Swiss Legislation: The Breakdown of the Social Contract Between the Generations

When the legislator seeks to overrule a previous law or decision, it can adopt one of three different approaches (Holland and Webb, 2013):

  1. Approach 1: say that the law becomes [x] and, if that differs substantially from what the understanding of law was until now, then hard luck – it was always [y] but it becomes [x] now. Here, any decision which changes the law from what it was previously used to be operates retrospectively as well as prospectively. It is retrospective in that the parties to the case are caught by the ruling and so are all those who have created leases or contracts on the basis of what used to be the law. Of course this can produce disturbance.

    For example, this year Romania’s President signed into law a bill that enables property buyers to walk away from overpriced mortgages, setting it on a potential collision course with commercial banks, the central bank and the European Commission. What the news conceal, however, is that the banks in Romania (about 90.2% of bank assets are held by institutions with foreign [read: EU] capital) transferred full currency risk to the borrowers, imposing credits in Swiss francs (CHF) instead of Romanian lei (RON). Since the Swiss unpegged the franc from the euro (€), those credits have become a borrower’s trauma.

  2. Approach 2: say that the new law is [x] but, because everyone has organised their affairs until now on the basis that the law was [y], the new view of the law only affects events occuring after the decision. So only contracts or leases formed after the date of legislation would be affected by the new law [x]. Contracts and leases, etc. formed before the ruling would continue to fall under the old law [y]. This is the ‘purest’ form of prospective overruling.
  3. Approach 3: it is possible to come up with other variations (mixtures). For instance, the decision might be held to be prospective as regards everyone not involved in the case but retrospective in its effect as between the parties to the case in which the ruling is given.

This month, the Swiss people will get the final say on reforms to the pension system in a referendum. Instead of a real reform with a flexible retirement age, the set of reforms would see the retirement age for women raised to 65 – it is currently 64 – bringing it in line with men. Secondly, pension payments will decrease from 6.8% of the capital per year to 6%, although salary deductions will go up slightly. That will be compensated with a ridiculous monthly 70 franc bonus in AVS/AHV (state pension) payments for everyone (Giesskannenprinzip). On top of that, the reforms will be financed by a 0.6% increase in VAT, a change to the constitution that will be put to the people – and especially to the young. The whole package is another symptom of the breakdown of the social contract between the generations.

How can politicians make a mark? By creating new laws and regulations. Preferably, these laws carry their names and have such fancy designations as the ‘Dodd-Frank Act’. As Niall Ferguson (2013) puts it: “Among the most deadly enemies of the rule of law is bad law.”

Weapons of Mass Migration: Forced Displacement as an Instrument of Coercion

Mass migration, it needs to be said, has long been exploited by devious entities as part of a new military genre: asymmetrical warfare.

In a powerful essay published in Strategic Insights, Kelly Greenhill (2010) defined such a tactic under coercive engineered migrations, noting: “those cross-border population movements that are deliberately created or manipulated in order to induce political, military and/or economic concessions from a target state or states.”

Asylum seekers and migrants descend from a large fishing vessel used to transport them from Turkey to the Greek island of Lesbos (© 2015 Zalmaï for Human Rights Watch)

Elaborating on her theory she goes on to add: “Coercive engineered migration is often embedded within mass migrations strategically engineered for dispossessive, exportive, or militarized reasons. It is likely, at least in part as a consequence of its embedded and often camouflaged nature, that its prevalence has also been generally under-recognized and its significance, underappreciated. Indeed, it is a phenomenon that for many observers has been hiding in plain sight.”

Greenhill’s insights certainly put Europe’s refugee crisis under a very different light. The real threat pose not the refugees per se, but the games of covert destabilisation so-called friendly nations are waging against each other’s governments. Qui bono?

Should we Own a Home?

It was the anglo-saxon world’s favourite economic game: property. No other facet of financial life has such a hold on the popular imagination. In the English-speaking world and also increasingly in other countries, it has become a truth universally acknowledged that nothing beats bricks and mortar as an investment. But should you really own a home? Unless you have 20 million bucks in the bank, in cash, you have no business buying a house.

People think the only way to save money is to buy a house. Maybe you will get your home paid off when you are old. But who wants to wait until they are old to have money? A home is not an investment because it doesn’t pay you every month. In fact, you have to pay it every month.
That is why a house is not an asset, it is a liability. Nothing is a good deal if you have to feed it constantly.

