The Wisdom of the Swiss; they reject a harmful pay equity scheme
November 25, 2013 Leave a comment
The Wisdom of the Swiss
They reject a harmful pay equity scheme.
Updated Nov. 24, 2013 5:05 p.m. ET
Swiss voters overwhelmingly rejected a referendum on pay-equality Sunday. Nearly two-thirds of the votes went against a proposal to limit the ratio of the highest-paid to lowest-paid people in a company to 12:1. The sponsors of the initiative blamed their defeat on a campaign of “fear” by the business community. The truth is, as voters plainly saw, that it was the 12:1 campaigners who were relying on emotional appeals.Few would disagree that in a perfect world pay would correspond with performance and productivity. In the real world, some people are inevitably overpaid, and some underpaid. But there is no iron law in that real world that dictates that one person’s contribution could only ever be 12 times greater than another’s. So in the name of combatting a few high-profile examples of supposed salary excess, the campaigners would have made it impossible to pay many people what they rightly earned. And to do so would have required a whole state apparatus of income reporting, verification and comparison and enforcement. Thus do progressive intentions inevitably give birth to the coercion needed to impose them on the public.
Then there was the international dimension. Many of the biggest companies in Switzerland, a country of some seven million, earn most of their money abroad or in international trade. That those firms have become global giants is thanks in no small part to Switzerland’s stable politics, moderate taxes and reliable rule of law. But faced with draconian limits on freedom of contract imposed in the name of egalitarianism, many of the targeted companies would have had little trouble leaving for other homes.
The practical result of “success” in Sunday’s referendum would have been to make Switzerland a poorer place and less attractive to foreign investment. And equality, to the extent it would have been achieved at all, would have been attained by driving the wealthy out, rather than improving the lot of the lowest paid. It’s to the credit of the Swiss that, the closer they looked, the less attractive they found the redistributionist mirage offered by the 12:1 campaigners.
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