Friday, 12 August 2016

Small is beautiful - On why Switzerland is successful

The New Zealand based columnist Oliver Hartwich describes why the Swiss are successful:

"If you are looking at Switzerland from outside, you cannot help but wonder how this small piece of central Europe – mountainous and with no obvious strategic advantages over its larger neighbours – made itself a world-class economy.
Well, for a start it probably helped that the Swiss never became part of the EU. Where other European countries succumbed to the idea of an integrated continent, the Swiss stubbornly remained independent and did their own thing. And it worked well, so there is hope for Britain after Brexit. --

For many years, Switzerland has been ranked as the world’s most competitive country by the World Economic Forum (New Zealand is 16th).
The key to Switzerland’s success is its decentralised nature. If every tier of government has income tax-raising powers, and if the various tiers of government are small in size, it is not difficult to imagine what this set-up will do to economic development. As councils and cantons can feel the results of their political decisions in their own pockets, of course they will pursue growth-friendly policies. As they realise that their residents are not just inhabitants but taxpayers, of course they will try to keep them happy.
Switzerland has chosen a path to economic development that is diametrically opposed to New Zealand’s and to most other developed economies. Instead of trying more centrally controlled policies, Switzerland has opted for the principle of subsidiarity. That means relegating decision-making to the lowest tier possible.
From a New Zealand perspective, the Swiss approach to governance is the polar opposite of what we have been trying so far. But even we have to realise that Swiss government yields much better results than we could ever hope for.
In a nutshell, Switzerland means that big does not always mean better and that small can be quite beautiful. It also demonstrates government needs performance incentives in order to, well, perform. That is not so surprising if you are in business but for government, apparently, it’s a big discovery."