Switzerland at No:1 in the World Happiness Report = extreme (or direct) democracy = tools for hands-on political egalitarianism

The Swiss excel at colourful and imaginative political demonstrations -- as in this objection to anti-immigrant  sentiment in Bern - postgutenberg@gmail.com

The Swiss excel at colourful, irreverent political demonstrations. This one in Bern was related to the debate about immigrants in 2011
– photograph by postgutenberg@gmail.com

oranges 6

Comparing oranges with oranges (see below) – photograph by MIL22

CH Bern protest 12 march 2011 Chryll Barron

Switzerland is reckoned as top country in this year’s World Happiness Report, the third in a series begun in 2012, and the work of United Nations economists. Most striking about the news of Swiss supremacy in contentment — making headlines worldwide, over the last few days — has been the paucity of explanations, or certainly any exegesis offering or even pretending to depth. This is further proof of the bizarre, almost wilful, ignorance about the little Alpine champion, to which this blog has been drawing attention for a while. (See ‘Seven reasons why indie publishing is the right choice for a travel book on Switzerland and its curious culture of extreme equality‘)

At post-Gutenberg.com — unusually harried and pressed for time, lately — we are waiting for a chance to study the methods behind the WHR calculations, to understand exactly what is being measured and how. In the meanwhile, we will record just these reactions to other observers’ reactions: no one appears, so far, to have noticed — or pointed out anywhere discoverable by search engine crawlers — that with Iceland ranking second on the 2015 WHR list, the top two positions are occupied by rivals for the distinction of being the world’s oldest democracy.

These also happen to be countries that come to mind in connection with extreme or direct democracy, which leans heavily on referendums to make government policy. That has long been a defining feature of modern Switzerland and in the case of Iceland, is the aspiration guiding the reshaping of its government since its humiliation in the financial crash of 2008.

People apparently are happiest in countries with political systems that do not simply enshrine social equality as the highest ideal — in, for example, their constitution — but have buttons and levers its citizens can use to make the idea of government by the people everyday reality.

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Screen shot from The Great European Disaster Movie, Annalisa Piras and Bill Emmott, Springshot Productions, 2015

After Switzerland and Iceland, the famously egalitarian Scandinavian countries — and New Zealand and Australia, ranking 9th and 10th , with anti-elitist ‘tall poppy syndrome’ embedded deep in their cultures — occupy most of the other slots in the top ten.

Oranges-with-oranges comparisons within this group would be more instructive than any apples-and-oranges exercise across the globe.

Unlike the Scandinavian nations, Switzerland was until recently a so-called ‘lean welfare state’ — comparatively stingy with social benefits.

So, can we surmise tentatively that feeling that you can make a real difference in the way your country is governed outranks a social super-safety net — cradle-to-grave cossetting by the state — as a fount of joy? It is an interesting possibility. Ten years of World Happiness Reports for inspection and reflection would be helpful, but we have had only three, so far.

- photograph by MIL22

A triumph for cooperatives: customer-owned Swiss banks are thriving while their shareholder-owned rivals lick their wounds in disgrace

Though the Swiss seem to have a special knack for running cooperatives, there is new interest in this form of organisation in communities all over the world. Photograph by Amita Chatterjee

Everyone writing off cooperatives as impractical — or as artefacts of misguided ‘hippie’ idealism — will please read the article below, re-published with the permission of Swissinfo.ch, a section of Switzerland’s equivalent of the BBC.

The Swiss see cooperatives as building blocks of democracy. They are rightly proud of their own ‘extreme’ or ‘direct’ democracy — the subject of an earlier post here – based on the rigorous implementation of proportional representation, and are apt to shake their heads despairingly about the ‘winner-takes-all’ version of the system of government in other western democracies.

The Economist — which has a habit of sniffily referring to cooperative banks as ‘dull but safe’ – has cited two authorities confirming the wisdom of coops:

A 2009 study by the Bundesbank, Germany’s central bank, into the connection between financial stability and bank ownership also found that co-operative banks were much less likely to fail than those owned by private shareholders. That fits with earlier work done by staff at the IMF in 2007, who argued in a working paper that co-operative banks were more stable than their commercial counterparts.

23 March 2012 

Crisis gives new life to cooperative banks

 by Armando Mombelli, swissinfo.ch 


Sometimes seen as an old-fashioned business model, cooperative banks have succeeded in strengthening their position since the crisis in the financial sector.

The three main cooperative banks in Switzerland – the Raiffeisen, Migros and Coop banks – have been enjoying strong growth in the past few years. 

“Until recent times, the banks had a stabilising effect on the economy. But in the past few years they have turned out to be a destabilising factor,” said Florian Wettstein, who teaches business ethics at St Gallen University. 

“Growing international competition and pressure from shareholders have led to a logic of short-term profit with very negative consequences,” said Wettstein. 

