Swiss success

A friend wrote a comment on the post 'Swiss Fit' wondering how the Swiss make their money - how they got to be so rich. This question has been on my mind for a number of years and I have been reading up on this on and off. There appear to be three primary reasons for the rise to wealth.

1. Becoming a magnet for other people's money.
Swiss banks have been a safe haven for the wealthy across the world for storing large volumes of money. The Swiss took anonymity very seriously and this anonymity came at a price for the depositors. It is said that numbered accounts in Swiss Banks do not earn any interest; in fact there is a service charge levied on the depositors for the privilege of keeping their money in those accounts. Swiss banks do offer wealth management services, where they would be willing to invest your money for a service charge again.

According to this Wikipedia article, an estimated 28% of all funds that are held outside the country of origin, also known as 'offshore funds' are kept in Switzerland. Swiss Banks manage about 5.4 Trillion Francs (approx 5,400 Billion Euros). A large component of that money, say, proceeds from corrupt activities, or deposits of black money, is likely earning handsome returns for Swiss Banks while costing the depositors a service charge, especially when the depositor needs the source of those funds to be kept secret. It is not difficult to imagine that some of these depositors sometimes disappear without naming an heir.

Large income at the Swiss banks would then have a multiplier effect on the economy. They will pay higher wages to their employees who will in turn be willing to pay for quality goods and services, like Bally shoes and expensive produce and higher wages to hire better baby sitters and valets. Higher wages lead to a higher standard of living.

2. Not getting involved in other people's wars - well, not committed, anyway.
As a result of their neutrality, the Swiss came out of World War II unscathed. All their factories were intact and ready to manufacture goods and services that were required for the rebuilding of Europe after the war. Even during the War, Swiss factories were supplying both the Allies and the Axis powers with the machines of war.

Swiss exports of military equipment exceeded USD 595 Million in 2014, an increase of 22% over 2013, but down from US$ 700 Million in 2012 according to this article on swissinfo.ch.

Even though the Swiss army doesn't go to war, their military equipment certainly does.

3. The Swiss are enterprising.
Switzerland is one of the leading manufacturers and exporters of engineering goods like railway equipment, electrical equipment like switchgear, orthopedic equipment including prosthetics and of course watches.

Here is a paradox for you. The world's largest manufacturer of marine diesel engines is Sulzer, a Swiss company - headquartered in a country with no oceanic shoreline and no navigable rivers to get to the ocean. That's enterprise for you. (Incidentally, Mitsubishi is among the top 3 too. Just saying)

The Swiss have reacted pragmatically to economic crises. After the first oil crisis of 1973, the Swiss invested heavily in non-oil based power generation. This article states that 95% of the electricity generated in Switzerland comes from non-oil power plants; 59% from hydro-electric plants and 36 % from nuclear power plants. The Swiss have thus insulated their economy from shocks induced by fluctuations in oil prices.


Moral of the story? If you want to get rich, follow these 3 simple rules.
1. Do not get into fights
2. Be enterprising; you might want to sell a gun or two to the idiots doing the shooting, and
3. Offer to hold their money while they fight.