Matt Yglesias has a new post discussing Switzerland. I have a longstanding interest in Switzerland, and thus cannot refrain from commenting.
In the first part of the post, Yglesias establishes that Switzerland is indeed a highly successful country. He also explains that this success is not due to some sort of gimmick, like secret Swiss bank accounts. The Swiss economy is extremely productive, and very little of that success relates to retail banking. He includes a graph showing how since 1880 Switzerland has outpaced its European neighbors by a wide margin:
That section of the post is very effectively presented. When it comes to explaining Switzerland’s success, however, the post is less impressive. Yglesias concludes as follows:
Maybe Swiss institutions could make us better citizens.
But to be unsatisfying about this, I’m skeptical. A lot of the politeness and consensus-oriented aspects of the Swiss system seem to clearly be emergent properties of the political culture rather than formal properties of the institutional arrangements. Swiss prosperity and its reputation as a well-governed little state predate the current form of the referendum system. And lots of things in Switzerland, not just the politics, seem well-organized and well-considered. It could easily just be that an unusually diligent and conscientious group of people can make all kinds of weird stuff work.
This may be correct, but the arguments that are offered in support fall well short of being persuasive. Yglesias discounts a bunch of (mostly right wing) explanations such as free markets, low taxes, decentralized government and widespread use of referenda.
When praising the Swiss system, people tend to talk a lot about decentralization and subsidiarity.
But what does this really amount to? Switzerland has a national pension system. They adopted a universal health care program in 1996. They have, as previously noted, a national state-owned railroad. They have a national decarbonization program. I’m obviously not denying that they have a good deal of cantonal autonomy, as well as municipal governments wielding real authority. This level of federalism doesn’t seem particularly different from what you see in Italy or Germany or the United States or Canada.
If you look at OECD countries, you observe that (with the exception of Mexico) all of the countries with a federal system are richer than the average developed economy:
There are not enough federal systems to be statistically significant, but surely there’s no reason to reject the notion that decentralization is beneficial, based on the list above.
I would add that in some respects Switzerland is even more decentralized than many other federal systems. Switzerland has less than 10 million people, which is fewer than individual states such as Ohio, Bavaria and Ontario. And that small number gets further divided into self-governing cantons, and then into even smaller local governments. It’s a highly decentralized system. (There’s a vast difference between a California referendum and a Swiss cantonal referendum.)
Some American rightists told me Switzerland’s success is due to their love of free markets.
And Switzerland does seem market-oriented for a European country. But still, their tax share of GDP is higher than ours in the U.S. They have sectoral bargaining with a much higher share of workers covered by collective bargaining agreements than the United States. There’s universal health care. College tuition for citizens costs $1,168 per year. There is a national minimum child allowance of about $2,500 per year and most cantons offer a bonus above that. So while I’m not saying that Switzerland is a leftist utopia, they have achieved a lot of the things that American progressives push for, and they did it in a political system where the center-left parties never secure a parliamentary majority or control the cabinet. Instead, centrist and center-right elites have consistently preempted left politics by incorporating sensible versions of progressive demands into the Swiss firmament.
By Yglesias’ standards, this is a really weak argument. Here’s a more accurate description of Switzerland’s taxes:
Switzerland has very low taxes compared to other Western European countries. They are slightly higher than in the US, but only because we run massive budget deficits. (Government spending in the US is higher than in Switzerland.) And Switzerland has lots of features that supply-siders like, such as no tax on capital gains from stock sales. More importantly, both the US and Switzerland are outliers, with very low taxes by rich country standards. And these two countries are also outliers in one other important way. Like Switzerland, the US is much richer than other developed countries (excluding a few tiny European principalities and oil rich Norway.) That’s an interesting coincidence!
I am not an extreme supply sider who thinks taxes explain everything (the Nordic countries are also fairly affluent), but I do believe low taxes to be one factor in the unusual success of Switzerland and the USA.
As for health care, I suspect that the US system is actually further from the free market ideal than the Swiss system, despite the fact that the Swiss system is more universal. Our government spends as much as most European countries on health care, and our regulations and subsidies produce grotesque distortions in the health care market. The Swiss system involves unusually large out of pocket payments for health care.
The US and Switzerland also hold a much larger than average number of referenda.
Here’s a list of some of the things that unusually rich Switzerland and unusually rich America have in common:
1. Relatively decentralized.
2. Lots of referenda.
3. Traditionally more free market than most developed economies (although the edge is eroding.)
4. Much lower than average taxes for a rich country.
5. A long period of isolation from warfare (on their soil), and a haven for dissidents fleeing persecution. Also a good place for migrants who want a business-friendly system.
