2 / 2014

The world’s oldest banking magazine – since 1895.

“Mothers teach children things, and grandmothers help them to forget.” Maria Ignácia Moraes with Roberto. Grandparents and grandchildren: pages 6 and 76.

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How We Tick

3 grew up in Norway in the 1920s. Those were hard times, 2 4 then the war came and my three brothers died. And yet I still look back at that time with fondness. We had to pull 1 “Itogether; everyone helped one another. I have tried to uphold these values my entire life.” Kåre Magne Hansen, 90, provides us with one of the most beautiful quotes in this edition of Bulletin. The The following contributed to this issue: retired carpenter has spent his entire life in Rena, a small city north of Oslo that was bombarded by the Germans during World War II. For this issue, we asked older people what has shaped them 1 Don Gillmor most in their long life (page 6). We supplement their look back The Canadian journalist and author writes about his native Toronto, where they have with the perspective of their grandchildren: Which family tradi- achieved what politicians and economic tions would they like to uphold (page 76)? leaders around the world dream of: the inte- “What lasts” is a major issue – and a typically human one. Homo gration of a large number of immigrants. But sapiens is the only creature that has a concept of time, that can how do you do this? Aga Khan, the leader of and must think about what he (or she) will leave behind. Kaiser 20 million Ishmaelite Muslims, said recently Wilhelm II proved that we are all prone to errors of judgment. that Toronto had the right software and “The car,” the monarch predicted, “has no future. I believe in the You are free. hardware. Don Gillmor looks at what this means starting on page 28. horse.” Bulletin avoids making such forecasts. Instead, we take stock in 19 stories. We present interesting aspects of the present, TECHART for all Porsche 911 models. 2 Nayan Chanda and attempt to draw conclusions for tomorrow from yesterday. The historian and author, who was born in n Toronto we found an example of how people will live together India in 1946, is the Director of Publications in the major metropolis of tomorrow. Every year, more than at Yale University’s Center for the Study of Globalization. In this issue, he discusses the 100,000 immigrants stream to the Canadian economic hub, astounding value of democracy in the enor- whose motto is, “Diversity Our Strength.” Toronto regularly tops mous nation of India. Page 54 I quality-of-life rankings, its crime rates are low, and its economy is booming. How is this possible (page 28)? Shifting gears, we speak 3 Will Gompertz with renowned economist Carmen M. Reinhart (starting on page What is good art? This small but difficult Genuine TECHART options for the 911 models stand for unique styling, extraordinary quality 22), who does not offer a lot of optimism (“I don’t paint a very and seamless technical compatibility. Adding an individual touch to the exterior, the chassis, the ­question is answered by art critic and former interior design or the exhaust system of your 911, TECHART refinement provides maximum free- spokesman for the Tate Modern with hu- pretty picture of the world at the moment.”). And we ask: How dom of choice. mor and expertise. Really good art, writes much do the Swiss have left in their wallets at the end of the month Gompertz, is usually the product of a passion- and at the end of their lives? And what were the best investment A clear statement of individuality: TECHART wheels. Such as the TECHART Formula II ate artist who deals with real problems in order strategies over the last 100 years? wheel which enhances the look of your 911 model with its sporty multipart styling. Just like all to create something of lasting value. Page 70 TECHART wheels, it is available in individual color to perfectly match your 911. inally, starting on page 50 we try to answer the big ques- 4 Beatrice Schlag tions about human nature. How do we tick, from eco- Since she first heard about the case of the nomic, political and religious points of view? ­Otter family nearly ten years ago, the US cor- respondent Beatrice Schlag has asked how F one can go on with life after a traumatic ex- We hope you enjoy this issue TECHART in Switzerland: perience like a grizzly bear attack. She vis-

Sahli & Frei AG ited Johan Otter, a man full of joie de vivre, Your editorial team General importer for TECHART and BRABUS / exclusive vehicles in San Diego, but soon the tears started to Industriestrasse 1, CH-8307 Effretikon Tel: +41 (0)52 355 30 50, E-Mail: [email protected] flow. Page 60

Cover photo: Eudes de Santana, photos page 1: private (3); Alistair Richardson Bulletin 2 / 2014 — 1 ©Plan

Education today ensures the future. Credit Suisse Global Education Initiative

The Credit Suisse Global Education Initiative supports selected international development organizations, to improve education opportunities for thousands of school-age children and young people, through a variety of locally relevant programs. We believe investing in young people is one of the best investments we can make. credit-suisse.com/responsibility/education Bulletin: What Lasts?

What Was, What Is, What Lasts WWWHO, WWWHEN, WWWHAT What We Can Learn from Traditional Essay: Why we live in the best of all A brief history of the internet, with Societies worlds ... so far. Page 4 successful startups, the hypes and the Pulitzer Prize winner Jared Diamond flops. Page 40 on traditional societies, and what we can What Really Counts (Part I) learn from them. Page 66 Grandmothers and grandfathers from How to Erase Traces Online around the world on formative moments The web never forgets. Tips for a life with The Knowledge of Our Ancestors and lasting values. Page 6 a minimal online footprint. Page 42 From the cinema to the hair-curler: Some inventions are older than we think. Page 69 Who Am I? How the Younger Generation Shops The great questionnaire – what Proust Generation Y are the consumers of and Frisch would ask today. Page 16 tomorrow. They behave radically differ- ently from their parents. Page 44 What Is Left... at the End of Life The average amount we inherit is How an Ancient Art Survives 450,000 Swiss francs, but assets are built Chiara Vigo is the last living person up only in later life. Page 18 preserving the ancient tradition of mussel silk. Page 46 … at the End of the Month What Makes Good Art Endure Taxes, rent, health care costs: Where How We Function Honesty and sincerity: How to recognize is the most economical place to live in Homo economicus – are humans modern art of lasting value. Page 70 Switzerland? Page 19 self-serving or cooperative? Page 52 What Defines a Classic Style After the Financial Crisis Homo politicus – India and the global Since Coco Chanel, the little black dress “Humans repeat their mistakes.” An value of democracy. Page 54 has been every woman’s essential ward- in-depth discussion with renowned econo- robe piece. Page 74 mist Carmen M. Reinhart. Page 22 Homo religiosus – Hans Küng and the Golden Rule for all. Page 56 What Really Counts (Part II) Grandchildren from around the world on How to Invest in Sustainability the values of their grandparents. Page 76 Conservation finance or: What helps nature and is also profitable. Page 58

Living with Trauma Johan Otter was attacked by a grizzly while hiking. A visit with a survivor. Page 60

How to Invest? Successful investment strategies from The Last Page the last hundred years. Page 27 Illustrated by Jörn Kaspuhl. Page 80

How We Can Live Together In the App Store The city of the future: 100,000 people The News & Expertise app, featuring immigrate to Toronto each year. The model the latest issue of Bulletin and other appears to be working. Page 28 Credit Suisse publications. www.credit-suisse.com/bulletin

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...So Far

Everything races past us, everything is continually changing – and eternal values are cast aside. Slow down! Perhaps the constant change isn’t so bad and we can simply learn to deal with the present. By Wolf Lotter

Charlie Chaplin recognized in the 1930s end it can no longer decide. Everything be- rity, trust, integrity and solidarity are also that everything was moving faster and comes a blur. Nothing is clear. called for – even when their loss is gener- faster. He directed and starred in “Modern ally lamented. Times,” a film that shows him as the vic- Polar Inertia tim of industrial society, a hamster on the The French media philosopher Paul Virilio How Good Were the Good Old Days? treadmill of a continually accelerating age once called this the process of “polar iner- The uneasy question “What lasts?” actually in which no room remains for values and tia.” We do everything very fast but we’re asks something else: What can we orient individuality. The message is that with the not moving ahead – that’s the impression, ourselves on? On others? On supernatural production line everything goes down the at least. We do not face the complexity and powers? Or on ourselves? We’re on to some- drain. Values help to orient us. Speed kills, hence the challenge, we simply rush past. thing here. “What lasts?” – people have al- as they say. Too high a speed disorients us. To be precise, we are not fast but in flight. ways asked this when their own compass is It throws us off track. And makes life But what are we fleeing from? out of order – for instance, when the world short. And Chaplin still hadn’t seen any- From ourselves. There is no other ex- spins too quickly for them. thing yet. planation for the search by many to slow This trend has been traced by some We live in an era of real time, defined down and find a new moral focused on back to the 1960s when resistance to the by ­“everything, anywhere, anytime,” the “eternal values.” The initial search for clues new consumer society that arose after catchphrase during the internet boom in the is difficult: What are these eternal values World War II – and provided the West 1990s. The web may not be the only tech- that are thrown under the bus? Every set of with much prosperity – began to grow. The nology out there, but it is perhaps the most values is transient, a compass whose needle change in values was also driven by the po- perfect technology to date, and it enhances soon no longer provides orientation. And litical student movement, as well as hippies our feeling that it is all too much and too eternal is a very long time. Of course, you and the Beat generation. For many, it was fast. What should we orient ourselves on? can refer to a set of rules for universal val- not about politicization but generally a The journey is similar to a glance out of the ues ​​such as the UN’s Universal Declaration “nicer, better world.” The question was window of an Intercity train. Looking of Human Rights from 1948. Freedom, simply: Isn’t there an alternative to materi- down, we can barely make out anything. self-determination, self-realization and alism, something that means more than Objects in the foreground become blurred, freedom of movement are its cornerstone. goods and merchandise? because the speed overwhelms our brain. It doesn’t deal in any way with morals but It may be a bitter pill for this self-en- Our brain has to choose between too rather focuses on the conditions for per- lightened generation but they were not much individual information and in the sonal development. Concepts such as secu- the first to have this thought. Johann

4 — Bulletin 2 / 2014 Wolfgang von Goethe complained about hunger has been decreasing considerably net, in which “real time” unfolds, “space this issue more than 200 years ago in his for years. In 1990, this figure was 15.1 per- vanishes,” and humans can no longer keep “Epilogue to Schiller’s Song of the Bell.” cent of all Earth’s inhabitants. Today, this up. Now the maximum speed has been figure is approximately 9 percent. In 2030, reached. We literally only see out of the And his spirit pressed on undaunted the value is expected to sink to 7 percent, window of a speeding train. To see the de- into the eternal realm of truth, goodness according to the estimates of the Food and tails, we would have to replace our brains and beauty, Agriculture Organization of the United with computers capable of keeping up. and at his back lay that formless illusion, Nations (FAO). the ordinary that binds us all. The world isn’t perfect but it is getting We Have to Choose better, and this is due primarily to well-func- Virilio proposes this “solution” ironically It’s all there, the ordinary, the usual, the tioning global business and technological but he knows the only alternative. Instead normal, everything opposed to eternal processes that are continually improving. of making us into robots capable of man- values. The beautiful, the true and the Some skeptics don’t want to hear about this. aging robot technology, we have to choose. good, which are always called upon in con- However, it doesn’t change the facts. Never We have to set the time according to our- trast to materialism, to the ordinary, are before have so many people had the oppor- selves. This not only enables us to stop the vague and unclear ideals, a longing. Not of tunity to live their lives in the here and now, feeling that it’s all too much and too com- this world. And maybe that’s why they are instead of hoping for eternal values and the plicated but we also find out what really the ideal vanishing point at a time when beautiful, the true and the good. matters – and we do so without sacrifice, more choices and more independent However, this also has to be learned. without slowing down and reduction, thinking are required of us than in any era The present seems so fast, so fleeting, be- which are now once more widely hailed as before. Do we want eternal values – or do cause we still have to learn to take the a panacea. It doesn’t have to be the way it we start to shape this world according to right perspective on these opportunities. is. We have to understand, proposes the our ideas? It’s worth asking whether the German sociologist and time researcher “good old times” were really so good with Karlheinz Geissler, what diversity means: their ideals of beauty, truth and goodness? “This has, of course, an effect on our rela- tionship with time. Making use of User’s Guide for the Modern World time-diversity means being able to decide The English philosopher Thomas Hobbes for or against something. Most of us, how- did not believe this when he published ever, avoid this decision.” “Leviathan” in 1651. The book is rightly So that’s it. Chaplin knew, of course. considered a kind of guide to the modern His “Modern Times” was a call for individ- world of enlightenment and the self-re- uality and against conformism and inertia. sponsibility of the individual. “Nasty, brut- We learn to organize our time, our lives. ish and short” – was Hobbes’s epitaph on Not forever. For now – and for us. the lives of the majority of his contempo- raries. He and other enlightenment figures Like a compass without orientation. chose another goal: less fate, more self-re- Every set of values is transient, a compass whose needle soon no longer provides orientation. liance. Less idealism, more grounding in reality. Instead of hoping for a better world, we should work on making the world bet- After so many centuries of lack in this re- ter in the here and now. Instead of vague gard, this is not surprising. So many gen- prospects, we should live in the present, erations before us led lives without alter- which we must shape. natives, with no choices, or prospects of This is the idea that has led to the improvement – they could not make deci- best of all previous worlds, in which more sions and had to accept their fate without and more people can realize themselves. question. The world had a straightforward We live three times longer than our ances- material foundation and did not move as tors at the start of the industrial age. Ma- fast as it does today. The economy scarcely terial conditions for most people have im- grew, prosperity was reserved for a small proved considerably – an OECD study level of society that preserved its power shows that, globally, per capita income and culture. Then the revolution of speed grew by a factor of eight from 1820 to began, which the philosopher Virilio 2000. People are also doing better in re- called the transformation; first the indus- gions often only associated with bad news trial revolution which led to the steam en- in the West. In Africa between 1950 and gine, railroad and automobiles – to “ma- 2010, life expectancy grew substantially – chines [...] that can produce speed on their from 38.2 years to 55.2 years. Although own,” as he writes. The “speed of light Wolf Lotter is a journalist and author. more and more people are living on the transmission media” of the 20th century His most recent publication is “Zivilkapitalismus” planet, the proportion that suffer from followed, from the telephone to the inter- [Civil Capitalism] (Pantheon/Random House)

Illustration: Jörn Kaspuhl Bulletin 2 / 2014 — 5 — What Lasts? —

What REALLY Counts (part I) A Long Life Griechenland oder Sao Paulo From the housewife in Japan, to the entrepreneur in Greece, to the farmer in Switzerland: Grandmothers and grandfathers explain what has shaped them over the last 100 years (what their grandchildren will take from the family traditions: page 76). Reports: Simon Brunner

“A simple, ordinary life gives me lasting happiness and joy.” Sakiko Yamaguchi, 72 Yokohama, Japan

6 — Bulletin 2 / 2014 Bulletin N°Photo: 2 / 20 Keiichi14 — Nitta 6 — What Lasts? —

“The freedom of entrepreneurship is priceless.” Nikos Vitogiannis, 70 Athens, Greece

7Photo: — AndreasBulletin Lux N° 2 / 2014 Bulletin 2 / 2014 — 7 — What Lasts? —

“I love exploring the world – I must have inherited it from my own grandfather.” Jeremi Malicki, 80 Wroclaw, Poland

