Would a democracy choose libertarian policies?

Suppose voters were given a direct say in government policy-making.  They could vote up or down on important tax and regulatory changes.  How would they vote?  It turns out that there is only one country that has anything close to a direct democracy.  The lessons it provides are a mixed bag for libertarians, but mostly positive.

One question that divides American progressives and libertarians is the supply-side effect of taxes.  Why do Europeans work less than Americans?  Is it because their tax rates are higher?  Does it reflect differing government regulations?  Or is it because their culture is different?  It may well be all three, but there is now some evidence that the lower worker hours in Europe do not represent a higher preference for leisure:

Voters in Switzerland have rejected a proposal to give themselves more annual leave in a national referendum.  . . .

Two-thirds of voters reportedly rejected an increase in the country’s minimum annual leave from four weeks to six, which would have brought it in line with most other West European countries.

But a proposal to construct what have locally been referred to as “sex boxes” for prostitutes got the green light from voters in Zurich.

The plan would see the creation of special parking spaces with walls between them where sex workers can ply their trade away from suburban areas in Switzerland’s biggest city.

I see two possible interpretations for this vote.  First, it may be the case that all Europeans prefer 4 weeks vacations, but other governments don’t give them the chance to vote on the issue.  (By analogy, many Europeans supported the death penalty when their governments abolished the practice.)  But my hunch is that a referendum on moving back from 6 to 4 weeks would fail in many Western European countries.  In my view a more plausible argument is that the Swiss vote reflects the lower income tax rates in Switzerland, as compared to other Western European countries.  Thus is a tax sense, Switzerland resembles the US more than France.  A third explanation might be cultural, but my gut instinct tells me that a 2 to 1 vote against 6 weeks of vacation represents more than cultural differences.  That’s a pretty overwhelming vote.

[As an aside, I anticipate many commenters putting way more weight on cultural factors than they actually deserve.  When US MTRs on the rich were very high in the 1950s, wives of well-paid men rarely worked.  When MTRs fell sharply between the 1960s and 1980s, wives of well-paid men became much more likely to work.  Just the opposite happened to the labor force participation rate of poorer women, as their implicit MTRs rose a lot between the 1950s and 1980s.  But the effect of MTRs seems “invisible” to most people, hence both liberals and conservatives are likely to see these changes in cultural terms.  Liberals see more well-educated women working as being the result of feminism, and conservatives see less poor women working as representing cultural regress away from Victorian values.  Also note that when French tax rates were similar to US rates in the 1960s, they worked similar hours.]

Back to Switzerland.  I see two positives for libertarianism and two negatives.  On the positive side, Swiss voters have produced a tax regime that is much more libertarian that those of other western European countries.  In addition, they tend to vote moderately libertarian on issues like prostitution, assisted suicide, drugs, etc.

On the negative side, Swiss voters do not seem to favor the ultra-low taxes that many libertarians would prefer.  And Switzerland has (I’m told) lots of petty regulations in areas such as real estate.  So it’s a mixed bag.  Still, the country seems to work pretty well, so if it’s not an overwhelming argument for libertarianism, it certainly presents a strong case for radical decentralization combined with direct democracy.  It also tends to refute the notion that America is far more unequal than Denmark because of our low tax regime.  Like all countries, Switzerland has some poverty.  But it certainly looks much more like Denmark than America, at least to the casual visitor.  There may be good arguments for turning the US into a progressive welfare state with Danish-style social welfare programs.  But we should be under no illusions that this would make America look anything like Denmark.  We’d still look like America, with all our “savage inequalities.”  And we’d become somewhat poorer.  Partly because Denmark is poorer than the US (or Switzerland), but partly because Denmark is in many ways more neo-liberal than the US.  Indeed it’s even more neoliberal than Switzerland, (according to the Heritage Foundation, if you look at economic freedom measures other than taxes and spending.)  Taxes matter, but free markets are also important.


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35 Responses to “Would a democracy choose libertarian policies?”

