Germany’s state quota has reached 51%. Citizens work until July just for the government. Meanwhile, Liechtenstein, Luxembourg, and Singapore, tiny, resource-poor, and sovereign, consistently top global prosperity rankings. Coincidence?
Philipp Bagus, professor at Madrid’s Universidad Rey Juan Carlos and Ludwig Erhard Prize laureate, argues the answer lies in a simple structural truth: small states outcompete large ones because they cannot afford to be bad. No empire to hide behind. No captive population to tax into submission. Only competition, institutions, and accountability.
Goethe saw it coming in 1828. The data confirms it today.
What this article covers:
- Goethe’s prophetic argument for sovereignty over centralism
- Bagus’s 6 core arguments for small states — with the hard numbers
- An interactive timeline: from 300 German principalities to EU bureaucracy, tracking freedom and state power from the Zollverein to 2024
- A scatter chart: state quota vs. economic freedom across 60+ countries
- The full Legatum Prosperity Index 2023 — all 167 countries, 12 pillars, 300 indicators (small states dominate the top 10)
- An interactive simulator: build your own state and see what the data predicts
- 10 historical epochs of human flourishing — from the Sumerians to Singapore
- A direct link to the companion Hayek Socialism Index