8 — Bulletin 2 / 2014 — What Lasts? —

Photo: Lukasz Wierzbowski Bulletin 2 / 2014 — 9 — What Lasts? —

“I am proud that my family will continue to work the farm.” Katharina Hess, 99 Ebnat-Kappel, Switzerland

10 — Bulletin 2 / 2014 Photo: Vera Hartmann — What Lasts? —

“I was strict with my children; it was only with my grandchildren that I loosened up.” Maria Ignácia Moraes, 90 São Paulo, Brazil

Photo: Eudes de Santana Bulletin 2 / 2014 — 11 — What Lasts? —

Page 6 — Sakiko Yamaguchi, 72 and grandparents, of course. The beauty My husband died when I was 45. He Housewife of traveling is the memories that stay with was shot. We never found out by whom Yokohama, Japan you for the rest of your life.” or why. I raised the children by myself, 2 daughters, 4 grandchildren and worked as a cleaning woman at a shoe “I have led a rather monotonous life, but shop. I am full of energy and to this day that does not mean I’ve been unhappy. I Page 10 — Katharina Hess, 99 can barely sit still. I always have to be do- spent my youth in the difficult post-war Retired farmer ing something. One of my sons and his years. I married at 25. My life was blessed Ebnat-Kappel, Switzerland wife died very young, so my granddaugh- by the birth of my two daughters. Watch- 1 son, 3 grandchildren, 3 great-grandchildren ter Refilwe grew up with me. I tried to ing them grow up was wonderful. We “I always enjoyed being a farmer; I liked raise her as a respectful person. She wants laughed a lot, we cried and – very rarely – the animals and the work. Our farm was to go to university now, which makes me we yelled at one another. Now I have four small, barely six hectares, and we did ev- very happy.” small grandchildren. A simple, ordinary erything ourselves. The only machine we life gives me lasting happiness and joy.” had was for mowing. In the 1960s, tu- berculosis infected the barn and we had Page 14 — Kåre Magne Hansen, 90 to dispose of all of the cattle. We were Retired carpenter Page 7 — Nikos Vitogiannis, 70 forced to lease the farm. In 1977, my son Rena, Norway Retired entrepreneur took over the farm and gradually we were 4 children, 4 grandchildren, Athens, Greece able to run it again ourselves. The same 1 great-grandchild 2 sons, 7 grandchildren year, my husband died of old age. Today, “I grew up in Norway in the 1920s. Those “Everyone in my family is an entrepre- three generations live under one roof. I were hard times. Then the war came and neur. My father built a business for crown am proud that my family will continue to all three of my brothers died. And yet I caps, the metal caps used on, for exam- work the farm.” still look back at that time with fondness. ple, Coca-Cola bottles. He was a mar- We had to pull together; everyone helped ket leader in Greece, and I joined him. one another. I have tried to uphold these Later, I founded four more companies. Page 11 — Maria Ignácia Moraes, 90 values in my family my entire life. Today, My brothers also worked with me, but my Retired handicrafts teacher every one of my children and grandchil- father and one brother died early. All of São Paulo, Brazil dren who has time stops by around noon a sudden, I was responsible for the busi- 2 children, 4 grandchildren, 10 adopted chil- for a quick coffee. I like this because most ness and seven children. Those were hard dren, 4 adopted grandchildren of my friends are already dead and my times, and we worked a lot. But the free- “My students often told me: ‘Outside of wife died six years ago. I retired in 1985, dom of entrepreneurship is priceless. Of school, you are a good friend, but as a but I still do some small carpentry proj- course, there are difficult customers and teacher you are too strict.’ How was I sup- ects. And I love hunting.” unreliable suppliers. Sometimes you feel posed to respond? I felt obligated to their hopeless. But when the day ends and you parents. They paid me, so I had to teach see what you have created, it makes you the children something. I am a perfection- infinitely happy. More important than ist after all. I was strict with my children, the companies was my wife. I met her at a too; it was only with my grandchildren party and immediately knew that she was that I loosened up. I always say, ‘Mothers the one. I had no doubt, her personality teach children things, and grandmothers was right, and she was beautiful. And I help them to forget.’ We have to spoil have been proved right to this day.” grandchildren. Except for Roberto! He is on the edge of an important moment in his life – his last year at university. He has Page 8 — Jeremi Malicki, 80 to get good grades. In our family, we get Retired railroad director good grades! I have two children of my Wroclaw, Poland own and ten adopted girls – four of whom 2 children, 2 grandchildren were siblings whose parents died quickly “Although I grew up in communist Poland, one after another. I simply couldn’t say no which was a fairly closed system, travel was and took them all in.” always my great passion. I love exploring the world – I must have inherited it from my grandfather, Witek. He was a simple Page 13 — Moni Dorcas Phahlane, 87 worker, but he collected travel books and Retired cleaning woman took many trips. And that was in the 19th Soweto, South Africa century, mind you. My passion for travel 4 children, 6 grandchildren, started early. When I was four years old, I 1 great-grandchild climbed Giewont, a high peak in the Tatra “I have no regrets in life – quite the con- Mountains in Poland – with my parents trary, I would do everything over again.

12 — Bulletin 2 / 2014 — What Lasts? —

“I am full of energy and can barely sit still.” Moni Dorcas Phahlane, 87 Soweto, South Africa

Photo: Per-Anders Pettersson Bulletin 2 / 2014 — 13 — What Lasts? —

14 — Bulletin 2 / 2014 — What Lasts? —

“I love hunting.” Kåre Magne Hansen, 90 Rena, Norway

Photo: Lars Botten Bulletin 2 / 2014 — 15 — What Lasts? —

Who Am I? The New Proust 37 Questions for Exploring Your Values, Sounding Out the Person Sitting Next to You and … Listening. By Mikael Krogerus

In fin de siècle Europe, light conversation For the revised questionnaire as well as for 7 — What do you know about the politi- (aka: small talk) was crucial to a success- the original, keep in mind that we all ad- cal opinions of your grandparents? ful evening. And yet the cultivated guest mire people who can give good responses. was not the one who always had the right Those who ask good questions are admired response down pat, nor was it the one who even more. But mostly, we remember those kept the audience in stitches with a series who really listen. of charming and witty comments. No, the ideal person to be seated next to was the 8 — Do you know your ecological foot- one who had mastered the high art of the 1 — Where would you like to live? print? What would need to happen for question. The explanation for this is sim- you to change your life accordingly? ple and true, and can be summarized by this single rule: We don’t love the bril- liant people, but the ones who make us 2 — Describe yourself in three words. feel brilliant when we are with them. And yet because it is so difficult to ask the right question in the right situa- tion, a little crib sheet was soon making the rounds through European salons. Ques- 9 — What kinds of compliments do you tions which appeared innocent, but in fact 3 — What is the first thing you do in get frequently? bared the soul. “Who would you rather the morning – and what does this say be?,” “How do you want to die?,” “What about you? qualities do you most value in a man?” The author of this questionnaire – an alche- 10 — Which of your abilities have been mist of love, holding the master key to the the most important for your career? hearts of women – remains unknown to this day. Marcel Proust, just thirteen years old at the time, answered the question- naire in 1885 at the birthday party of his friend Antoinette Fauré. In 1924, Fauré’s 4 — What was your last status update? son published Proust’s answers, and since And what was your very first one when 11 — In which areas are you better then it has been referred to as “Proust’s social networks first emerged? informed than your friends? Questionnaire.” The fact that he did not write the questions but merely responded to them argues for the charm of the previ- ously stated rule. Today, almost 130 years later, the questionnaire has lost some of its luster 5 — Where were you when you found out 12 — Who is the most intelligent person (“Which military operations do you ad- about 9/11? among your acquaintances? mire most?” was considered a sophisticated ice-breaker at the end of the 19th century, but today would only result in an irritated shake of the head). Questions are chil- 6 — Where would you attack the system 13 — Which of your distinctive character dren of their time, so it seems appropriate if you wanted to change it? traits did you already have as a child? to ­update the survey. Two of the original questions (no. 1 and no. 37) were kept as a tribute, and two others were borrowed from the great Swiss questioner Max Frisch (no. 22 and no. 23).

16 — Bulletin 2 / 2014 — What Lasts? —

14 — Who was your best friend at 16? 23 — Do you love someone? How can you 32 — What do you believe in even though What is that person doing today? tell? you cannot prove it?

15 — What was your first email address? 24 — Look in the mirror. What do you see? 33 — If you could rewrite part of your history, what part would you choose? 16 — What is your most valuable material possession?

25 — What is the biggest change that you have seen in yourself over the last five years?

17 — What do you typically spend too 34 — Could you have made more of much money on? yourself? Explain.

26 — With whom did you last have a 18 — In an airplane: Aisle or window? good laugh?

19 — A television series that you cannot 27 — What was the last thing you cried 35 — If you lost everything, where would get enough of. about? you start again?

20 — Are you able to balance all of the 28 — Who is the most important pressures of modern life? Which one is ­person in your life? What could you do the most difficult for you? to improve that relationship? 36 — What could you most easily do without for a whole year: alcohol, internet, orgasm?

21 — In which situations and where 29 — If hell was a hotel room, who are 37 — How would you like to die? can you manage to avoid looking at your you locked in with? smartphone every ten minutes?

30 — How many times have you had too much to drink in the last 30 days?

22 — Does someone love you? How can you tell? 31 — What ritual is important to you? Mikael Krogerus, born in 1976 in Stockholm, is a freelance journalist. He studied political science in Berlin and Denmark and, together with Roman Tschäppeler, co-authored the bestsellers “The Question Book,” “The Decision Book: 50 Models for Strategic Thinking” and “The Change Book” (originally published in Switzerland by Kein & Aber).

Bulletin 2 / 2014 — 17 — What Lasts? —

WHAT REMAINS FOR US The Final Tally How much do the Swiss have left in their wallet after life’s major and minor expenses? Assets, inheritance and disposable income at a glance. By Andrea Schnell

What Is Left at the End of Life? According to the latest federal tax statistics, the inheritance is added to pre-existing, Assets provide no benefits; they simply there are 10,500 people in Switzerland with saved assets. As a result, the 65+ demo- serve to smooth over consumption during net assets of more than 10 million Swiss graphic in the canton of Zurich has average a life-cycle – or so the Italian economist francs. They make up less than 0.5 percent taxable assets of 950,000 Swiss francs (see Franco Modigliani (1918–2003) believed. of those subject to wealth tax but own 26 figure). In contrast to the economic theory He was awarded the Nobel Prize in 1985 percent of total private assets. The “richest of Franco Modigliani, retirees do not con- for his life-cycle hypothesis. Accord- 300” according to Bilanz magazine have an sume their assets in retirement but rather ing to his theory, people save throughout estimated wealth of 564 billion francs, that grow them. The most frequent form of in- their working years in order to consume is nearly as much as Switzerland’s annual heritance is cash or bank deposits. Real their assets in old age and up to death – gross domestic product. estate makes up one-third of total inher- which is known in advance in the model The 2013 Global Wealth Report by itances. calculation. Two major points undermine Credit Suisse provides an international Modigliani’s theory. In practice, we don’t comparison of the concentration of wealth. Controversial Inheritance Tax know when we’ll die; and assets are passed According to this report, the distribution In contrast to many other European coun- on in the form of inheritance. of wealth in Switzerland is almost as un- tries, Switzerland does not have a national In Switzerland some 30 billion francs even as it is in Sweden, and more uneven inheritance tax. The collection of inheri- are passed on annually (“Inheritance in than in Germany or France, although it is tance and gift tax falls under the jurisdic- Switzerland,” 2005). In 2000, the average more even than in the US. In addition, the tion of the cantons, and the tax rate varies amount inherited per deceased was 450,000 concentration of wealth and average assets significantly. The canton of Schwyz does Swiss francs, not including the 25 percent vary between cantons. The average net as- not collect any inheritance or gift tax what- sets per person subject to tax are almost soever. In the other cantons, the surviving 300,000 Swiss francs in Switzerland. The spouse and, in some cases, the direct de- cantons with the highest average wealth scendants are exempt from paying inher- are Nidwalden and Schwyz with more itance tax. than 870,000 Swiss francs, and Jura and Income from inheritance and gift tax chf 450,000 Solothurn are at the bottom of the list with was 862 million Swiss francs in 2011, or Average amount inherited 120,000 Swiss francs. Within the cantons, 1.3 percent of the total tax revenues for the wealth is distributed most unevenly in cantons and municipalities. (per deceased). ­Basel-Stadt and Geneva, and most evenly An initiative launched in March in the canton of Uri. 2013 for inheritance tax reform is looking Average inheritance to introduce a national inheritance tax and received (per heir): Retirees Grow Assets Three-quarters of all assets are passed on to CHF 180,000. the closest family members, that is, to chil- dren and spouses. Some 60 percent of the total inheritance goes to children. Only 10 percent of estates are passed on to non-rel- of those who die without leaving behind an atives or organizations. With the popula- 45 percent estate. The average inheritance was 180,000 tion’s increasing life expectancy, the age of Just under half the heirs Swiss francs. However, one-third of the the heirs has also increased. Only a quarter received 98 percent of the population never inherits any money. As we of the assets passed on go to heirs under age see, inheritance is a highly irregular phe- 50. This figure is bound to shrink further. total amount inherited. nomenon: Forty-five percent of heirs receive The most significant portion of estates goes In other words, inheriting 98 percent of the total amount inherited. In- to 50 to 64 year olds. And as the age of heirs heritance is thus on the whole as unevenly increases, inheritances are being used for strengthens the asset distributed as assets. In other words, inher- different purposes than in the past. Life iting strengthens the asset concentration – decisions like setting up businesses or fam- ­concentration – those who those who already have, receive more. ily planning are typically completed, and already have, receive more.

18 — Bulletin 2 / 2014 — What Lasts? —

eliminate cantonal regulations. Instead, Wealthier in Later Life Assets by age (canton of Zurich) the cantons would receive one-third of the revenues, while two-thirds would be allo- Avg. life expectancy cated to the Swiss Federal Social Security Men Women Fund. The initiative’s backers propose a tax 73.2 81.5 rate of 20 percent and a one-time exemp- tion of two million Swiss francs per estate; only spouses would be completely exempt Residents of the canton from the tax. From an economic perspec- of Zurich who are aged 65+ have average tive, an inheritance tax has the advantage assets of 800,000 Swiss of causing little or no market distortion, francs. Counterintuitively, and it is relatively efficient as a method of assets continue to reallocation. By contrast, such a tax has grow after retirement. numerous unwanted side-effects such as double taxation of assets and inheritance, CHF the threat to company successions, and the 1,000,000 potential to avoid the tax through lifetime giving. Whether you see inheritance tax as positive or negative therefore depends on your political inclination.

