Your answer is to just give up?
It doesn’t work that way. 0% redistribution is also a possible solution that has to stand up to scrutiny.
0% is untenable anyway, but clearly countries closer to 0% have better off middle classes than countries that are closer to 100%. Switzerland in Europe, Botswana in Africa, Singapore in Asia, Chile in South America - there are many examples proving the point. And many counter examples - Greece in Europe, Zimbabwe in Africa, Argentina in South America, etc, etc. Obviously low wealth and income redistribution is not the only factor that plays a role in economic success (to some extent Scandinavians prove the point) but it’s one of the most important, if not the most important, factor.
Now we have to get the data right again.
why not use the world happiness report as a starting point to determine whose countries have it better?
It’s hard to measure happiness. Culture (scandinavians find it disgraceful to complain about their life) and geography (sun & beach or constant rain) plays a role. Also, some countries may have had their productive days behind them, where they accumulated a lot of capital (ownership of companies, infrastructure), and now they’re just chipping away off their accumulated wealth. Are they still happy? Sure, as long as the music keeps on playing…
Edit: do you know how our base happiness level comes back to a default after a major event? Like winning a lottery or becoming a cripple? How to factor this into the happiness reports? A rich person can be unhappy, a poor person with a loving family can be happy. Happiness is an elusive metric.
1 Like
I personally think that utility and happiness interpersonal comparisons and aggregation is basically nonsense on epistemological grounds. GDP per capita is measurable objective data - utility/happiness level is not. I find this basically unscientific.
Nevertheless, World Happiness Report doesn’t prove that high redistribution is causing (or is even correlated) with high happiness - Scandinavians are happy and Swiss are happy, first have higher redistribution, second lower. Clearly there are more factors to “happiness” than high redistribution - and (anecdotally) for me personally, more “free” stuff from government would make me unhappy because I understand that this will result in higher taxes (now or in the future in case of high debt) and less individual freedom (more governmental control).
PS. According to this report life in Kosovo is only slightly worse than in Singapore and apparently much better than in Estonia, South Korea, Japan, Hong Kong, Panama, Slovakia, Chile, Cyprus, Portugal… And life in Mexico, Saudi Arabia, Guatemala is better than life in all of these mentioned countries + Spain and Italy. I have a feeling this index can be more reliable in determining quality of life.
Yes, my point is more that it is not reasonable to just claim that 0% redistribution is the optimal solution by cherry picking countries with high GDP that are close to such a metric.
Sudden wealth syndrome is a real thing. It is not easy to handle a large windfall.
Another index that has probably some relation to the potential of wealth creation is the social mobility index.
Global Social Mobility Index 2020 | World Economic Forum
I think that social mobility also plays a large role in the wealth creation potential of individuals.
Well, I’ve never claimed that. I said that it’s better to strive for low redistribution rather than trying to figure out highest “optimal” redistribution that is not producing perverse incentives and causing more harm than good in effect - which in my opinion is just impossible exercise. I also don’t agree that I cherry-picked anything - It’s not my fault that countries with highest GDPs either have low redistribution or they had it for most of the history (e.g. Sweden had lower government spending to GDP ratio than US for most of its history). It’s just grim fact of life that capital accumulation leads to economic growth and raising living standards.
I guess that would be a reasonable middle ground between my position and yours. Personally, social mobility is not my most important value, but I agree that it is important in both subjective individual well-being and economy at large. As I mentioned before, low redistribution (i.e. high capital accumulation) is not the only factor that plays a role in economic growth. There are many other important ones: stable institutions, security of private property, openness to global trade, entrepreneurial culture, technological/scientific advancements, skillful/productive labor force, efficient administration (especially judiciary), low cost of business operation (low regulation), stable macroeconomic environment (low inflation and debt, reasonable interest rates), well-developed credit markets (stable banking system), good infrastructure, natural resources, etc, etc.
But still, if there’s a country with low redistribution and high social mobility (Switzerland) and country with high redistribution and high social mobility (Denmark), I’d rather live in the first one due to personal preferences and because I think that low redistribution produces better potential for future economic growth.
