00:00:00
Switzerland and its unique economic
00:00:01
system almost have a mythical status
00:00:03
globally for being the rich place where
00:00:05
rich stuff gets done the headline
00:00:07
economic figures back this up as well
00:00:08
Switzerland is routinely home to the
00:00:10
wealthiest population on the planet the
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country produces incredibly expensive
00:00:13
exports and its world-class financial
00:00:16
sector is synonymous with accommodating
00:00:17
wealthy clientele this is all supported
00:00:19
by its legendary neutrality further
00:00:21
heightening its Mystique as the place
00:00:23
where World shaping decisions are made
00:00:25
behind closed doors it's the global
00:00:27
headquarters of the central bank for
00:00:28
central banks it hosts the controversial
00:00:30
World economic Forum in Davos every year
00:00:32
and of course it has rightfully earned a
00:00:34
reputation for being a safe haven for
00:00:36
ill-gotten gains but behind this Global
00:00:38
reputation there's a real economy with
00:00:40
real people that reality is that
00:00:42
Switzerland is not magical there is
00:00:44
nothing inherently special about the
00:00:46
country that makes it the richest major
00:00:48
economy on Earth but if anything that
00:00:50
just makes it even more interesting
00:00:52
Switzerland's Success is Not luck and if
00:00:54
anything it had a few key challenges
00:00:56
working against it which means
00:00:57
theoretically other economies could
00:00:59
learn a lot from it it also means that
00:01:01
the outward success displayed to the
00:01:02
world doesn't necessarily translate to
00:01:04
the lived experience of average Swiss
00:01:06
citizens and its World leading
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Industries are not Invincible in fact
00:01:10
very publicly they're starting to lose
00:01:12
their luster and in Industries where
00:01:13
reputation is everything that could be a
00:01:16
very bad sign so to understand the real
00:01:18
economy of Switzerland we have to as
00:01:20
always answer a few important questions
00:01:23
how did it develop these World leading
00:01:25
high-end Industries do these industries
00:01:27
really benefit the day-to-day life of
00:01:29
the average Swiss citizen and finally
00:01:31
what happens to the country when its
00:01:33
Global reputation starts working against
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it strategic financial management is
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investing today being a landlock country
00:02:45
doesn't lend a hand to Independent
00:02:46
prosperity in most countries and with
00:02:48
little to know natural resources like
00:02:50
oil Switzerland's ability to become this
00:02:52
obscenely wealthy has never been a
00:02:54
result of Venezuela style extraction but
00:02:56
rather consistent collaboration with its
00:02:57
neighbors originally the country people
00:03:00
often had to venture out beyond their
00:03:01
borders to find decent pay and they
00:03:03
often worked as mercenaries most notably
00:03:05
with the old Swiss Confederacy which
00:03:07
allowed them to turn a profit under the
00:03:08
leadership of neighboring monarchs while
00:03:10
simultaneously discouraging invasions
00:03:12
even today the Swiss guards are the
00:03:14
people who protect the pope as far as
00:03:16
true wealth is concerned contrary to
00:03:17
some reports claiming that Switzerland
00:03:19
was Wealthy by the start of the 20th
00:03:20
century although the seeds were planted
00:03:22
its major Journey actually started
00:03:23
during World War II the reason for that
00:03:25
is that the Swiss government embraced
00:03:27
neutrality acting as a Haven for vast
00:03:29
amounts of money as well as supplying
00:03:30
what was needed to anybody who had
00:03:32
assets to spare after the war it was one
00:03:34
of the few manufacturing bases on the
00:03:36
continent that was left largely
00:03:37
untouched so it was able to supply for
00:03:39
Europe at a time when it couldn't supply
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for itself and with that the world's
00:03:42
soon to be richest middleman was born
