Swiss Voters Reject Economic Stupidity
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By Jacob Hornberger
Give Swiss voters credit -- well, at least 77 percent of them. In a recent national referendum, they overwhelmingly rejected a proposal that would have guaranteed each Swiss adult a monthly payment of $2,560 from the Swiss government. Just think: the payment was going to be free, just like Social Security, Medicaid, farm subsidies, food stamps, and education grants are free here in the United States.
Why do I say those Swiss voters are smart? After all, what’s smart about rejecting free money, right?
They’re smart because they understand that the generous monthly payment wasn’t going to be free at all. In order to make the payments, the government would have to first collect the money from the Swiss citizenry through taxes.
So let’s see: Under the plan a Swiss citizen would receive $2,560 in free money, but first he would have to pay $2,560 in monthly taxes so that the Swiss government would have the money to send him the $2,560. In actuality, he’d probably have to pay around $3,000 per month in taxes, because the government would have to pay salaries to government bureaucrats and incur other expenses for performing that service.
Do you see why I say that those 77 percent of Swiss voters are smart?
Of course, an American statist might come back and say, “Jacob, it didn’t have to be that way. The Swiss government could have taken all the money from the rich so that the money really would be free for most of the people receiving it.”
In fact, voters were not told how the government would be collecting the money to fund the generous monthly dole.
Maybe that didn’t matter to the Swiss.
Maybe the voters recognized the fundamental wrongfulness of using the government to take money from those to whom it belongs in order to give it to people to whom it does not belong.
Maybe they realized that the more income and savings that are confiscated from the rich, the less capital there is coming into existence, which is one of the keys to a prosperous society and rising standards of living for everyone.
Maybe they felt like Curdin Pirovino, a Swiss industrial designer, who was quoted in a New York Times article on the vote entitled “Guaranteed Income for All? Switzerland’s Voters Say No Thanks”: “You cannot give a society the idea that money is available for doing nothing.”
Or maybe they just didn’t want to tamper with a system that, according to the Times, “has allowed the country to remain among those with the highest living standards in the world, even with a growing and aging population.”
In fact, get this: Switzerland’s unemployment rate is 3.5 percent, less than half the average in the European Union. Compare that to the chronic, permanent unemployment rate of 30--40 percent for black teenagers in the United States.
The reason for the low Swiss unemployment rate? There is no minimum wage in Switzerland. As I detailed in a recent blog post entitled “Minimum-Wage Smartness in Switzerland,” in 2014 76.3 percent of Swiss voters rejected a minimum wage for Switzerland. Unlike American voters and other European voters, Swiss voters clearly understood that a minimum wage locks many people out of the labor market, leaving them unemployed and in need of a government dole.
Our American ancestors certainly would have related to the Swiss people today. That’s because our ancestors brought into existence an economic system without income taxation, Social Security, Medicare, Medicaid, farm subsidies, education grants, minimum-wage laws, economic regulations, welfare, drug laws, foreign aid, a vast military-industrial complex, a national-security governmental apparatus, foreign military bases, and other programs that form the essence of the welfare-warfare state under which today’s Americans live.
What happened when the United States had no welfare-warfare state? The result was not only the most prosperous society in history, especially for those at the bottom of the economic ladder, but also the most charitable.
Like those Swiss voters, our American ancestors were smart. Not so, unfortunately, for all too many modern-day Americans.
Jacob G. Hornberger is president of The Future of Freedom Foundation (www.fff.org) in Fairfax, Virginia.