Finally everyone in Switzerland has the right to be unhappy.
I’m talking about the other initiative.
I am more surprised that over 50% of population thought that Switzerland can unilaterally change international treaties with EU and not suffer any consequences.
We got away this time. But 35% are a lot.
Guys, we need an escape plan.
1 Like
The miracle of today is that the 99% became 34% and the 1% became 66%. This means that a lot of people felt threatened by this initiative. I do not think that the 34% who said yes to the initiative want to steal the money from the others, they simply believe that money grows without effort because it is not related to work. In my case the reality is that I live in a simple apartment, never drove a motorbike, never had a camper-van but managed to build wealth by proper management of my income. Unfortunately it seems to be a crime, to the eyes of some left wing people, not to have any debt.
7 Likes
Or they were defending what they perceive to be their future interests.
It also means that many still have the ambition, the drive, the hope that they can climb up the ladder. Which is a good thing.
1 Like
Frankly, those who bought real estate in the past have hugely benefited from the falling interest rates (their properties gained in value). This could have created some resentment among the younger generation, who can only dream of owning their own place.
Moreover, capital gains are already taxed in many countries, so it’s not like they invented something new. In the end, what counts is the total tax burden. This initiative wanted to increase the progression, funnel more money from capital owners to those without capital. As we can all agree, both 0% and 100% redistribution are bad, so it’s the question of how much % is efficient or “fair”. I guess the public decided that the poorest don’t have it so bad, as to justify more redistribution.
Moving on, I have been approached on the street by the people collecting signatures for a new initiative called Mikrosteuer. It is supposed to replace VAT, federal tax and stamp duty by a 0.5% transaction tax, which should supposedly help small businesses in their day-to-day business and “make order” with the financial sector, which just “sends money from one place to another” without adding value to the economy. My first impression is quite skeptical, but I guess many people could find it appealing.
3 Likes
Sorry but on this one I do not agree with you and you repeat many mistakes we heard during the campaign. Even quite knowledge people had difficulty to be clear about this topic.
The capital gain distributed like a dividend is free of tax after a vote of the swiss people few years ago. The initiative never spoke specifically of capital gain but also of dividend and income from rented housing. You forget to mention that in Switzerland we have wealth tax which does not exist in many other countries. The initiative never planned to waive the wealth tax as compensation.
This is true but taxation is not an efficient way to alleviate housing prices speculation. The main factor driving the increase of the price of housing is not the seller but the buyer. People are ready to get in debt without limit because the interest is dead cheap.
1 Like
Maybe so, but I’m just speculating on the sentiment of the voters. I don’t think most people understood what the incentive would be taxing. I’ve been following this thread, yet I myself already forgot what was the exact plan. So I don’t expect more from an average voter than from myself. The initiative was shamelessly targeting rich people, and yet such a populist proposal failed to gain public support. I’d say this is the Swiss miracle, I would be impressed if there was a similar result in Poland. (but our referendums can be thrown into the trash by politicians, no legal obligation there…)
I think they didn’t vote for this purpose, you are a bit too optimist about people thinking that it isn’t fair to take money from one who had it.
I think they vote for the purpose to be affected one day if they are lucky enough or had the opportunity to inherit from their parents a house for example, and they wanted to sold it and make a huge benefit.
Moreover, the idea wasn’t bad, but the process was terrible as it will have affected more than the 1% aimed. As always, the middle would have been affected, in my opinion.
I think I can agree with that. Many things that are being voted on in Swiss referendums seem weird to me for regular people to decide. We have no idea about this stuff, reading through the booklets can be very tedious. I wonder how seriously do Swiss people take their voting.
That being said, I don’t know if politicians can actually do a better job. They will vote for whatever, if it means appealing to the voters.
What I also don’t like about democracy is that 51% has 100% power on lawmaking, until the next election. It would be nice if political forces could “invest” their political capital (proportional to public support) in matters that are vital to them. Every voter group would get something that interests them pushed through.
Democracy is the dictatorship of the stupid.