800,000 What Is Left at the End of the Month? How much money the Swiss inherit is less important in daily life than the question The most significant of how much money they have left over portion of estates at the end of the month. The answer can 600,000 goes to 50 to 64 year olds; heirs under age 50 vary greatly depending on where you live. receive only a quarter Many households could improve their of the assets, because budgets by moving elsewhere. Consider- assets are only built up able savings are sometimes possible just later in life. a few miles down the road. Alongside 400,000 differing tax burdens, disposable income is determined by a number of other fac- tors. Living costs, health insurance pre- miums, family allowance amounts and commuting costs vary significantly be- 200,000 tween places of residence (see figure on page 20). For middle-class households, living costs and health insurance premi- ums are critical, the importance of the tax rate increases with income. Disposable 0 income represents the amount available to a household after deducting all man-

0–24 85+ datory charges and fixed costs. 25–34 35–44 45–54 55–64 65–74 75–84

Source: Federal Tax Statistics, Statistical Office of Canton Zurich Andrea Schnell works at Credit Suisse Economic Research.

Infographic: Crafft Bulletin 2 / 2014 — 19 — What Lasts? —

Where’s the Least Expensive Place to Live? Disposable income by municipality

Taking into account commuting costs to the nearest city center, all data in Swiss francs

High disposable income Low disposable income

6 5 2

1 4

3

8

7

Centers vs. suburbs as well as the higher health insurance compared to Kaiseraugst (Aargau) 6 : Life in a city is more expensive than in a premiums (Le Locle (Neuchâtel) 3 : taxes taxes 1,500, health insurance premium 600. suburb. The reason for this is the higher cost 3,000, health insurance premium 820 Difference in fixed costs: 560S wiss francs of living, that is, rents and real estate prices compared to Wattwil (St. Gallen) 4 : taxes monthly. (e.g. monthly living costs in Zurich City 1 are 1,900 and health insurance premium 560. 6,600 Swiss francs compared to 3,500 Monthly difference: 1,360 Swiss francs). Tourism Communities Swiss francs in Embrach in canton Zurich 2 ). These costs are also above average in The high (domestic and foreign) demand for Health insurance premiums are also above Western Switzerland outside the city centers. vacation properties in tourism destinations average in the city centers based on the The exceptions are the canton of Valais and has the effect of increasing the living costs higher density of specialists (780 in Zurich parts of Fribourg. for the local population. Example: Living costs compared to 640 in Embrach). in Zermatt (Valais) 7 3,800 compared to Cantonal Boundaries 1,500 in St. Niklaus (Valais) 8 . Western Switzerland vs. A large portion of the monthly fixed costs German-speaking Switzerland is ­dependent on cantonal regulations, which Sample household: Family with two children. In Western Switzerland, the fixed costs and means that taxes and health insurance Gross income 150,000, assets 300,000, mandatory charges are higher than in pre­miums can differ greatly. So it can be very single-family dwelling of average standard. German-speaking Switzerland. This is due to beneficial to move across canton lines.O ne the higher tax burden (all Western Switzer- example of fixed costs: Pratteln (Basel-Land) 5 : land cantons are above the Swiss average), taxes 1,900, health insurance premium 760

Source: “Living and Commuting: Where’s the Least Expensive Place to Live? Disposable Income in Switzerland” (www.credit-suisse.com/research)

20 — Bulletin 2 / 2014 Infographic: Crafft DISCOVER UNIQUE RESIDENCES IN THE HEART OF SWITZERLAND.

ARCHITECTURE INTERIORS LANDSCAPING CONSTRUCTION INVESTMENT REAL ESTATE FURNITURE- COLLECTIONS

SimmenGroup Chaltenbodenstrasse 16 / CH-8834 Schindellegi T +41 44 728 90 20 / www.simmengroup.ch — What Lasts? —

“Switzerland is a major exception and has been lucky. Hopefully, it will stay that way.” Carmen M. Reinhart.

22 — Bulletin 2 / 2014 Photo: Celeste Sloman — What Lasts? —

AFTER THE FINANCIAL CRISIS “The circumstances may change, human nature does not” Carmen M. Reinhart has studied financial crises and human nature for decades. The most cited female economist in the world sums it up: We forget too quickly and repeat our mistakes. In this interview, Reinhart explains why this is and why she has a mortgage despite a fear of debt. Interview: Simon Brunner

Professor Reinhart, along with the econo- There are big differences between Thanks to its debt ceiling, Switzerland has mist Kenneth S. Rogoff, you wrote the best- financial crises! created an institutional entity that keeps seller “This Time Is Different: Eight Cen- Of course. A pattern is, however, re- the government from taking on too much turies of Financial Folly.” Are we humans peated. There is a longer period in which debt. really doomed to fail again and again, and the boom is fueled by excesses, which are Debt ceilings are good – the EU’s Maas- start over from scratch? often funded by borrowing. In addition, tricht criteria also regulate debt levels – My answer is fatalistic: Yes. Financial a certain market is hyped. This could be but keep in mind that many crises are not crises have happened at different times, in real estate, equities, government bonds caused by sovereign debt. And there are different places, in different government or commodities. no ceilings for non-sovereign debt – that systems and cultures. The circumstances is the problem. These debts often become may change, human nature does not. And then what? public debts through crises. I am think- Assets seem to grow endlessly, with prof- ing, for example, about Ireland, Spain What is our biggest flaw? its in these markets rising unabated. You and Iceland. This is also an old story. Our memory fades. After a crisis, pre- can always borrow more and invest more. cautions are typically taken. But then These euphoric stages are an old phe- Could you give us an example? they are circumvented or we think they nomenon, they have existed for centuries. I was influenced strongly by Carlos Fed- are no longer necessary. The essence of However, confidence is an unstable and erico Díaz-Alejandro and his work on the “this time is different” syndrome lies uncertain commodity. Suddenly lenders the crisis in Chile in 1982. In the years in the assumption that crises only hap- retreat, whether because of a rumor or be- before the crisis, the Chilean govern- pen to others. Or they only happened in cause something actually happened. If you ment had a surplus. But the banks piled the past and today we are smarter. are heavily funded by borrowing, things on large debts by aggressively borrowing can become difficult. The crisis begins. money abroad. When the banks got into trouble, they had to be taken over wholly Some countries actually seem to behave or partially by the state. So the state ab- differently. For instance, Switzerland has sorbed the debt and the country slid into never been insolvent. a crisis with high unemployment and That’s right. Switzerland has had trou- recession. This is typical of crises, as we ble with its banks but no systemic crisis. see today: The debt does not begin with Carmen M. Reinhart, 58, has been the most- I could provide a very superficial analy- the state. cited female economist in the world since 2007 sis and state that the country is regulated (source: RePEc database). Reinhart teaches In- wisely and the regulations are enforced What can we learn from Chile? ternational Financial Systems at Harvard; pre- successfully. Both certainly play a role – After some difficult years, the country viously, she worked at the investment bank Bear Stearns and the International Monetary Fund. but is Switzerland therefore immune to recovered in the 1990s and capital flowed Reinhart was born in Cuba and grew up in the major crises? I don’t think so. My ar- into the country again. The banks were US. She is married to the economist Vincent R. gument is this: Practically everywhere able to borrow money abroad relatively Reinhart (chief US economist at Morgan Stan- in the world there have been enormous cheaply and lend it again in the domestic ley), and together they have a son. Reinhart and crises, even in the major financial cen- market with high interest rates – an attrac- her husband met while studying at Columbia ters of the UK or the US. Switzerland is tive business. This time the government University. Both are left-handed and therefore therefore a major exception and has been stepped in and regulated the flow of for- often sat next to each other in the classroom. lucky. Hopefully, it will stay that way. Is eign funds to the country. For once, they it safe? I don’t know. remembered previous crises.

Bulletin 2 / 2014 — 23 — What Lasts? —

In order for a country to develop, it needs And then? innovation. Of course, this brings Is it better to have Well, the irrational exuberance returns: with it speculative bubbles and unfulfilled Do you know how many times I’ve heard expectations. loved and lost every- the following sentences at the WEF in Some of the greatest crises have even Davos and around the world? “Emerg- been caused by real innovations. But thing than never ing markets are the global engine of how can you identify speculative bubbles growth!” “Emerging markets have fi- at an early stage? How do I know when to have loved at all? nally turned the corner!” “It’s the start of market activity has lost touch with the a new era!” What everyone forgot is that fundamentals? At the moment, the irra- there was no innovation in these coun- tional exuberance is virtually undetect- tries. There was nothing new, except that able empirically. Only when something of something, even if it is good, causes they were well positioned at the start of has crashed and burned can we say it was harm. What did you do in Switzerland the crisis. a bubble – but that’s not much help. when funds flowed too freely into the country and the Swiss franc rose above a Is it really different this time? Well, what can we do? Is there no way to level that was felt to be healthy? You tied Exactly! The capital is flowing into the avoid crises? the currency to the euro. Switzerland emerging markets again, and exactly the Global capital can fuel growth. But it would not take action against a modest same thing is happening that I have been can also lead to very dramatic crises. level of appreciation, but at this point it writing about for twenty years. People The question you have to ask is this: Is it was a problem. assume that capital flow periods are nor- better to have loved and lost everything mal and last forever – too many loans are than never to have loved at all? Should Do you actually have a mortgage yourself? made and too much is spent. Companies we regulate so heavily that we prevent Yes. We have recently moved to Boston become overleveraged, earn a lot and are recession but also any possible upturn? and now we have one again. overvalued. Currencies rise, countries Or do we have to take into account peri- lose competitiveness, the balance of pay- odic crises? How do you handle it? ments on current accounts deteriorates, I worry about my debts and am extremely and the problems begin. And what is your answer? careful. We will try to repay the mort- I’m afraid there is no simple formula. gage early. My advice to others is to think Is your forecast for emerging market econo- The US belongs to the group that has of possible scenarios when you take out mies negative? loved and lost. The quiet periods were a mortgage. A bomb won’t drop on your It’s not a question of what I think. Look long and we gained a lot. Some Asian house. But you should consider that your at the way these capital flow bonan- Tiger countries also belong to the bet- income could decline sharply and you zas usually end: with currency crashes, ter-to-have-loved group. The Asian crisis might no longer be able to pay the inter- banking crises, and debt and inflation of 1997–98 was extremely painful, but est without difficulty. If the proportion problems. After large capital inflows, a direct foreign investment and the higher of debt is high, of course, the question country – statistically speaking – is more level of integration in the global econ- is asked, what do you do if the property vulnerable to crises in the next three omy have helped some of these coun- loses value and you need to invest addi- years than if it had not experienced these tries to develop over the long term. On tional money. inflows. With few exceptions, I am very the other hand, there are countries with cautious when it comes to the future of less steep growth rates, where the answer Now we come to the current world situa- emerging market economies. probably tilts more toward the other side. tion. Where are we now? What remains of And there are countries in which crises the financial crisis? Where will the West be at the end of occur regularly. These countries liberal- Let’s start with the emerging market the year? ize, here comes a crisis, they add regula- economies and look back to 2007. Most I think the bleeding will have been tion, it gets better, the country liberalizes emerging market economies are built stemmed in large parts of the European again – and soon enough the next crisis lean. They have lowered their debt and periphery. Stemmed – I’m not talking is at the gate. In these countries, one is dramatically shifted from external to about recovery. If you look at the coun- tempted to say the cycles come so quickly internal debt in response to the count- tries that had systemically important that it cannot be good. less crises in the past 15 years: Mexico banking crises in 2007–08, only Ger- in 1994–95, Asia in 1997–98, Russia in many and the US have reached the per In your work, you take a critical approach to 1998, the real crisis in Brazil in 1999, capita income of before the crisis. France, debt. Isn’t debt central to our system? Argentina in 2001 and so on. So, in 2008 the UK, the Netherlands, Ireland, Ice- Debt is part of a functioning market. many emerging markets had very com- land, Portugal, Spain, Italy and Greece And certainly not every credit boom petitive currencies and sometimes even are not there yet. The International Mon- ends with a crisis. Nevertheless, virtu- current account surpluses. Accordingly, etary Fund (IMF) predicts that many of ally every crisis – and believe me I know they weathered the storm well; in fact, these countries will still not have reached crises – began with a credit boom. It’s better than ever. This was quite different the pre-crisis per capita income even like everywhere else in life. Too much in the 1930s. in 2018.

24 — Bulletin 2 / 2014 — What Lasts? —

So the crisis there will last ten years? lieve that emerging market economies Listening to you, one has to worry about Bad, right? At the beginning of the year, will not face problems in the near future. pensions. Kenneth Rogoff and I presented a I am not painting a very favorable picture Yes, indeed. The fact that the popula- small study at the American Economic of the world. It will not last forever, but it tion in many countries is aging is a major Association, where we studied the will take some time. problem in itself. But when I talk about cycles of crises. Systemic crises are al- the high public debt levels of many de- ways serious. But even for these, five Let’s talk about solutions. Many developed veloped countries today, I expect coun- or six years of recession are rare, and nations have already begun to introduce tries to want to hold interest rates as low today that’s what we have, especially in new regulations. as possible – similar to the period after peripheral Europe. This is good, but it’s also about avoiding World War II. If you look at how real, the next crisis. I’m still worried about inflation-adjusted interest rates have What will happen in concrete terms? working through the current crisis. changed since the crisis, they were even We will see a lot of sovereign debt re- negative in about 50 percent of the cases. structuring in Europe, which will pro- According to your analysis, what is the best This has an effect on pensions, which are vide stability. However, the reduction in way to overcome crises? often invested in government bonds and debt will take a very long time. The US Austerity programs are necessary, so that thus lose value. is a little ahead, especially with regard to the debt does not continue to grow, and private debt. It was a terrible process, in you have to actively reduce debt. This can Back to the topic of debt reduction. Kenneth which many people lost their homes, but be by increasing taxes or by other mech- S. Rogoff and you are considered the ideolo- it brought down debt. In Europe, on the anisms: negative interest rates, haircuts, gists for the current austerity programs and other hand, the debt ratios are not very inflation or a mix of financial repression. many leaders cite your work. far from their highs, and Japan is enter- These are all forms of taxation, where It is claimed that the study we published ing unexplored territory with debt that debts are transferred by the debtor to the in May 2010 has been the driver for aus- has never been higher. creditor. terity programs. That’s a simplification.

How is the rest of the world faring? One could also attempt to stimulate growth. You are talking about “Growth in a Time I find it hard to see where dynamic You can certainly wish for growth, but of Debt.” However, the work contained a growth could come from in the devel- historically it almost never happens that ­calculation error, which led to a fundamental oped world. I also find it difficult to be- you, so to speak, grow out of debt. debate over austerity programs.