  1. Gravatar of mbk mbk
    17. March 2012 at 06:32

    Ah… mixed bag and lots of idiosyncrasies. I’m told that Switzerland also has very strong social pressures for women not to work, once married, especially with kids. So I suspect Calvinism has a lot to do with it after all. On the general economic picture, once more, I’m told that huge swathes of the Swiss economy are in a protectionist coccoon and highly inefficient (all of agriculture – bananas are cheaper than local fruits, and this kind of thing), basically all the local parts of it. But these sectors are more than compensated for by the ultra liberal banking sector, a significant number of very successful multinationals (Novartis, Nestle et al.) and laws that favor holding companies.

    So I’d hesitate to generalize on the impact of direct democracy on overall economic sense in Switzerland. Where it does seem to have found interesting solutions is in the way immigration is handled and in local government spending. In immigration, it is the local community that has to approve an immigrant before the government rubber stamps the application. I find that a socially good idea. And the direct control of local government by the people often means that expensive prestige projects are simply voted down.

  2. Gravatar of Squarely Rooted Squarely Rooted
    17. March 2012 at 07:28

    This is all well-and-good, but I think you’ve forgotten about this:

    http://en.wikipedia.org/wiki/Minaret_controversy_in_Switzerland#Result

    I’d hope most definitions of libertarianism include basic religious freedom (not to mention freedom to use private property as the owner likes).

    Also:

    http://www.businessweek.com/magazine/content/03_43/b3855183_mz035.htm

    “Switzerland remains the leading offshore money manager, with about a third of the cross-border wealth in the world.”

    That’s not really the kind of thing any country can replicate.

  3. Gravatar of Eric G Eric G
    17. March 2012 at 07:44

    Actually, The Republican era of Ancient Rome, notably the late Republic gives us the best example of what people think of libertarianism and what happens when a system favors the rich people’s interests. Basically, for decades the super-rich got richer and they loved it while the super-poor hated it because they just wanted food and jobs but every time a politician tried to help them they were either stopped politically or killed (in the cases of the Gracchi and Caesar).
    Eventually 1 leader arose, Augustus, and streamlined government and became dictator. He then proceeded to help the poor, gave them food, jobs vis-a-vis large public works initiatives (stimulus?)that modernized the Ancient city, he provided the people with a professional firefighting force, and more.
    Economic libertarianism caused extreme inequality that led to there just being 1 dictator that provided for the masses of hungry poor. Is that what we want? No. Moral of the story: It’s better to help the poor before 1 person consolidates power and destroys the Republic.

  4. Gravatar of DonG DonG
    17. March 2012 at 07:58

    California’s prop. system is an American form of direct democracy. It doesn’t work. Special interests create all kinds of odd budget constraints that make it nearly impossible to create a budget. Representatives can work towards coherent laws.

    However, having a referendum for strongly controversial drafted legislation can be a good thing. It gives the representatives cover to propose things are tough medicine. We’ve seen that in Iceland, Greece, and Ohio recently.

  5. Gravatar of Matthias Matthias
    17. March 2012 at 08:05

    Just a few thoughts on your post since I am from Switzerland myself. First of all, I voted “No” on 6 weeks holidays. However I would have voted “Yes” on 5, and I know lots of my friends hold a similar opinion. So the main arguments against the 6 weeks of holidays were 1) many companies already grant 5 weeks of holidays (although again I know lots of people who just get the mandatory 4 weeks), 2) the Swiss labor costs are already high and coupled with the strong Swiss franc it would cost lots of jobs (as higher labor costs would decrease competitiveness) to introduce 6 weeks of holidays, 3) as SMEs are the backbone of the Swiss economy they would be hit particularly hard by this regulation as they would have the most trouble arranging 6 weeks of holidays for all their workers because there isn’t much room to maneuver with just a few employees and 4) There are high chances that employees need to compensate their additional holiday time by working more hours before and after their holidays, resulting in additional stress. Coupled with arguments 2) there were also arguments that there wouldn’t be any salary increases for a while, thus making us poorer.

