Investors are always excited to see hokey sticks, but the one below is disheartening.
Switzerland is experiencing an all-time high in Norwegian nationals permanently relocating there.
Migrations from Norway to Switzerland have skyrocketed followed by the arrival of the new left-wing government and the activation of a fiscal policy focused on raising taxes on wealth and ownership.
According to Bloomberg, between 2022 and 2023, an estimated 82 high-net-worth Norwegian individuals left the country, taking with them an accumulated wealth of approximately 4 billion euros. To put this number into perspective, Norway's GDP in 2023 was around 450 billion euros.
We won't have the migration data for 2024 until the first quarter of 2025.
Meanwhile, in Sweden, this year’s Nobel Prize in Economics was awarded to Daron Acemoglu, Simon Johnson and James Robinson that have demonstrated that what ultimately makes a nation rich is not what can be dug up from the ground or grown in its fields but from the ties that bind its citizens — that is, the ability of its population to innovate, exchange goods and services, and live peacefully with others is what really matters.
Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better.
Institutions that can be both political and economical, such as democratic institutions, but also how the markets function or how well your property is protected.
Their findings distinguish between "inclusive institutions", where for example whatever I invest in is protected, or that I have the right to vote, are important for countries prosperity. And "extractive institutions", where for example the state can just steal back from the ordinary people whatever they have accumulated.
The laureates conclude that the more inclusive a country’s institutions, the more prosperous it becomes. Or using the words from the The Royal Swedish Academy of Sciences "inclusive institutions are what is good for long run growth and prosperity".
Paradoxically, their work uses poor undemocratic nations with weak rule of law and institutions as example of "extractive institutions".
But the Norwegian case is an important reminder that super rich nations, with almost perfect democracies, but that enforce super strong rule of law and institutions against minorities (in this case rich citizens) can erode the binding of its citizens too.
Rich citizens are a natural (and desirable) consequence of prosperous countries with inclusive institutions.
So applying the logic provided by the Nobel winners we can adventure ourselves to conclude that: the fewer rich citizens a country has (or allows to have), the less inclusive its institutions are, the less bonded its citizens will be, and the less prosperous it will be in the long run.
The perfect recipe for what does NOT make a nation rich.
