For Maurits Van Brunschot, the breaking point came nearly 21 years after he first settled amid the cobblestone alleyways of De Wallen, Amsterdam's red-light district. Van Brunschot began taking his infant daughter to day care. The neighborhood's public nursery was squeezed between two brothels, where nearly naked women in the windows beckon adult passersby. "Can you imagine this is what she sees every day?" says Van Brunschot, a food-company executive.
That question is perhaps too rarely posed by the millions of people who visit Amsterdam each year. For them, the city's liberal laws and attitudes offer a stark...