00:03:45
but this was just the beginning
00:03:47
Switzerland was one of the first
00:03:48
countries in the world to develop
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mechanized industry in fact an early
00:03:51
textile boom made Swiss
00:03:52
industrialization only second to England
00:03:54
in the 19th century and they channeled
00:03:56
much of these profits soon after into
00:03:58
major infrastructure projects the legacy
00:04:00
of these efforts is a road network of
00:04:02
around 73,000 km and 5,200 km of Rail
00:04:06
lines with Swiss citizens using Railways
00:04:08
more than any other country in the world
00:04:10
through some of the most difficult to
00:04:11
develop terrain on the planet this
00:04:13
allowed many of its Industries to
00:04:15
prosper into the present day as
00:04:16
Switzerland's topography would have
00:04:18
otherwise made the transport of skilled
00:04:19
workers and materials an absolute
00:04:21
nightmare without these preemptive
00:04:22
efforts and even to this day it's a
00:04:24
surprisingly strong manufacturing Hub
00:04:26
the Machinery electrical engineering and
00:04:28
metals industry along alone employs over
00:04:30
300,000 people or 8% of Switzerland's
00:04:33
total Workforce an interesting side note
00:04:35
is that Switzerland was one of the
00:04:36
earliest pioneers of women in industrial
00:04:38
roles back in the late 19th century the
00:04:40
workforce was almost 50/50 men and women
00:04:43
and all of this emphasis on vocation has
00:04:45
led to many including the world economic
00:04:47
Forum to dub the Swiss labor force as
00:04:49
the most highly skilled in the developed
00:04:51
World from as young as 16 a lot of
00:04:53
Industry hopeful stop full-time
00:04:55
education instead rotating between
00:04:57
school interc company courses and
00:04:58
hands-on experience in a workplace
00:05:00
setting this 3 to four year education
00:05:02
includes both a wage and a crucial
00:05:04
introduction to the world of work it's a
00:05:06
decision that's paid dividends compared
00:05:08
to a lot of countries that are currently
00:05:09
struggling to find laborers capable or
00:05:11
willing to enter the trades of course
00:05:13
skilled labor comes at a price and the
00:05:15
country's people are paid extremely well
00:05:18
and it generally represents a large
00:05:19
portion of the cost of production of
00:05:21
goods and services these high incomes
00:05:23
also include gross wages social
00:05:25
contributions paid by the employer as
00:05:26
well as other expenses including
00:05:28
professional education training and
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recruitment in 2020 this amounted to
00:05:31
about $75 per hour worked for all
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secondary and tertiary sector
00:05:35
Enterprises with these labor cost the
00:05:38
Swiss simply can't compete on price for
00:05:40
generic Goods but unlike many other
00:05:41
countries they don't want to this uncom
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competitiveness is what allows them to
00:05:45
be one of the richest economies in the
00:05:47
world Switzerland is an absolute
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Powerhouse in the realm of quality
00:05:51
products they make everything from
00:05:52
worldclass industrial Machinery to
00:05:54
world-class Watchers that they can sell
00:05:55
at a huge markup because it has highend
00:05:58
industrial knowhow for such an advanced
00:06:00
high- income economy the manufacturing
00:06:02
industry typically associated with
00:06:03
middle-income countries contributes 25%
00:06:06
of their GDP they make over $3 billion
00:06:09
exporting compounds and base metal
00:06:11
watches alone of course while watches
00:06:13
that cost more than a car are the first
00:06:15
thing people think of when they think of
00:06:16
Swiss exports it's not even their
00:06:18
largest or most technical export their
00:06:21
Machinery is where the real money is
00:06:23
there cncs for example also known as a
00:06:25
Swiss type lathe or a Swiss automatic
00:06:26
lathe capable of producing small parts
00:06:28
with both precision and accuracy just
00:06:30
