There’s something strange going on in Switzerland. This Sunday, Swiss voters will vote on the 1:12 Initiative, a plan to limit the monthly pay of Swiss companies’ top executives to the yearly pay of their lowest paid employees, an annual ratio of one to twelve. The people behind that idea hope both to curb enormous executive salaries and to raise the standards of living for the poor.
Then there’s another, even more radical idea — a plan to give everyone a minimum basic income of 2,500 francs ($2,800) a month. To get this money, all you would have to do is be an adult citizen — and you could get this money even if you had a job. A vote on this idea is likely to be held in early 2016.
These ideas might sound crazy, but they’re real possibilities. In fact, Switzerland has been debating a lot of ideas like this over the past year — in March, the country approved a plan that would give shareholders an annual ballot on managers’ pay (the plan was called an “initiative against ‘fat cats'”), and next year the country will vote on a plan to impose a minimum wage of 4,000 Swiss francs ($4,300) a month.
What’s most strange about this radical egalitarianism is that Switzerland has long held a reputation as a kind of capitalist paradise, with secretive banks, low taxes, and lots of gold.
To understand this shift, you have to understand the idiosyncrasy of Switzerland’s political culture and political system.
The government is based around a federal structure (there are 26 cantons, each of which is technically a fully sovereign state), with a remarkable system of (semi) direct democracy. One key part of this system is the federal popular initiative. Citizens can propose a change to the Swiss Federal Constitution, and if 100,000 people sign it, a referendum must be held. If a double majority of citizens and representatives of the cantons agree to it, it becomes law. You can see some of the proposals on this website — “Do not abuse our pension!” reads one, while another hopes to protect the “wolf, bear, and lynx” (both failed).
Such a system relies on a remarkable ability to reach a consensus — even if they don’t like an initiative that passes, most Swiss will shut up and live with it. Clive H. Church, a professor from the Centre for Swiss Politics at the University of Kent, told Business Insider that Swiss political culture means that citizens are “willing to accept the people’s decision even if it goes against [their own]”; politicians can be counted on not to resign or protest if the vote doesn’t go their way; and — perhaps most incredibly — Swiss citizens will happily vote many times a year.
Church says that historically the Swiss left has used the initiatives to counteract a long-standing electoral weakness, adding that there has always been a “small but vociferous left wing in Swiss politics.”
“The popular initiative, as the Swiss direct democratic instrument per se, has ever been an approach for minorities, working class etc. to bring up their issues,” Claudio Kuster, one of the co-authors of the initiative against “fat cats” says. “During the last century there have been many initiatives, trying to force fiscal equality, to introduce and extend the pension system.”
But what exactly is behind this recent cluster of initiatives? Daniel Straub, one of the people behind the minimum basic income initiative, said it simply came down to rising social inequality, and others seem to agree.
“In the past in Switzerland, it was unusual that someone showed off their wealth,” David Roth, the leader of the youth wing of Swiss party the Social Democrats, and one of the architects of the 1:12 Initiative, says. “They had some modesty in Switzerland 30 years ago. 30 years ago, there was a relation between the highest and the lowest salary — a relation of 1:6.” For decades, Roth argues, as production rose in Switzerland, normal pay and executive pay rose in proportion, and that only changed 10-15 years ago.
“Don’t forget that Daniel Vasella, then CEO and chairman of the board of Novartis, had received (rather: grabbed by himself) up to 50 million USD some years ago,” Kuster says. “A few years before, he started at just one million. That growth was not explainable. And still isn’t.”
When I asked Thomas Milic, a lecturer at the University of Zurich whether the financial crisis of 2008 had played a role in people’s understanding of economic inequality, he explained that the crisis hadn’t really been a crisis for the Swiss. “Surprisingly, Switzerland has managed to emerged strengthened from ,” Milic says. “The jobless rate is low, extremely low if you compare it to the European Union. Average income is high. Thus, there is actually no mood of crisis in Switzerland.”
What changed in the past five years, Milic says, is the public perception of bankers. UBS, one of the biggest Swiss banks, had to be bailed out by the government, and people were not happy about it.
“For decades, the bankers had been regarded as paragons of Swissness, Swiss quality, and success,” Milic explains. “This changed significantly after the bailout of UBS. However, the attitude of the Swiss bankers hasn’t changed a lot — at least, that’s the opinion of a majority of Swiss people. They still receives hefty bonuses as if nothing happened — that’s the view of the average citizen. As long as the banks were successful, people accepted that silently. But — with the bankers’ ‘fall from grace’ — they are not willing to take that silently any more.”
Kuster tells me that my image of Switzerland as a “capitalist paradise” is “not that wrong.” But, he elaborates, “this spirit will only be kept alive if leading persons in economics and politics are aware of their responsibility, not only [in their work], but also in terms of payment. Modesty has been an old Swiss virtue, which due to globalization has eroded somehow the last two decades.”
Historically, Church says, the Swiss have been proud of being an Alpine democracy which saw everyone as equal. “There is unease that the country is seen as inhabited solely by bloated plutocrats, greedy bankers and tax dodgers,” Church says. “Economic equality is a way of mitigating this image.”
Of course, unease alone doesn’t necessarily create reforms, and Swiss initiatives are lucky to pass even 20% of the time. Most of the recent initiatives that have been accepted were proposed by right-wing SVP and focused on matters very different from economic inequality — matters like banning minarets and deporting criminals. March’s “fat cat” initiative was a “truly exceptional” case, Milic told me, explaining that it most likely passed (by 70%!) because it was spearheaded by Thomas Minder, a well-known entrepreneur in Switzerland who was able to appeal to liberal and right-wing voters.
So, while business leaders may be freaking out a little about Sunday’s 1:12 vote, don’t be too surprised if it fails. And, no, Switzerland probably isn’t going to offer a minimum basic income (one person we talked to said it had “hardly any chance” at all).
But, still, let’s all be happy somebody is at least considering these options.
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