Glossary

Austerity – Among economists and this, such as restrictions on interest ters, but also grants loans to coun- money to promote industrialization. politicians, there are two opinions rates on sovereign debt (“The Liqui- tries. These loans are subject to strict Partly due to the oil crisis and rising about whether to confront crises with dation of Government Debt,” Rein- austerity requirements. commodity prices Mexico had to austerity programs or stimulus pro- hart and Sbrancia, 2011). declare partial sovereign default and grams. Reinhart belongs to the former Irrational exuberance – Conc­ ept place a moratorium on debt payments. group, the latter group argues that the Graciela Laura Kaminsky – Eco- coined by Alan Greenspan, the for- This nearly brought the international state must boost consumption in crisis nomics professor at George Wash- mer chairman of the US Federal financial system to a standstill. situations in order to come out of the ington University, co-authored with Reserve. “Irrational exuberance” crisis through growth. Reinhart her most-cited paper (“The describes the euphoria of investors Negative interest rates – Arise when Twin Crises: The Causes of Banking during the dotcom boom of the 1990s the market interest rate is below the Capital flow bonanza – Reinhart’s and Balance-of-Payments Problems,” when internet companies were greatly rate of inflation. The creditor effec- concept for a recovery phase in which 1999). overvalued. tively loses money to the debtor. (too) much capital flows into a coun- try (“Capital Flow Bonanzas: An Haircut – Agreement between cred- Kenneth S. Rogoff (born 1953) – Systemic crisis – Financial collapse of Encompassing View of the Past and itor and debtor which leads to the ­American economist, Harvard pro- a market participant that spreads to Present,” Reinhart and Reinhart, (partial) remission of debts. Haircut fessor and former chief economist of other market participants and causes 2009). is mostly used for public finances. the International Monetary Fund. the functional collapse of the entire Co-author of “This Time Is Dif- financial system or significant seg- Carlos Federico Díaz-Alejandro Inflation, here inflation tax – In- ferent” and numerous studies with ments of it. (1937–1985) – Cuban economist, flation can be understood as a tax, Reinhart. taught at Yale and Columbia Univer- because government debt loses real sity. Served under President Rea- value through inflation and tax rev- Maastricht criteria – The Maastricht gan on the Commission on Central enues increase. The state writes off Treaty (1992) established a debt ratio America. its debt without making any actual for EU member states of less than payments. 60 percent of a country’s gross domes- Financial repression – State measures tic product. to regulate markets, in which assets International Monetary Fund of private individuals are redirected (IMF) – Special UN organization. Mexican debt crisis (1982) – In the to the state. According to Reinhart, The IMF promotes international co- 1960s and 1970s, many Latin Ameri- there are various ways to implement operation in monetary and trade mat- can countries borrowed large sums of

Bulletin 2 / 2014 — 25 — What Lasts? —

during my first year at the bank, it trig- gered panic in emerging market econ- omies, but also in American banks that had made large loans to Latin America. That was a fascinating experience. It in- fluenced me and shaped my research.

Why did you leave Bear Stearns? The first years were fascinating. I learned an incredible amount. However, I am a researcher and on Wall Street, I only had time to see the tip of the iceberg. I wanted to go deeper, so I joined the IMF in the research department. Later, I chose to pursue university research. There may have been some noise lately about my studies, but I have been doing the same thing for years. My currently most-cited paper, which I published with “The reduction in debt will take a very long time. The US is a little ahead. It was a terrible process.” economist Graciela Laura Kaminsky, (Foreclosed homes in Boston, 2008). deals with banking crises – and it was published in 1999.

With all of your experience, allow me to pose a question. If you could design a country from the ground up, what would you do to make sure there were no crises? Sorry, I have to disappoint you. Whether or not you avoid a crisis has mainly to do with memory.

This interview was conducted on January 27, 2014.

“If countries have difficulty borrowing money, they will have to implement austerity measures. That’s not a fad, it’s the reality.” (Photo: Protests in Madrid, 2013).

Ken and I tried to empirically estab- isted, times of financial self-sufficiency lish an upper limit for the ratio of debt were generally synonymous with auster- to gross domestic product, but an Ex- ity measures. My prediction is if coun- cel error slipped in. However, this error tries have difficulty borrowing money, did not put our basic statement in ques- they will have to implement austerity tion. Look, when I started in 1988 at the measures that are painful. That’s not a IMF, no one had ever heard of me and I fad, it’s the reality. had not published any studies apart from my dissertation. I attended the annual Crises have been your major area of research meeting in Berlin, the building was bar- for decades. Why is that? ricaded. The IMF had just implemented I started working in 1982 at the invest- strict austerity measures in emerging ment bank Bear Stearns. I was basically market countries, especially in Latin still a kid. Wall Street fascinated me. I America, which led to protests. Even had also had enough of being a poor stu- before my time, and before the IMF ex- dent. The Mexican debt crisis happened

26 — Bulletin 2 / 2014 Photos: Porter Gifford / Corbis / Dukas; Luca Piergiovanni / EPA / Keystone — What Lasts? —

How to Invest Well Worthwhile Which investment strategies have proven successful over the long term? Bonds and equities obey similar laws but there are significant differences in the local markets. By Anja Hochberg

Individuals, companies and governments Africa in a historical comparison) gener- have been buying and selling financial ated a real return averaging 7.4 percent products for centuries. Derivatives trad- per year since 1900, Austria is the worst ing can be traced back into the second equity market, reporting real earnings of century B.C., and even Aristotle told of a meager 0.7 percent per year over the market manipulation using derivatives same period. based on the capacities of olive oil presses. More complex products like forwards and Sunshine and Rain options are also old; these were traded in A glimpse at the distribution of income Amsterdam from the end of the 16th cen- over time reveals further differences tury, mostly for tulip bulbs. that provide a somewhat more optimis- The economic theory behind invest- tic picture of Austria. In the years from ing is a simple one. When someone in- 1964–2013, Australia was able to gener- vests money in the financial market, they ate higher income on average than in the are providing it for someone else to use. past thirteen years. So the return trend is The return is compensation for this tem- actually falling rapidly. The situation is re- porary relinquishment. The more risky the versed in Austria. At 4.6 percent, real in- borrower and the longer the investor parts come there over the last 13 years is higher Real income of 7.4 percent per year for 114 years: from his funds, the higher the income. It Australia’s equity market (Sydney stock exchange, than that seen on average from 1964– can be empirically proven that this holds 1968). 2013, when annual real income was 3 per- true in normal economic and market cy- cent. Thus, the trend is positive. But what cles. Now let’s take a look at two of the about Switzerland? It is leading the mid- most popular investment instruments, turn, both in terms of regional compar- dle of the pack. The equity market here bonds and equities. isons (similar to bonds) as well as in in- has generated an average real income of There is a wide array of bond types, vestment style. Should you invest in big 4.4 percent per year since 1900. but they (mostly) obey the following basic or small companies? Should you choose In summary, an investor using a “100 rule: Longer-term investments pay higher equities that have performed well in the years and up” horizon will have no prob- interest than short-term ones, and bonds past? Or is it better to look for companies lem following economic theory. But most from unstable regions of the world pay that have growth potential? Do you pre- of us first have to build up capital over the higher interest rates than those from sta- fer a more active style, selecting individual course of our lives (saving and investing) ble areas. In addition, the income of an securities, or a more passive style, invest- in order to live on it in old age (dissaving interest-bearing security is influenced by ing in funds that cover entire industries or and consumption). The shorter the invest- whether a market for it even exists. If an countries? There are no clear answers to ment period, the more important it is to investor lends money to a private company, these questions; they vary according to the balance the portfolio. We want to bene- the borrower’s note can hardly be sold on timeframe, industry and geography. fit from sunshine in the financial markets, an exchange. In such cases, the investor In its latest “Investment Return but also have our umbrellas with us in case will receive an extra premium based on the Yearbook,” the Credit Suisse Research In- of storms – and that is only possible with illiquidity of an instrument. stitute analyzed financial market data of a sophisticated mix based on our individ- the past 114 years for 23 countries with ual needs. To Each His Own remarkable results. The past century was The investor is also providing capital, al- marked by enormous political, economic beit somewhat less overtly, when buy- and societal changes. Besides the two ing equities. The equity buyer invests in a world wars, the Iron Curtain fell and Asia company and in turn is compensated with began to boom. The global economic sys- a dividend (in addition, the security price tem has changed fundamentally. Local can also increase). equity markets reacted quite differently to When it comes to equities, there are the transformation. While Australia (as Anja Hochberg is the Chief Investment Officer certainly major differences in risk and re- the second-best equity market after South for Switzerland/Europe at Credit Suisse.

Photo: Fairfax Archives Bulletin 2 / 2014 — 27 — What Lasts? —

How We Can Live Together Welcome to Toronto Canada’s largest city is immigrant-friendly. The over 100,000 immigrants who arrive every year are welcomed openly; the state is generous and sets few limits. Is this how the model of a global economic metropolis of the future works? By Don Gillmor

Multicultural center: View of downtown Toronto.

28 — Bulletin 2 / 2014 Photo: Paul Hahn / laif — What Lasts? —

Bulletin 2 / 2014 — 29 — What Lasts? —

Immigrants draw more new immigrants to the city: Muslims at Yonge-Dundas Square.

30 — Bulletin 2 / 2014 Photo: Christian Heeb / laif — What Lasts? —

hirty-two-year-old Carolina role model for the world – with its hard- Toronto, Canada Velez came to Toronto af- ware, the institutions, as well as with its ter earning a degree in busi- software, the cultural environment. The ness administration in Co- Aga Khan has contributed to that him- CANADA lombia, but was unable to find a job in self with the Global Centre for Plural- Montreal Tmanagement or marketing. “I applied ev- ism in Ottawa and the Ismaili Centre in erywhere and finally took a job as a re- Toronto. Chicago ceptionist,” she says. After a few other Immigrants have it good in To- Toronto Detroit jobs, she started her own business, Co- ronto. Government institutions offer New York lombiaExotic, which imports fruit from them help at every level – with learn- USA Washington Colombia. Now ColombiaExotic im- ing English, looking for a job or starting ports around five tons of fruit like yellow a company. The software is the famil- pitahaya and passion fruit a week. iar cultural environment – restaurants, Velez came to Toronto in search of businesses, churches and the language of a better life. She tried her luck in Wash- their home country. Unlike in the US, Ethnic groups ington DC before that, but it was easier to where assimilation is strongly empha- Minorities as a percentage of settle in Toronto. Besides, she appreciates sized, foreign cultures definitely have the total population the multicultural atmosphere in Canada’s their place in Toronto. The integration 14 largest city. “I like that we all come from process is organic, relaxed and not an 12 different countries. Every other person imposed obligation. here is an immigrant – it’s pleasant. Be- This generosity has also paid off 10 cause English is not everyone’s native lan- economically. Richard Florida, an ur- 8 guage, people are tolerant. And the state ban sociologist at the University of To- supports the immigrants.” Carolina Velez ronto’s Martin Prosperity Institute and 6 brought her parents along, too. The Velez author of the study The Rise of the Cre- 4 family is one of many who have been wel- ative Class, says, “The Canadian exper- comed with open arms. iment with an open immigration policy 2

In Canada, a nation of immigrants, has lent considerable momentum to eco- 0 Toronto takes the lead. 50 percent of the nomic development.” Businesses have 2.8 million residents were born outside of no problem finding multilingual, well- Arabic Korean Filipino

Canada – in the rest of the country, the trained employees. And with their con- Chinese Japanese figure is 22 percent. Toronto is a multi- tacts all over the world, the immigrants Asian West South Asian Black African cultural city where countless languages are make Toronto a global hub and linchpin. AmericanLatin spoken: These include Italian (178,750), Clement Gignac, former Minister Cantonese (177,735), Punjabi (164,855), of Economic Development in the prov- Chinese (162,890), Tagalog (140,005), ince of Québec, shares that opinion: “Ev- Spanish (127,825), Urdu (124,110) and erything indicates that immigration is Industry mix Percentage of the Toronto Metropolitan Portuguese (110,905). the key to Canada’s prosperity.” This is ­Region GDP At the same time, Toronto has one due in part to the fact that most immi- of the lowest crime rates of all major Ca- grants are between 20 and 44 years old 28.9 Miscellaneous nadian cities, coming in far below those and therefore belong to the age group of comparable US cities. 57 people were that is particularly sought after in the la-

murdered in Toronto in 2013, compared bor market. Manufacturing 15.3 to 415 murders reported in Chicago, a Financial sector 13.8 city of a similar size. The Drunken Mayor 1.6 Hotel and Public sector 13.6 Toronto could almost be a paradise if only hospitality industry Service industry 6.6 Aga Khan’s Ode to Toronto the administration were different. Lo- 4.6 Construction

Like Carolina Velez, the 78-year-old Aga cals are often asked, how on earth was 5.3 Retail Khan, the Imam of 20 million Ismailite 45-year-old Rob Ford elected mayor in 4.8 Transportation Muslims in 25 countries, is also a fan of 2010? The answer: Many who voted for Toronto. He’s one of the richest men in him were disappointed in his predecessor, the world, with a fortune estimated at a Harvard-educated lawyer who came 5.5 IT and computers 10 billion euros. Khan gave a speech in across as elitist and aloof and seemed dis- The financial sector had the Canadian Parliament in January and connected from regular people. The sim- the largest percentage was full of praise for the country where ple, nonpartisan Ford is very different. of the Toronto Metropolitan Region GDP in 2011. immigrants can live their culture and He, a millionaire, likes to present himself at the same time be assimilated as Ca- as an ordinary citizen. GDP Toronto Metropolitan Region: nadians. He rhapsodized about Toron- He is scandal personified. He brags CAD 239 billion to’s diversity and even called the city a while drunk about how he will finish

