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[Music]
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I want you to imagine for a second a
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theoretical country a country that has
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almost no natural resources certainly no
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coal oil or natural gas about a quarter
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of the country is either mountains lakes
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or Rivers and is categorized as
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unproductive for agricultural purposes
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it's landlocked so forget about a Navy
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or shipping prowess and as far as
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military is concerned they haven't taken
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part in an armed conflict in over 500
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years so you really don't need to worry
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about them pillaging or plundering their
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neighbors and it's tiny in fact it's so
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small it could fit inside of the United
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States
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238 times doesn't sound like the recipe
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for riches and wealth right
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well you'd be wrong because I'm not
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talking about a theoretical country I'm
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talking about Switzerland you see
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Switzerland proves that under the right
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conditions any country has the capacity
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to prosper and prosper big just 15 years
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ago it was an agrarian society and its
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Economic Development was that like of
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Italy Spain or Portugal but today the
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average wealth per adult is over a
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whopping
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685,000
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and roughly one adult in every six owns
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assets worth more than1 million us so
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how exactly did Switzerland get so
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filthy rich well let's take a
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[Music]
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look hi everyone today I'm bringing you
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this video from the Megan horn in Lake
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Luc concern Switzerland and Switzerland
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is such a fascinating country because
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it's one where specifically words like
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upheaval and Chaos aren't typically set
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alongside with it citizens and
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businesses around the world trust
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Switzerland and its institutions laws
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are clear stable and properly enforced
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and this is in part due to the fact that
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Switzerland has a very rigid legal
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system it's very difficult for a
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government to implement radical reforms
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without having massive political support
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or asking the people to approve those
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reforms in a series of referendum and
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consequently the political system
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doesn't seem to change on a whim every
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four years giving its citizens political
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Whiplash so things like the country's
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taxation systems also don't tend to
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change just simply whenever politicians
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feel like it which also means that taxes
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don't seem to change as frequently and
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Rise as quickly which always pushes
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taxes higher in the long run and all of
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this together means that Switzerland
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attracts a lot of capital country
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countes are not afraid to invest in
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Switzerland and this creates jobs but
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it's actually even more interesting than
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that because when you look at the globe
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as a whole there are very few countries
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that are more decentralized than
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Switzerland Switzerland is a Federation
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of 26 cantons and each Canton has
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significant fiscal powers and fiscal
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autonomy as they're entitled to manage
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nearly 25% of their total fiscal income
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Social Insurance included only Canada
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and the United States have S Sly High
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ratios for their own provinces or States
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although praised as a model of
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federalism Germany's bundeslander are
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only allowed freedom of choice in about
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0.7% of their fiscal revenues plus the
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individual cantons are free to make
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their own fiscal policies largely making
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their own decisions on how to tax
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corporations and individual income taxes
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alike Switzerland thus favors a fiscal
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competition system between Federal
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entities which in each Canton decides by
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itself what role the tax system should
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play in the canton's overall economic
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attractiveness this institutional
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competition limits the state's fiscal
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appetite and creates incentives for a
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sound allocation of public spending it
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also allows comparison and benchmarking
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between the cantons encouraging the
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spread of the most efficient Regional
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Solutions in short the individual
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cantons actually compete against one
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another to make their region more
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attractive to both businesses and
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consumers
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alike
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while the secrecy and luxury of
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Switzerland's banks have brought it
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International notoriety the financial
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industry only actually accounts for 12%
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of GDP and 6% of employment and that
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includes the banking sector the asset
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management industry and the insurance
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sector Switzerland is so much more than
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just Finance in fact it's home to many
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high value Industries
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Switzerland was the first country in
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Continental Europe to industrialize
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sometime around the Napoleonic Wars and
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this Head Start meant that their textile
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industry in particular was actually able
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to compete with England they also were
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very technically skilled by doing
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pre-industrial work such as watches or
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Embroidery in addition Swiss people were
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also likely to be highly educated at a
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time when the population and mass was
