I learn something every time I take a long trip to another country. When I went to Peru, it was “Choose what you do.” When I went to Kenya, it was “Take it slow.” When I went to Bolivia, it was “Experience early.”
I took a month-long trip to Switzerland recently. If I sum up the learning from this trip, it’s this — Our way isn’t the only way.
Most people drink coffee in a cup or mug here in the U.S. When I was at a mountain hut in Switzerland, I saw people pouring coffee into a bowl, putting butter or jam on their bread, and then dipping the bread into the coffee bowl.
That’s weird to me but they must have their good reasons. Maybe I should try it. Our way isn’t the only way.
I drive everywhere here in the U.S. but I didn’t need a car for a whole month while I was in Switzerland. I took trains and buses everywhere. This wasn’t limited to only large cities like Zurich or Geneva. Some small villages I went to had a population of no more than 1,000 people.
Trains go into the airport. You come out of the airport terminal and go directly into the train station. Regional buses wait at the train station. You come off the train and hop on a bus. They have a mobile phone app that tells you which trains and buses to take and you can buy one through-ticket that covers all the connections directly in the app even though the underlying trains and buses are operated by different companies.
The trains and buses aren’t necessarily fast but they are reliable. If the schedule in the mobile app says the train will arrive at 9:37, it shows up at 9:37. If you have only four minutes to switch from one train to another, you won’t miss the connection.
Going by train and bus is so much more convenient and less stressful. Swiss people of course also have cars. They just drive less frequently. Having fewer cars on the road means less pollution, less congestion, less road rage, and fewer traffic deaths and injuries.
As soon as I got back to the U.S., I needed an Uber to get home from the airport. It was such a big contrast.
Having good public transportation isn’t just a matter of population density. The state of New Jersey has more population in a land area about half the size of Switzerland. I definitely needed a car when I visited New Jersey. Our way of everybody driving everywhere isn’t the only way to organize transportation.
Free Enterprise + Public Infrastructure
I watched the movie Heidi before I left for Switzerland. It showed that Switzerland used to be a poor country. The Swiss people raised cattle and sheep in the mountains (famous for Swiss cheese). A poor girl was sent to Germany as the companion to a wealthy family’s daughter. She was laughed at for not being able to read.
Switzerland’s per-capita GDP is higher than that of the U.S. now. It’s as hands-off to capital as it gets. As a small country of only eight million people with a tiny domestic market, it has the largest food company in the world. As a land-locked mountainous country, it has the world’s largest ocean container shipping company. Without large mining resources of its own, it has the world’s largest commodity trading and mining company. Russian oligarchs have their operations there. Two Swiss pharmaceutical companies are in the global top five. Such a small country has a vastly disproportional economic power in the world.
The commitment to free enterprise didn’t stop the country from providing public infrastructure though. Their trains are run by a company 100% owned by the government. The inter-region buses are operated by a subsidiary of the country’s postal system. I saw the bus driver picking up mail from drop boxes along the way.
We’re debating in the U.S. whether some student loan borrowers should receive loan forgiveness of $10,000 or $20,000 just this one time. Tuition at many public universities in Switzerland is under $1,000 per semester. International students only pay $500 more. Albert Einstein got his college and Ph.D. degrees at a public university in Switzerland.
Funding public infrastructure obviously requires taxes. Swiss citizens see the long-term benefits to its economy from good public transportation and good public education. Our way of low taxes and low investment in public infrastructure isn’t the only way to have a thriving economy.
Like the United States, Switzerland also has a federal form of government. Citizens in its 26 states (“cantons”) literally don’t speak the same language. As I traveled from one canton to another and sometimes from the eastern part of the same canton to the western part, all the signs in the streets changed from German to French (I didn’t go to the Italian-speaking part of the country).
Rather than having two political parties dueling with each other and resulting in policy swings when one party comes to power versus the other, the Swiss legislature is made up of 11 different parties. With proportional representation as opposed to a winner-take-all system, gerrymandering isn’t a thing. All political leanings are represented. It doesn’t matter if you’re a conservative in a blue state or if you’re a liberal in a red state.
Seven members from 4 different political parties form a Federal Council that governs the country. The 7 members rotate to serve a one-year term as the President. The President doesn’t have any more power than any other member of the council. A stable government built on consensus creates a good environment for the economy.
Rather than going through years of litigation and having a judge or a handful of judges overturn laws, Swiss citizens can overturn laws directly in referendums held 3 or 4 times every year. Citizens can also amend the constitution directly in a referendum. The number of signatures needed to put an issue on a referendum is relatively low. The government and the legislature won’t make unpopular moves when they know citizens can easily veto them in a few months. The will of the people prevails.
Here in the U.S., we hold our constitution and the founding fathers in high regard as if they had the best design. I realized it isn’t the only way when I saw how well the Swiss constitution was designed. The American founding fathers had to deal with the problems they were facing at the time and make compromises. They couldn’t foresee the structural problems their compromises created without a good self-correction mechanism.
Direct democracy of course also has its problems. The county I live in now needed a new high school due to population growth resulting in overcrowding at the existing high school. When the county school district put a bond issue on the ballot in 2019, citizens in the county voted it down because they didn’t want to pay higher property taxes. Now, three years later, the population grew some more and the overcrowding got worse. The county still needed a new high school but construction costs have gone up a lot and the interest rate for issuing a bond has gone up a lot as well. Citizens have to pay much higher property taxes now than they would’ve paid three years ago because they waited. People sometimes make mistakes but on balance I think it’s better to give the power to the people.
Back to our usual money and finance topics, sometimes we think our way is the only way, and any other way will result in a disaster. It’s not true. We should always keep an open mind. Living in a low-cost-of-living area works. So does living in a high-cost-of-living area. Entrepreneurship works. So does working a W-2 job. Investing in index funds works. So does investing in real estate. What made us successful isn’t the only way.
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