With this final point I’d like to circle back to where Yglesias ended up. He suggested that the Swiss were in one sense superior to other people. Not genetically superior, but superior at making political decisions. More specifically, he points out that they are unusually well informed voters. Perhaps that’s because they have a direct say in policy.
I do not believe that Americans are superior at making political decisions, but I do believe we have one other type of superiority. We have an unusually talented extreme right tail of the talent distribution. Our economic system and political freedom make this place relatively appealing to talented migrants like Elon Musk. Thus while I don’t believe that Americans are more talented than citizens of places like Canada, on average, I do believe the top tenth of 1% of American talent is extremely impressive. This might help to explain our increasing dominance of intellectual capital-intensive industries such as software, biotech, filmmaking, finance, etc. Switzerland also does well in industries that require highly skilled individuals.
When thinking about cause and effect, it’s very hard to disentangle the impact of human talent and good institutions, for the simple reason that talented people tend to produce better institutions. Compare Switzerland to (less well-educated) mountainous and landlocked nations such as Afghanistan, Bolivia and Laos. Where would you prefer to migrate to?)
I live near Irvine, California, which has very good schools and very expensive homes. Talented people pay extra to move to Irvine, in order to get their kids into the good schools. Over time, less talented people are gradually priced out. That makes Irvine’s schools even better. But are they better because the new people are better at running schools, or because their kids are more talented?
I don’t think anyone is going to be happy with my conclusion. When analyzing Switzerland’s success, I believe progressives are wrong to discount the importance of what might be viewed as right wing (or libertarian) political and economic policies. At the same time, I suspect that Yglesias might be correct that Switzerland’s success is partly due to its people, not just its institutions. On the other, other hand, Switzerland’s good institutions have probably helped to attract the sort of people that make Switzerland successful.
Thus it’s almost impossible to completely disentangle the various explanations. If only the Swiss were willing to do a controlled experiment. How about if the French region adopts France’s economic and political system? Run the test for a few decades and see how it goes. Then the rest of the world could determine if the Swiss institutions really are superior, and we could all adopt their system. (If the French region adopts high-speed rail and suffers a loss of export competitiveness, then we can infer that institutions do matter.)
Alas, it’s the very fact that Switzerland is hyper-democratic that makes such a crazy experiment impossible. But maybe there’s a lesson there. Nothing stopped Mao from his Great Leap Forward experiment.
Although we cannot do controlled experiments, there are lots of natural experiments out there. And what do they show?
1. Institutions are really important (North vs. South Korea)
2. Within the same regime, talent differences are really important (Malays vs. Chinese within Malaysia.)
So it’s probably not a question of which explanation is right for Switzerland, rather it is a question of how important is each factor.
READER COMMENTS
Loquitur Veritatem
Aug 15 2022 at 6:06pm
Economic success requires the same things as liberty — mutual trust and respect, which foster beneficial cooperation. Such traits are easier to come by in a polity that is relatively homogeneous and has shared values (work ethic, etc.)
Scott Sumner
Aug 15 2022 at 6:46pm
I agree. It’s also worth noting that Switzerland is highly diverse, with 3 or 4 languages and an extremely large share of their population is immigrants.
The other unusually rich country (the US) is also very diverse.
Mark Z
Aug 15 2022 at 11:32pm
If Ricardian equivalence holds, isn’t it government spending rather than taxes as % of GDP that really matters for growth? And Switzerland spends less as a % of GDP than the US. Most of the reasons he gives that follows are redundant. Saying ‘Switzerland taxes more than the US’ then listing five things Switzerland spends the tax money on doesn’t count count as six reasons. The Swiss government is, overall, smaller than the US government. That’s the key point IMO.
I’m a pretty economically ‘right wing’ American and I’d take Swiss levels of taxation in exchange for Swiss levels of spending in a heartbeat. I’d also take their healthcare system over ours. I doubt most American progressives would greet these as ‘sensible versions of their preferred policies’ and be pre-empted by them; I think they’d probably view them as retrogressions.
I think there’s also a much stronger argument that low spending and less regulation are the causes of Swiss prosperity than child allowances or collective bargaining. This seems reminiscent of people who point out that Singapore isn’t a ‘libertarian utopia.’ But unless one is arguing that its strict drug laws and state ownership of lots of land or what have you are the real reason Singapore is rich, it doesn’t refute the claim that Singapore is rich mainly because of its libertarian policies.
robc
Aug 16 2022 at 9:40am
I worked in Switzerland in the early 90s. For a long time, I considered it my “backup country”, as I had connections to employment if necessary. That time has passed (when the Swiss joined the UN, I gave up on them).