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not in the 1700s most Swiss people knew
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how to read and write due to the high
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percentage of Protestants you needed to
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be able to read the Bible and this
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greatly helped industrialization so fast
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forward to today and it isn't actually
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probably so surprising that Switzerland
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is home to some of the world's leading
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largest global companies such as Nestle
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G UBS credit SS S3 Zurich Insurance or
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ABB but you know even though Switzerland
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is home to many International large
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global companies it's interesting to
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note that 99% of all companies in
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Switzerland are small and medium-sized
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but yeah of course for those who love
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gold Switzerland also refines about 70%
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of all Global Production and Swiss
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luxury is a springboard for their image
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it's a precious communication tool when
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competing at an international stage you
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know although the Swiss economy is
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definitely correlated with the image of
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luxury I still find that there exists a
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lot of ignorance about the Swiss economy
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it is often said that Switzerland is
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Rich only because it was involved in
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moneya laundering activities and the
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gold of many people after World War II
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which quite frankly is obviously absurd
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I mean don't get me wrong Switzerland
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was largely untouched during World War
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II which definitely gave it a leg up and
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Germany sold gold to the Swiss in order
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to get Swiss currency to make
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transactions on enemy territories and
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Swiss banks bought that gold well aware
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that it had been stolen from conquered
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territories and exploited persons but to
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be quite honest with you to Chum up
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Switzerland's success today to the Shady
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business dealings of 80 years ago
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doesn't accurately paint a good picture
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of what their economy is like today in
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particular it doesn't focus on just how
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fantastic Switzerland's sound public
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finances are historically speaking the
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elite and powerful people of Switzerland
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have almost always been liberal
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conservative they came from the
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industrial sector as well as the
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financial sector in order to avoid the
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agricultural sector making an alliance
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with the proletariat they kept helping
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them through selective protectionism and
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forged a strong right-wing Alliance
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which is why there was never actually a
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strong left movement like in the rest of
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Europe but this liberal position meant
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that they tended to keep the state as
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weak as possible and again this is
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Illustrated in the decentralization that
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I talked about earlier in the 26
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individual cantons at the national level
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Switzerland has a history of only doing
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the absolutely necessary interventions
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and in nearly every crisis and
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international conflict the Liberals and
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conservatives kept the country as
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anti-an as possible as a result the
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politicians here in Switzerland have a
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much harder time just simply promising
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free stuff to their citizens in order to
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get elected and the Swiss people tend to
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consider the consequences of the
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government's actions on the future of
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the economy thanks to this Switzerland
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is in an enviable position robust public
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finances go hand inhand with economic
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stability the little public debt it has
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can actually be financed with internal
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savings as Switzerland also enjoys large
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trade surpluses another advantage of
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having such a strong macroeconomic
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position is its currency the Swiss Fran
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which happens to be one of the strongest
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in the world over the past couple of
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decades the Swiss Fran has appreciated
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against all the world's major currencies
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it has not only appreciated
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significantly against the euro in the
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past 20 years or so but also against the
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US dollar and the British pound it means
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that Switzerland can export its products
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at higher prices import products more
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cheaply and allows its citizens and
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companies to invest more easily easily
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outside the country unless we not forget
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Safe Haven currencies like the Swiss
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frong do extraordinarily well during
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times of global crisis like what we're
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experiencing today and since
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Switzerland's economic policy is mainly
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driven by the need to maintain its Safe
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Haven status for Swiss Fran denominated
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wealth whenever the Swiss National Bank
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finds itself in a situation where it has
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to choose between combating inflation
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with either wage growth or swiss Fran
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appreciation it will almost certainly
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choose the ladder you know it's
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interesting although Switzerland is not
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technically a tax Haven it does have a
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much more attractive taxation structure
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than many Western democracies in fact
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While most countries have actually
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increased their tax burden Switzerland
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on the whole has not the main vat rate
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in Switzerland has hardly changed over
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time and today it stands at just
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8.1% which is actually quite low within
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the European context until 1968 vat in
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Germany was 10% % today it's 19 and
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until 1992 the general vat rate in Spain
