A Dilemma

According to the Cato Institute, winner-takes-all systems reinforce limited government while PR systems tend to lead to increases in the welfare state. If you've been reading my blog regularly you're well aware of my reservations of our current electoral system. I must say, though, I'm not entirely convinced with the Cato study. Most of the comparisons that are done are between the US and Europe. Is it possible that there are factors other than electoral systems account for larger welfare states and to what degree does an electoral system have on the size of the state. The US and UK use winner-takes-all systems, but they also have a history of economic liberalism, couldn't that account for the size of the state? Plus I think there's a counter example to the study, namely Switzerland, where they have use proportional representation and have a high degree of economic freedom.

Update: Oh, I should also mention Ireland as a counter-example as well.