People ask, “Why would you pay rent when you could buy?” Because you cannot leave. Who wants to go to jail for 30 years? You can be mobile and nimble if you rent. Mobility is a great thing in today’s world. Why settle down? Invest the money in yourself or your business. If you want a great opportunity to create income for yourself, realise that America is becoming a nation of renters!

The house, much like a college education, has been fed to us as the bourgeois dream. It is a middle class myth perpetuated by outdated thinking, politicians and mass media. The English-speaking world’s passion for property has also been the foundation for a political experiment: the creation of the world’s true property-owning democracies (the EU included).

Buying a house may have worked for previous generations but old ways of doing things are not viable in 2016. We are not in the 1950s, things have changed and people refuse to adjust. There are three considerations to bear in mind when trying to compare housing with other forms of capital asset (Ferguson, 2008):

  1. The first is depreciation. Stocks do not wear out and require new roofs; houses do.
  2. The second is liquidity. As assets, houses are a great deal more expensive to convert into cash than stocks.
  3. The third is volatility. Housing markets since WWII have been far less volatile than stock markets.

The Black Seed of the Wahhabis

Out of the poison cabinet of intellectual history: The reign of terror

“Saudi Arabia takes action against the IS but at the same time supports its intellectual paradigm” was an article I came across in the Neue Zürcher Zeitung. In the translation below, the article states that there wouldn’t exist any IS without a Wahhabi state doctrine.

Saudi Arabia not only raise the sword in their flag, but also against their own people: In 2015 the country chopped off more heads than the IS.

It was in the year 1801 when Saud ibn Abd al-Aziz ibn Muhammad as-Saud attacked the Iraqi city of Karbala with a mounted army and slit the throats of some 4000 people. The sacred sites of the Shiite inhabitants were destroyed, their houses raided. One year later, as-Saud conquers Mecca and Medina, his band of horselords devastates supposedly ‘heretic’ constructions in order to ‘clean’ the sacred sites of Islam. The defeated are not allowed to smoke any more, to make music, to wear eye-catching clothes, or to neglect prayer. Violators are whipped, mutilated, or put to death. Not by chance, it is a dominion that brings to mind the ravage of the IS two centuries later: Welcome to the first State of the Saudis built on terror.

In the year 2015 Saudi Arabia is still an absolutist ruled kingdom. The Saudis can do without raids meanwhile, because they are among the 20 most important economies in the world. They flood the globe with oil and a very special model of Islam (sometimes called Petro-Islam). They claim a leading role in international diplomacy, but execute their own citizens by the sword. They punish theft by chopping off the right hand, adultery by stoning, and homosexuality with 7000 lashes of the whip. The Saudis still destroy cultural heritage in their own country, consider the Shiite as apostates, despise other religions, and degrade women as second-class humans. Saudi Arabia imports Western technology, builds impressing glass towers, and treats modern age as a shopping experience: Welcome to Saudi Arabia of the 21. century. Freedom of faith for everyone? Felony!

In what way did the religious culture change since the devastation of Karbala in 1801? It did not. Preachers like Abdallah ad-Dosari call the shots. He proclaimed the recent pilgrim accident in Mecca with hundreds of Shiite fatalities as God’s gift to the world. The Saudi grand mufti Abdelaziz bin Abdallah appealed for the destruction of all churches on the Arabian Peninsula. Salah Bin Muhammad al-Budair, a current imam of the Grand Mosque in Medina and a judge of the high court, pulled the trigger of the howitzer himself when inspecting Saudi troops at the Yemen border. Reformation of Islam may come from outlying areas or the West, but for sure not from Saudi Arabia, which 2015 chopped off more heads than the IS. The Saudis preserve an extreme regressive, intolerant, and sectarian interpretation of faith, and even worse, export it throughout the world.

Their doctrine is also known as Wahhabism. The followers call themselves the ‘Muwahhidun’ (Unitarians). Wahhabism is named after an eighteenth-century preacher and scholar, Muhammad ibn Abd al-Wahhab (1703–1792). He started a revivalist movement in the remote, sparsely populated region of Najd, advocating a purging of practices such as the popular ‘cult of saints’, and shrine and tomb visitation, widespread among Muslims, but which he considered idolatry, impurities and innovations in Islam. Wahhabism is causing disunity in Muslim communities by labeling Muslims who disagreed with the Wahhabi definition of monotheism as apostates (takfir), thus paving the way for their execution for apostasy – the equivalent of a death sentence. It is no coincidence that today’s Salafi movement makes good use of the verdict in order to justify the murder of their fellow Muslims – a form of a Muslim Ku Klux Klan.