The question I like to ask libertarians (the answer for me is Yes) is would you accept a Swiss-style military draft if we also got a Swiss-style foreign policy?
Basically, neutrality and with mandatory National Guard duty.
Todd Ramsey
Aug 16 2022 at 9:59am
Yes.
But I (and Milton Friedman; although he referenced Israel, the principle applies to Switzerland) think conscription is necessary in Switzerland because of its small population, but would not be likewise necessary in the USA if we were truly neutral, defending only our borders and trade routes.
nobody.really
Aug 17 2022 at 12:16pm
Well, I don’t think any libertarians are going to be happy with MY conclusions–but most of the developed world acts as free riders benefiting from the US’s military spending. If the US adopted military spending more akin to Switzerland’s, would Switzerland adopt military spending akin to Switzerland’s?
Aaron Sorkin, A Few Good Men (1992)
robc
Aug 17 2022 at 1:22pm
I think you would be right about the rest of the world, but based on being a resident of Switzerland for a short time 30 years ago, I would say “YES”. Switzerland wouldn’t change. They didn’t during WW2, when if you were going to adopt a different position, that would be the time to do it.
Mark Bahner
Aug 17 2022 at 5:55pm
<blockquote>[M]y existence, while grotesque and incomprehensible to you, saves lives</blockquote>
That was Colonel Jessup’s (portrayed by Jack Nicholson) conceit…that his existence saved lives. But in fact he disobeyed orders, which resulted in the needless death of one of the men under his command. Then he lied about it under oath, and threw two other men under his command under the bus (to the point where they could have faced life in prison).
So his existence was not only grotesque, it was also thoroughly dishonorable, and needlessly cost lives (PFC Santiago and Lt. Col. Markinson).
P.S. These comments don’t really dispute/address your point about U.S. nuclear weapons, but I hate to see the moral of that great movie lost. (In fact, Colonel Jessup even admonished defense council Kaffee that in the Marines, “We follow orders or people die”…even after *Jessup’s* not following orders resulted in the deaths of PFC Santiago and Lt. Col. Markinson.)
tpeach
Aug 16 2022 at 1:32am
Note that the Nordic countries are also highly decentralised. The top 5 countries for local government revenue percentages are Sweden, Iceland, Denmark, Japan and Finland
Scott Sumner
Aug 16 2022 at 3:21pm
Good point.
flo
Aug 16 2022 at 2:52am
I think the high degree of decentralization is underestimated even by you. Just to set the scene: individual taxes are split three way: 1/3 goes to national level, 1/3 goes to canton/state level (21 cantons for 8m inhabitants), and 1/3 goes to community. Each level has reasonable autonomy in setting tax levels as well as enforcing regulations. There are instances where moving just across a cantonal and community border would reduce the tax burden by 30%.
With the high local taxes comes high autonomy in setting regulations and directing spending. We used to live in a community of about 15k inhabitants on the outskirts of Zurich which decided that the community wanted to become a community for young families. So they changed construction codes to allow for higher density housing, they invested in kindergartens, schools and playground. In the end, this autonomy allows for lots of experimentation at the local level which can be replicated at higher levels later, and lots of differentiation.
Next to the autonomy, there is a lot of accountability at the local level. Besides that fact that one tends to personally know the local government, lots of referendums are at the local level. And there are automatic budget controls as large budget increases and or changes in tax levels have to be approved by the populace.
Arqiduka
Aug 16 2022 at 5:00am
One can rely on some proxy indicators to assign some prelim weights to the people vs institutions: do Swiss firms do well competing in foreign markets? If yes, likely people are it, if not, institutions within Switzerland is it. A regression analysis would suffice.
BC
Aug 16 2022 at 7:12am
“I don’t think anyone is going to be happy with my conclusion….”
I don’t think many people outside the left would object strongly to your conclusions. Obviously, people on the right wouldn’t discount the importance of right wing political and economic policies, nor would they object to the notion that much success can be attributed to differences between people (either individuals or culture) holding institutions constant, nor would they dispute that good institutions attract good people. Well, anti-immigrationists would probably object to the final point. Since you haven’t attributed Switzerland’s success to some sort of privilege, then I don’t think people outside the left will be unhappy with your conclusions.