    So personally I didn’t really think about taxes when I voted, but about the competitiveness loss of the overall economy and the trouble SMEs would likely run into. Furthermore, the French model of 35h-week was brought up as “proof” that no additional jobs would be created by working less, much more likely the other way around. So I’d say there’s just a high level of common sense among the Swiss people because (at least most of those who vote) are more or less educated on what they vote about. And as far as leisure goes I’d say yes to 5 weeks.

    @mbk: It’s kinda the first time I hear about that “social pressure on married women” but then again I am just 26 years old. I could imagine it might be the case in some of the rural areas. But among the generation I grow up this certainly is NO issue. Agriculture is quite protected and subsidized but also very regulated. So as a consumer, I buy mostly Swiss products because of the higher quality (due to regulations). E.g. about meat I can be sure it’s not produced “in factories” and has no antibiotics etc. Also public transportation, I heard of outrageous inefficiencies in some of their workshops but at least everything functions well, so many rather accept (arguably not most efficient) government subsidies to public transportation than to either have much higher prices or even have German conditions (where DB wanted to do an IPO and just cut back on the quality too much and consequently ran into lots of problems).

    And while we are on that topic, we also voted about a law on the book market, i.e. if there should be price regulations (as we had until a few years ago) or if we should keep the free market here. And we voted free market.

    Next interesting upcoming initiative/referendum will be on the manager bonus issue.

  6. Gravatar of vincent vincent
    17. March 2012 at 09:01

    The key difference between Switzerland and California is that in Switzerland you can only veto a law by referendum – not propose a brand new one. In California the people have voted themselves both tax cuts and spending programs, and now refuse to reverse anything.

    As mbk said, in general, I would be weary of drawing any sort of general conclusions from the example of Switzerland. It is a very idiosyncratic country, that has benefited from exceptional historical and geographical circumstances.

    With regards to women, I’m sorry but your theory does not fit the historical record at all. How active were women in the workforce before FDR? Did they gradually join it post-WWII, or suddenly around 1981? Look at this for instance:

    http://www.bls.gov/opub/ted/2007/jan/wk2/art03.htm

    I see a linear progression from 1950-2000.

  7. Gravatar of Lars Christensen Lars Christensen
    17. March 2012 at 09:07

    Scott, I think we need to remember that the Scandinavian countries until the mid-1960 actually were quite libertarian compared to the US. Hence, in the mid-1960s government expenditure as a share of GDP in Denmark or Sweden was not larger than in the US. That changed particularly in the late 1960s and early 1970s, but in many ways especially Denmark is as libertarian or even more libertarian than both Switzerland and the US (something a libertarian like myself hate to admit…).

    A good example is labour market regulation. Most people don’t know, but Denmark do for example not have a legal minimum wage. Minimum wages is never ever discussed politically in Denmark – unlike in the US. Furthermore, Denmark has long tradition of free trade values and all of the major political parties in Denmark has historically been anti-protectionism. Even in terms of “welfare benefits” the Danish “welfare model” rely on a relatively high degree of private sector involvement. Hence, unemployment benefits are managed by private organisations (traditionally associated with labour unions) and even though the are heavily subsidies by the tax payers it is still in many ways are much more libertarian system that what you have in the US. Membership of a unemployment insurance scheme is for example not mandatory.

    When it comes to issues of civic liberties it is probably hard to find any countries in the world more libertarian than the Scandinavian countries.

    Do I say the Scandinavian countries are libertarian? Certainly not! Denmark has insanely high levels of taxation and the public sector is enormous. It is hardly an libertarian ideal. But Santorum’s ideas on porn would probably not get him elected to any political position in Denmark. But ok he is to the right of the Taleban on these issues… And it would be interesting to see what US presidential candidate would come out and abolish minimum wage laws…

  8. Gravatar of Brett Brett
    17. March 2012 at 09:32

    Interesting point about French tax rates in the 1960s, Scott. Do you have a link to some more information on that?

  9. Gravatar of ssumner ssumner
    17. March 2012 at 09:49

    mbk, Yes, I forget to mention that the Swiss allow much more immigration than other European countries.

