on.

  15. Gravatar of ssumner ssumner
    17. October 2015 at 13:54

    Patrick, Good points, although remember that Denmark is more capitalistic than the US despite the high taxes.

    E. Harding, Germany is more market oriented than France, which tells you something. And Switzerland is more market oriented than Germany. It seems like the more market oriented you are, the better the results.

    And Sweden did poorly in the 1970s and 1980s. The country should be richer than the US. As Swedish Americans are richer than the US.

    David, Countries that don’t try to improve end up sliding backwards. Ironically, your call for decentralization can be viewed as a call to make us more like Switzerland.

    Peter, Come back to me when the Dems start saying taxes on the middle class should be doubled, or tripled. And that public employees need to behave very differently. Then I’ll believe they really want to be like Denmark.

    Mike, good points.

    Travis, Yes, Matt is great.

    Luis,, Yeah the tax data is weird, I rely more on spending data.

    Jose, And why we need Swiss style decentralization.

  16. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    17. October 2015 at 14:44

    What’s interesting about Denmark is that it isn’t as ‘capitalistic’ (free market) as it used to be. If you’ve seen the movie ’84 Charing Cross Road’, when Britain was still rationing meat, butter, eggs in the early 1950s, Danish firms were doing a great business shipping those things into the country that ‘won WWII’.

    Formerly Nazi occupied Denmark was feeding socialist Britain.

  17. Gravatar of Lorenzo from Oz Lorenzo from Oz
    17. October 2015 at 15:14

    Citing the Scandinavian model makes no sense for Australia, let alone the US.

    If you are small, geographically contained, ethnically homogenous model OF COURSE you can run a social model that relies on congruent social bargaining at a relatively high tax-public good+ tradeoff. And, given the ease of information flows between officials and citizens and strong congruence in preferences and expectations, run the trade-off efficiently.

    None of these features apply to Australia or the US. Both are much more geographically varied (and if you don’t think that makes a difference for public policy, I invite you to take a tour around either the States of either, or the Provinces of Canada). Both are much more ethnically varied. (Around a quarter of Australians are foreign born.)

    Of course both US and Australia have evolved lower tax-public good+ trade offs. Indeed, as Sweden, for example, has become more ethnically diverse Sweden itself is having increasing trouble making “the Scandinavian model” work.

    The notion that public policy evolved in a way that suited the nature of the countries in Scandinavia but somehow weirdly went off the rails in Australia and the US does not make a lot of sense.

  18. Gravatar of E. Harding E. Harding
    17. October 2015 at 16:31

    -Its RGDP/worker growth during the 1970s and 1980s was not substantially different from that of the U.S., even when not accounting for changes in working hours.
    “The country should be richer than the US. As Swedish Americans are richer than the US.”
    -Hm. You’re right. But I don’t think the productivity gap is as large as the RGDP/capita gap.

  19. Gravatar of ssumner ssumner
    17. October 2015 at 16:58

    Patrick, Interesting.

    Lorenzo, I agree.

    E. Harding, I don’t think RGDP/worker is the right statistic to look at, I’d focus on RGDP/person. In any case, if Sweden grew as fast as the US during the 1970s I’d regard that as a poor performance. Other countries were gaining ground, and during those decades Sweden fell from being one of the richest countries in the world, to the middle of the pack of developed countries. Then after the neoliberal reforms of the 1990s they started doing well again.

    The reason productivity is the wrong number to look at is that the European welfare state model reduces GDP mostly by reducing hours worked, not by reducing productivity (although there is probably some impact on productivity.)

  20. Gravatar of Ray Lopez Ray Lopez
    17. October 2015 at 17:01

    Sumner: “Now suppose the US moved to complete socialized medicine, without dramatically cutting the pay of doctors and nurses. ” – nonsense; assume a can opener, as the old joke says. The reason the EU spends lower on healthcare is that they depend on the USA to discover things on the leading edge, then they appropriate it. Also the use state-run (not just subsidized) health care, as in Greece, and the doctors hate it and moonlight to make ends meet.

