Scott Sumner  

Switzerland

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Over at TheMoneyIllusion I recently did a post discussing the public policy issues that I thought were most important. These were the top 4:

Most important issues (no particular order):

1. US Military intervention (I'm mostly against it)

2. Immigration (more, more, more)

3. War on Drugs (end it, let out 400,000 prisoners)

4. Right to Die (I'm for it, read Scott Alexander if you don't think it's important.)


Because I'm a big fan of Swiss-style direct democracy, I thought I'd check out how my favorite political system did in terms of this list:

On immigration (from Wikipedia):

Switzerland and Australia, with about a quarter of their population born outside the country, are the two countries with the highest proportion of immigrants in the western world.
On drug legalization:
The world's most comprehensive legalized heroin program became permanent Sunday with overwhelming approval from Swiss voters who simultaneously rejected the decriminalization of marijuana.
On right to die:
It's a tourism boom, but not one to crow about: The number of people traveling to Switzerland to end their lives is growing. And it seems that more and more people with a nonfatal disease are making the trip.
On military intervention:
Switzerland is the oldest neutral country in the world; it has not fought a foreign war since its neutrality was established by the Treaty of Paris in 1815.
And a few other issues I mentioned as being important:

On health care, I favor the sort of market system that no country has fully embraced. However:

In the book, Herzlinger describes the health care system of Switzerland as a case study in consumer-driven health care, one that has things for both liberals and conservatives to like (and dislike).
Swiss consumers pay more out of pocket than in any other country, which leads to wiser decisions

On abortion:

Abortion was legalized by popular referendum in 2002, after its criminal prohibition had ceased to be observed in practice for some time.
On prostitution:
Zurich's drive-thru brothels have been hailed a success by Swiss social services, a year after they first opened.
I should point out that obviously there are lots of ways Switzerland differs from my ideal, such as the vote against pot decriminalization and their recent vote against more immigration. No country is perfect.

I also pointed out that my policy views reflect a utilitarian value system. Does the Swiss system maximize utility? It's hard to say, but this survey suggests the answer is yes:

Switzerland is the world's happiest nation thanks to healthy GDP figures, strong social bonds and an increasing life expectancy, a new study of global wellbeing has revealed.
Some pundits say that only Westerners hold these values, and that in other parts of the world people are driven by religious fanaticism. I presume they mean places like Syria. Maybe, but there seem to be a lot of Syrians trying to get in to Europe right now.

PS. I'm not interested in discussing my views on these policy questions; I have a comment thread over at TheMoneyIllusion on that issue. Here I'm interested in two other questions. Are Swiss policies more utilitarian than most other countries? And if so, does direct democracy plus decentralization tend to lead to utilitarian policies?


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COMMENTS (26 to date)
Someone from the other side writes:

Health insurance is less market based than it might appear. Maybe I should write a more in depth explanation one of these days.

Also the Co pay story is more complex than usually reported. As to whether the system works? It is usually fairly quick today get appointments button whether they actually help is a different issue...

E. Harding writes:

"Are Swiss policies more utilitarian than most other countries?"
-Yes, of course. Switzerland also has among the lowest rates of perceived corruption in the world:
http://www.gallup.com/poll/185759/widespread-government-corruption.aspx

"And if so, does direct democracy plus decentralization tend to lead to utilitarian policies?"
-Dunno. If this experiment was tried in Sudan or Brazil or Indonesia, I'm sure it would lead to different results. Does developed Asia have more utilitarian policies than the West?

Sieben writes:

Isn't the immigration statistic a little disingenuous? When we talk about immigration to America, we're basically talking about poor Mexicans. But "Swiss immigrant" means some white middle class person from another European country.

Scott Sumner writes:

E. Harding, East Asian seems more utilitiarian in some respects, less in others.

Sieben, Today the largest number of immigrants to the US come from China and India. Mexico is third.

James writes:

It's awfully hard to say whether or not policies are utilitarian because a lot of people seem to derive significant utility or disutility just from the knowledge of certain policies.

For example, there are people who live in places in rural Minnesota where they are unlikely to ever meet an illegal immigrant from Mexico. Still, they seem genuinely angry to know that illegal immigrants are showing up in Texas. There are people who will never need to work for minimum wage who get a lot of satisfaction from knowing that the minimum wage has been raised.

