Tackling Budget Deficit: A lesson in Swiss economics
Tackling Budget Deficit: A lesson in Swiss economics
Two hundred years ago, the US financial system was in disrepair, and national debt stood at $80 million. Half-way around the world, an audacious young man named Albert Gallatin was making the big move from Geneva to Boston---from traditional to progressive.
Gallatin would eventually move to Washington DC, where he’d rise to political office. As Secretary of the Treasury from 1801 to 1813—the longest such tenure in US history—he halved the public debt.
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Fast-forward to the present, and “the US is bankrupt,” according to Laurence J. Kotlikoff, Professor of Economics at Boston University. With a fiscal gap of about $202 trillion, the USA is “in worse fiscal shape than Japan or Greece.” In light of this, and to commemorate Gallatin’s 250th anniversary, swissnex Boston hosted “Tackling Budget Deficit: A discussion with Swiss and US experts” on February 7. Moderated by Gilbert E. Metcalf, Professor of Economics at Tufts University, it featured Prof. Kotlikoff and Dr. Fritz Zurbruegg, Director-General of Switzerland’s Federal Administration of Finance. |
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The event elicited techniques from the Swiss “debt brake” that could help the US financial situation, in much the same way as Gallatin had used his Swiss expertise to save America’s coffers in the 1800s.
For instance, Dr. Fritz Zurbrügg noted that, in Switzerland’s case, the federal government was the culprit when it came to debt and spending. He suggested a paring down of dynamic social insurances, which tend to squeeze discretionary spending. He also mentioned a revision of Switzerland’s budget law which has mandated that, every four years, the government undertake long-term fiscal sustainability measures.
The standing-room-only audience engaged the speakers with their questions, even over wine and Swiss delights long after the discussion had ended.
