September 1, 2009 - Starbucks has several coffee shops in Geneva, Switzerland. Given the lines in front of the stores most of the time it appears that they are doing quite well. The Francophone Swiss clearly enjoy a good cup of sweetened Joe.
What makes this interesting is that Starbucks in Geneva is paying its workers around 3,500 USD per month minimum wage for a 37 hour work week, and each worker gets 6 weeks of vacation every year from the first year they work. Starbucks is making a contribution to the workers health insurance and some payment to their pension.
This is not unique to Starbucks. Every United States based corporation in Switzerland does the same. It's the law, that Starbucks can make a profit with such requirements, is something to note.
It seems reasonable to assume that their profits in Switzerland must be less than their profits in the US where their costs are much lower. Trust me when I say it is not because Swiss Starbuck's employees are more productive. I've waited on lines in Geneva and watched the usual French attitude towards both work and customers; ce n'est pas bon, n'est pas.
So either their profits are not lower in Switzerland because they can charge more because workers are paid more and thus can afford to pay more; or if they are lower they are not so low as to cause them to close. This then suggests that US companies in the US could operate with lower profits and still not close. If every employer had to pay health insurance then it just becomes a cost of doing business. If every employer had to give 6 weeks of vacation per year, voila, just another cost of business.
The Swiss have some of the highest costs in the world, wages as well as goods. Yet, it has the highest standards of living of any country in the world. It does not practice free trade in any area other than money. It will take yours and keep its own.
Try getting a non Swiss watch repaired in Geneva, bon chance.
It subsidies milk, cheese, bien sur, and wine (all things considered not a bad combination). It offers free education and low cost university and trade education. By the way the trains do run on time, are clean, and fast. The McDonald's in Geneva advertises that is buns are 100% Swiss content. When has a McDonald's ad campaign in the US advertised made in the USA?
The difference is that while the Swiss understand and manipulate the market, they do not let the market define them or who they are. When they decided a few years ago to modernize their train system in order to cut the 28 minute commute from Nyon to Geneva by 3 minutes, no Swiss citizen claimed their taxes were too high or doubted the social value of such a public expenditure.
First, they gave a bid to a private Swiss firm to engineer the new locomotives. Next, they gave a bid to a private Swiss firm to build the locomotives over a 5 year period. Then they invested in a train engineer training program so that by the time the first new generation of locomotives were ready to roll there would be a skilled group of engineers to operate them and a skilled group of mechanics to fix them. Not a single centime of Swiss currency left the country in this process. Swiss designed, Swiss built, Swiss repaired. Would French built trains have been cheaper? Probably. Would German engineered trains been better? Probably. But the Swiss define patriotism as being what's best for the Swiss, not an individual Swiss but most of the Swiss.
The Swiss rich are almost as rich as our rich. Of course it is very bad taste to show your wealth in Switzerland if for no other reason then it attracts attention from the Swiss tax authorities. You see they also have a wealth tax. Every year you pay a tax on your wealth, not just your income but your wealth. You pay a tax on your Audi every year based on what it is worth, just for the pleasure of owning it. The difference is that the Swiss poor are not as poor as our poor and the gap between the wealthiest and poorest isn't nearly as large as here in the US.
The point here isn't that the Swiss are better or worse. Rather that they understand that life is more than working, more than shopping, and certainly more than market based indicators.
It is equally interesting that when Swiss companies come to the US they immediately adopt the US business practices. Why because they can make more money I suppose. They do things here they would never even dream of or want to do to their citizens in Switzerland.
As long as the public debate over the Employee Free Choice Act, or Health Care Reform is framed based on the market, we lose. We lose as trade unionists. We lose as citizens, and yes we lose as patriots.
The next time you're in a Starbucks ask them how many days of vacation they get a year and wonder why it is half as much as their Swiss workers?