There are people who would never be in a position to seek an abortion themselves who find the frequency of abortion extremely distressing out of empathy for the suffering that the unborn experience in an abortion. There is also the matter of comparing the utility that a woman loses if she has to carry an unwanted pregnancy to term with the utility gain for the child and the rest of the world if the pregnancy is carried to term. I would find it very hard to make a utilitarian case for a legal system which prohibits infanticide from the moment of birth but permits abortion in the 39th week.

As an anecdote, everyone I've ever known seems to believe that their policy preferences would be utility maximizing, whether they call themselves utilitarians or not. I've known many people who rejected utilitarianism but I've never met anyone who said something like "I concede that my policies would result in the average person being less happy than they could be, but I accept that as necessary in the pursuit of some other principle." I take this as evidence that most people are far too confident in their own ability to know the actual consequences of various policies.

Dan W. writes:

Scott,

In your response to Sieben you are still being disingenuous. Switzerland welcomes immigrants who look like native Swiss! Meanwhile they are less hospitable at welcoming immigrants who do not look like them. Just consider the Swiss response to the African migrant crisis. Borders still matter, even in Switzerland.

From CNBC: The Basel University survey, published by the Schweiz am Sonntag newspaper, found 83.1 percent preferred the country to provide financial aid to places where the migrant crisis is more acute, rather than accept more refugees and migrants themselves.

Vivian Darkbloom writes:

"Sieben, Today the largest number of immigrants to the US come from China and India. Mexico is third."

Not according to the Department of Homeland Security:


http://www.dhs.gov/sites/default/files/publications/ois_lpr_fr_2013.pdf

According to that source, the *legal" immigration to the US ranked as follows for 2013:

1. Mexico 135,028
2. China 71,798
3. India 68,458

The same ranking and similar percentages for prior years (see table 3).

And, what would total legal and illegal immigration look like?

Noah Carl writes:

You may find this interesting, Scott: http://www.ft.com/cms/s/0/0ab4b852-5c70-11e5-a28b-50226830d644.html#axzz3mGBfhSwV

Pajser writes:

In short terms, I expect that general population is less educated, informed etc. and make decisions with less calculation than politicians. In long terms, I expect direct democracy involves people in politics and makes it (not only direct choices) more utilitarian.

I guess that - like in economy - centralization is theoretically better (it leads to total utility maximum) but it is complicate enough that not even armies are completely centralized. I advocate pushing centralization and falling back if there are good reasons. Good (and only good) reason for decentralization of Switzerland I see is that its citizens want it.

The aid to poor countries seems as good measure of the morality of the country. (Immigrants are rarely the most needy people in the world.) Switzerland (0.5% GNI) is between USA (0.2%) and Norway (1.1%).

ThomasH writes:

I would a agree with the first three and put tax reform on the list (instead of the right to die whihc I'll leave as a state issue).

The tax reform elements.

a) a carbon tax (with elimination of other ways of discouraging ACC).
b) eliminate wage taxes and the corporate income tax with imputation of world wide business profits to owners
c) a progressive personal consumption tax with partial tax credits for charitable giving, a negative rate bottom rung, and (I am unsure abut this) full credit for state and local personal consumption taxes. (I am also unsure about how to treat inheritance and recognize that there are tricky questions about which self and family improvement expenditures like education and medical care/insurance are "consumption.")
d) tax set at levels to roughly balance over a business cycle.

B Cole writes:

I wonder if nations such as Switzerland and Japan are justified in limiting immigration for cultural, not economic reasons.

The United States is a nation of immigrants, and so limiting immigration here is a dubious proposition. But other nations are more homogeneous, such as the Han Chinese or the Japanese, and if they should become overwhelmed by immigrants, it would change the nature of their societies and their cultures.

Is (peacefully) preserving one's culture or ethnic group always a bad thing?

Scott Sumner writes:

James, You said:

"It's awfully hard to say whether or not policies are utilitarian because a lot of people seem to derive significant utility or disutility just from the knowledge of certain policies."

Yes, an under-appreciated point.