    As far as free markets, obviously neither you nor I are qualified to make an overall judgment on such a complex question. I’d point to various surveys of economic freedom, that rank the Swiss pretty high, but not as high as countries like Denmark. But I agree there are lots of petty regulations on local industries. The trick is in getting a sense of how important they are. The US also has lots of petty regulations, but since Swiss prices are considerably higher than US prices, their regulations are probably somewhat more inefficient than ours.

    Eric;

    “Actually, The Republican era of Ancient Rome, notably the late Republic gives us the best example of what people think of libertarianism and what happens when a system favors the rich people’s interests.”

    Congrats on most non-sequitors in one sentence. Equating ancient Rome with libertarianism (hmm, didn’t they have slavery?) and then equating libertarianism with policies that “favor the rich.” Libertarians oppose policies that favor the rich.

    DonG, You said;

    “California’s prop. system is an American form of direct democracy.”

    I’m opposed to American forms of direct democracy (which are highly centralized) and favor Swiss direct democracy (which is highly decentralized.)

    Vincent, I distinguished between poorer women and richer women. You didn’t.

    I’m certainly not arguing tax rates are all that matter, labor saving technology in household production, and smaller families also matter.

    Lars, We do realize that. Despite it’s ultra-high tax rates, the very conservative Heritage Foundation rates Denmark as more economically free than the US.

    Brett, No, it’s just something I read. I think both countries had government sectors around 30-35% of GDP back around 1960, but someone should double check, as not everything I read is true.

  10. Gravatar of Neal Neal
    17. March 2012 at 09:52

    Scott, perhaps people of different cultures respond in approximately the same way to the same financial incentives, as you argue by comparing French and American hours worked. But for some reason, the French voted to restrict their hours-worked, while Americans didn’t. Is there a non-cultural explanation for the different national policy preferences from roughly the same starting points?

  11. Gravatar of Lars Christensen Lars Christensen
    17. March 2012 at 09:58

    Scott, just for the record. I do disagree with Heritage Foundation’s assessment that Denmark is economically more free than the US, but maybe that is because I have to pay insanely high taxes;-)

  12. Gravatar of ssumner ssumner
    17. March 2012 at 10:00

    Square-rooted,

    1. Swiss off-shore banking does not explain why it’s a rich country.

    2. As far as I know, all countries restrict the location of religious buildings. Recently we stopped a mosque from being built in lower Manhattan. Near where I lived they tried hard (and failed) to stop a Mormon temple. With democracy you take the good with the bad–and when I look and non-democratic countries, I feel pretty good about Switzerland. Of course there is no conflict between democracy and having a constitution with a Bill of Rights.

    Mattias, Good points, but I would point out that taxes are almost never a conscious factor in people’s decisions, but can be a subconscious factor. Where taxes are very high, extra vacation time doesn’t make you much poorer, and you mentioned fear of being poorer in your comment.

  13. Gravatar of Lars Christensen Lars Christensen
    17. March 2012 at 10:01

    Just check up on it…in the latest Economic Freedom Index the US is number 10 and Denmark is number 11…anyway still hate to pay those taxes…interestingly enough Canada is more economically free than the US according to Heritage Foundation.

  14. Gravatar of ssumner ssumner
    17. March 2012 at 10:02

    Neal, That’s an incredibly difficult question. Quite honestly know one knows, but I suspect lots of factors come into play. Perhaps including culture.

    Lars, Duly noted. But I think it’s an interesting comment on American conservatism. Their academic work says Denmark is great; their political rhetoric suggests it’s a living hell.

  15. Gravatar of ssumner ssumner
    17. March 2012 at 10:03

    Lars, I think last year they were reversed, around 7 and 8. I hadn’t seen the newest data.

  16. Gravatar of Matthias Matthias
    17. March 2012 at 10:09

    @Vincent: That’s wrong, Swiss can do both as well. A veto needs 50’000 signature, an initiative 100’000 signatures. An initiative will first be discussed in parliament (takes up to 2 years). Sometimes the legislative will do law changes (indirect counter proposal) or do a direct counter proposal. So sometimes, an initiative will not be put to vote if their comitee is happy with the parliament solution. If not, there’ll be a public vote, just like in a referendum.