    Sumner also plays with words, saying Denmark is more capitalist than the USA. Well I once saw a stat that said there’s more stock ownership by entrepreneurs in Sweden (private and public listed stock), and employee-owned stock in private and public corporations, so by that measure Sweden is also more ‘capitalist’ than the USA. Day = night, like a nose of wax* with Sumner.


    * According to the Oxford English Dictionary, “nose of wax” antedates Justice Bradley by about 350 years. Meaning “a thing easily turned or moulded in any way desired; a person easily influenced, one of a weak character,” it first appeared in print in 1532, and was commonly used until about 1700 to describe attempts to “reinterpret” Biblical passages to suit one’s convenience. The phrase is very rarely heard today outside of Supreme Court opinions

  21. Gravatar of benjamin cole benjamin cole
    17. October 2015 at 17:58

    Curiously, the US government also runs a pure communist healthcare system. In the VA, former federal employees receive complete medical care for life, inside federal facilities staffed by other federal employees. This communist healthcare system is funded by income and capital gains taxes levied on productive citizens. No beneficarie contribution.

    The last time I checked the VA serves 8 million Americans and the socialist Obamacare system about 16 million. Beneficaries do pay for Obamacare and services are provided in the private sector.

    Congressman Paul Ryan says the VA is sacrosanct and there can be no cutting of the VA budget.

    Alone among the candidates, Donald Trump has suggested privatizing the VA.

    So, in America, who is a socialist, a communist and who has an occasional flash of common sense?

  22. Gravatar of Christian List Christian List
    17. October 2015 at 22:43

    Those countries mentioned are not only homogeneous and small. There’s another thing that is often overlooked. I think people tend to forget about innovation. There’s not as much innovation in Nordic States than in the US. Even if you consider GDP and population. It gets even worse when you talk about real breakthroughs, and by that I mean innovations that change the world.

    Take medicine for an example. Most real innovations in medicine come from the US. So no. The US should not be like the Nordic states but the Nordic States should be like the US. The last uber-mensch-inventor from the Nordic States was a guy named Alfred Nobel. And his last huge invention was in 1867. Yet it wasn’t even in his homeland Sweden but in Geesthacht, Germany.

  23. Gravatar of derivs derivs
    18. October 2015 at 02:29

    Think one would have to adjust GDP down 5%+ for that Denmark month of vacation days.

    My favorite Socialism offer that will never be mentioned. Tell me the average molecules produced last year per person, and When I reach a point where I contribute my fair share, I’ll take the rest of the year off.. Now let the other peoples contribute their part. I would have had a good 11+ months off a year.

    As for your following post. Brazil is not Socialism, it’s a dirty criminal organization masquerading as “anti-rich – for the poor” in order to have the support of the dumbest of the dumb.

  24. Gravatar of ssumner ssumner
    18. October 2015 at 06:14

    derivs, Notice that I never claimed Brazil was socialism. I worry about people who call themselves “socialist” like the current Brazilian government.

  25. Gravatar of Matt McOsker Matt McOsker
    18. October 2015 at 06:38

    1) Denmark is tiny in land area so yes public transit is easier
    2) what is the tax rate comparison? Are we including US payroll taxes, state, local property?
    3) what if we converted half our military spending and labor to health care?

  26. Gravatar of Matt McOsker Matt McOsker
    18. October 2015 at 06:41

    4) what are the allowable deductions in Denmark?

  27. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    18. October 2015 at 06:44

    Scott, ’84 Caring Cross Road’ has to be one of the most boring movies ever made…except for the economics lessons it provides. The best scene shows Anthony Hopkins and a few other Brits standing on the sidewalk outside a butcher shop with forlorn looks on their faces. In the window is a sign that reads;

    It’s not our Fault When we have to say

  28. Gravatar of TravisV TravisV
    18. October 2015 at 06:54

    Patrick Sullivan, that Sanandaji paper is a great find!