Infographic: Crafft Bulletin 2 / 2014 — 31 — What Lasts? —

off a rival. Drunk again, he complains in In 1971, Canada’s then-Prime Minis- Growth a restaurant about Toronto’s police chief ter Pierre Trudeau initiated a policy of GDP development for the city of Toronto (in CAD billions) in a fake Jamaican accent. He takes drugs multiculturalism; the positive aspects and knocks down an elderly city coun- of immigration were acknowledged and cilor. Mayor Ford has made headlines Canada was officially defined as a multi- 150 with his behavior and is popular fodder cultural nation. for cabaret artists. Ford’s political career is based pri- They Come to Stay marily on a single promise: lowering Toronto completely transformed its im- taxes. His core constituency is white men age within ten years. Little Italy was cop- who yearn for the good old days. A time ied by a dozen different ethnic groups. 100 when they called the shots, well-pay- Offshoots of Chinatown in the city cen- ing jobs were plentiful, women stayed at ter were established in the Markham home and the Toronto Maple Leafs won Quarter at the North End as well as on the Stanley Cup again and again. A time Gerrard Street in the East End. Also on when driving a car was still fun, not a Gerrard Street but further east, Little 50 time-consuming torture. Even if “To- India sprang up with countless Indian ronto the Good,” as the saying used to restaurants and stores. Indian immi- go, was not good for everyone. That was grants now tend to settle in Brampton in the early 1960s. the north, where they make up 36.7 per- cent of the population. A Muslim com- When the City Was Bleak and Boring munity has formed east of Greektown on 0 Back then, the city presented itself as Danforth Avenue. Little Portugal is in 1990 1995 2000 2005 2010 2015 clean and efficient, but rather dull. To- Dundas West, and the Tamils gravitate ronto’s “goodness” paled in compari- towards St. Jamestown and Scarborough. son to romantic Paris, decadent Berlin The larger the different ethnic or swinging London. In the 60s, people groups become, the more encouraged said that you earned money in Toronto, their people feel to stay in the city. In Profiles and then drove to Montreal to spend it the Greek quarter, you can meet Greek and have fun. Or as actor Peter Ustinov women in their 70s who have lived in once said (and it wasn’t meant as a com- Canada for 30 years and don’t speak a Carolina Velez, business pliment), “Toronto is New York run by word of English. They have never worked administration graduate the Swiss.” outside of the home, and they can buy from Colombia and head Toronto’s increased liveliness can ­everything they need in Greek stores. of ColombiaExotic be traced back to its growing diversity. At Sometimes a quarter draws so many the beginning of the 20th century, Can- immigrants that the local culture begins ada passed immigration laws to attract to feel it’s being supplanted. In Markham, From receptionist to workers to settle the vast, largely unin- the Asian community was suddenly in habited prairies. Then in 1952 the immi- the majority, which fueled resentment in entrepreneur: “I like that gration law was amended to bring urban local residents. A shopping center where we all come from immigrants into the country as well. But the products were only described in Chi- anyone who the government felt did not nese incensed some non-Chinese cus- different countries. fit into “Canadian society” – usually mi- tomers. Even among tolerant Canadians, norities – could still be rejected. A small there is a fear of being marginalized on Every other person here but symbolic quota was set for non-white their home turf. But in contrast to other is an immigrant – it’s immigrants from other Commonwealth countries, xenophobic parties play a very nations – India, Pakistan, Ceylon. subordinate role in Canada’s politics and pleasant. Because After the relevant limits were lifted there has never been conflict because of English is not everyone’s in the 1950s, 300,000 Italians emi- immigrants. grated to Canada. Half of those settled Quite the opposite: Canadians ac- native language, in Toronto, giving the city many skilled commodate the immigrants. There has workers, a lively atmosphere and decent been a transition in police work. Officers people are tolerant.” coffee. A flood of immigrants came to receive special training; members of eth- Toronto in the mid-1960s – Greeks, In- nic minorities are being hired. Despite dians, Portuguese, Chinese and people budget cuts, schools are facing the chal- from the Caribbean. The last remaining lenge of taking on non-English-speaking limitations were lifted, and the social and religious landscape began to change significantly. Read more on page 37

32 — Bulletin 2 / 2014 Photo: Personal — What Lasts? —

Reportage (Personenporträt)

Toronto speaks many languages: on Queen Street.

Diversity is growing: vintage shop and classic car rental in Kensington Market.

Photos: Christian Heeb / laif; Karl-Heinz Raach / laif Bulletin 2 / 2014 — 33 — What Lasts? —

evt. nachshooting (schönes Wetter)

A completely different image within ten years: Toronto skyline with a view of the Central Business District.

34 — Bulletin 2 / 2014 Photo: Andre Kohls / Visum — What Lasts? —

Bulletin 2 / 2014 — 35 — Was bleibt? —

A quarter for every group: pedestrians in Little India...

... and a cook in Chinatown.

36 — Bulletin 2 / 2014 Photos: Paul Hahn / laif (2) — What Lasts? —

students. There are two education depart- All in all, receiving Canadian citizen- ments: one for the Anglophone sector that ship will become more difficult. The Profiles is used by most immigrants, and the other new law gives the Immigration Min- for the Francophone area, which is used ister far-reaching powers to bestow or by immigrants from Haiti, Vietnam and deny citizenship unilaterally. So the con- Binu George, some African countries. Around 32,000 servative administration’s new immigra- founder of Translife foreign students live in Toronto – they tion policy functions like a business. It Battery Solutions make up roughly 21 percent of all Cana- is based on demand – seeking out immi- Canada Ltd dian students and enrich the economy by grants according to specific criteria – and an estimated 2.3 billion Canadian dollars. fortified with a pinch of absolutism. Half of the students remain in Toronto af- Many immigrants want ter passing their exams. How Toronto Helps The individual categories – skilled worker, to open their own The State Steps In academic, entrepreneur – are listed on the business. There are gov- “Immigrants are a huge asset for To- Canadian government’s website with the ronto,” says Carol Wilding, Director of respective requirements. Many immi- ernment assistance the Toronto Board of Trade. “Their pres- grants in Toronto want to open their own ence has a direct impact on the region’s business. There are government assistance organizations to help. economic power. But we need to better in- organizations for immigrants (the On- George grew up in tegrate these people into the labor market. tario Self Employment Benefit Program, We need to recognize degrees from for- the Toronto Region Immigrant Employ- India and holds a degree eign universities more quickly and place ment Council, etc.) and university pro- in engineering. The these people in the right jobs. This applies grams (the Bridging Program for Inter- to businesses as well, not just the state.” nationally Educated Professionals at York company he founded in Utilizing this labor pool sensibly University). In addition, there are also is not easy in a city that gains around private foundations, such as the Maytree Canada recycles industrial 103,400 immigrants every year – not in- Foundation, that support immigrants. batteries and currently cluding students and workers with tem- But the system has gaps despite porary visas. That’s why you can find these substantial resources. A few years has two employees. Indian neurosurgeons driving taxis, Chi- ago, attorney Marion Annau discovered nese engineers distributing flyers and Pa- that there was no free legal advice for im- kistani doctors flipping burgers. migrants who want to be self-employed. For that reason, the federal gov- Annau subsequently founded Connect ernment revised the citizenship law this Legal, which brings together entrepre- year. The new law, which will take effect neurs and attorneys who offer free legal Carol Wilding, in 2015, includes a state-managed “dat- advice. “Our immigrant community is President and CEO ing site” for matching up immigrants highly educated; fifty percent have a col- of the Toronto Region seeking jobs with employers who need lege degree,” notes Annau. “These people Board of Trade workers with specific skill sets. are full of energy, but don’t know any- “We are transitioning from a pas- thing about the laws or culture here. We sive system to an active one,” says Min- fill this gap.” “We cross borders ister of Immigration Chris Alexander. Binu George is one of those who “We used to process each citizenship ap- have benefited from Connect Legal. He every day – when we plication individually. Now we are aim- grew up in India and earned a univer- drive to work, when we ing for a system that above all takes into sity degree in engineering, then worked account the people who are needed in for 15 years in Oman before coming to go shopping, in our this country.” Employers should be in- Toronto. After working for an engineer- volved in the decision on who receives a ing firm, he founded Translife Battery free time. The public residency permit. Solutions Canada Ltd., which recycles transportation network The process will be more transpar- industrial batteries. He now has two em- ent and better organized, but also lon- ployees. Connect Legal established the reaches far beyond ger and more costly. In the future, any- contact with a lawyer who supported the city limits. one applying for citizenship must have him. “He drafted all the contracts,” says paid taxes in four out of six years spent in Binu George, “and gave me free advice.” It certainly won’t last Canada – it’s currently three out of four. Advanced language skills will need to Just Good, or Excellent? another four years.” be proven – applicants between the ages Policies need to change so that Toronto of 14 and 64 will be tested on language will remain colorful and the future will skills as well as general knowledge. remain bright. The Board of Trade’s

Photos: Personal (2) Bulletin 2 / 2014 — 37 — What Lasts? —

annual report shows that Toronto ranks Profiles third out of 23 cities in the categories of quality of life, crime, labor market and other location factors. Neverthe- Marion Annau, less, there are unsolved problems. The attorney and founder city’s infrastructure is outdated, pub- of a free legal advisory lic transportation is overloaded and not organization widespread enough, and economic per- formance is lagging behind the other lo- cation factors. The reduced productivity She devised an appealing is partially due to the fact that Toronto’s citizens spend an above-average amount offer: “Our immigrant of time sitting in rush-hour traffic (66 community is well- minutes) – just behind frontrunner New York. educated; 50 percent “The Toronto region is at a cross- roads,” states the Board’s report. “One have a college degree. road leads in the direction ‘good enough’, These people are full and the other toward ‘excellent’.” How- ever, the road to excellence is facing a of energy, but don’t vacuum in political leadership. Com- know anything about plaints have begun to emerge about local government, at all levels. the laws or culture here. Mayor Rob Ford is like a vacuum that drowns morality, statesmanlike We fill this gap.” thinking, political creativity, tolerance and predictability. Both local and provincial elections will be held this year. “Two elections in one year, that is a good opportunity,” com- ments Carol Wilding from the Toronto Board of Trade. “Because many of the The Aga Kahn, religious city’s problems are essentially problems leader of the Ismailite for the entire region. We cross borders ev- Muslims; one of the rich- ery day – when we drive to work, when we est men in the world go shopping, in our free time. The pub- lic transportation network reaches far ­beyond the city limits. It certainly won’t Khan gave a speech in last another four years.” Toronto is multicultural, but a bit the Canadian Parliament sluggish – an economic powerhouse that in January and was full is stuck in traffic. But despite its weak- nesses, Toronto is a global model for plu- of praise for the country ralism, a center of creativity and eco- where immigrants can live nomic activity. their culture and at the same time be assimilated as Canadians. He rhapso- dized about Toronto’s diversity and even called Don Gillmor is a Canadian author and journal- the city a role model for ist. In addition to other books, he has written a historical novel about Canada (“Kanata”) and a the world. two-volume history of the country. As a journal- ist, Gillmor works for Walrus, Saturday Night and Toronto Life. He has won ten National Magazine Awards and many other honors.

38 — Bulletin 2 / 2014 Photos: Personal; interTOPICS / pa / ddp images — What Lasts? —

Leonardo Caprese,23, Schuhmacher 5. Generation Florenz, Pore vedamet, siminul landusdanis nonsequ aeptati onecerum quuntin cimaio quiae quo ea de nemquae nobis dio essita sim ratquas aut incium eos sunt fugiamus dollendebitnih iliquam excepudantu dolupidentis eum re provitiunda voluptu r maximo doluptat rest de net Pore vedamet, siminul landusdanis nonsequ aeptati onecerum quuntin cimaio quiae quo ea de nemquae nobis dio essita sim ratquas aut incium eos sunt fugiamus dollendebitnih iliquam excepudantu dolupidentis eum re provitiunda voluptu r maximo doluptat rest de net 500 Z

Old and new: Toronto’s former and current City Hall at Nathan Phillips Square.

Photo: Samuel Zuder / laif Bulletin 2 / 2014 — 39 — What Lasts? —

WWWHO, WWWHEN, WWWHAT Nasdaq: The New York stock exchange has seen tech dreams from Amazon to The Digital World Order Zynga, but also witnessed the dot-com bubble burst. The internet as we know it has been around for From 2000 to the end of 2002, the exchange lost slightly more than two decades – and it already two-thirds of its value. dominates many areas of our lives. The story so far.

Match.com: Looking for a partner is one of the biggest online markets and, with 3,900 providers, it generates some USD 2.1 billion annually in the US alone. The market for online pornography is similar in size, but the figures here are less reliable.

Cern: The European Organi- Google: This name has become a zation for Nuclear Research verb, because no other company is considered the birth- Netscape: The first brows- can collect and analyze data as well, place of the web because er that made it easy to click from simple searches to wearable it is where British computer through the web was the result internet glasses – part of “wearable scientist Tim Berners-Lee of a Mosaic research project computing,” the next big thing on the developed the hypertext stan- and was later the first major internet? dard in 1989. dot-com IPO.

Arpanet: Without Cern this US military- European Yahoo match.com PayPal financed network, Organization for Directory Singles exchange Payment system which sent its first Nuclear Research data packets on October 29, 1969, there would be no modern internet. NeXT Netscape Amazon Google Computer Browser Mail-order company Search engine manufacturer

Pretty Good Arpanet Compuserve Mosaic Ebay Hotmail Nasdaq Internet auction Research project Online service Privacy Browser Email service Stock exchange Encryption house

Prehistory Birth Era of the web browser Commercial phase 1969 1989/90 1991/92 1993/94 1995/96 1997/98 1999/2000

Number of users Ten most-visited websites

Worldwide: Switzerland: 3,000 1. Google.com 1. Google.ch 2,937 million users (March 2014), 2. Facebook.com 2. google.com 2,500 which corresponds to 40.7 3. Youtube.com 3. Facebook.com percent of the world’s population 2,000 4. Yahoo.com 4. Youtube.com 5. Baidu.com 5. wikipedia.org in mn 1,500 6. wikipedia.org 6. Yahoo.com 7. Qq.com 7. Linkedin.com 1,000 8. Twitter.com 8. 20min.ch 500 9. Live.com 9. Blick.ch 10. Linkedin.com 10. Twitter.com 0 1995 2000 2005 2010 2014 As of: April 2014 Sources: IBISWorld Research, RIAA/Frontier Economics, nasdaq.com, Gartner, McKinsey, Spiegel, finanzen.de, visionmobile.com, Internet World Stats, Mercury News, Google Finance, Alexa

40 — Bulletin 2 / 2014 Contents: Simon Brunner and Steffan Heuer, Info graphic: Crafft — What Lasts? —

Orkut: Not all websites Apple: The introduction of the have to be successful in iPhone in 2007 raised Steve Jobs America. This social network to a tech messiah and rang in is a favorite in Brazil – just the golden age of mobile devices as WeChat and Weibo.com that can do everything (as long as dominate in China. the battery has a charge). Orkut Social network

WhatsApp: People want to talk without Skype borders, and innovation is for sale. Five years after WhatsApp is founded, IP telephony, Android: Google acquired Facebook pays USD 19 billion to absorb instant messaging this company in response the 190 million customers of the fast- to Apple’s revolutionary est-growing internet service in history. Napster: The first smartphone and made An- file-sharing site droid the world’s dominant gave the music Wordpress operating system for mobile industry a shock, devices. Blog Software from which it has still not recovered despite iTunes and Spotify. In the The cloud: US alone, music Second Life: So far, a Business in off- worth USD 7 to Flickr complete shift of life to the site computing 20 billion is down- Photo community digital world has not panned and data storage loaded illegally, out. Virtual reality such as was worth some along with films, Second Life was one of USD 131 billion Candy Crush TV series and many internet companies in 2013, and it Saga: This puzzle software. is expected to game is consid- Second Life that did not live up to the hype. WhatsApp grow to more than ered one of the 3D online USD 1.7 trillion by most successful Instant messaging infrastructure 2025. apps of all time; the British com- pany King Digital floated its stock in March 2014. The LinkedIn Android Cloud Facebook YouTube Pinterest app market is now Business network, Mobile operating Computing network, Social network Video portal Social network worth a total of recruiting system data storage USD 53 billion.

