The Swiss waiter, the Catalan Minister, and happiness

The Swiss waiter. I just delivered to my publisher a typed manuscript that I hope to have published soon. For research purposes, I had asked for information about specific salaries. Too late, a friend sent me the following message that he had received from a Swiss cousin: "I had the chance to ask one of my friends who works in a restaurant what he is paid. He’s 35 years old, has worked in the same restaurant in Zurich for five years, and is paid about 5,000 CHF plus 2,000 in tips each month. He works 42.5 hours per week. He told me that the salary is set by collective bargaining at a minimum of 4,100 CHF per month, once the apprenticeship is complete."

One Swiss Franc (CHF) equals one euro. However, the reader would be mistaken if he mechanically transformed the previous figures into euros, as you would have to adjust for the higher cost of living in Switzerland than here. If you make the proper corrections, the monthly salary of the Swiss waiter is equivalent to only 3,150 euros in Catalonia, and the tips would be 1,250. As to the minimum salary established by agreement, that figure would be equivalent to 2,600 euros.

Why is the Swiss waiter paid so much more than his Catalan counterpart?

Every time that I have tried to show Switzerland as an example of good governance, I have run up against someone who sings the usual song about Switzerland being a tax haven. As if that accounted for everything.

Switzerland is certainly a tax haven, for two reasons. First, because they pay very few taxes. A little less than in Australia, Ireland, New Zealand, or the United Kingdom, and a little more than in the United States. Obviously, if the Swiss waiter is paid a lot it is not for this first reason. Second, Swiss banks offer banking secrecy, which means that many people from around the world hide part of their assets in a Swiss account. This does have an impact on Swiss prosperity. However, there is no need to exaggerate the magnitude. First, because there are very few private bankers, and income redistribution in Switzerland is very limited. Second, because even if income were redistributed, it would not amount to much: Panama is also a tax haven, there are fewer people to share income with (it has half the population of Switzerland) and, to top it all, it has the canal that brings in an enormous flow of money, as if it were pennies from heaven. Nevertheless, its per capita income is only one eighth that of the Swiss.

Finally, if we analyze the Swiss accounts, we shall see that exports of financial services amount to 2,000 euros per person per year, the same as payments for the use of technology (royalties), and slightly more than tourism (1,700 euros per person per year). On the other hand, exports of products represent 22,000 euros per person per year.

The Swiss waiter isn’t paid so much because Switzerland is a tax haven, but rather for other reasons: because Switzerland has very well integrated institutions, because they carefully scrutinize the utility of public projects before approving them, because they have industry that invests highly in R&D and, finally, because they do not tolerate low salaries. They hardly practice any tax redistribution, but they are very effective in the fight against poverty.

Happiness. The press has made much (28-4-15) of a UN study finding that the Swiss are the happiest people in the world. Spaniards rank 36th, right behind Colombians, Thais, and Saudis. The difference between the Swiss and Spanish positions is fundamentally the result of the answers to the following questions: Are you happy with your freedom to decide what to do with your life?; How much money did you give to charity in the last month?; Is there a lot of corruption around you?; Did you feel happy or unhappy yesterday?

The study places the five Nordic countries just behind Switzerland. As you know, those countries suffer from the highest tax rates in the world, which proves that this has nothing to do with happiness.

Rajoy. With an unbecoming emphasis for him, but with an imprecision typical of populism, Rajoy just stated: "Ours is the best nation in the world" (26/4/15).

The Catalan Minister. Some months ago I attended a project presentation by a Minister of the Generalitat at Barcelona’s Cercle d’Economia. There was a lot of emphasis on job creation. In the question-and-answer session I asked him if they were taking steps to make sure that salaries were decent. He answered that to be competitive and to be able to create jobs, salaries had to be low.

Independence. As someone who has regularly written about it, I am sometimes asked if I think that Catalan independence is possible and when it might take place. The answer to both questions seems obvious to me: yes, and soon after somebody who is up to the job proposes a credible program to build, in Catalonia, one of the best countries in the world.