  29. Gravatar of TravisV TravisV
    18. October 2015 at 06:56

    See here:

    Is anyone else amused to see Tyler Durden of all people complain about: $18 trillion national debt, 15 million more Americans in poverty, Median income down

  30. Gravatar of TravisV TravisV
    18. October 2015 at 07:28

    Prof. Sumner,

    Arnold Kling just addressed you in his latest post at his blog.

    P.S.: Kling has written some awesome posts lately…..

  31. Gravatar of TravisV TravisV
    18. October 2015 at 09:01

    Bob Murphy attacked Prof. Sumner in his latest post:

    I wrote a half-baked response in the comments section.

  32. Gravatar of Tom Brown Tom Brown
    18. October 2015 at 13:13

    “Unfortunately, the Dems don’t actually want us to be anything like Denmark, nor does the GOP want us to be anything like Switzerland. Hence the debate over “big government” is all a sham.”

    You may be right on that score Scott. I’m not sure about the Dems, but I’ll guess the GOP may secretly favor The Old Confederacy. Or perhaps Franco’s Spain? You have a guess for the Dems?

  33. Gravatar of collin collin
    18. October 2015 at 14:43

    I always assumed both Parties want some glorfied memory of the US in 1960. Republicans want hard working local communities with the church at the center and Democrats love the union workers with protected wages. That version of America would go through an extended recessionary/inflationary period (1974 – 1982) and by 1995 broke that America did not exist anymore.

    I find the whole comparing to other nations really boring as there are a lot of attributes that make the whole culture. I know Singapore is the most beloved nation to libertarians but that nation has bizarrely low birth rates along with high abortion rates. I find really ridiculous when anybody compares a nation to the US whose population is less than California.

  34. Gravatar of Floccina Floccina
    18. October 2015 at 17:40

    Hence the debate over “big government” is all a sham.
    Most of Government in the USA looks like sham to me.

    The reason productivity is the wrong number to look at is that the European welfare state model reduces GDP mostly by reducing hours worked, not by reducing productivity (although there is probably some impact on productivity.)

    I have read that Europeans work more for in family consumption and so end up working just an much as USAers.

  35. Gravatar of Floccina Floccina
    19. October 2015 at 07:07

    Seriously though I think that you can move a lot of consumption from the rich to poor without harming the economy too much if you do it efficiently. Of course making college “free” is a very, very silly way to transfer money. It would mostly transfer money from working college grads to current students. BTW the children of low income parents already go to college tuition free. A BIG might help with non tuition costs (as would working on making it possible for more students to live with parents college more). This would be a wash except that it looks like it would encourage more waste. I think if Bernie where really targeting Denmark he would say that he wants to get colleges to lower p[er student spending to the point where government spends no more per student but college is free.

    Similarly with health insurance I do not see why Government could not cover everyone without spending more than they spend now. If Bernie wanted to be more like Denmark he might propose a plan to get to universal coverage without increasing spending.

    Instead Bernie likes to promise the middle class that he will take consumption from the rich and give it to them.

  36. Gravatar of ssumner ssumner
    19. October 2015 at 08:19

    Matt, It’s also far cheaper to build transit projects in big densely populated European countries than in America.

    We should reduce defense, but it won’t get us very far.

    Denmark has far higher taxes on the middle class, even taking all taxes into account.

    Tom, You asked:

    “You have a guess for the Dems?”

    Brazil seems to be their model. Stupid regulations and spending programs that mostly benefit the affluent, like free college, or public employees (like big pensions.) Token support for the poor, delivered in as paternalistic a fashion as possible.

    Floccina, Lots of good points.

  37. Gravatar of Bababooey Bababooey
    19. October 2015 at 10:32

    From about 800 AD until Gustavus Adolphus’ dead-cat bounce in 1630s the Scandinavians exported all of their aggressive, hyper-masculine genes into a reign of murder, pillage, enslavement across Europe– Iceland, Paris, England, Sicily, Greece, Russia, etc all suffered the onslaught.