Apple Napster Myspace Twitter Instagram 4G Candy Crush Hardware Music sharing Social network with a Microblogging Photo and video Next generation and software Saga exchange focus on music service sharing mobile network Game manufacturer

The social web The mobile revolution 2001/02 2003/04 2005/06 2007/08 2009/10 2 011/12 2013/14

Digital graveyard Key figures (in USD)

Market Price CompuServe 1969 – 2009: online service value (bn) at issue Current Low High Google 8/19/2004 9/3/2004 2/26/2014 GOOG 368.14 50.12 564.14 49.95 609.47 Altavista 1995 – 2013: search engine Facebook 5/17/2012 9/4/2012 3/10/2014 FB 152.34 38.00 62.41 17.73 72.03 Amazon 5/15/1997 5/22/1997 1/21/2014 Pets.com 1998 – 2000: pet supplies AMZN 147.52 1.96 331.80 1.39 407.05 Yahoo 4/12/1996 7/24/1996 1/3/2000 YHOO 33.56 1.38 34.87 0.66 118.75 Twitter 11/7/2013 11/25/2013 12/26/2013 Webvan 1999 – 2001: online grocery delivery service TWTR 24.21 44.90 42.49 39.06 73.31 LinkedIn 5/19/2011 11/29/2011 9/11/2013 LNKD 20.42 94.25 176.18 59.07 256.14 1995 1998 2001 2004 2007 2010 2013 Notes: All daily closing prices, stock splits included (Amazon and Yahoo!); current prices as of April 9, 2014

Bulletin 2 / 2014 — 41 — What Lasts? —

HOW TO ERASE TRACES ONLINE Digital Trash Disposal Deleting a person’s history on the internet is difficult and seldom entirely successful. A new industry has developed that deals with e-mails, comments and entire social media profiles. Does it work? By Steffan Heuer

108.8 billion e-mails are sent daily in the What people delete or believe they have comments left by others – friends on so- business world and more than two million ­deleted may actually lead a second life cial networks or entries in the archives of internet searches are answered by Google in many databases. There is no shortage commercial providers or authorities. It is – every minute! In the same 60 seconds, of prominent examples. For instance, in unclear who these “memories” belong to, 278,000 tweets are sent via Twitter, 1.8 a lawsuit between Kevin Costner and who can access them and who can mon- million posts in Facebook are liked and Stephen Baldwin, Costner was surprised itor them. 72 hours of video are uploaded to YouTube when Baldwin’s lawyers retrieved po- (see box). And these figures are surely tentially incriminating text messages There Forever dated by now. from his phone, which he thought long “Forgetting is essential for people. We Who can keep up with this flood of since deleted. Or the case of the British dispose of useless memories, and we wipe data – not to mention the cleaning and re- police consultant for youth issues, Paris clean what no longer seems important moval of information? Digital refuse is one Brown, who lost her job because of tweets for dealing with the present,” says Viktor of the unsolved problems of the 21st cen- about drinking sprees and other private Mayer-Schönberger, a data security expert tury, because its disposal, permanent stor- information. who teaches at Oxford University and has age and destruction raise several technical, It gets even more difficult when explored this topic in depth in his books legal and sociological questions. it comes to cleaning digital legacies of “Delete” and “Big Data.”

42 — Bulletin 2 / 2014 Illustration: Nana Rausch / QuickHoney — What Lasts? —

It is no longer possible even for vigilant the copies received by the recipients. If you citizens today to entirely delete their Binary Legacies want to prevent network service providers tracks online, says Mayer-Schönberger, and third parties from storing and evalu- because they cannot control what others Every day more and more information is ating data and metadata, you should avoid posted, liked and e-mailed – the digital share and transmit about them. However, leaving traces in the future. SnapChat is data volume grows and grows. However, it is not completely hopeless when it comes a byte is typically already the past only one of many apps that offers the option of to cleaning your digital identity, at least a few seconds after publication. destroying an image or text. However, the in part, and to protect yourself from un- conversations are not permanently gone pleasant surprises. A growing number of but can be restored with a little know-how. services and apps are available to help with Applications such as ChatSecure, Wickr this task. Number of e-mails per day (commercial) or Silent Circle, on the other hand, delete The basic rules are mundane: It is messages after they have been read, ensur- easier not to upload or share entries than ing the messages cannot be retrieved later. to remove them after the fact. Specifically, this means when registering or participat- 132.1 bn Forgetting Is Not a Right ing in a service, give serious thought to 2017 While business is booming when it comes whether each new entry contains details to cleaning the web, legislators are think- you may someday wish to take back. It is The flood of ing about how they can provide more rights also important to look into the privacy e-mail will continue to the individual. California was the first settings of providers like Facebook and to grow in the to pass a law penalizing “revenge porn,” or coming years. watch for their continual changes and plug the distribution of libelous sexual content. their data leaks from the start. If you use “We have gotten ourselves into this anonymous search engines such as Duck- predicament of saving everything in order DuckGo instead of Google you will leave 108.8 bn to retrieve it,” says the Dutch researcher behind no identifiable traces in your daily 2014 Paulan Korenhof, who studied deleting searches – the key piece in the puzzle of and forgetting in her dissertation. She leading an ostensibly private life. Source: The Radicati Group considers it essential to promote “a right to forget,” as the EU ruled at the start of Help with Deletion the year. “It’s like aiming a cannon at spar- Professionally cleaning or erasing of un- rows. It is often enough to make the infor- desired data records online is carried out … in 60 seconds … mation difficult for third parties to access by services such as reputation.com. They to protect the interests of all involved.” Be- monitor what is said about persons or com- cause the internet has become a world ar- panies and can remove entries or move 14 new songs are added (Spotify) chive, there is at least one party who will them down in the search results using 70 new names are registered (web domains) not press the delete key. For the time be- search engine optimization (SEO). That’s 72 hrs of video are uploaded (YouTube) ing, the best recipe is to be economical often enough, because few people click be- 347 new blog posts are added (Wordpress) with data. yond the second or third page of results. 571 new websites are launched (The search algorithms people use, how- ever, do this.) 3,600 images uploaded (Instagram) If you want to be deleted from the 11,000 active users (Pinterest) registry of large data brokers you can hire 11,000 search results (LinkedIn) companies like DeleteMe to monitor doz- 15,000 music downloads (iTunes) ens of databases for an annual fee. There is, 17,000 transactions (Walmart online) however, one catch. “It is unrealistic to ex- 20,000 new photos (Tumblr) pect to delete yourself entirely from the in- ternet,” says Rob Shavell, head of Abine, a 41,000 posts per second (Facebook) service that promises protection of privacy 83,000 dollars of sales (Amazon) online. “However, you can remove most of 104,000 photos shared (Snapchat) the information listed publicly from com- 278,000 tweets (Twitter) mercial services.” One solution for Twit- 1.4 mn minutes of telephony (Skype) ter is the free service Twitwipe. Yet delet- ing isn’t simply deleting here, either. Old 1.8 mn likes (Facebook) entries that were shared by other services 2 mn search results (Google) and archived are not affected by this clean- 20 mn photos viewed (Flickr) ing campaign. Steffan Heuer is a US correspondent and author of the book “Mich kriegt ihr nicht! Die The same goes for electronic commu- wichtigsten Schritte zur digitalen Selbst­ Sources: http://blog.qmee.com nication. Deleting your correspondence verteidigung” [You Can’t Catch Me: Key Steps for on LinkedIn or Facebook does not include Digital Self-Defense] (Murmann Verlag).

Bulletin 2 / 2014 — 43 — What Lasts? —

HOW THE YOUNGER GENERATION SHOPS Anything, Anytime, Anywhere A candy bar has more than 20 Facebook pages; young people share cars rather than buying them. Self-fulfillment? Absolutely. Security? That, too. Welcome to the brave new world of consumption, where almost everything has changed. By Anders Parment

Young people born between the early 1980s millennials report that they select goods in which ensures a high degree of market cov- and 2000 are members of Generation Y, a wide variety of price ranges, depending on erage. Milk is advertised as a “cool” prod- the so-called millennials. Coming after the situation. This generation has grown up uct; a candy bar like Snickers has over 20 the baby boomers (born after World War in a complex environment in which brands Facebook pages, some targeted to specific II) and Generation X (born between 1960 play an important role, a “branded society.” groups, others devoted to fans, competi- and 1980), the millennials have become the Owning a specific label serves a purpose; it tions, etc. world’s most thoroughly studied and most allows consumers to express their lifestyle. Bakeries sell fresh bread 24 hours a sophisticated consumers. Who are these Consumption is an essential way of show- day. People can order groceries online at members of Generation Y, and how are ing who you are. any time of day or night and have them de- they changing our approach to shopping? And to demonstrate who you are, livered to their doorstep. Newspapers are For the most part, they have never you need to call attention to yourself. The no longer being read on paper only, but on had to worry about material well-being and millennials know how to make themselves computers and cell phones, too. have enjoyed a high standard of living. Un- heard; they have grown up in a society A wide range of choices means less til the financial crisis hit, they had expe- that places little emphasis on data protec- loyalty. For the baby boomers, it was only rienced only a booming economy. Salaries tion, but a great deal on “sharing.” Shar- natural to remain loyal to local businesses. increased as prices declined. ing, in this context, doesn’t mean being Younger consumers, on the other hand, de- The millennials are born consumers, generous to others, but rather telling the cide where to buy on a case-by-case basis – and they were trained at an early age. Three world about yourself. Millennials “like” at a nearby store or from a faraway vendor out of five of their parents report having in- brands and products on Facebook; they via the internet. cluded their children in purchase decisions tweet about their experiences with compa- when they were very young. Generation Y nies, whether positive or negative, and they 2 — Products As Experiences has always had a wide variety of products post photos of things they like – or don’t Today, products like clothing or travel are to choose from, and that variety has only like – on Instagram or Pinterest. And of viewed in terms of experiences. Whereas increased. No generation before them had course, they comment on everything from baby boomers have always spent their va- so many things that they could buy; today a friend’s purchases to the products they cations in the same place, the millennials even the neighborhood grocery store carries have purchased from Amazon and other prefer variety. They want to get away from wasabi nuts, Irish Highland beef and mo- online merchants. home, but they also want to experience bile phone subscriptions. And then there’s That, in brief, is the situation today. something new, not what they saw on their the internet, something their parents had But how, specifically, do today’s 14- to last trip. Travel companies, like merchants never even dreamed of. 34-year-olds approach consumption? Stud- that sell other consumer goods, appeal to While educators may worry about ies and surveys by the Stockholm Business baby boomers and millennials in different the harmful effects of having so much to School have looked into four aspects of the ways. Members of the older generation rely choose from, the millennials themselves consumer behavior of Generation Y. They on retail stores to learn about new products; see it in positive terms. Only three percent have investigated changes in their purchas- millennials want to receive information di- of them say that it leads to uncertainty or ing habits and looked at differences be- rectly and choose for themselves where to frustration. The overwhelming majority tween Generation Y and the baby boomers. purchase a product. The role of a salesper- take it for granted that they will have ac- son in a store is of little importance. What- cess to a wide variety of products, and they 1 — Everyday Necessities (short-lived ever the product, millennials rarely seek consider that to be a good thing. consumer goods) advice in a brick-and-mortar store. When The selection has expanded – and be- Everyday products such as milk, bread purchasing clothing, for example, only 18 come highly stratified. Even small grocery and newspapers are being sold in increas- percent are “very likely” to ask for help from stores carry budget, organic, regional and ingly imaginative ways. They can be pur- a salesperson, compared to 31 percent of premium goods. Eighty-four percent of chased through a wide variety of channels, baby boomers. For members of the baby

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The online generation: The millennials (14- to 34-year-olds) are sophisticated customers. boom generation, the purchasing process that focuses on experiences, self-fulfill- The Bottom Line usually begins only when they enter a store ment and emotion, these services are taking Consumption patterns are undergoing a and ask for advice. A typical millennial, on on new meaning. Companies need to offer radical change. More products are avail- the other hand, has already gathered infor- them both online and offline, while main- able to choose from, information is be- mation before walking into the store. taining a consistent standard of quality. The coming increasingly available and custom- millennials do their everyday banking on- ers are responding immediately, wherever 3 — Consumer Durables line, but when they have a specific concern, they happen to be. So how can a company Baby boomers and millennials take very they expect brick-and-mortar banks to pro- win over these new and sophisticated cli- different approaches to the purchase of du- vide advice. ents? A 30-year-old woman recently told rable consumer goods, such as furniture or The baby boomers have always con- me, “Companies should concentrate on a car. Older people regard such purchases sidered it important to save and plan for providing a high-quality product. If they as investments; they want to own their cars. the future. Members of Generation Y are do that, their advertising will be credible. Increasing numbers of millennials, partic- interested in self-fulfillment, although In any case, we do most of the advertising ularly those who live in large cities, prefer they’re not willing to give up security. for them.” to rent, lease, share or borrow a car. Among They are enjoying life while planning for the baby boom generation, 73 percent are their future. Instead of thinking in terms very interested in purchasing a car, com- of “either – or,” they believe that “anything pared to 55 percent of Generation Y. is possible.” Millennials view cars much as they Young people clearly differ from pre- view a pair of shoes. Sometimes you want vious generations in terms of their behavior to wear sneakers, sometimes you’d rather and their approach to planning ahead. This wear a pair of suede boots. What counts is partly because of their age, and partly be- is the item’s function, the brand – and the cause times have changed. Paying off debts monthly cost. is an important goal for baby boomers; in contrast, millennials are willing to ac- 4 — Services cept debt in order to achieve certain goals, When purchasing banking and insurance such as purchasing an attractive home Anders Parment is an independent strategic services, millennials attach great impor- or enjoying a higher standard of living advisor who teaches at the Stockholm Business tance to practical considerations. In an era more quickly. School. His research focuses on Generation Y.

Photo: Tommy Ton / Trunk Archive Bulletin 2 / 2014 — 45 — What Lasts? —

The power of the water: Chiara Vigo by the sea in Sant’Antioco in South Sardinia.

Magical luster: Mussel silk in golden, gleaming threads.