watching them is one of the most
00:06:31
soothing nerdy spectacles of all time
00:06:34
and because organizations are willing to
00:06:36
pay for Machinery that will provide
00:06:37
incremental improvements that will be
00:06:39
paid off over thousands of manufacturing
00:06:40
runs the Swiss Machinery industry can
00:06:43
charge a huge premium for their products
00:06:45
which means the Swiss people can be paid
00:06:46
more since they're competing on quality
00:06:48
not on price helping to keep its status
00:06:50
as a High inome Country this also avoids
00:06:53
the problem of being a landlock country
00:06:55
normally such a position makes trade
00:06:57
very expensive because bulk Goods can't
00:06:59
be directly loaded onto ships which are
00:07:01
the cheapest form of transportation over
00:07:02
long distances but this is a problem for
00:07:05
an economy making basic Goods with low
00:07:07
margins a toaster can be manufactured
00:07:09
pretty much anywhere especially in
00:07:10
places like China so people are going to
00:07:12
buy the cheapest one putting huge
00:07:14
pressure on shipping and labor costs a
00:07:16
Rolex can only be made in Switzerland so
00:07:18
they can charge a lot and the cost of
00:07:20
Labor and shipping is basically
00:07:21
Irrelevant in the end cost of the
00:07:23
product now most other landlock
00:07:25
countries in the world struggle with
00:07:26
crippling poverty so this strategy of
00:07:28
high margin exports sounds like it could
00:07:30
be something that could help them too
00:07:32
unfortunately it only really works in
00:07:34
Switzerland because it had such a huge
00:07:36
Head Start building up the machinery
00:07:38
training a Workforce and building the
00:07:39
infrastructure to make these industries
00:07:41
what they are today literally took
00:07:43
centuries and if Switzerland wasn't one
00:07:45
of the first industrial countries in the
00:07:47
world and in an opportune position in
00:07:49
postar Europe it's unlikely these
00:07:51
industries would be as prosperous as
00:07:52
they are today wealth begets wealth and
00:07:54
Switzerland has been able to reinvest
00:07:56
over a very long time plus Switzerland
00:07:59
can also bring in World leading people
00:08:00
in their respective fields and pay them
00:08:02
more than they can make pretty much
00:08:03
anywhere else and this isn't even
00:08:05
considering the greatest asset that
00:08:07
Switzerland has a trustworthy
00:08:08
environment at least the right kind of
00:08:10
trustworthy the country is made up of
00:08:13
cantons which act as self-governing
00:08:14
bodies it also runs through a council
00:08:16
where the head of state decisions are
00:08:18
made by a committee of course this does
00:08:20
mean that things change incredibly
00:08:22
slowly and bureaucracy is tedious
00:08:24
however this is exactly what people
00:08:26
operating in Switzerland want they want
00:08:28
to know that nothing is going to change
00:08:29
in the place where they're doing
00:08:30
business even if it would be for the
00:08:32
betterment of the population this
00:08:34
stability and perceived safety is a
00:08:36
major component in the Swiss wealth
00:08:37
machine that still needs to be addressed
00:08:39
the element that journalists YouTubers
00:08:40
and pretty much everyone else watches
00:08:42
like a hawk it's Banking and Financial
00:08:44
Services Switzerland has a long history
00:08:47
of banking tracing its way back to the
00:08:48
fact that the country is literally
00:08:50
designed like a vault with natural
00:08:51
protections from the rest of Europe it
00:08:53
became a safe haven for kingdoms to keep
00:08:55
their gold and conduct Finance in a
00:08:57
place that would be very hard to break
00:08:58
into which again rapidly escalated
00:09:00
during and after the second world war
00:09:02
even today Switzerland is one of the
00:09:04
best defended countries in the world
00:09:06
even though it's surrounded by very
00:09:07
peaceful neighbors their citizenry is
00:09:09
often cited as been well armed and near
00:09:11
places like the German border every
00:09:13
Railroad and Highway tunnel has been
00:09:15
prepared to shut with explosives not to
00:09:17
mention that the country itself is
