Wednesday, June 29, 2005

Switzerland

No entries for a week – a bit of a gap by my own standards. I’ve been on holiday (vacation to US-English speakers). Went down to Switzerland for a week. We relaxed, we saw Zurich, met some friends, visited Lucerne for a few days (where I would recommend the Hotel Hofgarten), did some lake swimming, walked up (half a mountain) and generally had an enjoyable time.

Of course, Switzerland is expensive – I probably don’t need to tell you this – but its worth thinking about in more depth. What makes Switzerland expensive? Taxes are low, employment is high, salaries are high (so people can afford the prices) but you might expect these things to cancel out. At the moment I can’t answer my question.

(Another question I can’t answer: how can the subsidise the train system so much when taxes are so low? I suspect, the answer is limited public spending on health care, similar to the US where health care money is spent by the private not the public sector. This is the ultimate stealth-tax.)

What was clear is that Switzerland is a service based economy. Yes there is some farming, and some manufacturing – particularly precision engineering like watches and things but the driving forces in the Swiss economy are Banking and Tourism, both service industries - and both industries that don't like change.

(OK, maybe I didn’t see another side of Switzerland since I only visited the home of Banking and Tourism, please correct me if I’m wrong.)

What is interesting is that Switzerland potentially offers a view into the future. We know that much manufacturing and even some services are migrating to low-wage economies, so what advanced economies like the UK is betting on is keeping the high-value services. There will always be some low-value services (e.g. bar tender) but the high-value ones are the ones really worth having and they are knowledge based. Bankers require knowledge of banking, IT people require knowledge of IT, Teachers require knowledge of their domain, and so on.

I’d like to learn more about Switzerland’s economic model and what it can teach us for the future.

I’d also like to know how Switzerland got to be where it is today. How did it create such an economy?

And, the malevolent curious side of me, would like to know more about the ghosts in Switzerland’s cupboard. The place is too clean, too wealthy – I was actually relieved to see homeless people, it told me the place was real!