You said:

"As an anecdote, everyone I've ever known seems to believe that their policy preferences would be utility maximizing, whether they call themselves utilitarians or not."

Maybe, but I've heard people say they oppose forced kidney transplants, even though (they claim) it would meet utilitarian criteria.

Vivian, Here's my source:

"Mexicans still dominate the overall composition of immigrants in the U.S., accounting for more than a quarter of the foreign-born people. But of the 1.2 million newly arrived immigrants here legally and illegally counted in 2013 numbers, China led with 147,000, followed by India with 129,000 and Mexico with 125,000. It's a sharp contrast to 2000, when there were 402,000 from Mexico and no more than 84,000 each from India and China. Experts say part of the reason for the decrease in Mexican immigrants is a dramatic plunge in illegal immigration."

http://bigstory.ap.org/article/f69a1520a35e4825a1a0305872d18088/immigration-shift-shows-india-china-outpacing-mexico

Panser, That's just government foreign aid. Americans give far more private charity than citizens of other countries. Indeed what Bill Gates is doing would actually be illegal in Europe, where billionaires must give at least 1/2 their fortune to family members.

Thomas, Good comment.

B. Cole, Well I don't think we need to worry about 1.25 billion Han being overwhelmed by immigrants. But seriously, I do see your point. Personally, I prefer ethnic diversity, but I can see how others would feel differently.

ThomasH writes:

I favor limiting immigration to the capacity of the society to assimilate the immigrants. Investments to increase such capacity could be a good thing, but the capacity would not be infinite. Still for the US I think the existing capacity (which could be easily and cheaply increased) is way underused, particularly for high skills immigrants. Too many too quickly from a given culture/ethnic group leads to multiculturalism.

AS writes:

@James: You are right. People tend to have stronger preferences over abstract policies than real outcomes. It seems counterintuitive. The question is why? Have political elites brainwashed us into becoming ideologues to attract support and distract us from the real issues?

Sieben writes:

Scott,

Sieben, Today the largest number of immigrants to the US come from China and India. Mexico is third.

Okay. I concede to being rationally ignorant of the actual statistics. Regardless, in common parlance, "immigrant" is code for "Mexican", even if Mexico does not provide the majority of U.S. immigration, legal vs. illegal, yearly vs. aggregate, etc.

Furthermore, even if I am completely wrong and out of touch with modern American immigration discourse, my original point still stands. The Swiss are primarily open to white middle class immigration. The United States is concerned about poor non-white immigration. I don't see any disagreement in immigration philosophy between the two countries.

E. Harding writes:

@ssumner

-What are the others?

Robert Schadler writes:

Having live in Switzerland as an adolescent, I'm generally well inclined toward them. I lived in a house with five people -- none native to Switzerland (one Austrian, one German, one French, two Americans).
I can follow the utilitarian/libertarian arguments with regard to the social policies highlighted.
Whether they are working there, and will continue to do so, is worth a discussion.
The proposition that Switzerland has a "generous" or "open" immigration policy, however, is either based invincible ignorance or disingenuousness. And it is doubtful that they even welcome "middle class Europeans." Their immigrants are overwhelmingly white, culturally European, and wealthy. Very wealth Chinese, Indians and Mexicans are also probably welcomed.
(One might also review their policy toward minarets that was at issue a few years ago.)
The argument for "direct democracy" are, at best, naive. At least with respect to whether the political boundaries are ones that capture a small, culturally homogenous group of people. It is all but impossible to imagine a diverse country with 100 million, much less one billion, even attempting such a system.

Pajser writes:

USA private aid is massive. However, combined aid for Norway, Switzerland, and USA seems to be 1.11%, 0.55%, and 0.42% of GNI respectively.

Scott Sumner writes:

Sieben, There may be some truth to what you say, but a pretty large chunk of Swiss immigration has been muslims from former Yugoslavia, Albania, Turkey, etc. One might argue that they have just as much trouble assimilating as Mexicans (who often self identify as whites, BTW.)

E. Harding. One example would be Singapore's draconian drug laws. Or Japan's tight immigration rules.

Pajser, Thanks for that info. Of course Norway's a bit of an outlier, with such massive oil wealth that it ends up giving more than other developed countries. Having said that, I recall that the Nordics tend to do well on foreign aid, and I consider the Nordic countries in general to be quite utilitarian. Indeed their current model can be viewed as (fairly) free markets plus redistribution, with is a center left from of utilitarianism.

