Switzerland: A country popular for a lot of things like tourism, chocolates, Swiss banks, and whatnot, but in this article, we are exploring an aspect of this country that no one would have imagined. Switzerland is the most expensive country in the world. Zurich, Switzerland ‘s global financial and banking hub, is the most expensive city in the world. Now you will wonder how expensive it can be. Well, if you visit Switzerland and get some Indian food at the food courts in the airports. Then a simple bowl of Indian vegetables and rice/ bread will cost you about 40 Swiss francs., Approximately 3,200 INR. If you want to get a haircut that costs between 200-500 rs in India, there will cost about EUR 40 to 50, i.e. EUR 4,200.
The cost of living index was developed to compare the cost of living in various cities around the world. New York was taken as the basis for the calculation of this Index, the cost of living allocated to New York is 100, which is one of the most expensive cities in the world. There are only six more cities above New York that are more expensive than it, and their cost of living is more than new York. All these cities, including Zurich, Geneva, Lugano, etc., are located in Switzerland. India’s cost of living index for 2020 is 24 and the cost of living index for Zurich is 131, the highest in the world. The question that comes to our mind right away is what is the explanation for this? How are certain cities costly, and why aren’t some that costly.
In fact, what is the reason why Switzerland is so costly? You need to grasp some of the essential fundamentals first. You see, today, a common trend between developed and developing nations. Advanced nations have always been established and developing countries continue to develop. There is a generalized hypothesis about this. Around 500 years ago, India and China were among the developing countries of the world and wealthier than Europe. That is because it is believed that around 500 years ago, mankind used to revolve around agriculture. This was the time of the revolution in agriculture. Before the industrial revolution began in Europe, and after the advent of the industrial revolution, the economy of the world started to revolve around industries. It took a step back from agriculture. The primary, secondary and tertiary sectors that we are talking about today have emerged from this. The hypothesis is that the climate was comfortable in countries like India and China, and the land was very fertile for agriculture, so people could live their lives comfortably. On the other hand, the climate in Europe was very harsh and cold. It is a basic aspect of life that we need to adapt to the environment to survive.
As a result, climate and environmental conditions have forced people to innovate, and that is why the industrial revolution has taken place in Europe instead of coming from India or China, and as the global economy now revolves around industries, European countries have moved forward easily. Nevertheless, the question remains as to why Switzerland is so costly. Jewelry in Switzerland, even a simple diamond ring will cost about EUR 54,000 approx. 50 crores which are nearly equal to an engineer’s annual salary in Germany. Switzerland is famous for what kind of things?Luxury watches, chocolates, a highly established tourism industry
The common fact among all these items is that they are end products and highly valued products.
Switzerland exports all these products to other countries. Compared to India, which primarily exports agricultural products. So it’s clear that you’re not going to get as much revenue by exporting agricultural products as you get by exporting luxury goods. Unless it was just because of this argument, all European countries would have been costly. There are several expensive reasons for this. There are a lot of rich people in this country. According to estimates, the largest per capita millionaire population is in Switzerland which means 11.8 percent of its population. That means every tenth person walking down the street is a millionaire.
It doesn’t mean that all millionaires are born in that country alone, in reality, that country has attracted these millionaires to itself.
The explanation of why all the rich people in the world want to come to Switzerland can not be attributed to one particular factor, but the tax is very low and it is easy to start a business in Switzerland. The Swiss tax rate is 8 percent on most items and 7.7 percent when you go out to eat in the restaurant. 3.5 on accommodation and just 2.7 percent on basic needs. You can easily compare it to the GST tax slabs where biscuits fall under the 18% tax category.
If we equate Delhi to Zurich, you’ll find all the costs in Zurich, whether it is transportation, lodging, clothing is 10 times the cost of these in Delhi. The advantage of living in the most expensive city in the world is that when these people go out to visit other countries, they find it incredibly inexpensive. It is incredibly cheap for people living in Switzerland to visit every other country in the world.Swiss banks are extremely safe. Historically, they remained very popular with people who wanted to export their money from their countries and engage in money laundering. Switzerland is also one of the countries that have traditionally remained secure and stable. So, all the rich people want to live in such a healthy and prosperous place. They do not want to live in a country where there is a common dispute, where there is a political impulse.
For example, India, where the shocks for businesses come one after the other. First demonetization then GST Then tax reform and what not.No one wants to be part of a country where people are fighting in the name of faith and where there are regular political and religious riots.
Let’s compare Switzerland with Germany, about 60 to 70 years ago when Germany was governed by a dictator, all these countries were involved in the world war, and all the millionaires present in Europe came to live in Switzerland because it was the only safe and neutral country.
What effect will the flocking of all the millionaires have on the economy of the country?
All people will sell their goods or services at a higher price, assuming that there are so many wealthy people that they can afford to purchase these items easily. The price of anything can be raised because the millionaires can afford it.
And that’s the fundamental idea that is applied here as people have more money to spend and the ability to spend then the cost of living will certainly increase. The cost of living indices will be higher for areas where people are wealthy and have greater buying power. The same definition applies to all cities and countries in the rest of the world. Take New York, for example, all the Hollywood celebrities want to reside there.
Compare it to Mumbai, only all the Bollywood celebrities in India want to live in Mumbai alone. So, if you want to save up some money then reside in the city where the rich people don’t want to live.