00:09:18
dotted with thousands of mountain
00:09:20
bunkers that may or may not be filled
00:09:21
with gold of dubious origin all jokes
00:09:23
aside many of these Cold War precautions
00:09:25
are starting to be dismantled however
00:09:27
Swiss defense as a whole is still pretty
00:09:29
impressive and that reputation as a
00:09:31
countrysize fortress is carried through
00:09:33
to the modern day it's the home of the
00:09:35
bank for international settlements which
00:09:36
is the Central Bank of central banks and
00:09:38
is responsible for coordinating
00:09:39
international funds transfers between
00:09:41
entire countries it was headquartered in
00:09:43
Switzerland for the same reason that a
00:09:45
lot of Finance gets done in Switzerland
00:09:47
people trust it and upholding their
00:09:50
long-standing tradition it doesn't take
00:09:52
sides and honestly it's rare to find a
00:09:54
country that does both people trust the
00:09:56
US Financial system but it does clearly
00:09:58
take sides Switzerland has also
00:10:00
historically not taken sides on legal
00:10:02
issues either where the country wouldn't
00:10:04
cooperate with other countries
00:10:05
authorities after dirty money was kept
00:10:07
in their Swiss banks an example of this
00:10:09
can be found in Switzerland's blocking
00:10:10
statute article 271 of the Swiss
00:10:12
criminal code the statute makes it
00:10:14
illegal to perform official acts on
00:10:15
behalf of a foreign Authority on Swiss
00:10:17
soil which includes Gathering evidence
00:10:19
for foreign proceedings examining
00:10:20
Witnesses and serving proceedings for
00:10:22
foreign litigation even from the
00:10:24
description it's clear that following
00:10:25
the money Trail at least for a while all
00:10:27
roads would end at the Swiss border but
00:10:30
this is changing and now International
00:10:32
pressure has meant that Switzerland is
00:10:33
being forced to cooperate more and more
00:10:35
with other countries so it's not really
00:10:37
the safe haven it was depicted as in
00:10:39
things like The Wolf of Wall Street and
00:10:41
of course it's not all criminal like
00:10:42
Hollywood makes it out to be Switzerland
00:10:44
still does do a lot of legitimate
00:10:46
financial services but over
00:10:48
financializing the economy isn't always
00:10:50
a good thing it almost always leaves an
00:10:52
economy vulnerable if the industry is
00:10:54
heavily prioritized just last year
00:10:56
credit s the second largest financial
00:10:58
institution in the country collapsed
00:11:00
causing a panic in an economy that was
00:11:02
famed for its Financial stability
00:11:04
shakeups of credit s's board
00:11:05
particularly in the aftermath of the
00:11:07
green sill and aragos sandals led to the
00:11:09
loss of institutional knowledge at the
00:11:10
lender which left credit s's board
00:11:12
unable to find long-term solutions to
00:11:14
its shortcomings even with buffers
00:11:16
leading to a poor risk culture inside
00:11:18
the institution plus even here dirty
00:11:20
dealings emerge so it's putting it
00:11:22
lightly a pretty mixed bag laundering
00:11:24
money for Japanese gangs and Bulgarian
00:11:26
traffickers to Kickbacks in MOS and tax
00:11:29
EV which involves superpowers like the
00:11:30
United States spying on former employees
00:11:33
on their own soil dealing with African
00:11:34
dictators and jobs for business deals
00:11:36
with Chinese officials in Hong Kong well
00:11:38
this isn't the rap sheet that reputable
00:11:40
investors love to see but what about the
00:11:42
domestic issues do these industries both
00:11:45
clean and controversial really benefit
00:11:47
the day-to-day life of the average Swiss
00:11:48
citizen while a Canton system has led to
00:11:51
remarkable and enviable stability one
00:11:53
side effect of this is surprising
00:11:55
Regional disparity the difference in
00:11:57
income levels between cantons is B
00:11:59
bigger than the income levels between a
00:12:00
lot of countries inside of Europe and
00:12:03
most of the wealth is concentrated in
00:12:04
just two cantons Zug and schweise they
00:12:07
all have different taxes with the
00:12:08
richest paying about 51% laws languages
