Scott Sumner  

Voters in successful neoliberal economies have no interest in Pikettynomics

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Hooves and Priors... Down With Public Goods...

Or at least that's the inference I draw from an email sent to me by Zurich resident Marco Salvi:

Dear Professor Sumner
I would like to bring to your attention that the Swiss voters have rejected today the introduction of a new federal inheritance tax of 20% by a more than 2 to 1 margin (official results are still pending). This is yet another setback for the Piketty Agenda in Switzerland. In the past few years voters have refused to tax rich ex-pats more heavily, to introduce a federal minimum wage, to increase the wealth tax (in Zurich) or to limit the ratio of the highest wages to the lowest in a company to 1:12. Non-pension wealth inequality in Switzerland is among the highest in the world.
When the political right has badly mismanaged an economy over many decades (think Argentina or Venezuela), Piketty's ideas will have some appeal to the voters. But successful neoliberal economies with political decentralization and a high level of direct democracy would prefer being rich to being equal, as we can see from the recent Swiss elections.

The Swiss government also supplies very informative graphics for their 4 recent referenda. I recommend taking a look; you'll see that some votes require just a majority, while others also require a majority of cantons. The funding of public TV vote was particularly interesting. The vote broke down on the basis of language, and squeaked by with strong French support, despite mild opposition in the more heavily populated German-speaking areas. (You may need to click on an arrow to bring up the map.)

In the past, I've argued that Switzerland has by far the best political system on Earth, indeed no other country is even close. During the 20th century, Switzerland had more national referenda than the rest of the world combined. Meanwhile 30 million Chinese people starved to death because of the policies of Mao. No referendum was held on the Great Leap Forward.

So much for the "democracy doesn't work because the voters are stupid, we need a strong leader" theory.

I consider myself to be reasonably well informed. I generally know which party is in power in countries like Sweden. And yet at no time in my life could I name a single Swiss political party, or political figure. There's a lesson there somewhere. Perhaps the lesson is that you don't want to live in a country where it matters a lot who gets elected President.




COMMENTS (18 to date)
Emerson writes:

It's also true that it's best if it doesn't matter who is granted the position of Fed Chairman

Scott Sumner writes:

Emerson, Excellent example.

Brett writes:
In the past, I've argued that Switzerland has by far the best political system on Earth, indeed no other country is even close.

You're talking about the last western country to give women the right to vote (in 1971 - and some cantons had to be forced to give them the right to vote in the early 1990s). I don't consider a country that disenfranchised half of their adult population until well after all their neighbors and contemporaries moved on to be a good political system - if anything, it showcases the flaws in relying so heavily on direct democracy.

Scott Sumner writes:

Brett, I was praising their current system, but yes, let's look at history:

1. WWI. 10 million dead. For nothing. Switzerland not involved.

2. The Swiss are late giving women the right to vote.

So there are good points and bad points that come with democracy. If it's a choice between Swiss and Anglo-French democracy in the 20th century, I wouldn't have to think very hard.

Whenever I praise a country, people immediately think of something bad about that country, and somehow make that bad thing represent an overall appraisal of the system. It doesn't work. You must take the sweet with the sour. It's no fair to say "women should have the right to vote and the European powers should not have fought WWI." Of course that's true, but that's not an option, if we are judging history. If we are idealizing, then let's re-run Swiss history with women always having the right to vote. Adding up the pluses and minuses, the Swiss made the best political decisions during the 20th century.

Here's another example. Suppose someone liked the American system. Would you say, "but America didn't end slavery until 1865, and didn't end Jim Crow until 1964"? Suppose someone liked Britain's system. Would you say "what about imperialism?" Suppose they liked Belgium. Would you say "What about the Congo?" Sure those are part of any overall appraisal, but they are not in and of themselves an overall appraisal.

BTW, if I wanted to criticize Switzerland I could easily think of worse things, keeping bank accounts of Jewish holocaust victims, for instance.

ZC writes:

@Brett

I think you're placing a little too much importance on the process, as opposed to the outcome. Sure, voting is great and all, but only if it results in a good outcome. I'm sure none of those disenfranchised women minded living out their world leading life expectancies in one of the most stable and prosperous countries in the world.

If the extent of the franchise is your definition of a 'good political system' (your words), well, Haiti must be superior to Switzerland because women their were allowed to vote, stand for election, and given every other constitutional protection that men had their in 1950. Given the choice, I think most women would rather live disenfranchised in pre-70's Switzerland than in the Haiti of today.