46 — Bulletin 2 / 2014 Photos: Karin Desmarowitz (2) — What Lasts? —

HOW AN ANCIENT ART SURVIVES The Old Woman and the Sea Chiara Vigo is the last living person preserving the secret knowledge of mussel silk – a magical and precious cloth. Vigo is the master of an art that has survived for millennia. By Sandro Mattioli

Books have been written on how to brew Looking at this room, one might think we Out of concern for the endangered mus- beer. Baking bread is even described in the are observing an artisan at work. But Chi- sels that produce the filaments – and be- instructions for a bread machine made in ara Vigo quickly points out that she is a cause her knowledge cannot be traded for Japan. People enjoy them both, and both master, and that there is a big difference. A money. The byssus, she says, belongs to ev- have been around for thousands of years. master has students – she lives from teach- erybody and is there for everyone. In her But who still needs to know how to weave ing, not from producing. And even if it view, the sea is holy. “That’s why we must byssus? In ancient times, kings and priests looks just like a workshop, nothing is sold stop using it and polluting it for commer- clothed themselves in this material, a here. Only donations are permitted. cial purposes!” fine textile, light as a feather, soft and yet The windows in the massive walls let Chiara Vigo saw the power of the warm, woven from the filaments of the no- a bit of light through, shining on glasses of water with her own eyes when her grand- ble pen shell mussel. A protected species, colorful tinctures lining the windowsills. mother passed the mantle to her. She its shells reach sizes of up to one meter and Chiara Vigo takes back one of the feath- went to the sea with her and prayed to the grow tufts from each side, but the mol- er-light, grayish-greenish-brown clumps. water as she had always done, as Chiara lusk can spare only a few grams of the fine It looks like a pile of cat hair in which a Vigo still does several times a day. Sud- threads each year. Jules Verne described denly, Vigo says, a column of water rose this special cloth in his adventure novel from the ocean, five meters high, and her “20,000 Leagues under the Sea” in 1869. “We must stop using the sea grandmother said only: “So, now you can Today, people wear H&M, Zara or Boss, for commercial purposes.” let the water drop down again.” Chiara but not sea silk. So why do we still even Vigo, then just 27 years old, was now the need to know how it is woven? new master. In the small town of Sant’Antioco few splinters of eggshell and bits of leaves in the south of Sardinia, Chiara Vigo is are tangled. Then she takes a small brush Making Cloth and Contacts possibly the last person on earth who still with fine bristles, like one normally used Her task was solely to protect the knowl- has this knowledge. And the knowledge to brush a cat’s coat. edge and to pass it on to the next genera- extends far beyond just how to spin the “This is the sea silk in its raw form,” tion. That is why Vigo emphasizes that she filaments into threads and how to weave she explains; it is bits of shell and algae is a master, not only teaching her students cloth from them. Her knowledge is that of caught in its threads rather than eggshells. a craft but an entire way of life. A school an entire ancient culture – in some ways, This is the way the filaments come from that comes from the sea and in which the she is this old culture, which lives on in her the sea. Chiara Vigo has only desalinated power of the water plays a central role. It today, the master of sea silk weaving. If she them. “I soaked them for 25 days in fresh is a spiritual force: “My God is the lion of dies, this knowledge will die with her. water, changing the water every three the water, he commands everything,” says hours, day and night.” She then dried the Chiara Vigo. “Watch Out, It’s Going to Get Esoteric!” filaments in the shade. Glass cases dis- And this is why she comes to the mu- Wearing a pink wool sweater, Vigo sits play what these are transformed into after seum day after day, to a room of around at a small table in her sea silk museum, carding and spinning: golden shimmering one hundred square meters provided by her black hair, streaked lightly with gray, threads, embroidered in patterns on linen the city. This is where the master receives pulled into a ponytail. Beside her stands or woven into pure sea silk cloth. The cloth her students. There are no classes there, no a dark, heavy loom spanned with linen shines magically in the light. set hours, only cooperative work without threads. “This is going to be an esoteric Chiara Vigo could trade the sea time constraints, without payment. She journey, so watch out!” she says in greet- silk for untold sums of money, selling it teaches her students how to spin, natu- ing, looking the visitor in the eyes and to sheiks and the world’s other multi-bil- rally, first with wool and later – if they are smiling. Offering him a seat, she puts a lionaires. A Japanese group offered her a good enough – with sea silk. Vigo teaches tuft of fine strands into his hand. fortune for her knowledge. She said no. them how to dye the materials, and

Bulletin 2 / 2014 — 47 — What Lasts? —

guiles, when it sparkles and flashes and relationship with her mother, she tears up shimmers. Then, nothing remains to sug- the paper. She is the second-born child, gest that the threads originated as the and tradition demands that she is to fol- protein secretions of a mollusk rather than low her mother as master. “But there is one from a gold mine. small problem: I am so different from her, perhaps not as patient, and I don’t know if A Language No Longer Spoken I have the strength to carry on the whole The knowledge of the mussel silk has been scope of her work,” Maddalena writes. passed down within Chiara Vigo’s family for centuries. Vigo says that she can trace A Dying Tradition? it back over thirty generations. When the For Maddalena, this is not a straightfor- master prays to the water, she does it in ward decision, as evidenced by her writ- a language that is no longer spoken by ing. “It is not easy for me to talk about this, anyone. When she records the individual because most people I know think that I steps of her work, she uses ancient sym- absolutely must carry on the tradition, and bols. A rabbi who recently visited her from that it would be crazy to let the art die out.” the Sorbonne in Paris recognized both of Her mother is not one of these peo- these. The researcher found old Hebrew ple. This decision is completely up to expressions in the language. The art of Maddalena, says Chiara Vigo. Parents weaving mussel silk must also have been never “own” their children; they are only shaped in the Jewish culture. entrusted with them. But her daughter The training is conducted without still struggles with the decision, and fears any writing at all. Everything that there the immense responsibility. She worries is to know about weaving mussel silk is in that if she accepts it, she will be unable to Chiara Vigo’s memory. Her grandmother handle the task, and in this way, she will never repeated anything, Vigo says, she ruin everything. Or, on the other hand, was a silent master. She herself is 59 years if she decides not to accept, she will have old now, and the time is approaching to to bear the guilt for the loss of the art of pass the baton once again. Chiara Vigo has mussel silk weaving after millennia. First, yet to choose a successor. The power of the though, she is headed to Dublin to study. water will find someone, she says. And if The power of the water will take care not, the knowledge will come to life again of things. sometime, somewhere and somehow. One of Vigo’s students is Luca, ac- tually a sound artist, who is learning the secrets of dyeing from her. It’s a compli- cated subject. Some herbs used in dye- ing must be gathered according to the phases of the moon, and others depend on the prevailing winds. Otherwise, they keep their pigments to themselves. Vigo’s More than a craft: Chiara Vigo at work (above); nephew Marco is also one of her students. mussel silk in a linen cloth. Like many of her relatives, he bears the sea (“Mar”) in his name, like Mario, her hus- band, and Marianna, her daughter. Marco how to weave. But she is also a teacher of is just thirteen years old, but he has been humanity, because as a master, she has to coming to her to learn how to work with make contacts as well as cloth. Says Vigo, the spindle for a year and a half now. a master needs to find out what the people But in the end, perhaps the mysteri- coming to him or her need. ous power of the sea will choose one of her But tradition demands that Chiara two daughters as the next master. Perhaps Vigo find her successor within the family. Maddalena, who does not bear the name Then, she will pass on to the next master of the sea but rather the land, an island of the recipe for the tincture used to bring out the same name. In any case, Maddalena is that golden shimmer in the byssus. interested. But she does not want to talk to It is dark within the old stone walls, reporters about it. She allows us to quote and several halogen spotlights cast their from a letter she wrote to her mother. She light through the gloom. However it is has a very special mother, it says, but ev- only in sunlight that the silk truly be- ery time when she tries to write about her Sandro Mattioli is a freelance journalist in Berlin.

48 — Bulletin 2 / 2014 Photos: Alessandro Cani; Elisa Locci accentus [ak’tsεntus]: supports projects involving social and humanitarian commitment, culture and sports, and nature and ecology – donors can set up a subfoundation – long-term, professional support in implementing the founder’s wishes – infrastructure available free of charge, and many more benefits

ACCENTUS charitable foundation, Bleicherweg 33, CH-8070 Zürich, +41 44 333 03 33 www.accentus.ch Supported by CREDIT SUISSE AG — What Lasts? —

HOW WE FUNCTION Earning, Voting, Sharing What makes us tick? The question cannot be answered in the abstract but is best studied based on specifics. Over the following pages, we will take a closer look at three cases – each one meaningful in its own way. Humanity’s economic image: We compare ideas of the major economic theorists and apply them to today. Who is still current and whose star is fading? Humanity’s political image is examined on the basis of the elections in India, the world’s biggest democracy: If popular participation prevails in this enormous country, does it represent a value applicable to all? For humanity’s religious image, we visited Hans Küng, the famous Swiss theologian who has spent decades studying the Golden Rule, which appears in a similar form in all religions and in many cultures (“Do unto others as you would have them do unto you.”). A portrait of a man set on bringing people together.

50 — Bulletin 2 / 2014 Illustration: Rami Niemi — What Lasts? —

Homo oeconomicus, politicus and religiosus in a boat

Bulletin 2 / 2014 — 51 — What Lasts? —

means of measures controlling the move- The Economic Person ment of capital, and the government steered the funds into important indus- tries promising high growth rates. This behavior was very similar to that of the principalities and lead- ing states of the 16th through the 18th centuries. Adam Smith coined the term mercantilism to describe the system pro- tecting a leading domestic industry (agri- culture at the time) by means of duties and deeming the accumulation of export sur- pluses as a central objective of economic policy. But over time, mercantilism pro- duced bad investments, since protecting existing industries hindered the growth of new industries, falling short of the goal of increased prosperity. China’s leaders re- cently came to the same realization. They passed a major reform package in Novem- ber 2013 to help the country move from a strictly controlled market economy to one that is to a large extent free. In 1776, Adam Smith provided the first comprehensive description of the advantages of a free market economy based on the division of labor in his work “The Wealth of Nations.” David Ricardo (1772–1823) described in greater detail the gains in wealth brought by free trade, and in doing so contributed to the repeal How to Better Ourselves of the Corn Laws (protective tariffs on Economists have debated man’s motives for centuries. grain imports) and thus to the liberaliza- tion of British trade. These were powerful Their conclusions could help to create institutions to factors in Great Britain’s rise to the lead- promote the prosperity of individuals and of the community. ing industrial nation of the 19th century. By Oliver Adler Self-interest and Creativity That an atomistic and “chaotic” market economy could have better results than one that was seemingly well organized Economists are unnecessary in paradise Greater prosperity requires greater pro- may at first seem astonishing. Its main because there is an abundance of time and duction. This can be achieved either advantage is greater emphasis on indi- resources. But Adam and Eve were driven through the accumulation of resources, vidual incentives. As Adam Smith said, out of paradise, and those circumstances or savings, that are invested in the means “It is not from the benevolence of the changed dramatically. As written in Gen- of production or by increasing productiv- butcher, the brewer, or the baker that we esis, “in toil you will eat of it (your land) all ity. No one is questioning the logic behind can expect our dinner, but from their re- the days of your life... until you will return this. But how should the goal be reached? gard for their own interest.” The so-called to dust...” From that moment on, econo- One possible answer is good planning. neo-classical economic theory, one that mists became relevant for the world. Their Even though the Soviet-style planned today still forms the core of economic task: to answer the fundamental question economy was an obvious failure, this is policy textbooks, demonstrates in a more of how individuals and society as a whole not as evident in the case of more flexible formal way that an economy built upon can improve living conditions and attain variations. consumers maximizing their self-interest prosperity despite limited resources and The Japanese and even French mod- and producers maximizing their profits time. Surprisingly, their answers to this els of forced industrialization pursued af- – Homines oeconomici, in other words – question have not changed over the course ter the Second World War led to a strong results in the most efficient allocation of of history despite the enormous economic and sustained upswing. More recently, limited resources. The central point being progress and growing complexity of eco- China used a similar development model. that market prices for goods and factors nomic structures and technologies. Savings were kept inside the country by of production provide the participants in

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the economy with instructions on how to vators reflected in specific actions? Nobel free riders. Such institutions create trust, achieve the best result. Prize laureate in economic sciences Ama- and trust in turn reinforces cooperative Joseph Schumpeter (1883–1950) also rtya Sen, a prophet in issues surrounding behavior. Cooperative behavior must be argued that in a capitalist economy, the the theory of wealth, argues that Aristotle learned beginning in the nursery. Just as entrepreneurial dynamic leads to growth already described ethical motivations as important as the contributions of the fam- and prosperity through “creative destruc- important for economic actions, and that ily, school and university to the develop- tion.” The market must clear the ground for Adam Smith also underscored moralistic ment of productivity-increasing “human economic as well as cultural development. considerations as just as decisive for peo- capital” could be their contributions to Economists like Philippe Aghion demon- ple’s actions as self-interest. cooperative behavior – to citizenship, in strate that the markets’ flexibility, particu- Ernst Fehr and other researchers other words. One would think that the larly in late phases of development, is im- have proven in experiments that a lack of experience of countries with successful portant when wealth must be increased by self-interest and cooperative behavior are institutions could trigger learning effects means of innovation rather than by imitat- in no way exceptions to the rule, but are elsewhere, and thus contribute to greater ing existing techno­logy. Planning imposed regularly observable. However, coopera- prosperity. from above limits the potential for wealth tive solutions are fragile and can be sub- How then to create prosperity? The in such phases of development. verted by free riders. Because non-coop- answer, as expected, is not clear. But two erative modes of behavior – ranging from aspects seem to be crucial. First of all, eco- Public Goods and Altruism seemingly harmless retention of informa- nomic well-being is the result of the peo- However, the pure market economy tion, through cheating and to corruption ple’s urge to improve their circumstances. model is an abstraction that the real world and violent criminal behavior – can have a When the urge to “maximize benefit” is only reflects in an extremely limited fash- high economic cost, economists must ask stifled, individual creativity cannot flour- ion. First of all, it assumes that the market themselves whether and how cooperation ish. If competition is prevented, there will participants have all the information rel- – and thus prosperity – can be promoted. be no successes. Secondly, successful so- evant for their decisions. The model does cieties are characterized not only by com- not take into account any information Genetics or History petition but also by cooperative behavior. gaps, uncertainty and, especially, asym- A look across various societies and coun- Institutions that create trust reinforce co- metries in the information between mar- tries reveals significant behavioral differ- operation and prosperity. The trick is to ket participants, although they are very ences of the participants in the economy. find a balance between the two forces. common in reality. Does a used car buyer Even if some of these are only stereotypes, know whether it is a lemon? How can a the Scandinavian countries and Switzer- lender in Renaissance-era Venice find land seem to be characterized by cooper- out if a borrower is creditworthy? Does ative behavior while Greece and Italy are a shareholder know whether the board of identified by less cooperative behavior. directors and the management will act in Japanese and Chileans seem to be more his best interest? Does the public know cooperative, while Chinese and Argen- whether nuclear power plant operators or tinians seem more individualistic and bank directors have planned for adequate less cooperative. More important for the safety margins? economists and sociologists is the ques- Secondly, the model assumes that tion of whether these qualities – to the the title rights for all resources are clear extent that they actually exist – are un- and protected. But what happens if this changeable or adaptable. How import- is not the case? The issue of these “pub- ant is genetics, how important is history lic goods” which are not traded on the and the culture that results from it? Co- market is a central one. Pollution of the operative group behavior of immigrants environment and global warming are ex- from apparently uncooperative societies amples of a sub-optimal allocation of re- in their new countries indicates the latter. sources that can result from the lack of Economists like Daron Acemoglu title rights and hence prices to regulate have pointed out the importance of so- trade. Market failure is a widespread phe- cietal and governmental institutions for nomenon. explaining economic successes and fail- Finally, there is the more fundamen- ures. Strong constitutions and separation tal question of whether the Homo Oeco- of powers at the government level can re- nomicus model also reflects people accu- inforce cooperative behavior and hinder rately. Is striving for self-interest really the uncooperative behavior. dominant behavior? Aren’t the interests Through their disciplinary effect on of family, work colleagues, acquaintances financial policy, politically independent and strangers also important motives for central banks attending to the stability the individual? Aren’t the desire for justice of the currency can promote cooperative Oliver Adler is Head of Economic Research at and ethical principles also powerful moti- behavior in the economy and discourage Credit Suisse.

