Apparently not the Swiss residents of the canton of Schaffhausen, in the northern part of Switzerland. Schaffhausen is in fact moving to a system of “degressive” taxation. That’s right, lower tax rates for the rich:

Beginning in January 2004, Schaffhausen will replace its system of increasing marginal tax rates on income with a system of degressive marginal rates. The cantonal tax rate will be set at just under 8 percent for income of SFr 100,000. It will rise to a peak of 11.5 percent for income between SFr 600,000 and SFr 800,000. Thereafter, the marginal rate declines with each incremental chunk of income: 10 percent at SFr 1,300,000; 8 percent at SFr 3,000,000; and just over 6 percent for income more than SFr 10,000,000. This is a true incentive-based tax system–the larger one’s income, the lower one’s marginal rate.

Declining marginal tax rates will also apply to wealth taxes, further enhancing the degressivity of cantonal taxes.

Schaffhausen has its own legislative parliament, which contains eighty deputies representing all regions within the canton. Eight political parties compete for these seats. Evidently Schaffhausen’s voters support a tax cut that gives the greatest benefits to the richest people. They believe that attracting wealthy individuals to reside in their midst is good for everyone.

Here is the full story. I don’t expect to have any data on this soon, but I am pleased to see the experiment. One question, of course, is whether cross-canton migration effects (as opposed to labor supply effects) are beneficial for Switzerland as a whole, or just for Schaffhausen. It does not create aggregate value to shuffle rich people from one canton to another. In any case I am amused to see an idea that finally weakens Alvin Rabushka’s loyalty to the flat tax.

Addendum: I am embarrassed to admit that co-blogger Alex tells me he posted on this topic some time ago, read his coverage as well.

Anti-aging drugs appear closer on the horizon, but how would a fountain of youth change our behavior? Lawrence Solum asks whether potential immortals would be afraid to ever put their lives at risk:

Given eternally long lives, the real issue concerns taking risks…So the question becomes, “Would it be rational to engage in regular low-risk behaviors (like daily walking), given that over the course of an eternal life, death would be the almost certain consequence?” One might imagine that in the beginning, such behaviors would continue, but that over time one would begin to realize that the odds were catching up with friends, family, and co-workers. Would the loss of eternal life really be a greater cost than the loss of the current human span of several decades? If the answer to this question were yes, then perhaps most humans would began to avoid risk. A very cautious approach to life might add tens of thousands of years to one’s anticipated life span. I have an image of fine restaraunts serving only minced food to avoid the small (but statistically significant) risk of choking. No roller-skating, no skiing, no contact sports, no flying on airplances, no boating, no swimming. Would the eternal life lived to minimize risk be a recognizably human life?

Update: An astute reader notes that in contemporary vampire fiction, ancient vampires are generally potrayed as extremely risk averse–employing proxies when personal action in accord with their conception of the good (the bad?) would involve a significant risk to their immortality.

A related question is whether immortals would be less ambitious, since they might always feel they could accomplish their goals in a more distant future. As long as we are citing fiction, I recall seeing a television show about immortal beings. They were content to remain homeless and spent most of their time sitting around a campfire and talking. They accumulated few possessions. They never feared such a course of action would lead to death, and they always held the option of trying to do more.

Solum’s query was prompted by a Volokh Conspiracy post of mine. I asked the different question of whether an immortal is necessarily a murderer with a probability approaching one, given the recurring risk of accidents.

Addendum: Read the commentary of Randall Parker.

Brad DeLong writes:

It is not possible for a card-carrying neoliberal like me to wish for any but the most minor of controls to curb the most speculative of capital flows. Capital markets can get the allocation of investment badly wrong, but governments are likely to get it even worse, and the incentives to corrupt bureaucrats do need to be kept as low as possible. But the hope for a repetition of the late nineteenth-century experience, in which core investors’ money gave peripheral economies the priceless gift of cutting decades off the time needed for successful economic development, has–so far–proved vain.

The full post — worth reading — is a very thoughtful and indeed moving elegy to the nineteenth century. DeLong points out that today a good deal of international capital flows today to the United States, rather than to the poorer countries.

Nonetheless I am more optimistic about the contemporary potential for international capital movements to spur growth. Singapore moved from a run-down port to a wealthy country in a few decades, and the transition was driven largely by foreign investment. Malaysia has faced a rockier road but by historical standards must be judged a success. Most of Africa has stood still or regressed, but clearly domestic policies are the major culprit. The more serious counterexamples have been in the Latin countries, many of which have received significant foreign direct investment, yet without coming close to eliminating poverty.

When it comes to China, we can see the glass as either half empty or half full:

China’s scorecard for attracting foreign investment reads like this: Trying hard, doing well, but could do even better. That is the assessment of a just-published OECD report, Investment Policy Review of China — Progress and Reform Challenges. In 2002, China became the world’s largest recipient of total foreign direct investment (FDI), attracting nearly $53 billion. That performance comes thanks to China’s progress on structural reforms, its accession to the World Trade Organization, and efforts to bring regulations in line with international standards.

So is China a counterexample to Brad’s claim? It depends how we count. It is only one country but of course over a billion people.

It also depends how we understand China. Liberalization has brought foreign investment, which has made its “low-wage-but-much-higher-than-before-wage” factories possible. My post immediately below cites research that finds much of the Chinese progress as coming from the shift of labor out of agriculture. This does not mean that capital flows had no role, since they helped make such a shift possible. We also should distinguish between total foreign investment and the per capita measure: “At $30 per capita, China receives less FDI than other major developing countries, such as Brazil with $195 per capita.” But of course foreign capital flows, and Chinese progress, have been concentrated in just a few regions of China.

What is the lesson? Foreign direct investment needs good domestic policies to translate into significantly higher living standards. When such policies are in place, it is amazing how far foreign direct investment can go. Even small per capita amounts of FDI can have a large and positive impact on individuals’ lives. Foreign capital flows have not lost their magic, but they will not lift all boats either.