Todd Ramsey
Aug 16 2022 at 10:09am
Switzerland also has integrated four different peoples speaking and writing four different languages. Few states in history have achieved such cohesion without bloodshed.
robc
Aug 16 2022 at 11:28am
There was bloodshed involved.
IIRC, it is why they developed their neutrality.
Todd Ramsey
Aug 17 2022 at 10:05am
robc, you’re right, my bad, I learned something today!
Relatively little bloodshed, however? Compared to, for example, the Balkans.
TMC
Aug 16 2022 at 10:45am
RobC mentioned the Swiss military conscription. Possibly this is what creates such a high trust environment in a diverse community.
Also as to “happy with my conclusion….”, I think you are right on.
Scott Sumner
Aug 16 2022 at 3:23pm
Everyone, Good comments. I don’t have much to add.
dave schutz
Aug 16 2022 at 6:10pm
I’d like to throw one more factor into the mix – neutrality, and success in going through WWII in particular without getting their industrial base/infrastructure bombed flat and huge numbers of young people killed. Gave them an enormous head start heading into the fifties. As well, if you were a multinational looking to set up a European HQ in the fifties/sixties and you wanted good dependable power and phone service, it was worth a premium to set up in Switzerland. All that put them into a nice place, and then they didn’t squander it.
Sweden has a lot of the same factors going for it, and has similarly done well.
Scott Sumner
Aug 17 2022 at 3:28pm
Actually, Sweden’s performance is closer to that of other northern European countries, even those destroyed by war, and trails far behind Switzerland.
tony
Aug 16 2022 at 5:40pm
I’ve long felt the key to Swiss success is similar to the key for Japan’s success: its consensus process. In the Swiss case, imo, the consensus process goes back to the Treaty of Stans, when the rural and urban cantons agreed to divide the spoils of the defeat of Burgundy “equitably”, after the rural cantons had held the urban cantons under siege when they felt the urban cantons were holding back. Rules and conventions were set then. All who were at the table had credible threats. No one at the table was destroyed after the agreement was made. The agreement was enforceable. The agreement was called a recreation of the “holy alliance” of 1291. And the precise terms of the agreement didn’t have to be laid out in detail because aggrieved parties still had enough power to scupper it, worst case. That is, they maintained credible threats post-agreement. Ever since, that’s been the norm. A later example is the general strike of 1921, where unions got agreement from large employers. The agreements have been frequently renewed, but in Swiss form (like Switzerland maintaining its bomb shelters), the unions kept a power to reenact the general strike, i.e., they sustained their credible threats. Not a few breakdowns of US-Swiss relations have happened because Swiss insisted on testing if their options to exit agreements after an expiration date were still valid, i.e., to show their credible threats were still credible.
Godfree Roberts
Aug 16 2022 at 10:51pm
Excellent analysis and fun reading. Many thanks and two quibbles:
“Alas, it’s the very fact that Switzerland is hyper-democratic that makes such a crazy experiment impossible. But maybe there’s a lesson there. Nothing stopped Mao from his Great Leap Forward experiment”. Though it took some arm-twisting, Mao had the unanimous support of the Steering Committee for the GLF. Though it was abandoned due to massive, multi-year flooding in the south and drought in the north, it still accomplished more in two years than did India in twenty. Nor did anyone starve to death during or after the GLF. That’s apocryphal nonsense.
“Institutions are really important (North vs. South Korea)” So are embargoes and pouring resources into the South while starving the North and threatening it militarily on a daily basis for 70 years.
Henk Bruinsma
Aug 17 2022 at 5:06am
“Nor did anyone starve to death during or after the GLF.”
Not according to Wikipedia in their lemma on the GLF:
About the famine caused by the GLF: “(…)estimates range from upwards of 15 million to 55 million people.”
Henri Hein
Aug 17 2022 at 2:30pm
I have seen estimates as high as 80 million. It depends exactly how you measure it, and there is some inherent inaccuracy you cannot account for. Especially since China itself is not interested in examining the catastrophe openly.
The NCBI estimates 30 million deaths from a meta study. That does not include reduced child births, mental impairment, etc., which populations also suffer from famines.
Scott Sumner
Aug 17 2022 at 3:30pm
Not sure if you are just a troll, but that has to be the most ridiculous comment I’ve ever read. And there’s a lot of competition.
Nadav
Aug 17 2022 at 5:28pm
What strikes me the most about Switzerland’s success is that it’s really merely a (highly visible) subset of the broader success of the European Alpine region:
Slovenia is the most economically successful region in the Balkans, and the closest to the Alps.
