Is Switzerland a forgotten country?

Forgotten Swiss model for success

It should be easy for us to say that inequality develops very differently in different places. This is an indication that smart politics is at least one of several factors influencing inequality (ourworldindata.org). But which measures are wise - and which are not?

Switzerland, right from the start, intervenes little in the distribution of income in an international comparison. Only three countries show minor changes: Turkey, Chile and South Korea. This can be seen in the graph based on OECD figures, which ranks countries according to the extent of their redistribution from top left to bottom right. In Switzerland, the Gini index as a measure of inequality changes comparatively little with redistribution (black line): it only decreases by 0.1 index points compared to the initial value of market income (bar). Even the USA and some of the Baltic states, which are not exactly known for excessive welfare states, intervene more strongly in the distribution (Schwarz 2013).


The reason for this Swiss reluctance is obvious: there is simply little reason for redistribution. Even without government intervention, the Swiss labor market creates a much more even output than other countries. The Gini index before redistribution is just under 0.4 in Switzerland. In the USA (0.51), Great Britain (0.53) and, for example, also in France (0.5), which is known as egalitarian, income is distributed much more unevenly.
So this is Switzerland's recipe for success: an even distribution can also be achieved by ensuring that wages are already evenly distributed. This is where smart policy comes in: among other things, with widely accessible, good education, a liberal labor market (Schlegel 2017), a functioning social partnership and a high proportion of employed people. That is much more promising than interventions through state redistribution, which are always associated with a loss of prosperity.

Additional Information
Data

  • Data were used for 2013. The Gini of market income is compared with that of disposable income.
  • The market income corresponds to the sum of the labor income and the capital income. Disposable income is the sum of labor income, capital income and transfer income minus taxes and social security contributions.
  • The data come from the OECD. They were made available on ourworldindata.org. https://ourworldindata.org/income-inequality/.

Terms

  • Gini index: A frequently used key figure for distribution. Using income as an example, it means that with a value of 0 all people receive exactly the same income and with a value of 1 one person receives everything and the rest of them receive nothing.

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