    It’s easier to govern after you’ve spent 800 years expelling gangsterisms from your society onto your terrified neighbors, leaving only simpering eunuchs and metrosexuals in your gene pool.

    See also, United Kingdom post-Flanders.

  38. Gravatar of ssumner ssumner
    20. October 2015 at 09:42

    Bababooey, I’m 1/4th Scandinavian, so they must have exported a few beta males as well.

  39. Gravatar of myb6 myb6
    23. October 2015 at 10:51

    I’m an admitted nationalist American, but I’m a massive fan of Switzerland, have visited there, and, given a Rawlsian veil would’ve chosen to born there (with the US second). “Let’s Be a Giant Switzerland” is a useful short-hand for many of my political opinions. I’m going to be nit-picky, just because I’ve put a lot of thought into this topic:

    Switzerland has no meaningful underclass. The natives are highly productive without any notable demographic exceptions, and immigrants are overwhelmingly from nearly-as-rich, culturally-similar Europeans. In contrast, even drastic policy changes in the US wouldn’t change the existence of a sizable underclass for whom we’re very short on proven, effective interventions. Our attempts to provide safety, infrastructure, social services, education, and material abundance to our underclass is a difficult and expensive undertaking that the Swiss just don’t have to deal with. Thus even unskilled wages in Switzerland are extremely high and the Swiss can cheaply provide social benefits that would bankrupt the US (eg unlimited, as far I could tell, education support).

    Nor do the Swiss have to contend with any horribly-lagging regions, being entirely within the Blue Banana (which is a phenomenon that has no particular correlation to national borders and thus can’t be explained by modern policy choices). This is not only impressive given the lack of transfers (cf. huge US Northeast/Deep-South spread prior to ongoing policy of inter-state transfers), but also reduces the need/demand of federal power. I’ll continue with the federalism theme by noting that for social/cultural/historical/linguistic reasons Cantons are much more meaningful than US States, allowing a lot of cantonal policy (eg wealth taxes or the highly redistributive pension system) which is unrealistic for US States with minuscule entry/exit barriers.

    The small size of Switzerland is indeed a factor. The Swiss can play an international policy-competition game that is economically meaningful for such a small country (HK, Singapore, etc). If the US adopted the same corporate/VHNWI/finance-friendly regime, the benefits would be a rounding-error instead of a pillar. Their size also makes it quite sensible for them to choose extremely open trade, whereas the US has a huge domestic market and is much more vulnerable to lop-sided tech transfer across its borders.

    Finally, Switzerland’s small size and defense-friendly geography has forced and allowed it to avoid the international competition game for centuries, exempting their political institutions from an important centralizing/corrupting influence. A radical decentralization of the US and domestication of the military are goals I advocate, but would have to contend with several problems: (1) our political institutions are currently not adapted to such a circumstance, (2) if the US does a poor job relieving itself the international-guarantor burden, the consequences might be horrifying (can’t possibly know, but it’s a reasonable concern given history), and (3) an elite grown fat on international power/prestige/influence and command of massive resources, well-organized to resist any diminishment.

  40. Gravatar of myb6 myb6
    23. October 2015 at 10:54

    Clarifying poor wording:

    4th paragraph “international policy-competition game” is a reference to business policy. Switzerland obviously competes very intensely in this arena.

    5th paragraph “international competition game” is a reference to power politics. Switzerland is a non-entity.

    I’ll edit more next time.

  41. Gravatar of Peter Schaeffer Peter Schaeffer
    23. October 2015 at 11:27


    It turns out that there actually two people with the last name of Sanandaji, Nima, and Tino. They are brothers. Both are quite articulate and productive.

    Tino Sanandaji has an article that is quite germane to this discussion. See “The American Left’s Two Europes Problem” ( Basically, Tino shows that what works in Denmark, fails in Southern Europe.