Eventually Abd aw-Wahhab formed 1744 a pact with a local leader Muhammad bin Saud, offering political obedience and promising that protection and propagation of the Wahhabi movement would mean ‘power and glory’ and rule of ‘lands and men’ – a pact that persists down to the present day. This duality of sword and Islam has been eternised on the Saudi Arabian flag, and the alliance between followers of ibn Abd al-Wahhab and Muhammad bin Saud’s successors (the House of Saud) proved to be a rather durable one. The house of bin Saud continued to maintain its politico-religious alliance with the Wahhabi sect through the waxing and waning of its own political fortunes over the next 150 years, through to its eventual proclamation of the Kingdom of Saudi Arabia in 1932, and then afterwards, on into ‘modern’ times. Today, Mohammed bin Abd Al-Wahhab’s teachings are state-sponsored and the official form of Sunni Islam in 21st century Saudi Arabia. Open critique on the theocratic alliance are prosecuted – a fact that dissidents like blogger Raif Badawi learn the hard way. He demanded equal treatment of Muslims, Christians, Jews, and atheists. For the Wahhabi judiciary, Badawi’s contravention was worth ten years of confinement plus 1000 cane strokes.

After 9/11 many political scientists asked for change in the Saudi Kingdom – the renunciation of institutionalised hatred on Shiite Muslims, Jews or the West, coined in Schoolbooks of even first graders. But nothing changed. The world wide Wahhabite proselytisation was pursued consequently like in earlier decades, financed by Saudi petro-dollars and brought forward by mosques, preachers, schools and charities who also supported terror organisations. Today, with the appearance of the IS – the other small Islamic state – the Saudis see themselves confronted with the same inconvenient questions.

In order to illustrate the unholy alliance between petro-dollars and radical thinking, Bernard Lewis (2004) suggests to imagine that the Klu Klux Klan took absolute power over Texas and started to proselytise with support of oil capital. The 20 November 2015 issue of the New York Times featured an Op-Ed Opinion piece by Algerian writer Kamel Daoud with the title ’Saudi Arabia, an ISIS That Has Made It’, where he warned that one has to live in the Muslim world to understand the immense transformative influence of religious television channels on society by accessing its weak links: households, women, rural areas. The Saudi royals are caught in a perfect trap: Weakened by succession laws that encourage turnover, they cling to ancestral ties between king and preacher. The Saudi clergy produces Islamism, which both threatens the country and gives legitimacy to the regime.

[…] As an ally of the US in its struggle against terrorism, Saudi Arabia has to restrain its revolutionary children of Wahhabism. Riyadh even created an ‘Islamic coalition against terrorism’ but left it totally open to interpretation how they look at ‘terror’ or how this coalition would ever take action. In order to draw a line towards the IS, Saudi clergy produce doubtful arguments. They state that for hundreds of years the Khawarij were a source of insurrection against the Caliphate and that they are responsible for the terror. In contrary Islam of Saudi Arabia, goes the argument, is renowned for its purity and peacefulness – could it be more ironic? Maybe a moderate Wahhabism?

So far the article in the magazine quoted. Daoud observes that the West’s denial regarding Saudi Arabia is striking: It salutes the theocracy as its ally but pretends not to notice that it is the world’s chief ideological sponsor of Islamist culture. Once more, the world is suffering from US foreign policy.

The Future of Work: Driving for Uber

“Professionals who work for Google and Facebook can use the apps on their phones to get their apartments cleaned by Handy or Homejoy; their groceries bought and delivered by Instacart; their clothes washed by Washio and their flowers delivered by BloomThat. Fancy Hands will provide them with personal assistants who can book trips or negotiate with the cable company. Task Rabbit will send somebody out to pick up a last-minute gift and Shyp will gift-wrap and deliver it. SpoonRocket will deliver a restaurant-quality meal to the door within ten minutes. The obvious inspiration for all this is Uber, a car service which was founded in San Francisco in 2009 and which already operates in 53 countries.” (The Economist, 2015)

I learned about Uber through a workmate who used it for getting home after a work gathering. Being always a bit short of cash, I thought it might be an opportunity to work as a driver in order to get some extra pocket money. So I enrolled on their website and was promptly invited to an information evening. Obviously, quite a lot of people came with the same hope of brushing up their valet: Foreign workers, retired persons, outsiders, insurgents – in other words, desperate people like me.

