There is no prosperity without trust

Thoughts on Switzerland's envisaged subjugation under the EU's legal code

Photo by Antoine Schibler on Unsplash

Let me start with a confession: I’m a sceptic of the European Union in its post-Maastricht incarnation. Not because I doubt that the road to a federal European state is paved with good intentions, but because I consider the EU’s supranationalism a threat to both the prosperity of Europeans and their capacity for self-government. The clearest sign of that threat is the rise of the populist right in many European countries. Populism is the consequence, not the cause, of the longstanding crisis of Europe’s technocratic regime. That Trump’s protectionism hurts prosperity does’t make the EU’s approach to trade beneficial for Europeans.

It was in this spirit that I, a professional historian, and Heinrich Fischer, a lifelong business leader, have cooperated on this essay. There is a political context to our intervention: The Swiss government recently negotiated a new agreement with the European Union. Misleadingly labelled a “bilateral treaty” by its supporters, the agreement would turn Switzerland into an EU-member without voting rights. As usual, however, it is the Swiss citizens that will have the final say on this issue, in a referendum to be held in either 2027 or 2028.

Heinrich Fischer looks back on a distinguished career in business. He holds degrees in physics from the Swiss Federal Institute of Technology (ETH), graduating at the top of his class in 1973, and in Economics from the University of Zurich. In the 1972 Summer Olympics he and Alfred Bachmann won a silver medal in rowing. Fischer subsequently embarked on a highly successful career as an industrialist. As well as Chairman of the Board of Directors of Hilti Corporation, he served on the Board of Directors of various Swiss technology companies and is a trustee of the ETH Foundation.

The piece has just been published in German in the weekend edition of the Neue Zürcher Zeitung (NZZ).

Photo by Guillaume Périgois on Unsplash

ANYONE who has had the opportunity to get to know many different companies and countries over a long professional life knows about the significance of corporate culture or national culture for the success of companies and states. The degree of openness, self-confidence, and empowerment with which people interact says a lot about the prevailing culture.

“It’s trust, stupid!”

How well or poorly states or companies perform internationally strongly correlates with the trust built within a state or company. Without a culture of trust and personal responsibility, long-term success is hard to attain. This is precisely what economists Douglas North (Nobel Prize 1993), Daron Acemoglu, Simon Johnson and James Robinson (joint Nobel Prize 2024) have demonstrated. They show that differences in institutional patterns have led to large and persistent disparities in prosperity. Trust between the state and its citizens plays a key role in this. Where it is lacking, there is going to be extensive regulation, which in turn leads to a loss of prosperity.

Economic success begins with customer needs and ideas of how to address them, which are brought together by entrepreneurs. Economic productivity and prosperity arise from competition for the best solution. A high degree of trust reduces transaction costs in social, economic and political contexts, increases the efficiency of government and administration, and thereby stimulates the economy. The same applies to companies, where, too, trust between employees and companies and the resulting freedom are the basis for innovation, effectiveness, and efficiency.