    Why? Because people are not blank slates. The notion that the U.S. can adopt Danish policies and get Danish results is absurd. It hasn’t worked in most of Europe. Why would it work here (other than in Minnesota)?

  42. Gravatar of Peter Schaeffer Peter Schaeffer
    23. October 2015 at 11:36


    I have also lived and worked in Switzerland (just Zurich actually). Switzerland has almost no underclass. That’s a huge delta vs. the USA. In practical terms, Switzerland is far less diverse than the USA.

    Ironically, Switzerland is also far less multi-cultural than the USA. The irony is that with 4 official languages, you would expect Switzerland to be more multi-cultural, but it is not.

    In Zurich, French, Italian, and Romansh are almost unknown. I expected to see trilingual or quadralingual signs everyone. There were/are none. Literally the only sign of the other Swiss languages was/is the “SBB CFF FFS” on the intercity trains.

  43. Gravatar of myb6 myb6
    23. October 2015 at 12:38


    Yeah, on the cantonal level, the most important level operationally, the Swiss didn’t seem particularly diverse in linguistic, behavioral (rule-breaking triggers immediate opprobrium), nor economic senses. I was just a visitor, so intricate social details like the following are second-hand from my hosts: even tiny, neighboring cantons both speaking Swiss German and with small populations can have different rituals and slang and Swiss social networks favor their fellow cantonal citizens. I’d love to back up my second-hand assertion with some quantitative proof, like those social maps of the US using phone data; alas it’s beyond my immediate capability.

  44. Gravatar of myb6 myb6
    23. October 2015 at 12:54

    Because there was some commentary on transit, and Peter spent his time in Zurich, I’d like to bring up that Zurich developed a unique transit model that should appeal to any business-minded individual. With a referendum rejecting a Metro network with all that expensive tunneling, Zurich instead modified their street-system to prioritize trams and buses (increasing speed, capacity, and reliability for little cost), and upgraded their commuter rail to meet the hi-speed/distance demand. One of the planet’s best transit systems, and they didn’t even need to shell out for a Metro.

  45. Gravatar of buffalo cyclist buffalo cyclist
    23. October 2015 at 18:21

    Denmark is not more capitalist than the US. Denmark has very high taxes (including a 180% car tax), generous social benefits, rent control, a high number of government employees and policies like Vision Zero that reject the cost benefit analysis of neoclassical economics. Denmark also has a very high unionization rate, which I certainly don’t view as necessarily socialist, but which many conservatives and neoliberals do.

    The Heritage Foundation’s methodology is deeply flawed. Yes, the US has complex regulations, but that doesn’t mean the economy is highly regulated. Rather, our political system results in regulations filled with loopholes and exemptions, thereby adding to regulatory complexity.

  46. Gravatar of buffalo cyclist buffalo cyclist
    23. October 2015 at 18:36

    Also, I forgot to add that Denmark receives a higher rating from The Heritage Foundation because it is rated significantly less corrupt than the US, not because it has a freer market.

  47. Gravatar of ssumner ssumner
    23. October 2015 at 19:22

    Myb6 and Peter, Thanks for the info. Very interesting. Yes, I was aware that Switzerland is very different from the US, which was one of the points of my post.

    Switzerland also seems to have the highest average IQ of any non-Asian nation, FWIW.

    Buffalo cyclist, Heritage uses 10 categories, corruption in only one, and the US is not especially corrupt either (although more so than Denmark.) Denmark is much more socialist than the US in two categories (government spending and taxes.) In the other 8 categories Denmark is the most free market economy on Earth, according to Heritage. (Or was last time I checked around 2008–maybe things have changed.)

    I used ‘capitalist’ loosely, the term has multiple meanings. I meant something more like “free market” for which a lack of corruption is quite important. Leftist usually define ‘capitalism’ more along the lines of “evil”.

    And the US economy is extremely highly regulated—if you don’t think so trying running a large business sometime. Heck, McGovern reached that conclusion running a small business.

    I’ve met more than one businessman who told me his business was basically regulatory arbitrage.

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