00:12:11
mainly German French and Italian as well
00:12:13
as respective traditions in each segment
00:12:15
so moving between cantons is almost like
00:12:17
moving between countries people make
00:12:19
lots of money but everything is
00:12:21
expensive inequality is a real issue
00:12:23
amongst cantons and because of the cost
00:12:25
of living this pushes even average
00:12:26
earners into stretching their personal
00:12:28
finances for families this can mean as
00:12:30
little as three people under a small
00:12:32
roof can expect to spend between 4,000
00:12:34
and 8,000 Swiss Franks per month on
00:12:37
living expenses these costs can vary
00:12:39
depending on lifestyle and where they
00:12:40
live in Switzerland but it's
00:12:42
staggeringly high for the average person
00:12:44
nonetheless this means that true Swiss
00:12:46
quality of life is not that much
00:12:48
different from a lot of other countries
00:12:50
Switzerland is also reshaping its
00:12:52
domestic Industries which means growth
00:12:54
has been slow but again if anything slow
00:12:56
and stable growth is exactly what the
00:12:58
country wants the country is amongst the
00:13:01
richest in the world it doesn't need
00:13:02
strong growth to catch up anymore
00:13:04
instead it needs to focus more on
00:13:06
domestic issues to make sure its amazing
00:13:08
economic figures translate into real
00:13:09
quality of life for its citizens they
00:13:11
are in a great spot to make lasting
00:13:13
changes but time is of the essence today
00:13:15
there are other countries that can
00:13:17
provide the same Services as Switzerland
00:13:18
especially due to Switzerland finally
00:13:20
cathing under the pressure and making
00:13:21
moves to encourage greater transparency
00:13:24
which although is an ethical decision
00:13:25
more and more information is been
00:13:27
released that makes Swiss banking look
00:13:28
less airtight than it was just a decade
00:13:30
ago the country isn't going to be able
00:13:32
to Coast on its reputation alone forever
00:13:35
and that's a big problem major headlines
00:13:37
regarding mismanagement are not
00:13:38
something that Switzerland can afford
00:13:40
Switzerland has a reputation that makes
00:13:42
it almost ethereal people from all over
00:13:44
the world want to work or simply travel
00:13:46
to the country because of the premium
00:13:48
brand it has created for itself and
00:13:49
businesses wealthy tourists and high net
00:13:51
worth individuals have been willing to
00:13:53
pay a premium for this brand recognition
00:13:55
which makes the country extremely rich
00:13:57
the challenge is that Brands can go
00:13:59
style very quickly the products that the
00:14:01
country produces are arguably the finest
00:14:03
in the world to the point where buyers
00:14:04
usually don't even question the cost
00:14:06
it's banking system although more
00:14:08
exposed than ever before still leaves
00:14:09
analysts both perplexed and fascinated
00:14:11
as to how such a small country has
00:14:13
managed to act as Europeans Financial
00:14:14
middleman for centries but without
00:14:16
proper diversification with an emphasis
00:14:18
on financialization this channel has
00:14:19
shown time and time again that
00:14:21
reputations can dissolve overnight the
00:14:23
faith of international clientele can end
00:14:25
swiftly and eventually what was once
00:14:27
considered a financial Miracle can
00:14:28
become just cautionary case study for
00:14:30
now the country is fine and of course
00:14:32
nobody can predict the future least of
00:14:34
all economists but Switzerland is not
00:14:36
magical it's an ultra high income
00:14:38
economy that has demonstrated that it's
00:14:40
really just a more expensive option in
00:14:41
an increasingly competitive global
00:14:43
economy now some of those emerging
00:14:45
competitors are the golf states that are
00:14:47
spending trillions of dollars on making
00:14:49
themselves into their own Financial hubs
00:14:50
to replace their oil industry we've made
00:14:52
an entire video analyzing the viability
00:14:54
of that which you should be able to
00:14:55
click to on your screen now thanks for
00:14:57
watching mate bye