    And actually, the Swiss (well I voted against it but the majority) just voted for a VAT tax hike about 2 or 3 years ago. I think a big thing here is the information, that people are going to know WHAT exactly happens with the new tax revenue, or if we vote on a tax cut, where government most likely has to cut back on spending.

    The difference between California and Swiss is probably the degree of (de)centralization as Scott Sumner pointed out.

  17. Gravatar of Major_Freedom Major_Freedom
    17. March 2012 at 13:18

    I hate to say the obvious, but direct democracy only produces libertarian oriented voting outcomes when the people are already libertarian minded.

    A third explanation might be cultural, but my gut instinct tells me that a 2 to 1 vote against 6 weeks of vacation represents more than cultural differences. That’s a pretty overwhelming vote.

    If the vote was so overwhelming in Switzerland, then doesn’t that show a cultural explanation in Switzerland vis a vis other European countries? Or are you referring to cultural differences between “Europeans” and “Americans”? If so, how does the Swiss represent “Europeans”?

    When US MTRs on the rich were very high in the 1950s, wives of well-paid men rarely worked. When MTRs fell sharply between the 1960s and 1980s, wives of well-paid men became much more likely to work.

    The early 1970s was around the time real wages began a long term trend of stagnation, and the 1970s was a highly inflationary period. Maybe one income no longer sufficed?

    Just the opposite happened to the labor force participation rate of poorer women, as their implicit MTRs rose a lot between the 1950s and 1980s. But the effect of MTRs seems “invisible” to most people, hence both liberals and conservatives are likely to see these changes in cultural terms.

    Of course nobody should deny that a high implicit MTR generates a high disincentive to work, but just a question: why did you introduce an “implicit” MTR for the working poor to explain the decline in employment for poor women, but you did not use an “implicit” MTR to explain the increase in employment for women in general? Is it because women’s implicit MTR was in general lower, so no need to refer to it?

    Still, the country seems to work pretty well, so if it’s not an overwhelming argument for libertarianism, it certainly presents a strong case for radical decentralization combined with direct democracy.

    Ah, if only you applied decentralization to money production. What would you say to someone who talked like you do about money, and said:

    “GIVEN that we don’t have radical decentralization, and GIVEN that we don’t have direct democracy, then I am not going to devote my time and resources advocating for it, nor will I explain how it works, nor will I explain the benefits of it, no, I will instead devote all my time and resources to tinkering with what we have, and promoting a certain policy or policies that make the best use of the “GIVEN” non-radical, non-decentralized, non-direct democracy systems we have.”

    Why do you get so “radical” and “anti-establishment” when it comes to changing entire political systems, but you balk at doing the same for money production? If there is only one country in the world that has direct democracy, then shouldn’t we use your capitulating attitude you have towards money, for entire political systems too and not bother with it, and just “work with what we have” instead?

  18. Gravatar of Tommy Dorsett Tommy Dorsett
    17. March 2012 at 13:37

    Scott – What about California and its widespread use of direct democracy (referenda and initiatives). The State is a disaster: high MTRs, boom and bust growth cycles, excessive debt and, increasingly, an exodus of the most productive residents.

  19. Gravatar of Jason Jason
    17. March 2012 at 15:44

    “As an aside, I anticipate many commenters putting way more weight on cultural factors than they actually deserve. … Liberals see more well-educated women working as being the result of feminism, and conservatives see less poor women working as representing cultural regress away from Victorian values.”

    This is demonstrably true and is called fundamental attribution error.

    http://en.wikipedia.org/wiki/Fundamental_attribution_error

  20. Gravatar of tim tim
    17. March 2012 at 19:33

    Switzerland is also quite conservative. It was the last Western country to give women the right to vote (1971).

  21. Gravatar of ssumner ssumner
    18. March 2012 at 05:11

    MF, You said;

    “I hate to say the obvious, but direct democracy only produces libertarian-oriented voting outcomes when the people are already libertarian minded.”

    As usual, the obvious is wrong. Decentralization and direct democracy make people more libertarian, as they see the consequences of their actions more clearly. They turn into “consumers.”

