I was reading this article on tipping, and remembered how much I like living in New Zealand from that point of view. In New Zealand, service tends to be pretty good - casual but friendly. In particular, it's entirely normal for wait staff, shop assistants etc. to interact on a natural, person to person level with the customer, rather than in a role-defined way. And tipping is very uncommon here.
One argument often given for tipping is that it promotes good service. I don't think so. I think at best it promotes artifically good service. It turns politeness into a product - the staff are being friendly in order to earn a tip, rather than to be friendly, and there's a difference in tone to that transaction. They're playing a role more so than being themselves.
Not tipping doesn't automatically mean good service, or even that people won't be playing a role. In Eastern Europe, tipping isn't the norm, but service is often sullen. I think this can be a feature of bureaucratic societies where the person performing a service is in a position of power and sees him- or herself as 'one-up' on (superior to) the members of the public they interact with. It's no coincidence that Kafka, who wrote brilliantly about the nightmares of bureaucracy, was from the Czech Republic. In Japan, in contrast, where tipping's also not part of the culture, subservience plays a significant role in their society, and so service staff naturally adopt a 'one-down' attitude of genuine deference with respect to the customer.
In both the above cases, the attitude taken is at least genuinely expressed, even if it's not as refreshing as a natural interaction between equals, such as tends to be the case here in New Zealand. In contrast, I think in cultures with tipping, staff can have a cynical combination of the two - an outwardly one-down, but privately one-up, attitude to the customer. At the extreme, the stereotypical image of this is of the waiter whose smarmily exaggerated politeness barely conceals his deep disdain for the customer.
Another reason people promote tipping is that they argue it will lead staff to serve you better next time. If you're going to look at it that way, though, seeing it as payment in advance, then is there really any difference between tipping and bribery?
The most common, and worst, argument for tipping is that staff in the US are paid below the minimum wage, and have to rely on tips to make a living wage. That's fine as a reason for tipping staff if you eat in a restaurant in the US today, but it's no justification at all for why the tipping culture should continue to exist tomorrow. It would be much better if the laws are changed so that all staff earn a decent minimum wage, and tipping is no longer vital.
So, thank you, New Zealand, for having a refreshingly down-to-earth, uncynical, unbureaucratic, and unstratified culture. Good work! (Here's 20%.)