In 1989 I went to the University of Washington to found the Environmental Management MBA curriculum. It was the first such program in America and students found it an attractive option. One of my programs featured nationally prominent business leaders who met in Seattle to attend seminars on environmental economics and policy. All were impressive and behaved with deportment. A few even became good friends who later visited Ramona and me at our Montana ranch.
One who greatly impressed me was Harry Teasley, president of Coca-Cola Foods and the Wine Spectrum. Harry was an engineering graduate of Georgia Tech, an avid outdoorsman, and a wide-ranging compulsive reader. Our seminars introduced him to economists and public intellectuals who shared his classical liberal philosophy.
This was a new arena for Harry and he flourished in it. He sampled several conservative and libertarian think tanks and found the Reason Foundation especially attractive. Reason’s mission is to advance "a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law." Harry participated in Reason programs, soon became its chairman, and he introduced other prominent business leaders to the Reason Foundation.
Harry takes political economy seriously indeed and studies its foundations and applications. Although he doesn't use this language, he is mightily concerned with the same question that motivated America's founders: What arrangements foster social harmony and economic progress while constraining political plunder?
It is conceptually easy to control the predation of roving bandits via police, courts, and prisons. It is much more difficult to design institutions that control the stationary bandits naturally drawn to political offices. That is where the easy money resides in every modern economy and is usually extracted without bloodshed.
Switzerland, a trilingual nation, has evolved solutions to the stationary bandit problem. Harry became attracted to the architecture and application of Switzerland's culture and political economy. He gave me permission to share a much-shortened (and lightly edited) version of his analysis. I shared his comments with Dr. Howard K. Lee, a former FREE board member who has lived in Switzerland for the past 20 years. He agrees with Harry’s views on Switzerland’s success.
Harry Teasley wrote:
Nobel Laureate, Friedrich Hayek, made the following observation. “The possibility of men living together in peace and to their mutual advantage without having to agree on common concrete aims, and bound only by abstract rules of conduct, was perhaps the greatest discovery mankind ever made.” With each visit to Switzerland, my understanding and appreciation of the political economy of the country becomes deeper and more nuanced. I view Switzerland through the eyes of a visitor and also one who sees Switzerland through a congenial lens... The Swiss people have been incredibly successful in evolving a political philosophy, culture and political - governmental structure, which limits the potential power of a centralist, nationalist and statist administration through the adoption of a federal system and other policies, which distribute power...
Like many countries, Switzerland has created a bicameral legislature where, in one house of parliament, small cantons have equal power with larger cantons. Thus, some power is balanced and distributed equally, based on political jurisdiction rather than on population. Additionally, Switzerland is a confederation of states and power, and is balanced and distributed between individual cantons (states) and the national (central) government. Further, the Swiss political system is also characterized by the concept of subsidiarity (a central authority should perform only those tasks which cannot be performed at a more local level). Importantly, under the system of subsidiarity, the power to tax is also well distributed.
The powers to tax and spend coincides almost exactly, as each level of government is responsible for its own finances. Thus, the power to tax is well distributed and for the most part decentralized. This distributed tax structure also creates an environment in which cantons can both cooperate and compete, which helps drive overall efficient administrative management.
In 1891, Swiss citizens made a crucial change in their constitutional structure. Citizens can directly vote on proposals to veto or nullify legislation passed by the central government, as well as propose and vote on initiatives, which can become law via plebiscite. This condition informs and limits the action of the central government. Thus, power is balanced and distributed between the central government and all citizens as a group.
Unlike most countries, Switzerland is not ruled by a king, emperor, elected president or prime minister, but by a cabinet of seven, each of whom serves a single year as President on a rotating basis. Election to a political office is not an act that allows the politician to develop wealth through salaries, perks and privilege....In overwhelmingly most cases, politicians cannot make a living from political activity. The political system is designed that politicians have “normal” jobs or sources of income like the citizens who they represent. Thus, power is also self-limiting, based on lack of the financial rewards often existing in other countries.
The country operates an effective system of education, which both educates and prepares the young person to assume a self-supporting position in the greater society. The apprentice program is a critical part of this structure. ...
On redistribution: There is very little explicit redistribution ... both the Swiss governments and the people at large tend to be financially conservative and responsible. It appears that a respect for education, combined with individual and financial responsibility, are bedrock cultural virtues internalized by most citizens.
Thus, I posit the following summary:
Implicit in all the foregoing is that political power is very well balanced and distributed via a truly federalist structure based on states rights.... Simply stated, much power is decentralized in Switzerland. On a cultural level, it appears that the Swiss view liberty and individual responsibility as opposite side of the same coin.
Switzerland is a burr under the saddle of other more centralized and statist countries. I believe that the EU and the US will continue to put pressure on Switzerland to be more like the politically-correct states which run large deficits and pass laws and regulations that invade the liberty of it’s individual citizens or those of other countries. And, there are always outside interests (read IRS), which seek rents and ways to confiscate other people’s money.
In summary, I find the political economy of Switzerland to be both the exemplar for and antidote to the politically correct views sweeping much of the world.