swiss insights – Avenir Suisse’s Monthly Report (05/2020)


New publications:
The Dead End of Repatriation ([link removed])
Coronavirus Challenges Swiss Social Security ([link removed])
Say No to Bailouts ([link removed])

Focus of the Month:
The Absurdity of Autarchy ([link removed])

Other Highlights:
Deglobalization Is a Big Mistake ([link removed])


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The Absurdity of Autarchy
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The lessons of the Covid-19 crisis for Switzerland should be to boost openness, not the contrary

by Haig Simonian, our external editor

Healthcare, travel and education are just three of the areas being reassessed following the Covid-19 outbreak. Most momentous of all, however, is the worldwide rethink about globalization.

Come a global disruptor like the corona virus, and the elaborate supply chains developed by industry over recent years quickly break down. Visiting her doctor recently, my wife was warned about looming shortages, and the potential outright unavailability, of medication because manufacturing was concentrated in China and supply chains had collapsed.

It was the motor industry that probably pioneered maximizing productivity and minimizing costs by relocating manufacturing to cheaper locations. But while global supply chains and “just in time” production work wonders when ticking like clockwork, they can gum up fast in a jam.

Hence the widespread calls for reconsidering globalization and returning (or “onshoring”) key activities to their former locations. Not even liberal Switzerland has been a stranger to the trend. Here, left wingers have advocated onshoring, while centrists have recommended steps to boost the supply of Swiss nurses and care staff. The ultraconservative right, meanwhile, has demanded maintaining current temporary border controls and abolishing the free movement of people within the European single market.

Would such a strategy help the Swiss? Decidedly not, argue three distinguished Avenir Suisse scholars in their latest publication on the consequences of the pandemic.

Diversity of supply is key to ensure security (Musicfox, Unsplash)

Another way
In "Sackgasse Re-Nationalisierung ([link removed]) " (The Dead End of Repatriation ([link removed]) ), senior fellow Patrick Dümmler and co-authors Peter Grünenfelder and Pascal Lago say, few countries have in recent decades benefited more from globalization than Switzerland.

They suggest lower trade barriers and improvements in transport and communications have fuelled prosperity in the small, open and trade dependent alpine state. Federal tax revenues alone have risen by about 150 percent over the past 17 years, while around 2 million Swiss workers have benefited from the greater access to foreign markets, they reckon.

Not only has Switzerland been a major beneficiary of globalization, it could never develop a fully autarchic economy anyway, the authors add. The Alps may be beautiful, but Switzerland remains a country bereft of natural resources and dependent partly on foreign labor. It is often forgotten, for example, that the early electrification of Swiss railways had less to do with scientific foresight or environmentalism than the fact that the country had no coal, while its early hydroelectric schemes provided relatively easy and comparatively cheap power.

Diversity rather than autarchy
Rather than trying to ensure an unachievable independence, the pandemic has demonstrated Switzerland’s priority should be on ensuring diversity of supply to ensure security. That applies as much to food, medicines and other essentials as to commodities and power. “The strategy should be openness,” the authors emphasize.

In policy terms, that means the Swiss government should do its utmost to further multilateralism in world affairs, notably in fighting protectionism. Unilaterally, all remaining Swiss import tariffs should be eliminated. And to further boost security, Switzerland should diversify its suppliers and not impede foreign takeovers.

Focusing on healthcare, the authors recommend a deal with the European Union, and ensuring free movement, not least for the thousands of foreign nationals who cross the border into Switzerland each day to provide specialist skills and talents.

Concludes Grünenfelder in a separate recent opinion piece for the Handelszeitung ([link removed]) newspaper. “The call for renationalization is demonstrably not just misguided economically, but in health policy terms too.”
Anmelden


** Our latest publications
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The Dead End of Repatriation ([link removed])
Coronavirus Challenges Swiss Social Security ([link removed])
Say No to Bailouts ([link removed])

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Avenir Suisse is the leading Swiss think tank which promotes open-market ideas in economics, politics and society at large. Although continuing to publish on Switzerland’s domestic politics, the think tank aims to address Switzerland’s growing importance in the international community and global economy. Avenir Suisse’s English-language monthly newsletter aims to reunite people and institutions interested in obtaining regular valuable insights on Switzerland, useful in international discussions and as a source of comparisons.
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