    I meant implicit MTRs for everyone, but the difference is most noticeable for the poor.

    Tommy, See my reply to DonG.

    Jason, What is an attribution error?

    Tim, That doesn’t make it more conservative, as in other countries the voters are often more culturally conservative than the leaders. Switzerland is not particularly conservative, as their policies on prostitution, drugs, assisted suicide show quite clearly.

    Everyone, I will be doing some traveling, so I won’t be able to answer comments for a while.

  22. Gravatar of dwb dwb
    18. March 2012 at 08:04

    i like to think i live in the current decade, whatever it is.

    i know a lot of people who have said they are “libertarian” but unfortunately in my mind that has always been something of a buffet of ideas that people feel they can choose from: legalize pot but socialize health care; get rid of oil/gas tax expenditures but not wind; small government except search everyone at the airport, install GPS surveillance on your car, and we want to make sure whats going on in your bedroom and bloodstream is fully approved.

    Yoram Bauman the standup economist had a pretty good routine that captured the essence.

  23. Gravatar of Major_Freedom Major_Freedom
    18. March 2012 at 08:35

    “I hate to say the obvious, but direct democracy only produces libertarian-oriented voting outcomes when the people are already libertarian minded.”

    As usual, the obvious is wrong. Decentralization and direct democracy make people more libertarian, as they see the consequences of their actions more clearly. They turn into “consumers.”

    I don’t view individual thought and action as subsidiary to the legal system. I view the legal system as subsidiary to individual thought. In order to even have decentralization, a more libertarian minded public is required. In order to even have direct democracy, a more libertarian minded public is required. In order to produce libertarian voting outcomes, a more libertarian minded public is required. I reject the notion that decentralization and direct democracy “turn people libertarian.”

  24. Gravatar of Morgan Warstler Morgan Warstler
    18. March 2012 at 17:19

    “Decentralization and direct democracy make people more libertarian, as they see the consequences of their actions more clearly. They turn into “consumers.””

    Sumner, that’s about as deep as you go thinking about behavioral aspects of policy changes.

    Even your NGDP you show very little grasp of the major effect it has turning people into libertarians.

    But you admit in comments above you GET IT, you just choose not to talk about it.

    That’s odd, no?

  25. Gravatar of Johannes Johannes
    19. March 2012 at 04:41

    I just want to add that most jobs in the lower half of the income distribution have been better paid in good old Europe than in the USA. That might be part of the reason why we haven’t had the urge to work in three jobs at a time.

    Also redistribution probably plays a role. If true, it would turn the argument against Europe’s “laziness” substantially, because extensive work is a burden on individuals and no blessing.

    Further there seam to be diminishing returns to working more. If you construct an (GDP/capita)/(working houres/capita)-index, the USA doesn’t look very good among industrialized countries. So basically, yes the USA is one of the richest countries in the world, but they work for it pretty hard. I cannot really see the advantage of that, especially since you would expect leisure time to get more important as you get richer.

  26. Gravatar of Floccina Floccina
    19. March 2012 at 07:10

    Why do Europeans work less than Americans?

    This is just highlight the point that Europeans do not work less than Americans, which I am sure that Scott knows (I am not correcting him), they work less in the taxed economy and more for in family consumption.

  27. Gravatar of Floccina Floccina
    19. March 2012 at 07:21

    How do small service businesses like independent bakeries and restaurants deal with 4 or 6 weeks of vacations?

  28. Gravatar of Wonks Anonymous Wonks Anonymous
    19. March 2012 at 09:12

    My impression with the recent Charles Murray book is that folks are complaining about MEN not working, and the entry of women into the work force is considered a cause of that.

  29. Gravatar of Johannes Johannes
    20. March 2012 at 00:27

    @ Floccina
    Maybe hire more workers? (and increase prices a bit)

    If you look at the local service industry there are huge differences between countries. I have been in Canada for a year and was wondering how many people are working in supermarkets despite having reasonable minimum wages. In Germany you see nobody despite a cashier and someone filling the shelfs. Also the cashier actually serves 5 customers in the time a Canadian cashier serves 1 (they have 5 times as many, are more friendly and pack you stuff so).

