At the European Resource Bank conference earlier this month, Pierre Bessard from Switzerland’s Institut Liberal spoke on a panel investigating “The Link between the Weight of the State and Economic prosperity.”
His presentation included two slides that definitely are worth sharing.
The first slide, which is based on research from the Boston Consulting Group, looks at which jurisdictions have the most households with more than $1 million of wealth.
Switzerland is the easy winner, and you probably won’t be surprised to see Hong Kong and Singapore also do very well.
Gee, I wonder if the fact that Switzerland (#4), Hong Kong (#1), and Singapore (#2) score highly on the Economic Freedom of the World index has any connection with their comparative prosperity?
That’s a rhetorical question, of course.
Most sensible people already understand that countries with free markets and small government out-perform nations with big welfare states and lots of intervention.
Speaking of which, let’s look at Pierre’s slide that compares Swiss public finances with the dismal numbers from Eurozone nations.
The most impressive part of this data is the way Switzerland has maintained a much smaller burden of government spending.
One reason for this superior outcome is the Swiss “Debt Brake,” a voter-imposed spending cap that basically prevents politicians from increasing spending faster than inflation plus population.
Now let’s compare Switzerland and France, which is what I did last Saturday at the Free Market Road Show conference in Paris.
As part of my remarks, I asked the audience whether they thought that their government, which consumes 57 percent of GDP, gives them better services than Germany’s government, which consumes 45 percent of GDP.
They said no.
I then asked if they got better government than citizens of Canada, where government consumes 41 percent of GDP.
They said no.
And I concluded by asking them whether they got better government than the people of Switzerland, where government is only 34 percent of economic output (I used OECD data for my comparisons, which is why my numbers are not identical to Pierre’s numbers).
Once again, they said no.
The fundamental question, then, is why French politicians impose such a heavy burden of government spending – with a very high cost to the economy – when citizens don’t get better services?
Or maybe the real question is why French voters elect politicians that pursue such senseless policies?
But to be fair, we should ask why American voters elected Bush and Obama, both of whom have made America more like France?
[…] Switzerland is a great role model. […]
[…] Switzerland is a great role model. […]
[…] the way, I made the same point as Tirole when I spoke last year in Paris. I asked my audience whether they thought they got better and/or more services than the citizens of Switzerland, where […]
[…] By the way, this analysis also applies to analysis between nations. Why, for instance, should successful people in France pay so much money to their government when they can move to Switzerland and get equivalent services at a much-lower cost. […]
[…] the way, I made the same point as Tirole when I spoke last year in Paris. I asked my audience whether they thought they got better and/or more services than the citizens of Switzerland, where […]
[…] want to focus the debate on how much government is necessary to get the things people want, sort of like I did in Paris back in […]
[…] compared to other European nations, Switzerland is a fiscal Shangi-La. The tax burden is lower, and spending consumes a smaller share of economic […]
[…] Whenever I give a speech in France, I ask the audience whether their government (which consumes for the half of economic output) gives them more and […]
[…] this data, I’d like to ask the people of Illinois the same question I asked an audience in Paris when comparing France and Switzerland. What exactly are you getting for all that […]
[…] this data, I’d like to ask the people of Illinois the same question I asked an audience in Paris when comparing France and Switzerland. What exactly are you getting for all that […]
[…] Doing Business. It also has a self-destructive wealth tax. And government spending, though modest compared to neighbors, consumes slight more than one-third of economic […]
[…] compare France and Switzerland. Or look at the wreckage of communism. Or consider the prosperity of Hong Kong and […]
[…] compare France and Switzerland. Or look at the wreckage of communism. Or consider the prosperity of Hong Kong and […]
[…] compare France and Switzerland. Or look at the wreckage of communism. Or consider the prosperity of Hong Kong and […]
[…] In my humble opinion, the most powerful comparison is between France and […]
[…] In my humble opinion, the most powerful comparison is between France and […]
[…] In my humble opinion, the most powerful comparison is between France and […]
[…] like a nice free lunch, right? That offer might be very attractive in a place like France, but Swiss voters apparently understand that government can’t give all that money to people […]
[…] Some of this is common sense. What government do you think is more competent and effective, France with its big government or Switzerland with its medium-sized government? Where do you think government is more effective, Singapore with its small government or the […]
[…] Some of this is common sense. What government do you think is more competent and effective, France with its big government or Switzerland with its medium-sized government? Where do you think government is more effective, Singapore with its small government or the United […]
[…] Some of this is common sense. What government do you think is more competent and effective, France with its big government or Switzerland with its medium-sized government? Where do you think government is more effective, Singapore with its small government or the United […]
