Chocolate for Thought

There is a pervasive feeling among thinking people that this country is not just facing a severe economic crisis but that we are losing something exceptional. That something is American exceptionalism precisely. Lech Walesa, the blue-collar hero of Polish freedom from communism put it well in a recent piece in the Wall Street Journal. There is only one of America and if it ceases being itself, the world is left in the dark, goes the thinking. It’s not reasonable to count on the debt-ridden government pension-sucking Europeans to hold up the flashlight. The fact is that several European countries are disappearing because they don’t make enough babies to replenish themselves. That’s the ultimate form of pessimism. (And no, this is not a racist statement, I am completely pleased with the fact that brown-skinned Mexicans and their children are keeping the American population growing. They make good immigrants. See my article on Mexican immigration, with Nikiforov, in the Summer 2009 issue of the Independent Review.)

Unfortunately, there is an innate humility among Americans which makes it difficult for them to think aloud about American exceptionalism. If there were not, twenty years of cultural relativism in the schools would make the very thought difficult to formulate: “Everybody is equal. We are not any better than those who suck their grandmothers’ brain – but only after they die, or than those who practice horrendous sexual mutilation on little girls, or than those who still practice slavery. Only American slavery was atrocious. Slavery in exotic locales is kind of nice, actually, if you look at it in its proper cultural context.”

One way to overcome this shyness and diffuse sense of equality in order better to grasp what we are losing is to consider Swiss exceptionalism about which no one gives a damn, not even the SwissIt turns out that in the main respects, there is not one America, there are several. Switzerland is one.

Contrary to a widespread impression, Americans probably don’t have the highest standard of living in the world. I will use Gross Domestic Product per capita (GDP/cap) to discuss this matter further. It’s simply the total value of the goods of all kinds produced in one country in one year divided by the number of population. If you care to look, you will find out why GDP/cap is not a good measure of anything because, blah, blah, blah. Or, you can simply trust, for the time being, my assertion that it’s a fine measure for our limited purpose of illustrating the standard of living in similar countries with fairly large economies. (Check my credentials to discuss such matters if you wish. Go through my vita […] and then, through Google. Go ahead, every time someone Googles me, I get a shiver up my leg, like Chris Matthew of MSNBC when he thinks of Barack Obama.)

The GDP per capita I am using is computed “PPP,” Purchasing Power Parity; it take into account different costs in different countries. So, it can be used to compare what ordinary people can really buy, at home, with their share of GDP. It compares what’s comparable. In this essay, I am only referring specifically to advanced developed countries. A short walk in any street of any town of any country I mention by name would persuade you that I am comparing what’s comparable. Those countries are not identical but they are similar. Americans have larger cars than the French but the French enjoy longer vacations, as do the Germans. The Swiss have smaller cars than Americans and shorter vacations than the French or the Germans but, in their country, just about everything works, which is more than we, or the French, can say.

For 2009 Luxembourg’s GDP/cap was above $77,000 and Norway’s above $59,000 while the US ranked 10th at $46,600. Switzerland ranked 18th at $41,600 By way of comparison the mean for the whole European Union was $32,700 . France stood at about that level. (All of the above figures are from the CIA World Factbook, available on-line, consulted 2/16/10.) For 2009, in raw terms, the French were thus collectively about 20% poorer than the Swiss. If you had made the comparison ten years ago, the French would have fared worse in comparison with the Swiss and the Swiss much better in comparison with Americans.

Luxembourg is really rich in every sense of the term plus it’s a fiscal paradise which makes comparisons difficult. Norway possesses important petroleum resources that are well administered and whose proceeds are well-distributed. The other seven countries that rank above the US are oil sheikdoms or very small, which also makes comparisons difficult. The US has over 303 million people, France has 56 million, and Switzerland only about 7,5 million people. The point I want to make is that the Swiss are richer than about 95% of all people in the world or more and, more importantly, that they are richer on average than the French, right next door.

Switzerland is also smaller than France on every dimension. It has a small internal, domestic market. It’s not part of the huge European Union market, unlike France. (It does have a limited free trade agreement with the EU) Its climate is similar to that of France. Unlike France, Switzerland has almost no natural resources aside from expensive hydroelectric power. The Swiss are not even obviously better educated than the French. They spend the same % of their GDP on education as the French. That’s more in absolute terms since the Swiss GDP is higher. But France has obviously more top-notch schools at the university level than its neighbor. Contrary to a widespread impression, Switzerland is not primarily a financial country either. Its service sector, which would include finance, is proportionately smaller than that of France. It’s also smaller than the German and the American service sectors. If anything, Switzerland is a more industrial country – in the conventional sense – than France, and Germany, and the US. The usual common-sense explanations for the Swiss superiority in general don’t match well the Swiss reality.

For reasons I can’t go into here, many people like “cultural” explanations of socio-economic phenomena. Most of the people with such preferences don’t really know what they mean by culture. Yet, by any definition, language should be included under “culture.” With three and a half official languages, it’s difficult to argue that Switzerland has distinctive culture. (It’s not impossible but it’s far-fetched.- Do you know what the fourth language, the one I call “half” is called?)

So, what does Switzerland have that France, and its neighbors, and most poor countries don’t have?

The answer is not about what it has but about what it does not have. Switzerland has little government. It applies with great rigor the principle of subsidiarity – which is also implicit in the US Constitution. Whatever concerns the village or town is decided at that level. What cannot be is decided at the canton level. Very few decisions ever reach the central, federal government. The Swiss central government is so small, you hardly every hear about it. The country’s President, unlike the French President (or the German Chancellor) is hardly ever on television because she has little to say that would matter to her citizens.

Correspondingly the weight of taxation is less in Switzerland than it is in France, not a little less but much less: It’s at 30% of GDP (like in pre-Obama America) against 46% in France. Now, let’s run this into real numbers, Suppose there were a political earthquake and the French taxation rate were reduced to Swiss levels. This means that in the first year, each French man, woman and baby, on average, would have about $5,000 to invest, to pay toward a car, or to buy more health insurance. What do you think this would do for the French economic growth rate?

To summarize: The Swiss federal government does not suck the substance out of its citizens and it’s too small to prevent them from doing whatever they want to do. The Swiss strive more than their neighbors who are in every way in similar circumstances and they thrive more. Does anyone think this is a coincidence?

Here the story ends. Until now, the US has been in most respects (including taxes) like tiny Switzerland. The Obama administration and its mad mentors in Congress want us to become like France.

As you ruminate these simple facts  also think of this: The giant food multinational firm, Nestlé, is a Swiss firm. Anyone who has no cocoa, no sugar and no milk to speak of, and who can sell chocolate to the world knows something worth knowing.

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