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was 12% and today it's
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21% and the same thing can actually be
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said about income taxes Swiss personal
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income tax rates which depend on the
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Canton one lives in are significantly
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lower with the average Corporation pays
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just between 12 and 22% of its profits
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and taxes again depending on the Canton
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in which they are domiciled and the
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property transfer tax for the purchase
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of a home is between 1 and 3% and for a
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bit of personal reference here guys when
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we purchased our home in Boden verberg
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in Germany we paid 5% in real estate
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transfer tax which is high compared to
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Switzerland but maybe I should be
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counting my blessings because in some
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states it's as high as 6 and a half% in
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Germany inheritance taxes on the other
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hand are highly complex and depend again
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on the Canton and the relationship
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between the deceased and their air
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however the average effective rate in
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2019 stood at just 1.4% of the Capital
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inherited which again is comparatively
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[Music]
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[Applause]
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low worldclass infrastructure allows the
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Swiss economy to boost trade tourism and
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mobility and Switzerland is known for
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its efficient trains which almost always
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run on time and at comparatively
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competitive prices for those of you who
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have had the pleasure of traveling on
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them you know what I'm talking about but
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it's not just trains Switzerland also
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boasts a blockbuster Road
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Network in fact Sean connory drove the
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infamous fap pass as James Bond in his
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Aspen DB5 and if this weren't enough
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Switzerland is also a leader in air
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travel with one of the highest ratios
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between passengers and number of
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inhabitants in the world and couple all
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of this with its central European
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location it's quite frankly just easier
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for both individuals and companies to do
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business here in Switzerland and all of
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that has positive effects for its
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society as a whole and speaking of
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society did you know that Switzerland is
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in third place in the oecd in terms of
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the share of immigrants in its
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population with the foreign born
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accounting for 26% of the total
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population Germany and Italy are the
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most common nationalities among foreign
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citizens living in Switzerland each
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accounting for approximately 15% of the
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total and thanks to the high demand for
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skilled labor Switzerland actually
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employs more doctors engineers and
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researchers than any developed oecd
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country in 2018 the median salary of
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expats according to an HSBC survey was
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$22,800 qualified Workforce and an
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advanced level of technological
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development a 2022 CTI millionaire
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report revealed that nine of the 10 most
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expensive schools worldwide are
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international schools in Switzerland but
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quite frankly even if you can't afford
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one of those gilded diplomas from an
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international school in Switzerland both
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public and private education in
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Switzerland is exceptionally good in the
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field of Education Switzerland is the
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second country in the world with the
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highest percentage of adults with a PhD
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and like all public spending public
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education Switzerland is tax funded and
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decentralized with each of the
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individual cantons having vast oversight
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on how to spend their tax dollars on
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education specifically in 2021 the
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Confederation cantons and communes spent
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41.3 billion Swiss Franks on education
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this amount corresponds to 17.7% of the
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total public expenditure and 5.6% of the
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gross domestic product and on a national
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level the Swiss economy spends 3% of GDP
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on research and development more than
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75% of that money comes from the private
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sector not surprisingly then Swiss
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companies are the ones with the highest
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levels of investment in R&D at 6.6% of
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their net income and all of these things
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together allow Switzerland to maintain
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its leadership in the pharmaceutical
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chemical engineering and agricultural
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Industries so why is Switzerland so Rich
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well quite frankly it's actually quite
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complex a lot of people tend to Chum all
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of this up to its Banking and Financial
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sector but again the true answer is well
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a lot more in the little details
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historical economic and political
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factors have all contributed to the
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buildup of Swiss wealth at times these
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factors have been influenced by smart
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business and smart political decisions
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and at other times Well simply by fate
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and well whatever the case it might be
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Switzerland is definitely home to the
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wealthy and the mega rich but you know
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in the meantime I don't actually qualify
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to be part of that group so I'm going to
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go back to my car and eat the sandwich
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that I packed and well get my rear end
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back to Germany but in the meantime guys
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if you enjoyed what you saw today be
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sure to hit that thumbs up button and
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for more content from type Ashton hit
00:15:19
that subscribe button so I'll see you
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next Sunday
00:15:27
cheers
