Randy McDonald (rfmcdpei) wrote,
Randy McDonald

[LINK] "The Swiss turn on the super-rich"

Emma Thomasson's extended Reuters article describing growing hostility in Switzerland towards the superwealthy, rooted in a long-standing egalitarianism along with a certain xenophobia, might mark the beginning of a trend. This is relevant not only for Switzerland itself or for other countries inspired by its rhetoric and experience, but for the world as a whole. What would wealthy Europeans do if Switzerland is no longer available to them as a tax haven?

In February 2008, Thomas Minder, a Swiss businessman whose family-owned company is best known for its old-fashioned herbal toothpaste, attacked his banker, UBS Chairman Marcel Ospel, as if he were a form of stubborn plaque. At a shareholders' meeting in Basel, he stormed the podium as Ospel addressed the crowd. Ospel's bodyguards grappled with Minder and wrestled him away before he could land his symbolic blow — he was trying to hand the embattled head of Switzerland's largest bank a bound copy of Swiss company law, which codifies corporate temperance.

"Gentlemen, you are responsible for the biggest write-downs in Swiss corporate history," Minder had railed just a few minutes before, referring to UBS's loss of $50 billion during the subprime meltdown that prompted it to seek a government bailout. "Put an end to the Americanization of UBS corporate philosophy!"

The bodyguards marched Minder out of the hall amid a chorus of boos and jeers. Two months later, Ospel was gone, taking the fall for UBS's recklessness, but Minder's campaign against big bonuses had only just begun; shortly after Ospel was ousted, Minder filed the 100,000 signatures needed to launch a referendum to impose some of the tightest controls on executive compensation in the world.

[. . .]

Despite strong opposition from the business elite, Minder's initiative is given a good chance of passing when it goes to a vote on March 2. Even if his referendum fails, the country will automatically adopt a counterproposal put forward by parliament that would compel companies to hold votes on executive pay, although the results would not be binding.

This is a stunning turn of events for the land of secret bank accounts and carefully calibrated neutrality. Even though most Swiss enjoy a very high standard of living, Minder's campaign has struck a chord in a proudly egalitarian country increasingly unhappy with a growing class of super-rich unafraid to flaunt their wealth. Combine that with an undercurrent of xenophobia — many of the top-paid executives in Switzerland are foreigners — and you have a volatile mix. In another sign of discontent, parts of the country are also considering scrapping the tax breaks that have lured wealthy foreigners such as Formula One driver Michael Schumacher, pop stars Phil Collins and Tina Turner, and Switzerland's richest man, Ingvar Kamprad, the Swedish founder of Ikea. "There is severe inequality that one really senses, even if there is no abject poverty in Switzerland," says economist Hans Kissling, former head of the Zurich statistics office, who has written a book warning that the growing influence of the super-rich carries the risk of turning Switzerland into a feudal state by undermining a tradition of direct democracy that dates back to the Middle Ages.

[. . .] The top 1 percent in Switzerland control more than a third of the nation's wealth, which is slightly larger than the share owned by the richest 1 percent in the United States. Switzerland also has the highest density of millionaires in the West, with 9.5 percent of all households having $1 million or more, and the greatest number of ultra-rich families — 366 households worth more than $100 million. Ten percent of all the world's billionaires live there.

This astounding concentration of wealth riles the Swiss, although their economy has held up relatively well through the financial crisis. For all its prosperity and success in international banking, Switzerland is a country still firmly rooted in its farming past, a nation with no history of monarchy or even aristocracy. "Even though Swiss people earn good money and have an average high salary, we also have a strong traditional feeling about what is good corporate governance," Minder says as he sucks one of his company's herbal throat lozenges. "You can have your second home, you can drive your Ferrari, you can eat your beef every day, but Swiss people are middle class, with no extreme highs or lows."
Tags: economics, european union, globalization, links, switzerland
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