Sunday, March 6, 2011

The Enviable Brilliance of the Swiss

How else shall one describe a people who have maintained the integrity of their civil society for so long? It appears its become necessary to qualify Daniel Hannan's generally accurate proposition that "America must not follow Europe".

Just recently, 56.3 percent of Swiss participants in a national referendum, appealing to their most cherished values of security and limited government, voted against an initiative "banning army-issue firearms from the home and setting up a central arms register in a bid to curb gun violence." There was a considerable campaign in favor of the initiative, staffed by "a broad coalition of NGOs, trade unions, churches, pacifists and centre-left parties." Fortunately, the Swiss as a whole can be counted on to make sound decisions regarding matters of civil liberties.

Perhaps the high rate of civilian gun ownership helps to explain why crime is extraordinarily low in Switzerland. I'd wager that the risk involved in engaging in violent criminal activity in Switzerland must be relatively high since the high rate of civilian gun ownership means the risk of begin deterred, apprehended, or shot during the commission of a criminal act is correspondingly high.

In addition to upholding gun rights, 51.7 percent of participants from the canton of Bern voted within a canton referendum in favor of replacing the old nuclear reactor at a location called Mühleberg with a brand new one. The Swiss affinity for nuclear power has waned considerably in the past but a renewed desire for nuclear power as a significant source of electricity, fueled in part by clean energy concerns, has compelled the Swiss to oppose further moratoriums on the production of nuclear power.

Naturally, recent Swiss wisdom does not end here. My mother can recall, when she traveled to East Germany in the late 70s, how unsettled she was when she discovered the extent to which socialism left Eastern Europe bespattered in filth and poverty. By contrast, when she headed south towards Zurich she remarked that it was probably the most immaculate place she had ever been, easily overcoming New York, Paris, or any other part of Europe she had been to. This tradition of cleanliness is continued by Swiss citizens such as Thomas Niederer, founder and president of the Swiss Association of Environmental Trash Divers (SAET). Niederer has recently announced that he will embark upon an endeavor to cleanse Switzerland's lakes and bodies of water of their human contaminants. Niederer expresses his intolerance towards a fouled landscape when he insists that “I can’t turn a blind eye to the rubbish, the waste produced by society, that one encounters underwater. I can’t simply swim past it.”

Though it may be true that a perfect society alludes us so far, its arguable that Switzerland bests every other nation in terms of its proximity to this ideal. It enjoys an extraordinary level of government non-intervention, as indicated by the 2011 Index of Economic Freedom andFreedom Houses' 2010 Country Report. Its citizens have refused to vote in favor of transforming Switzerland into a member of the EU, perhaps a wise decision given the dubiousness of the EU's commitment to liberalization. It has a stellar record on governmental respect for private property rights, as indicated by the 2010 International Property Rights Index (page 69 of 79).

In fact, Switzerland is so free that it has been aggravating its European neighbors for years. Despite unlettered bullying from Washington and the OECD, the Swiss engage in a delightful kind of tax competition, where they attract firms and financial capital from around the world by imposing minimal taxation. The tax policy works like a charm and now Swiss locales like Rolle can brag about coping with the problem of too much economic growth. We feel their pain.

Similarly, the 26 cantons within Switzerland are free to engage in tax competition as well. According to Paul Green,
"the canton of Obwalden formerly had one of the higher tax rates, but to compete brought it down to a flat 10% – though cantons Zug and Schwyz are better known for their low taxes. In the south, cantons Vaud, Geneva and the Italian-speaking Ticino are currently lowest. Also, it is perfectly possible for any reasonably wealthy person to cut a special deal with a canton for a much lower rate. In fact, the wealthier the better – the lack of social envy and its politics is unusual and noteworthy.

There are also occasional amnesties to provide for tax which is not paid. The evaded amounts are actually lower percentage-wise than the much more oppressive surrounding countries. This can only be due to lower rates, more local accountability and less violent collection methods leading to less resentment and motivation for resistance. Tax evasion, if found out, might land an offender in a somewhat uncomfortable civil action, but it is not a crime."

The logic of tax competitiveness is not different to comprehend. If two governments A and Bmaintain the same tax rate X and one government, government A, decides to tax liberalize the market within its jurisdiction by reducing its tax rate to (X - R), then, ceteris paribus, economic agents and their financial capital within the jurisdiction of government B will most likely either remain within jurisdiction B (unlikely) or will move to the jurisdiction of government A because as tax liberalization occurs, it increases the freedom of economic agents to generate profits and keep those profits. The Swiss understand. The EU doesn't.

The Swiss tradition of respect for civil liberties comes in part as a result of its political configuration. Political power is severely decentralized. The country is a confederation of 26 regional constituents called cantons. Similar to our now abandoned 10th Amendment, Article 3 of Title 1 of the Swiss Constitution states that "the Cantons are sovereign insofar as their sovereignty is not limited by the Federal Constitution; they shall exercise all rights which are not transferred to the Confederation." This is significant because the administrative privileges given to the federal government mostly concern foreign policy. Domestically, local governments are in charge. Political jurisdictions are small, the assignment of tasks to local authorities is maximized, popular referenda are a staple of Swiss political life, and power within the federal government is deliberately spread out. This decentralization of political power ensures that the federal government is less capable of becoming repressive.

Add to this the fact that four languages are spoken in Switzerland - German, French, Italian, and Romansh - and the people nevertheless manage to co-exist peacefully. Oh, and the Swiss government doesn't subsidize foreign dictators or finance nation-building fiascos. So next time when we exalt ourselves as citizens of the greatest country on Earth, perhaps instead we should second guess ourselves in light of the existence of our Alpine ally.

1 comment:

  1. I don't know that much about Switzerland, however I am extremely skeptical of your claim that the Swiss tolerance for private ownership of firearms has anything to do with a respect for individual rights. Firearms are in virtually every home in Switzerland because Switzerland practices conscription with virtually all males age 20 to 34 and requires all conscripts to keep their firearms in their homes. Not many countries have such extreme practices when it comes to conscription; to me, that's about as far from respecting individual rights as you can get.

    Also the personal income tax rate in Switzerland is comparable to the U.S., though better than the rest of Europe. Their corporate tax rates and capital gains taxation is more liberal, true, but their motivation seems to be more economic than rights-respecting. They think that with lower taxes, they can attract more business and ultimately increase tax revenue.

    I admit, though, these are literally the only two things I know about Switzerland. I haven't been exposed much to their culture aside from a few Swiss I met in college (who were all uber-socialist). But I have yet to come across a culture that even thinks in terms of rights, other than the U.S. and to some extent Germany.