    I am not sure what the conclusion of this is, but I guess the non-tradables sector will do fine no matter what the regulations or cultural differences are. As long as actual spending power is there.

  30. Gravatar of Sparks Sparks
    20. March 2012 at 13:37

    On the Swiss vote, it’s important to remember that the law would have given them time off, not “vacation” as Americans think of it. Very few people in any country, even Switzerland, can afford to spend six weeks in Tuscany or Tahiti or the French Riviera. Most people won’t be able to enjoy additional vacations with this extra time off – it would just be sit-around time at home. Couple that with the pain-in-the-butt factor of trying to do even normal business (e.g., many small businesses, like bakeries, simply shut down for a month), and one can begin to appreciate a “no” vote on this referendum, no matter the marginal tax rate.

  31. Gravatar of Some Spaniard Some Spaniard
    22. March 2012 at 03:24

    It’s somewhat misleading to talk about “Europeans” when discussing Switzerland, since there are substantial cultural differences between European countries and thus Switzerland may not be representative of Europe as a whole on some issues.

  32. Gravatar of ssumner ssumner
    22. March 2012 at 16:49

    dwb, Good point.

    MF, I don’t agree.

    Johannes, It’s not what you think or what I think that counts (I also prefer leisure to money.) What matters is what people will choose if free to make the choice, without their labor/leisure decision being distorted by heavy taxes. And in that case the answer is the US system. That’s why more immigrants want to move to the US than Europe, and also why Americans score higher on happiness surveys.

    Floccina, Good point.

    Wonk Anonymous, Good point.

    Sparks. Good point.

    Some Spaniard. Yes, but it’s the only evidence we have of how Europeans would decide to work if faced with a free vote and a somewhat American tax system. So the burden of proof is on those arguing for cultural differences.

  33. Gravatar of Johannes Johannes
    24. March 2012 at 09:34

    @ssummer
    But the reasons why people work less matters. If it is because of higher salaries (even if that includes social transfers) it is good, if it is because of taxes it is bad. Unfortunately you cannot seperate higher taxes from higher distribution/services. It is therefore not clear for me that US-citizens work more because of lower taxes (Maybe it is the real wages which stagnated in the USA since the 70s).

    Right now the happiness index in Sweden, Denmark, Netherlands, Norway, Finland and Austria is higher than in the USA despite having higher taxes (don’t know about the past so). However, it is hard to believe that the tax level caused that. Maybe what they did with all that tax money, or the lower after tax income distribution.

    The migration flows could also be explained by language and cultural reasons. It is certainly more difficult for small countries with a unique language to attract immigrants. Also all European countries could easily attract immigrants and did so in the past. However, thay just don’t want/need immigrants even so I admit that this is not a good thing.

    If you only mean highly qualified immigration, it is cetainly true that they rather go to countries with higher salaries and lower taxes for high income earners. However, I don’t see how that would matter for the argument.

  34. Gravatar of D R D R
    24. March 2012 at 10:00

    “I also prefer leisure to money.”

    Please, nobody let Scott anywhere near an economics student until he clarifies this howler of a statement.

  35. Gravatar of Chris Chris
    22. July 2012 at 12:44

    The question is when people goes on six weeks paid holiday who will do their jobs? This is the issue, there are not enough Swiss people to cover Swiss socalled jobs. The Swiss do not employ immigrants unless it is to clean the toilets etc. They are not prepared to properly accept immigrants in to the labour market as this may help immigrants to integrate and next ‘they will bring their whole family’ into ‘precious’ Switzerland and deprive the Swiss. This is the view of the Swiss people and the reason the six weeks holidays were rejected. Do you know that even after living lawfully in Switzerland for nine years an immigrant cannot join the police or work for the State and local government in any meaningful capacity. Yes immigrants will be tolorated to clean the toilets but nothing more. In Switzerland, it is not about getting the best persons for the job, it is about getting a White Swiss employed and all the international companies that conducts business here complies with the Swiss ways even it is in breach of both domestice and international Laws.

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