The high
placement of Switzerland on essentially all lists measuring the GDP (per
capita) of countries is unique in that, next to its competitors in similar
slots, it has no abundance of natural resources (such as Norway with its
astonishing oil deposits), it is not a small tax haven (such as Luxembourg,
Macau, or Liechtenstein, to name a few), and it does not have huge amounts
of land to diversify its exports, or a
strong defense industry at that (such as its nearest neighbor on most GDP
lists, the United States). So, what could account for Switzerland's placement
in the top 10 of almost all lists of GDP
(the World Bank considers its placement at #5)? While Switzerland is known most
for its fine watches and knives denoting exceptional craftsmanship, the next
thing most think about concerning Switzerland is the well-known shady banking
practices employed there. While craftsmanship and being a beacon for
international banking would certainly denote high earnings, Switzerland's large
economy is more due to its history among European nations rather than its raw
talents.
Switzerland has historically been
perceived as a neutral, stable country, obviously mostly due to Swiss
neutrality during the first and second World Wars. However, the largest factor
during the first half of the 20th century as to Switzerland's economic prowress
was actually an economic depression during the first World War. Border guards
were made up of conscripted working-class men who were not compensated for lost
wages, and increased currency production during this time period caused
inflation; both of these factors lead to an economic downturn which was not
helped by their inabilty to import/export goods due to the surrounding combat.
This low period extended after the war and was made even worse by the onset of
World War II. Of note, however, is that Swiss neutrality in the first conflict
made them ideal candidates for business and negotiations (for example, the
Geneva conventions and associated conferences) which helped their international
image on the whole.
The period of Swiss history during
the Second World War was not altogether different. They experienced an economic
slump at the onset of the war followed by fortification of their borders and
conscription. However, their involvement in the second war was highly economic
as opposed to the almost complete neutrality of the first, with Switzerland
selling arms to their neighboring countries (France, Germany, and allies such
as Great Britain) and dealing financially with both sides of the war.
Afterwards, it was again seen as a ideal place to handle negotiations due to
neutrality, and Geneva conventions continued to be held there. Unlike a
majority of Europe, Switzerland's industry was largely undamaged by the war and
was therefore mostly able to continue business as usual before, during, and
after World Wars I and II. In short, Switzerland's conduct from the 1910s to
the 1940s allowed the international financial community to see it as a safe
haven, and a stable one at that, causing Switzerland to be a ready target for
investment and banking concerns. However, this is only the "start" of
a successful GDP, and would have to be maintained by policy and actions.
Most notably, Switzerland has a
rather unique taxation structure. Their constituion places specific limits on
how their citizens might be taxed, and due to the means by which taxes are
implemented being subject to direct democracy (IE, counting all votes and using
them to determine the outcome) all taxes can be struck down by the population
which they affect. Furthermore, it is in the Swiss constitution that all taxes
must be general and equal in nature, and proportionate in the affectee's
ability to pay the tax. Therefore, by constitutional nature all Swiss taxes are
supposedly designed to accomodate the population as much as possible, and therefore
they have one of the lowest tax revenue as a percentage of GDP rate among most
first-world countries (IE, the United States, Australia, Norway, Sweden,
Canada, etc.) In all, their taxation practices allow most citizens to be taxed
by a fair amount according to their situation and therefore allow them to keep
a majority of their income.
Indeed, a majority of Switzerland's
politics are the closest in the world to "direct democracy" in that
almost all changes to law have the option to and all changes to the
constitution must have a referendum, a direct vote in which the entire
electorate (in Switzerland's case, the population it affects) is asked to adopt
or reject the proposal. The necessary signatures needed to challenge a law is
only 50,000; these must be collected in a 100-day period, and given
Switzerland's population of nearly eight million, this is hardly a majority.
Citizens may also seek to amend the constitution themselves, and the signatures
required for this are only 100,000 in eight months. While necessary legal
wording for these amendments is obviously required, and the government may make
a similar counter-proposal for the amendment, this kind of political power and
freedom is almost unheard of elsewhere in the world. In short, the Swiss are close
to having the most enfranchised voters on the planet, and are able to make and
decide on laws affecting themselves by their own decision, rather than be
represented by a leader.
The Swiss "executive
branch" is comprised of a seven-member panel known as the Swiss Federal
Council, comprised of citizens eligible for the position who do not necessarily
need to register for the election to be elected. This combination cabinet and
collective presidency decides most major decisions typical of the United States
president and works in hand with the legislative branch of the Swiss
government. The Federal Council is often diverse in which political parties are
seated, usually having only one or two seats filled by one party; this
diversification, as well as being a small council rather than a singular person
or party, allows stability in government by discouraging one party moving into
leadership and swearing to undo most of another party's actions. The effect of
this stability on their economy and therefore GDP is largely superficial in
that the Council will likely not play direct roles in the finalization of taxes
and other economic laws (whose "final veto" ultimately lies in
popular referendum), however the stability in government, both in reality and
in appearance, creates a very appealing platform for investment and economic
prosperity.
In total, the Swiss' economic
success (often toted as the "Swiss Miracle") is rooted in being
neutral and friendly, and supplanted by having one of the freest and most
stable governments on earth. Its strategic position is also of no small importance: being surrounded by
mountains allowed them the security to be neutral, and ensured that no invading
power actually wanted to disrupt the Swiss system. Their lack of natural
resources (aside from coal deposits) allows them to be even less
strategic, and lets them focus economic power on specialty crafts and financial
objectives. An astonishingly democratic, free, and most importantly largely
successful political system gives them governmental stability and a unique
amount of transparency that cannot be bad for citizens and corporations alike.
Swiss neutrality, stability, and success therefore makes them a centerpoint for
international affairs of all kinds, including finances and diplomacy, which
makes them extremely likeable and allows foreign investment to essentially flow
into the country. Furthermore, this analysis says nothing of Swiss
infrastructure, which is more a product of a successful economy despite how
much it also bolsters the economy.
But are these practices and
successes viable elsewhere? It's not entirely likely; most other countries have
strategic resources, weak points in geography that allow hostilities to invade,
and most first-world countries have populations often considered too large for
a direct democracy. Furthermore, Switzerland had a very unique situation during
the World Wars, and was able to keep its independence and neutrality during the
second due to their economic practices. It is not always so easy to remain
neutral. However, aside from their ability to effectively be an almost "direct democracy"
their government is certainly insanely successful and has no means (other than
the popular referendums and amendments) which makes it unscalable to the
population bulges of first world
countries. So, is it viable for other countries to emulate the Swiss? In some
ways yes, in others not so much. However, to assume it impossible to emulate
Switzerland would almost certainly be considered folly.
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