Switzerland & California
When thinking about successful and competitive economies, Dubai probably comes to mind along with Singapore, or New York. But when you consider any relevant economic data over a longer period of time, California and Switzerland become two prime examples of powerful economies. However, thanks to the role of popular politics and the usual anti-business rhetoric that follows, the consideration of California and Switzerland as powerful economies may soon change. The hope of many is that countries like Britain can learn from the mistakes that will lead to that.
For decades, California has been the center of American technological innovation and business, as well as the home to the biggest movie industry in existence. Hollywood and Silicon Valley make California an economic powerhouse. On the other side of the world, Switzerland is home to the world’s most formidable banking system along with engineering and pharmaceutical industries that make it the fourth richest country in the world when measured by per capita GDP. Despite the successes of both California and Switzerland, another thing they share in common is that both have been flirting with populistic policies that are driving away both businesses and their residents.
Switzerland has taken aim at large corporations, with efforts to limiting the pay of top executives as well as taking a different stance on immigration. Although not a member of the European Union, Switzerland had allowed citizens of EU countries free access into Switzerland, but votes were cast in favor of strict immigration quotas. California, which has been similarly embracing policies that anger businesses, levies some of the highest state taxes in the United States. With efforts to ramp up labor protection, passing more environmental legislation and increasing business taxes, California is becoming less business friendly.
So what is the result of all of this and what can a country like Britain take away from it? While it is understandable that perhaps executive pay is very higher, and unrestricted immigration can hurt certain communities, or even that high taxes are sometimes necessary for the good of the entire state, having a powerful economy is still dependent on keeping big businesses on your side. People and businesses are leaving California and Switzerland in droves. Along with that, jobs leave as well. The United Kingdom is on a good track in terms of competitiveness in their economy and job creation, and it would benefit them to continue on that same track and not be detoured by popular ideas that seem good on the outside.
Thank you for reading!
Originally published at andrewchamberlain.ch on April 24, 2015.