“We no longer talk about growth. What we want is bigger growth than last year’s or last quarter’s. At a certain point, this attempt defeats itself and we get speculative bubbles which burst sooner or later.” 

The last such speculative bubble that burst in 2008 threw the financial sector into crisis and forced many countries to exert huge efforts to save banks in difficulty. 

Even Switzerland was not spared: UBS, the number one Swiss bank, just missed going under thanks to massive intervention by the federal government and the country’s central bank. 

“It is interesting to note that Swiss banks, in particular UBS, were not just caught up in this trend. They played a very active role on the international scene, throwing their traditional culture of caution to the winds,” noted Wettstein. 

New management models 

The crisis in the financial sector spread to the “real” economy and it is still negatively impacting on growth around the world. Governments have been studying new models of management and regulation of banking to avoid another major financial crisis. 

Forbidding high-risk speculative ventures, separating investment banking from deposit management, limiting bonuses and various other measures have been examined by the Swiss government as well as others. 

Government and parliament here have approved an increase in equity capital requirements for banks, higher than those enforced by other European countries. This measure has still been regarded as insufficient by many experts. 

On the other hand, a business model that is sustainable and crisis-proof has existed for quite some time: it is the model of cooperative banks securely anchored in the local economy. 

Since 2008, Raiffeisen, Migros and Coop bank have attracted thousands of customers and billions of francs away from the “big two”, UBS and Credit Suisse, whose credibility nosedived after the losses they took on the American market. 

Last January, Raiffeisen almost completely took over Wegelin Bank, which had to shut down its activities when it found itself under investigation in the United States along with ten other Swiss banks accused of having helped thousands of American customers to evade taxes. 

In February, Raiffeisen became the first bank to guarantee transparent financing of political parties and indicate it was in favour of the introduction of automatic exchange of information on bank deposits with European countries. 

Several advantages 

In difficult times for the financial services industry, this cooperative bank is showing itself particularly dynamic and willing to break with taboos like banking secrecy which no longer seem to have much of a future. 

In the International Year of Cooperatives proclaimed by the UN, this fact may serve to renew interest in a business model often dismissed as old-fashioned – almost all the big cooperatives were founded more than half a century ago. 

“Cooperative banks actually offer several advantages,” said the economist Hans Kissling. 

 “The main one is that they are not exposed to pressure from owners or shareholders, and so they do not go for big risks and excesses. Rather they pursue a long-term strategy in the interest of their members, who are also their customers.” 

“Once shares are not involved, there is no danger of things like insider trading. Nor is there a danger of public takeover bids at their expense: attempted takeovers by other companies have to be approved by the members,” added Kissling, who is a former board member of a cooperative. 

“And last but not least, capital does not drain from the company through payments of  exorbitant dividends or salaries. It stays in the cooperative and gets used for new investments or to strengthen its equity.” 

Democracy and solidarity 

Tending as they do to democracy and solidarity, cooperatives almost always come out on top of the rankings for companies that enjoy the trust of the ordinary public. 

This has not in itself been enough to stimulate growth in the sector: every year thousands of limited companies are founded in Switzerland, but only a handful of cooperatives are set up. 

“The government should introduce tax breaks or create a special fund to promote the conversion of family businesses into cooperatives, for example on the death of the owner. Another option might be to introduce share certificates without the right to vote, which would encourage the capitalisation of cooperatives,” said Kissling. 

In the Swiss banking sector, most of the potential for this kind of development would come from the cantonal banks, which several cantons hope to privatise eventually. Conversion of these into cooperatives instead of limited companies would help safeguard their original mandate. 

In this way, almost half of the 20 principal Swiss banks could one day become cooperatives. 

“Promotion of cooperatives should above all be anchored in the constitution, as it is in Italy,” maintained Kissling. 

“This would not only serve to acknowledge the economic and social importance of cooperatives, but also to emphasise the long Swiss tradition of solidarity, which goes right back to the country’s roots.” 

He recalls that the Swiss Confederation is called in German “Eidgenossenschaft”, which literally means “a cooperative of sworn allies”. 

Armando Mombelli, swissinfo.ch

(Translated from Italian by Terence MacNamee)

[ Of course cooperatives — being creations of imperfect human beings — also have their flaws, and these are considered in a swissinfo.ch briefing on the topic. ]

Extreme democracy is not an impossible dream if you copy Switzerland, not California

St. Francis Yacht Club, CB

Beside the bay, beneath the trees, the St. Francis Yacht Club at dusk, after a symposium on direct democracy

Techno-optimists are sure that our egalitarian internet that brought you to this blog will flatten power structures in organisations, both online and offline, and usher in an age of extreme democracy. Cynics say that they are wrong. Whisper to them tentatively about, for instance, reorganising the media to make readers and viewers part-owners and managers, and they will roar at you, “Ridiculous! Disastrous! It could never work!’

You must then reply in calming tones, ‘True, if you do it like California, but not if you copy Switzerland.’