The right to vote is a means to an end, not an end in and of itself. Just because you have the 'right' to vote, doesn't mean your vote is worth anything. If you're a Republican in Hawaii or Democrat in Utah, you're essentially disenfranchised. I mean, c'mon, as it stands now, the likely 'choices' US voters will have in the next presidential election are between Hillary and Jeb. If going to the ballot box makes you feel good, knock yourself out, but lets not lose sight of the fact that it's the outcome of a political system upon the daily lives of those that live under it, not the act of voting itself that matters.

BC writes:

"Perhaps the lesson is that you don't want to live in a country where it matters a lot who gets elected President."

Agreed, a necessary condition for a good political system is that it shouldn't matter much who ends up in power. Another characteristic is that, like an umpire in a baseball game, if government is doing a good job, then you shouldn't notice it much. If you notice government, then it's probably not doing a good job. It sounds like Swiss political parties and political figures are largely unnoticed.

What features of the Swiss political system give rise to these anonymous political actors that nobody notices or cares about? Is it just the prominence of national referenda? It's not obvious to me that reliance on referenda leads to blissful indifference towards government.

david condon writes:

I was curious about why you think the Swiss have the best government in the world so went looking for it, but all I could find were a few posts where you praised the Swiss National Bank; very different from voter referenda, and this article where you seem to imply that Singapore has the best government in the world.

Andrew_FL writes:
Perhaps the lesson is that you don't want to live in a country where it matters a lot who gets elected President.

I think that rather depends on why it doesn't matter. If it doesn't matter because one lives in a de facto one party state, because the major parties have no daylight between them on any issues, it's not obviously a good thing.

On the other hand, if it does not matter because the President has no power, that may be a good thing. Provided that it is not the case that a great deal of power is instead vested elsewhere.

Scott Sumner writes:

David, I've argued that Singapore has the best economic policies. But Switzerland has the best political system. You could google my SSRN paper "The Great Danes."

I have lots of posts on Switzerland at TheMoneyIllusion.com

Andrew, You said:

"If it doesn't matter because one lives in a de facto one party state, because the major parties have no daylight between them on any issues, it's not obviously a good thing."

I'm not sure I agree with that. It seems to me that the more successful the country, the smaller the differences between the major parties. Contrast Switzerland and Venezuela.

Sean writes:

I am wondering about your classifying Venezuela as being managed by the political right. I am not arguing, but that categorization surprises me for many reasons. I am interested in finding out what you mean--even if perhaps I am missing something blindingly obvious or misinterpreting something. Thanks.

CW writes:

It seems increasingly difficult to distinguish between political parties in the U.S. and the country has certainly passed the point where it matters who is elected President. I hardly agree that this is indicative of a good political system.

I think BC's analogy of the degree to which one notices an umpire in a ballgame is excellent.

Daublin writes:

The mandatory military service in Switzerland seems pretty bad, both economically and morally. Every productive male gets yanked out of the economy and forced into months of marching in formation and so on.

I'm not sure what I'd say is an awesome government around the world. It's a depressing field to select from.

david condon writes:

Thanks. I take it your main conclusion is based on Frey and Stutzer's work on direct democracy, but when looking into it I found opinions on that research are quite mixed, and most researchers were getting null results; including one replication paper. I was interested because my prior would be that direct democracy would be worse than representative democracy, which is in turn worse than technocracy although there do seem to be some merits to direct democracy over representative democracy.

http://www.jstor.org/stable/41342346

http://link.springer.com/article/10.1007/s10902-007-9050-9

http://link.springer.com/article/10.1007/s11109-011-9164-y

http://www.emeraldinsight.com/doi/abs/10.1108/03068291011062489

Brendan Riske writes:

Switzerland is a shining example liberty, the freedom to do what you want. People disagree with many of the outcomes (ie women not being able to vote until recently) but the process is respected and will keep going. All they need to do is get rid of the SNB.

Ognian Davchev writes:

Does anybody know how the Swiss decide which referendums should require cantonal majority and which should not?

srp writes:

Reuven Brenner made a similar argument (in Labyrinths of Prosperity) about the superiority of Swiss institutions, noting that there are no famous or charismatic Swiss politicians and that public spending is more likely to meet public preferences in a system with frequent popular referenda to check the actions of the representative bodies.

myb6 writes:

I completely agree that Switzerland has the best political institutions in the world.

I'm not sure if other countries can actually learn much from the Swiss example, however. Located in defensible mountainous territory in the middle of the blue banana, Swiss culture and politics have been under different selection pressures than even their close neighbors: less foreign intervention, less ability to dominate foreigners, yet retaining incentive/opportunity for economic modernity. Could Swiss politics survive in a context lacking Swiss people and Swiss history?

AS writes:

myb6: good point. Transplanting constitutions rarely achieves the intended outcome. Formal rules are only as useful as they are successfully enforced and followed.

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