How to Maintain and Expand the Swiss National Wealth: A Personal Perspective

The key question of the talk was about what Switzerland should prioritize and avoid in order to be ahead of time and maintain its wealth. Prof. Abhari’s talk started with some thoughts about wealth in general and later picked up on these thoughts by looking at a case study of societal impacts of a policy with the model enerpol. His talk was concluding with recommendations for Switzerland.

Modern sovereign states with borders are rather new in the history of humanity. Nowadays a state’s focus lies on how to maintain sovereignty and increase wealth within its borders and a state’s decision-making circles around that. The sovereign states can be seen as agents who optimize for themselves, and try to find their self-benefit with (or without) cooperation with others.  But what is wealth? Prof. Abhari’s definition of wealth consists of four components. First there are natural resources which are determined by a nation’s location. There are very few countries leading the production of raw material, namely China, the Untited states, Australia, Russia and Canada. Most other countries, including Switzerland, are minor players in the production. But the EU, and also Switzerland, established themselves as value-adding societies which heavily rely on importing raw materials and exporting (semi-)finished goods. Switzerland in particular became a trading hub; large amounts of raw material are traded through Switzerland, e.g. 35% of crude oil and 60% of all metals. The reasons for having been chosen as a meeting place are its stability and its neutrality, “a fair neutral place in the middle without power to influence force anyone”. The second component is knowledge and technology, the added values to natural resources. The development in this area came mainly in three many big steps. A recent element of the technological advancement is the first industrial revolution.  Steam engines decoupled muscle power and production and gave rise to mass production, specialization and a strong working class. Electricity further increased industrial production at larges scales. There has been a continuing transition where now, a key part is about managing information in the digital era. Value shifted to technology and know-how and we are faced with a global race to lead it. A handful of nations are being successful in doing so by building an ecosystem for innovative transition from knowhow to wealth as financial, technical and political conditions have to be well aligned. The third component infrastructure is all about facilitating human benefit and the organization of the society and bring about major efficiency of scale. To make infrastructure efficient, parts of it has to be globally coupled, e.g. gas pipelines, global shipping routes or air traffic. The fourth component which is often neglected, Prof. Abhari calls the ‘Geist’ of a state – its values, norms and cultural beliefs that allow a society to develop, share and maintain an identity.

With ‘EnerPol’ what-if analysis can be conducted at different scales (continental to community). By combining population modelling, mobility modelling, energy modelling, etc. policy changes can be assessed, and it is said to potentially support scenario-based planning. As a case study the impact of limiting immigration on the Swiss population is presented. The model results show that household size goes down, total population significantly drops, people become older and the birth rates drop. The model also gives information aspects for the social system like taxes, security, rents, etc. As example the impact on the social security system is presented: the first pillar would go bankrupt 20-30 years earlier than without an immigration limit, under the current payment system.

Recommendations from Prof. Abhari to the federal council as decision-making body of Switzerland cover a wide range of topics. A key element to stay ahead of time is to not only look at the states own interest but also at interests of others, to develop intelligence about what is happening on an actionable level, and to prioritize to be able to be proactive. The focus for Switzerland should be the maintenance of its infrastructure as well as its knowledge and technology. Concrete suggestions encompass for example the development of competences to observe and anticipate decision-making of partners, to maintain human talent by promoting role models for the civil society to contribute and to encourage investment in the Swiss wealth generating businesses by its pension funds and insurances. Further Prof. Abhari suggests changing law in order to promote entrepreneurship and to facilitate new business models for critical energy, transport and communication infrastructure and urban planning, to conduct a holistic assessment of the future transformation of the urban built up environment by bringing in different stakeholders as well as civil society and to consider cascading crisis analysis of various inter-connected scenarios to develop efficient response. Prof. Abhari sees the main threats in the erosion of sovereignty and the loss of critical industries. He concludes by stating, that Switzerland is doing well now, but needs to move, stay proactive and take policy decisions along the lines of his recommendations

The discussion following the talk covered topics like the necessity of redistribution in order to keep social stability or the increasing importance of intellectual property by shifting from a trading hub for natural resources to technology and communication. Prof. Abhari explains the difference of technology, as non-tradeable thing, in comparison to knowledge and data. In the discussion, also more explanations about the ‘Geist’ are given and the questions of when a state’s interest interferes with its ‘Geist’ and how to address this is discussed. Further a discussion develops about how much politics matter and how important trust is. The discussion ends with the statement that Swiss technocrats try to do their best but are not always very visible, and that it is generally unsure if and how recommendations like the ones from Prof. Abhari will be translated into policy.