[…] makes sense. There are still a few places in the world – such as Switzerland, Cayman, Hong Kong, Bermuda, etc – where the political class actually understands it is good to […]
[…] makes sense. There are still a few places in the world – such as Switzerland, Cayman, Hong Kong, Bermuda, etc – where the political class actually understands it is good […]
‘long live neo-liberalism .only neo-liberalism can bring prosperity in the future’
[…] Switzerland stands out for being the only advanced nation with a semi-decent score of “Moderately Free,” though that’s nothing to brag about. But when all your neighbors are “Unfree,” you look good by comparison. No wonder Switzerland is in much better shape than France. […]
[…] for government to provide an extensive array of services, I’ll ask the same question I posed to a French audience earlier this year: Is there any evidence that the French government, which consumes 57 percent of the economy’s […]
[…] Here’s a powerful comparison of France and […]
[…] what I did, for instance, when comparing fiscal policy in France and Switzerland. And it goes without saying (but I’ll say it anyhow) that Switzerland’s comparative […]
[…] the share of economic output consumed by the public sector. That’s what I did, for instance, when comparing fiscal policy in France and Switzerland. And it goes without saying (but I’ll say it anyhow) that Switzerland’s comparative frugality […]
[…] share of economic output consumed by the public sector. That’s what I did, for instance, when comparing fiscal policy in France and Switzerland. And it goes without saying (but I’ll say it anyhow) that Switzerland’s comparative […]
Switzerland has direct democracy- democracy in its purest form. Most of the rest of the world has token democracy, whereby the elected officials believe the People have ceded power through their vote to them to do as they feel.
Or, in short,
If you try to make being poor more comfortable (and thus being rich harder) in the short term, total systemic poverty will overrun you in the long term.
Yes, but to go from 57% government spending to 34% you have to undergo some immediate cuts now, and then wait for the compounding effect of growth to catch up and eventually set you on a permanent higher growth trendline.
And which voter will do that?
Only those electorates that serendipitously (or by virtue of the law of -small- probabilities) break away from the demagogic Krugmanesque norm of higher growth through less personal motivation and flatter effort-reward curves.
And that is why voters need to understand the eventual indomitable power of compounding higher growth.
It is more likely than not that by the end of this century (a very long time in human progress) the cure or complete prevention of cancer will be found. If humanity had had a mere one tenth of a percent higher annual growth in the past millennium, the cure or prevention would have already been found. Every person who dies from cancer today, together with the billions that will likely die by the time the disease is finally conquered, is, in a rather direct way, a victim of lower growth. French mentality growth.
I admire Switzerland primarily for one reason: Unlike Americans, the Swiss citizens have had many centuries to screw up their country through mandatory compassion and the big state it requires. But they have not. In America, seems like it was mostly the serendipity of finding a brand new continent and having to rebuild the indolent behemoth from scratch – though Latin America proved that that can be done quite fast. In any case, that is why all prosperous countries that are not tiny are new-world recently discovered continents. But that is temporary and only a matter of time until Americans succumb to standard French voter mentality. The point of no return has passed already and the country is firmly in the grip of the vicious cycle to decline.
So enjoy the short age of the smorgasbord the best you can. ObamaCare kicks in, in a few short months! Some people will drop from the workforce, others will become a little less motivated, some HopNChangers will keep working out of idealistic momentum until they realize what they have done. Lower long term economic performance, a little more desperation, a NEW call for even more help from the collective. The vicious cycle has closed.
Teach your children the advantage of international mobility,… or put all your eggs in what seems to be evolving into the American (hand) basket.
Reblogged this on This Got My Attention and commented:
Switzerland is special for more than just its terrific chocolate.
I have just arrived from a month working in Switzerland and, specially coming from Uruguay, I always return so impressed by Swiss decentralization of power, micro level management of public affairs, direct democracy in important decisions and general lack of interest in politics and politicians …. very refreshing!
Gee, I wonder if we can make better sense of the global picture by supposing that the world has neighborhoods (e.g. Hong Kong, Switzerland, etc.) where the superwealthy are overrepresented, just as every country has its wealthy neighborhoods.
Now, we are, or should be, familiar with the problem of people becoming superwealthy through state capitalism, i.e. rigged commerce carried out under the color of law and protected by cops, courts, and soldiers. Case in point: The wealthiest area of the USA is now a region surrounding the federalists’ capital. Not hard to figure out that a hypothesis of “Economic Freedom” is inadequate to explain this phenomenon.
Now let’s take a look at Switzerland. In the process of doing so, let us recall the global, integrated system of nationalized currencies and central banking.