On the 10th of October, Californians will commemorate – note that I do not say, celebrate– the hundredth birthday of direct democracy in their state. They learnt how to use the tools for this system run on referendums and citizens’ initiatives from watching the Swiss. How did the midget Alpine republic invent its style of government? Today’s peaceable Switzerland came together as a federation of bolshie and aggressively independent tribes united by their determination to resist being conquered by huge and powerful neighbouring countries.

Switzerland– not a member of the European Union, which partly explains its soaring currency and almost indecently successful economy – is the anti-melting pot. In an article I wrote for Prospect last February, I suggested that it could replace America as the model for how to run culturally diverse societies. Its system of government goes to extraordinary lengths to protect the distinctiveness of its many radically different cultures and shield minorities from being bullied by majority opinions and beliefs.

This makes it a good model for old countries redesigning constitutions, new ‘emerging’ countries — and for groups and organisations being specially designed for the internet and treating all cultural traditions as equal.

But it has been a bad model for California– for which Californians have only themselves to blame, as Joe Mathews, born and bred in the state, and his co-author, Mark Paul, explain in their much-praised California Crackup (2010). Unless tales of incompetence heaped on ineptitude send you running for a prescription for antidepressants, you can also read a good analysis of why direct democracy has not served California well on The Economist site.

At the heart of the trouble is that Californians have been irresponsible and undisciplined, in using the levers of direct democracy. It is as if the Swiss gave them a demonstration of the etiquette for communal eating – showing them how to make sure everyone gets the same chances to dip their fondue forks into the cheese – and the Californians somehow ended up coated in gooey strands of Emmenthal, forking themselves in the foot. For years, Californians have found it impossible to agree on how they should tax themselves to run their government and, year after year, government employees go unpaid for weeks or months while they wait for one state budget crisis after another to be resolved.

Last Wednesday, the Swiss consulate inSan Francisco played generous host to a lunch and symposium – California Direct Democracy: the Next 100 Years – in the city’s most enviably situated private space, the St. Francis Yacht Club, so close to the water’s edge that it is almost floating.

After a brief welcoming speech by their consul, Julius Anderegg, the Swiss stayed tactfully in the background while their guests discussed how Californians might extract themselves from their mess. Not until after this event did the most enlightening apostle of Swiss democracy, Bruno Kaufmann, a citizen of both Switzerland and Sweden– two countries Americans inexplicably tend to confuse – say that California is the only place he has come across that needs less direct democracy. Asked for his opinion of the Californian implementation of the system, he said bluntly,

Your process is much more about enabling conflict, but not about solving conflict. You use it like a hammer, when what you need is a screwdriver.

Bruno Kaufmann

Bruno, who is forty-five, has dedicated his entire working life to being something of a Johnny Appleseed for collaborative democracy. He has written about it as a journalist, and from Sweden runs the Initiative and Referendum Institute Europe, which is in Germany (Marburg), as its first director. His career is a model of Buddha-like patience. He told me how at eighteen, acting from deep personal conviction, he wrote Switzerland’s first-ever proposal for abolishing its army. Though he and his fellow-campaigners lost the referendum on the question held in 1989, the 36 per cent of the population who voted ‘yes’ licensed criticism of the Swiss tradition of compulsory military service – strictly taboo, before. That eventually led to the army being shrunk from 600,000 to 100,000 troops.

Next spring, he will have to take a bow when a new European Citizens’ Initiative is handed to 500 million EU citizens – giving them the means to formally propose new laws, and the same right to do so as their parliament. He was the coordinator of the network that mobilised support for the idea. When I asked him how long it took him and his fellow campaigners to realise this particular dream, he said simply, ‘Twenty years.’

So what is the secret of the Swiss success with direct democracy?

Two things, he said:

  • A deeply ingrained preference for consensual and consultative over confrontational decision-making, and a commitment to making it work – even though it can be infuriatingly slow.
  • A willingness to lose cheerfully, when you are out-voted and do not get what you want. (Nothing bars you from trying again, later, and succeeding.)

One paradox about this culture of outstandingly collaborative behaviour is, of course, that the Swiss — collectively — are not joiners. Switzerland is a tiny, go-it-alone country. It obstinately resisted pressure to join the EU. It did not even join the United Nations until 2002 – becoming the world’ first country to do so as a result of a referendum, in which the winning side won by only a small margin.

I was thinking about this as I stared out of the meeting room’s glass walls. A brisk wind was frothing up waves in an undulating mosaic of blue, grey, and jade. There was something gloriously bizarre about being part of a group discussing schemes for cooperation and democracy with part of my mind hypnotised by the most thrilling figures in my field of vision – solitary windsurfers, battered by the elements pushing and tearing at them, … forcing them to bend and tilt … down, down, down … nearly capsizing, then thankfully upright again … all by themselves, helped by no one, and too consumed by the struggle to keep their balance to help anyone else.