James writes:

Scott,

I oppose forced kidney transplants in the real world and in the vacuum of a late night bull session because it violates the property rights of the involuntary donor.

But forced kidney transplants can only happen in the real world if there are rules to permit some set of people to force others to surrender their organs. I find it probable that any such rules would be abused to the point of lowering total utility. From experience, I think most opponents of forced kidney transfers hold to a similar position.

E. Harding writes:

@ssumner

-Those sound pretty utilitarian for the people living there. Do you think Japan's native population would be better off if those islands were to become half Filipino? Would native Singaporeans be better off with legal heroin+cocaine?

Floccina writes:
The world's most comprehensive legalized heroin program became permanent Sunday with overwhelming approval from Swiss voters who simultaneously rejected the decriminalization of marijuana.

So why are people worldwide so against complete legalization of all recreational drugs? They were legal in the USA not so long ago?

Dan W. writes:

Scott,

Does not California give all these policies? And if not it's a short trip to Nevada for what's missing in CA.

I've heard it said that California once was perfection. Some guy even wrote a book about it: California's Golden Years: When Government Worked and Why
http://www.amazon.com/Californias-Golden-Years-Government-Worked/dp/0877724342

If CA is no longer paradise what happened? Who moved the cheese? Can the system fix itself? The consensus is no but is that just human pessimism?

Many Californians have been moving to other states. This raises a point that is oft overlooked on the topic of immigration. As a matter of course Americans embrace free immigration of their fellow countrymen. Red States even go so far as to say anyone can buy a plot of land, build a house, and add to a county's population! Blue States hold the more restricted view that anyone can move in if they replace someone moving out. Yes, there is great irony in how Liberals are much more restrictive in housing policy than Conservatives yet Liberals claim to be more open minded about immigration.

US immigration policy has become a political issue partly because the existing policy is flawed but mainly because the government has proven untrustworthy in applying the law. Americans do not trust the government will be faithful in applying immigration law and, consequently, they believe the government will be arbitrary and unfair. Sensible people want a border and they want a fair process for managing it. They see rewarding people for breaking the law as unfair. Make the law fair and just and sensible people will support it. It seems the immigration policies of Switzerland and Australia are sensible. If only Americans could be accorded the same sensible immigration policies and enforcement!

Mark Brophy writes:

Are European billionaires really required to "give at least 1/2 their fortune to family members?"

William occam writes:

Don't think they have the kind of immigration you advocate:

1. 85% of immigrants in Switzerland are European.

2. 3.6% of the Swiss population is non_European

3. The admission of people from non-EU/EFTA countries is regulated by the Foreign Nationals Act, and is limited to skilled workers who are urgently required and are likely to integrate successfully in the long term. There are quotas established yearly: in 2012 it was 3,500 residency permits and 5,000 short-term permits

https://en.wikipedia.org/wiki/Immigration_to_Switzerland

Mike B writes:

Piggybacking off of William, Swiss Immigration is notoriously difficult for non-EU residents with a painstaking and expensive process for purchasing Swiss property and becoming a Swiss citizen. I also think its worth looking at the History of Switzerland and Europe and how it was able to become the wealthy, educated, and immigrant choosy country that it is now.

Hint: by staying neutral in both world wars and as a consequence, laundering Nazi money into the international markets... They have done an excellent job managing their wealth, but unlike Norway, who's wealth came from natural resources, Switzerland's came from some rather dark practices... Beautiful country though!

Heres a nice paper from Studer at LSE "when did the swiss get so rich"

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CCUQFjABahUKEwithM-El4zIAhWKbz4KHT8tAW8&url=http%3A%2F%2Fwww.ubscenter.uzh.ch%2Fassets%2Fdocuments%2FStuder_When%2520Did%2520the%2520Swiss%2520Get%2520so%2520Rich.pdf&usg=AFQjCNGatA-GAPjOAwP8qwLRBEKfTeFOKA&sig2=piJ3X37cx8YE433DH8lP8w

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