Liechtenstein: the freest nation in the Western world because it's a... monarchy?

[Dylan Lawrence Moore]

Quick geographic reminder: Liechtenstein is one of those tiny countries in Europe nestled between Austria and Switzerland. It's got a population of about 36k, about 5 miles wide and 10 long, and shares most of its policies with Switzerland (along with its currency).

 

I've been recently applying for jobs in Austria, and managed to stumble upon a position in Liechtenstein. I figured what the hell and sent an application off, not really expecting anything back, and was rather shocked when I got a personal email asking me for an interview. Being the investigative person that I am, I immediately began looking up information on Liechtenstein (if anything, to not sound like an idiot to the person who would be interviewing me).

 

In my search, I quickly stumbled across the following article from mises.org:

 

http://mises.org/journals/jls/22_1/22_1_14.pdf

 

The premise of the article is that Liechtenstein enjoys the most freedom within the western "free" world because it never made the shift over to democracy from monarchy.

 

Some of the freedoms of Liechtenstein include:

 

-Lowest tax rate of all Western countries (maxing out at 17%)

-ZERO national debt

-Not even a budget deficit

-Tax "evasion" considered a civil offense, not criminal

-Only 20% of budget consumed by welfare (apparently 50% is standard in "civilized" countries)

-Absolutely no subsidies for business and industry

 

This is despite the fact that Liechtenstein has a constitutional monarchy--the standard type where the monarch has the authority to disband parliament whenever he wishes. He's the head of the executive branch and has the ability to veto legislation and appoint judges.

 

However, in the monarch's defense, the people voted to keep him in and apparently reserve the right to kick him out.

 

The author of the article explains this apparent contradiction with a few basic points:

 

-A monarch is in for the long haul, whereas a president or a prime minister is short-term

-A monarch's debt is traditionally considered his alone, whereas a republic's debt belongs "to the people", encouraging the monarch to live within his means, and encouraging leaders of democracies to steal as much as possible as fast as possible

-Generally, a monarch has to pay for his own armies, greatly limiting the scope of war (in comparison to democracies, where you can just stir up nationalistic fervor to get people to enlist).

 

The author even goes to suggest that most of us are mistaken in our understanding of the amount of freedom associated with the Western world's transition from monarchies to democracies, and that monarchy is really the lesser of the two evils.

 

This article blew me away. Of course, I don't think it's fair to compare a country the size of a football field with a "normal-sized" country. I'm sure a huge part of the freedom of Liechtenstein has to do with the small geographic size and the low population--things are a bit more personal when the prince is your neighbor. The modern extent of technology, specifically communication and travel, I'm sure also have a lot to do with it, especially in the Schengen border area, where the population literally has the option to "vote with their feet" and just drive across the border.

 

However, the author makes some very good points about the long-term thinking of a monarch vs. the short-term thinking of a democracy stooge. The article really illustrates how a locally-managed, small geographic area really exemplifies freedom, even when done so under the ridiculous concept of royalty.

 

I wanted to post it here because I thought everyone else would enjoy it.

-Dylan

[kcq]

doesn't have to be because of monarchy, i'd attribute this to the low population if anything.

 

Look at norway in comparison

[LuckyNumber23]

Liechtenstein is doing so well for other reasons as well. They don't have an army, the Swiss will defend them if need be. In addition, it is notorious for laundering money. Like Luxembourg this status has become quasi official. Governments all over Europe use trusts in Vaduz to fund secret projects or to hide stolen money. Good luck with your job search Dylan! Austrian and Liechtenstein are both wonderful countries.

[st434u]

Democracy is the worst possible form of government. An Absolute Monarchy (not a Constitutional Monarchy) is the least bad (obviously, not having a State is better than monarchy). Contrary to popular belief, Europe was much more free under the rule of Absolute Monarchs, especially in the time ranging from the 15th to the latter 19th centuries. With tax rates rarely if ever exceeding 5 to 10%, in most cases averaging about 8%. And that's the total tax burden, not just income taxes. Similarly, there was no such thing as compulsory public education; welfare did not exist, and legislation (rulers creating new laws) happened mostly only once every few generations or so. Likewise the inflation rate of the money supply was much lower and often did not exceed the production of precious metal entering the market. National debts were small (since the King knew that they would have to pay it back themselves, or have their heirs pay it back), and they paid a higher interest than private debt (because of course, without the ability to monetize debt, everybody realized that the King may not pay back). In the same way, wars were royal wars, involving only two opposing private-royal armies which did not engage in widespread massacres as they do today.

 

I made a post almost two years ago summarizing some of the reasons why this happens, but didn't get any replies, here: http://board.freedomainradio.com/topic/32990-democracy-an-improvement-over-what-came-before/

 

It was the development of technology and the accumulation of capital brought about by the industrial revolution that allowed democracy to spread and be maintained, not the other way around.

 

If you go country by country today and look at their level of freedom versus statism, there is a clear tendency for countries with more democratic elements to be more statist, and those with more restrictions on democracy to be less statist. What the mainstream politicians often do is try to reverse this tendency by pretending that the more democratic countries are actually less democratic, and vice-versa. But few would deny that countries such as Liechtenstein, Singapore, Hong Kong, China, and Chile, are far less democratic than Cuba, Venezuela, The United States, South Africa and France. So what they try to do in these cases is to pretend that the less democratic countries are worse off, even though their economic growth and level of freedom is clearly larger than in the more democratic countries.

 

For more on this, read Democracy: The God That Failed, by Hans-Hermann Hoppe. There's also these two lectures by him that you can listen to online: http://mises.org/media/1070 (also available for download as mp3) and http://www.youtube.com/watch?v=k1GjHpOtcgk (ignore the picture, just listen to the audio)

[GRosado]

Lichtenstein is the freest western country? I would say Chile or Switzerland is.

[Gunnhvatr]

I always smile when people, usually from the USA, point to problems in the UK or the colonies and blame the royal family.  They never assume the problems came from elected officials and bureaucracies.  They prescribe abolishing the royals as an ultimate solution.

I don't necessarily support monarchy, but it is fun to see people speaking as if Liz' is ruling over us with an iron fist.

[Phuein]

I don't know any details, at all, but I get a rather good feeling from another monarchy - Jordan. The country seems to handle the generally disastrous political, economical, and environmental situation here in the Middle East, quite well. I wonder how the inhabitants feel about it, when it comes down to daily life.

[GRosado]

Actually forget my previous statement the freest nation in the western hemisphere is actually the Netherlands. That's according to the data gathered by the Cato & Fraser institutes.