Alto Adige/Sudtirol is the most economically successful region in Italy, and the closest to the Alps.
After Paris, the Grenoble region is the wealthiest and most innovative in France, and is considered France’s gateway to the Alps.
Liechtenstein is Liechtenstein
Bavaria and Baden-Wurttemberg are now the wealthiest states in Germany (excluding the city-state of Hamburg), and the closest to the Alps.
I think explaining the success of the Alps as a whole is actually the more interesting question than explaining the success of Switzerland per se. At the risk of going down in a blaze of amateur sociology, here is my theory:
For the longest time, the region of the Alps was the most inhospitable part of Europe because it did not easily support agriculture. Later, during the first Industrial Revolution, the Alps also suffered from lack of natural resources like coal and iron. So it was an economic laggard. However, behind the scenes it was developing high levels of human and social capital—aristocratic travelers making the Grand tour and Russian aristocrats going to spas a la Anna Karenina would frequently remark on the pleasing gingerbread perfection of the region—the hardworking housewives, the rosy-cheeked children, the spotless patios in front of the houses, the well-ordered rose beds hanging on the windowsills, etc. etc. Basically, the region selected for well-organized, hard-working people capable of co-ordinating activities among themselves.
Starting around the end of the 19th century, the economy evolved to the point where this particular human and social capital became extremely valuable in industries like pharmaceuticals, precision manufacturing, etc. The entire region rode the tailwind and here we are.
Scott Sumner
Aug 18 2022 at 12:21pm
Very good comment. I made a similar observation about that region a few years back:
https://www.econlib.org/archives/2016/05/the_rich_heart.html
But I didn’t have an explanation.
That explanation might also apply to Scandinavia.
Spencer
Aug 22 2022 at 9:14am
Similarly, Singapore’s only natural resource is its port. Not being cursed by resources, other than trade infrastructure (a port or passes) and human capital …
Talis Forstmanis
Aug 18 2022 at 5:07pm
~Forty years ago, a British man who had married a Swiss woman, called the Swiss “the mountain Jews”.
LorenzoFromOz
Aug 21 2022 at 7:08am
The small-population/federalism advantage suggests persistent diseconomies of scale in administration. That has implications for the historical patterns of the size of states similar to what transaction costs have for the size of firms. As David Friedman argued decades ago.
https://www.jstor.org/stable/1828329
Richard W Fulmer
Aug 22 2022 at 2:08pm
Switzerland has a very stable currency. How do they achieve that?
Anders Jonsson
Sep 7 2022 at 5:16pm
A long track record of low and stable inflation. Even now around 2 percent; in the EUR area approaching ten. They do not need to do much, as money looking for stability will often simply buy Swiss franks – even when, back in the GFC, banks charged for deposits to pay for negative interest rates. Only when it gets really out of whack does the Central Bank intervene a bit and buy up a couple of billion EUR, but that is more to stabilise than to reduce overvaluation – Swiss companies are remarkably resilient and seldom compete on price.
Anders
Sep 7 2022 at 5:12pm
I live in Switzerland, am not American, but could probably name all SCOTUS judges but NOT the president of my country. In fact many people do not, unless they just happened to read the paper. The council (including the president) and the parliament at the federal level keep an astoundingly low profile; cantonal and even local elections and referenda matter more.
That is a result of evolution, of course – the Swiss came together for purely practical purposes of defense. Even with the 1858 constitution, any expansion of federal powers had to be strongly motivated and sanctioned by all. Very few decisions are made at the federal level outside of defense and foreign policy (and recently, strikingly, health, with the federal government having no constitutional authority to mandate masks and lockdowns, a heated discussion ensued that propelled the introverted minister of health, used to the shadows, into the national arena).
It is not only that cantons are much more independent than US states – there is no federal tax collection authority, not even a federal license plate system, and while there must be some kind of FBI, I have never heard of them. In addition, even the cantons, some as small as 10,000 inhabitants and two half cantons of much less, called thus that, for reasons of scale and pragmatism, they let the neighbouring larger county handle much of the administration, are de facto federal states. Municipalities decide most things on their own, and calling referenda is easy, with rules varying widely from state to state.
There is also a range of restrictions on economic freedom. Most agricultural products are protected – fillet of beef often over 100 USD, and farmers grow maize for fodder next to 2 million dollar homes that would barely pass as middle class in the US. Dozens of trains, impeccably maintained, trundle up mountains, heavily subsidised of course. Even villages often have a tunnel under them to avoid the noise of cars. Everytime I see a new road work project, I cant for the life of me think what was wrong with the old road.