“They have created a plethora of on-demand companies that put time-starved urban professionals in timely contact with job-starved workers, creating a sometimes distasteful caricature of technology-driven social disparity in the process; an article about the on-demand economy by Kevin Roose in New York magazine began with the revelation that the housecleaner he hired through Homejoy lived in a homeless shelter.” (Economist, 2015)

In contrast, the venue of a Zurich web agency, welcomed by a Yuppie-style host who informed us participants what a great thing Uber was. We were presented a short marketing movie about Uber’s history and finally got to employment details. I learnt that I am going to drive for their new service UberPop, their cheapest line of business open to anyone who owns a car not older than eight years and willing to engage in “ride sharing”. UberPop is not about ride sharing, but it sounds less suspect in the dawn of potential government intervention (as happened in the Netherlands, which banned Uber completely). The Economist (2015) refers in this context to “underused capacity” (how polite…):

“Underused capacity applies not just to people’s time, but also to their assets: to drive for Lyft or Uber you do need a car. The on-demand economy is in many ways a continuation of what has been called the “sharing economy” exemplified by Airnb, a company which turns apartments into guesthouses and their owners into hoteliers. For people with few assets, though, on-demand labour markets matter more.”

Our host stressed the fact that Uber is insured up to US$ 5 million – should there be an accident or an issue with one of the customers. The lengthy contract, which I received after the info meeting, says something else: That it is the driver’s responsibility to be properly insured and that the driver is obliged to inform his insurance that he is carrying out (professional) driving services. True, Uber as a company is insured against any claims customers may create after an incident, but it does not apply to the driver. The contract also makes clear that it is a driver’s responsibility to oblige to local laws and pay taxes – in other words, Uber does not care about local frameworks: Taxes, social security contributions, insurances – all left to the driver, returning to pre-industrial revolution principles of piecework with the associated exploitation and insecurity. Therefore, UberPop can be cheaper than any local transportations service, as it undermines competition through unequal conditions. Are these the working conditions of the future? Brave new world… The Economist may be too optimistic in its statement:

“The on-demand economy is not introducing the serpent of casual labour into the garden of full emoployment: it is exploiting an already casualised workforce on ways that will ameliorate some problems even as they aggravate others.”

So far the downside of the coin. Once I started driving, another side emerged. My customers were cheerful, between 16 and an estimated 35, knew how to make good use of their smart phones, many in well paid jobs.

“The on-demand economy is the result of pairing freelance workforce with the smartphone, which now provides far more computing power than the desktop computers which reshaped companies in the 1990s, and to far more people. […] Now that most people carry computers in their pockets which can keep them connected with each other, know where they are, understand their social network and so on, the transaction costs involved in finding people to do things can be pushed a long way down.” (Economist, 2015)

Using a taxi in Zurich can ruin you, but for many of my customers that was not the issue. The point was that taxi drivers were perceived as unfriendly (best case) to rude (worst case), that there were issues with acceptance of credit cards (instead of cash) and safety (for female customers). My backseat drivers had a higher opinion of Uber (painless service, easy payment, friendly drivers).

Besides the social problems that it creates, I strongly believe that Uber is undermining local rules and that is unfair. But Uber also addresses a public nuisance (expensive, unfriendly local taxi service) and an understandable need for painless service.

At the end of the day, the question for me was if Uber has fulfilled my expectations for a bit of pocket money. Somehow it is a yes – I made some cash. But compared to the amount of hours spent, very low. Subtract from that gas, more time spent for cleaning the car, and general car usage. Without Uber’s incentive program (extra payment for being available in the city on Friday and Saturday evening), it would definitely not pay to drive for UberPop. Not surprisingly, I was asked by my customers if I am a temporary “job seeker” (i.e. unemployed).

“The on-demand economy is good for outsiders and insurgents – and for entrepreneurs trying to create new businesses using such people. […] In Europe, the labour market drives a wedge between insiders who have lots of protections and outsiders who don’t; on-demand arrangements may give outsiders a chance of breaking in. […] If this seems attractive, it is also a measure of the way that the on-demand economy will contribute to pressure to reduce labour rights in all sorts of situations; a growing abundance of on-demand employees with no normally accepted rights such as sick-pay and overtime will give employers at firms with more standard structures an incentive to cut back. The more such pressures spread, the more protests against “Plattform Kapitalismus” the world is likely to see.”

[All quotes from: The Economist (2015): The Future of Work: There’s an App for that, EU Edition, January 3]
Further reading: How Payroll Survey is Missing Uber