For an average citizen, income taxes are low, from 10 to 40 per cent, and the basic income deduction is close to 40,000 USD. VAT is under 8 per cent. Most come from the large number of high net worth individuals in villas by the lakes, or value booked in Switzerland based European headquarters of MNEs. Public services are also a dream: if you lose your drivers license, you go up to a counter, pay 50 dollars, and the lady prints a new one for you.
It boggles the mind how a country with so many subsidies and tariffs and at least four layers of administration within each canton, which all enjoy substantial autonomy, and with such heavy regulation on land use that Zurich, a city of 600 k people, have rental prices as high as those in Manhattan for units surrounded by farmers idly growing beets or something else of startlingly low value per acre, with no confederation wide system of standards and licensing (if you are a doctor in Geneva and want to work in Wallis, you have to apply for a license and recognition of your diploma and prove that you speak German even if you work in the much larger French speaking part of the canton – that such a country could be competitive, let alone top the world. Not to mention the four official languages and lingering animosities even within tiny, officially bilingual villages, where the language you choose for your greeting becomes a quasi-performative act. And mountains so high crossing the tiny country over seven passes can take you a whole day for perhaps 300 miles.
I get the standard arguments, especially the one about how necessity created a network of watch-making workshops, building skills that could be used for precision mechanics, gradually establishing a Swiss premium brand. But we could tell similar stories elsewhere.
My only guess is that there is continuous innovation and cooperation and competition in the policy arena. Cantons, regions, and municipalities look at what others are doing and quickly adapt what works better. Similarly, there is a de facto federal government outside the actual government: cantonal assemblies that agree on many things, including professional licensing, what car license plates should look like, and a dizzying array of things we cannot imagine being done by anyone else than central government. It has grown organically not by decree, but by emerging necessities, and even much of the discussion about what to do about big Tech start there – only when issues become so intractable as to cause significant harm, would they set up a dedicated agency, which might be intercantonal and independent from Federal Government.
The most symbolic of all: Switzerland has no capital. It is, in a side clause, mention as the seat of parliament and the council. The two high courts are in Lausanne and Belinzona, and the scattering of actual federal agencies spread around the country.
And most striking of all: ask any Swiss how their government works, and most of it they will not even know. Still, it works.
RickLu
Sep 13 2022 at 5:40pm
Interesting read. However, there is something else all these ‘succesful’ countries have in common- very small relative populations.
With a population of not even 9 million people and such a large number of multinationals present, you can afford to have low taxes because you can still bring in enough to pay for everything and everyone. Add to this that Switzerland has many international well-earning people and expats working there, often at their career peaks, in hubs like Zurich, Geneve and Basel, and you create a high concentration of high-earning people that in turn attracts more companies. Meanwhile, the braindrain from France, Germany and Italy and other regions to Switzerland is huge (and it’s not limited to Europe). The effects of all this are tangible in Switzerland because of the small scale of the country. A similar scenario applies to the Benelux-region, although less extreme (which can also be explained since they have nearly 30 million inhabitants combined). The whole of the EU benefits from this complex ecosystem yet I would expect some old (tax) arrangements to face more strain in the coming decades. Still, money tends to stay where the money already is, and the alpine region in particular will continue to offer high quality of life with access to clean air, drinkable water, a well-educated population, safety, a diversified economy and a good infrastructure.
Scandinavia is, much like Switzerland, a rich region with very, very little people. Contrary to popular belief, taxes are very low in Scandinavia, except for labor. Sweden, for example, has no inheritance tax. Denmark, Norway and Sweden amount to somewhat over 20 million people. That is really, really few people to take care of on such a rich continent as Europe, with easy access to the German economy, big oil reserves in Norway and a global system that admires these countries and any designs they produce, and will buy it.
Germany, Italy, the UK or France, for example, cannot compete with Switzerland in lowering taxes, simply because there are too many inhabitants, it would not work with their scale. And even those 4 European countries have low populations in comparison to many countries in, say, South America or Asia – India and China alone are at around 1.4 billion people each! Singapore, again, has less than 6 million, among whom many are expats as well, which is why it is often called ‘the exception’.
And yes, the US has 300 million people and low taxes, but then again, that’s the US, a country so different that it requires at bare minimum a post of its own. Switzerland however can only exist as it is because of its neighbours and the complex ecosystem where it resides. The Swiss, deep down, understand this, which is why they are in the EU in all ways but in the name.
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