Bulletin 2 / 2014 — 53 — What Lasts? —

On the face of it democracy in India is The Political Person an impossibility. Democracy, defined as a political system that permits changing rulers or government on a regular basis through a ballot, allows for decision-mak- ing by the representatives of the largest part of the population, and permits free- dom of thought and assembly and the rule of law, is considered a rare flower that can blossom only in a homogenous and rela- tively wealthy society. In fact, philosopher John Stuart Mill was of the opinion that democracy was almost an impossibility in multiethnic cultures and would never work at all in multilingual societies. More modern observers like Selig S. Harrison, who worked as India correspondent for the Washington Post, gave democracy no chance at all in India. In his book “India: The Most Dangerous Decades,” published in 1960, he predicted that India’s many contradictions would cause its break-up. In 1967, Neville Maxwell from the Lon- don Times thought that the elections held that year would be India’s last. But the cit- izens of India defied these and many other prophets of doom. The country has indeed been convulsed by political assassinations, civil disturbances, riots, insurgencies, and long, paralyzing strikes, and has witnessed unseemly fist fights inside the chamber. The Indian Experience Things got so bad that democratic rule The founders of modern India went to great lengths to was even suspended for two years in the 1970s. But by then democracy had taken guarantee the country’s 800 million citizens the right to vote. root and grown. They knew that the only way the country would be able to function successfully was as a democracy. By Nayan Chanda “The greatest gamble in history” Deep ethnic, religious and linguistic diver- sity aside, India was also supposed to have A short time ago, as the world’s largest members of Parliament. Over a thousand been doomed to authoritarian rule because democratic nation began its elections, it parties contesting the polls represent just of its crushing poverty and illiteracy. The seemed a good time to ask whether de- an infinitesimal part of this huge country’s first general elections held in 1952 were mocracy is a universal value. Not everyone diversity in terms of ethnicity, faith, lan- called the greatest gamble in history. Po- thinks so. But the 1.2 billion Indians who guage, castes and customs. litical scientist Seymour Martin Lipset ex- are in the process of voting would answer Of course, the fact that one-sixth plained that a country has to reach a level this question with a resounding yes. of the world’s population has embraced of affluence and education before it can be On April 7, India embarked on an democracy does not prove the universal- ready to exercise democratic rights. He has electoral adventure the scale of which the ity of its appeal. But the fact that India convincingly shown how the scale of per rest of the world has never experienced. It is an important leader of a growing trend capita income reflected how authoritarian will end on May 12 when the results will of democratization of the world is an im- or democratic a country was. The richer be announced. (At the time of publica- portant argument. Today, 60 percent of ones more democratic and the poorer more tion, the outcome of the elections was not the world’s countries are democratic while authoritarian. Political scientist Robert J. yet known.) Some five million civil ser- in 1989 this was true of only 41 percent. Barro went one step further: “Democra- vants and police will set up polling booths The Indian experience defies both the con- cies that arise without prior economic de- across the land and others will begin a trek ventional wisdom about the rarity of the velopment … tend not to last.” In India, it through hills and jungles in jeeps and on bloom of democracy as well as the more was the other way around, economic devel- elephant back carrying small electronic modern justification offered by authoritar- opment followed democracy. The elections ballot boxes. By May 12, some 800 million ian Asian states about the impracticability currently being held therefore directly con- voters will have cast their votes to elect 543 of democracy in traditional societies. tradict the theories of Lipset and Barro.

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In fact, the experience of 22 months start- disenfranchised and oppressed sections they see in universal franchise and free- ing in 1975 when democracy was curtailed of the society through affirmative action. dom. But those who deny democracy be- in India proved how the idea of freedom Linguistic diversity was protected by cre- ing a universal value argue that for poor and elected government had taken root ating a federal system of states roughly co- people bread is more important than the in poor India. Claiming that opposition inciding with linguistic regions and avoid- right to vote. Sen points to the 1977 Indian criticism and democratic protests threat- ing imposition of the majority language election when the electorate roundly voted ened national security Prime Minister In- – Hindi. against Indira Gandhi’s party for having dira Gandhi got the president to declare Because the political parties de- brought in the emergency rule. These elec- an emergency, suspending all democratic pended on votes from minority groups, tions confirmed that “people in economic rights. This led to massive government re- they made a special effort to support their need also need a political voice. Democ- pression. By decidedly throwing her party interests. Ironically, India today has more racy is not a luxury that can await the ar- out of office in the 1977 election that fol- caste, region and language based political rival of general prosperity.” lowed, the Indian electorate showed how parties than when the country’s demo- India’s embrace of democracy, how- much they valued their democracy. cratic constitution was being deliberated. ever, does not mean that the country has Instead of hampering the growth of de- reached the level of affluence or freedom -as The Answer Is Democracy mocracy India’s political parties based on sociated with western democracies. In re- The experience of India has, in fact, caste and religious communities seem to ality, Indian democracy has had an imper- turned all these apparent certitudes about have embraced electoral tools as major fect record. In many ways getting elected who may or may not become democratic means of advancing their interest. In fact, has become a far more important aspect of on their head. Conventional wisdom: A recently India fragmented again by creat- democratic rule than being accountable or country needs stability and homogene- ing a 29th state – Telangana, carved out of truly representative of the interest of the ity to have universal suffrage. Yet, the in- Andhra Pradesh. Despite the governance electorate. There has been corruption, vio- troduction of democracy in India, in fact, difficulty that such political fragmentation lence, fraud, abuse of power and attempts brought about stability and unified the caused, the community-based movements to repress freedom of the press and due country. When the British left their bu- have nevertheless strengthened the roots process. But the right to elect a candidate reaucratic colonial state and its police and of democracy. that they trust and to vote out a govern- army in the hands of a small elite – the ment that has failed to deliver remains an Indian National Congress – there was no India’s Far-Sighted Elite irreversible gain for Indians of all walks of certainty that India would adopt a dem- Although some form of communitarian life. Free and fair elections have been held ocratic system. In fact, it was reasonable governance was known in ancient India, regularly and with a level of participation to expect that the massive religious vio- and its cultural traditions boast of hetero- that would be the subject of envy in many lence and displacement of population that doxy and pluralism, the robust democracy developed countries. A vibrant media re- accompanied independence would have of today is a western transplant. India has mains independent; and the courts have called for stern authoritarian rule by the democracy not because a rising middle been free of political interference. People representatives of the Hindu majority. But class emerging from the Industrial Rev- can move freely around the country. India’s Constituent Assembly consisting olution was clamoring for universal fran- As noted above, flaws have appeared of mostly western-educated liberals em- chise. It is because India’s political elite and will no doubt continue to dog the In- braced secular democracy as the answer had the wisdom or perhaps, as historian dian political system, but for 1.2 billion to the country’s challenge of poverty and Sunil Khilnani writes in his The Idea of citizens constitutional democracy has be- religious division. Long before indepen- India, “in a fit of absentmindedness” em- come an integral part of Indian life. dence was achieved, Jawaharlal Nehru, braced democracy. a close companion of Mahatma Gandhi, India offers a rich example of how wrote in his book “The Discovery of In- a conjuncture of circumstances and the dia”: “I am convinced that nationalism can determination of the elite made the ide- only come out of the ideological fusion of als of democracy take root. The acceptance Hindu, Muslim, Sikh and other groups in of democratic norms by a vast, poor and India.” Only a secular democracy could largely illiterate population through praxis help create the national bond. stands as a major argument for considering The founders agreed that only by democracy as a universal value. creating a state based on the consent of its Indian economist and philosopher diverse population and able to bring de- Amartya Sen has argued that in order Nayan Chanda is head of the publication at the velopment and eliminate social injustice for a value to be considered universal it Institute of Globalization at Yale University. He was born in 1946 in India and is the author of could India maintain its national integrity. does not have to have universal consent. several books about politics in Southeast Asia National identity that was forged during Rather, the claim of a universal value is which have been translated into numerous the struggle for independence should be that people anywhere may have reason to languages. Chanda studied history in Calcutta strengthened through acknowledging di- see it as valuable. The fact that an increas- and international relations at the Sorbonne in Paris before he became a journalist and went to versity and adopting democratic decen- ing number of people all over the world Saigon, Vietnam, to work as a correspondent for tralization. Universal suffrage could be have been steadily moving towards de- the “Far Eastern Economic Review.” Today, given greater meaning by pulling up the mocracy certainly demonstrates the value he lives and works in New Haven, Connecticut.

Bulletin 2 / 2014 — 55 — What Lasts? —

that has become a clarion call for world The Religious Person peace: “There will be no peace among the nations without peace among the religions.”

Parliament of World Religions An older and somewhat tired Küng re- ceives the visitor at his home in Tübin- gen at the end of March. If you ask him about his famous phrase, the 86-year old becomes very alert. Over the past 20 years Küng has done extensive research on the world religions of Judaism, Christianity and Islam as part of the “Global Ethics” project, sponsored by his Foundation on Global Ethics, which he founded in 1995 and directed until stepping down last year. In his research, Küng discovered an as- tounding consensus among world religions regarding the questions of justice, respect for life and humanity. Global ethics naturally have an im- pact that reaches far beyond any religion, acting essentially as a moral global agency. “Global politics require a foundation based on a global ethic, a world ethic,” believes Küng. And for him, this foundation lies in the “Golden Rule of Reciprocity”: “Do unto others as you would have them do unto you." The Parliament of World Religions, assembled from representatives of all world “Do unto others as you would religions every six years, stated in its “Dec- laration toward a Global Ethic” in Chicago have them do unto you.” in 1993 that this Golden Rule represents The Golden Rule is a fundamental law of all religions. the “inalienable, absolute norm for all ar- eas of life, for family and communities, for Still, it should be followed more – especially in the business all ethnicities, nations and religions.” The world. This is what rebel theologian Hans Küng is Golden Rule is – if you will – an ethical calling for. And, he is also planning for the end of his life. and minimal consensus, a fundamental principle that, though worded differently, By Hansjörg Schultz is found in all religions. Confucius (551 to 489 B.C.) formu- The man works hard. He has written thou- the priest and professor shied away from lates it like this: “Never impose on others sands and thousands of pages over the last insider theological jargon and pleaded for what you would not choose for yourself.” 50 years. His books, printed in editions of a more authentic approach to talking about And in Christianity: “So in everything, do millions and translated into over 30 lan- faith. At the same time, Küng broke rad- to others what you would have them do to guages, have made Hans Küng one of the ically with traditional theological teach- you.” (Matthew 7:12). In his book “Global most quoted theologians in the world. In ings. For example, he believes that the Ethics Project,” Küng states that Imman- Küng, intense curiosity joins with a radi- Bethlehem story is incorrect. A virgin did uel Kant’s Categorical Imperative is really cally open and global mindset. A native of not give birth to Jesus in a barn – the Cath- a secular paraphrase of religion’s Golden Lucerne, Switzerland, Küng’s theological olic dogma is a myth. And the resurrec- Rule: “Act only according to that maxim research and writings draw from related tion of Jesus, the central tenet of Catholic whereby you can, at the same time, will disciplines, including philosophy, history, belief, should not be viewed as a “strictly that it should become a universal law.” but also political science, economics, liter- historical event.” This rule, says Küng today, requires a ature and music. Parallel to this rejection of church rethinking on the part of every individual: Küng’s 1974 global bestseller “On teachings, Küng began nurturing a grow- “Before I do something, I have to ask my- Being a Christian” made him popular, but ing interest in the major religions of the self: What consequence will that have for also resulted in the Vatican imposing a world, engaging with them in an ongoing others?” A maxim for action that directly teaching ban on him in 1979. In his book, dialogue. He also formulated the phrase opposes our fast-living, dog-eat-dog soci-

56 — Bulletin 2 / 2014 Illustration: Rami Niemi — What Lasts? —

ety. This is a rule that Küng would like to especially to the global economy. And It was difficult enough for the enthusiastic see parents teach their children. Finally, it this does not mean that “profit, whether skier to give up parallel turns and a cool is also a rule that should be reintroduced it is justified in and of itself, justifies any descent at 80. Later, the complaints of old and adhered to in the business world, means, including breach of trust, capital- age began to mount: An aching back, fail- where, in Küng’s opinion, the relationship ist greed and social exploitation.” Küng ing eyesight, hearing-aid and, most of all, between morals and profit has dropped to would like to see the return of more “old the onset of Parkinson’s have placed limits an all-time low. school bankers” who understood that not on the life and work of someone who is in everything that yields a profit is permis- fact very used to sitting down to work at his Doing Business with Integrity sible. And Küng is convinced that by using desk every day. Küng’s Golden Rule as it applies to busi- the Golden Rule of Reciprocity as an ethi- “I live on call,” states Küng. He finds ness was, in fact, implemented almost one cal framework, banks can still be very suc- the increasing infirmity of his body as a hundred years ago by American cloth- cessful. Küng does not want to overstep his “harbinger of death.” He is fighting it with ing manufacturer and salesman Arthur boundaries in the business world; he is a medications and exercise. But even at 86, he Nash, who lamented at the beginning of theologian, not an economist. It is not his wants to be able to decide freely for himself. the 20th century that many businessmen, intention to provide advice on what should Christians among them, were simply social be done to fix the economy. His warnings “There is no obligation to continue living.” Darwinists. He then did something about address dealings that are, in his opinion, “I do not want to live on as a shadow of my it. He introduced his vision of the Golden out of control on a moral level. former self,” wrote Küng. He is consider- Rule at his store in Cincinnati as the “only When Hans Küng wrote “Doing ing ending his life perhaps with the aid of useful” formula for business success and Business with Integrity,” he was thinking an assisted suicide organization when he then backed it up by making his employees about everyone involved in today’s compet- no longer sees any hope of a human exis- fellow shareholders. With double success: itive global economy who, in his view, had tence. “One has a right to continue living, Profits rose and everyone got a piece of the lost their moral compass. Businesspeople but there is no obligation to do so,” believes pie. Just two years after introducing Nash’s as well as top managers, stock exchange Küng. He does not want to end his life, he “Golden Rule in Business” as a fundamen- traders, politicians and scientists had to be wants to complete it. As Küng says, he is tal business principle, the workers in his reminded of their own set of moral values, full with life, not tired of life. company earned on average 20 percent more Küng proposed. It could be his last great act of rebel- than before. New employees were hired due This also applies to politics and the lion against the Catholic Church, which to the high volume of orders. Workers also world’s crisis areas. Hans Küng also notes has fundamentally rejected assisted sui- had a say in new hires, because they had a with a touch of sadness that more and more cide. But the pious theologian Hans Küng major interest in having new colleagues who regions are following the other Old Testa- writes that nowhere in the Bible does it say also believed that the good of the many was ment rule “An eye for an eye, a tooth for a that humans must stick around until the important. The number of workers in Nash’s tooth” instead of the Golden Rule. Some very end. Instead, he believes firmly in life company rose from 29 in 1919 to 3000 in regional conflicts are reminiscent of the after death and therefore does not want to 1923. Revenues climbed during the same Cold War. “We are being thrown back to a hold onto his earthly existence at any price. period from 26,000 to 1.1 million US dol- time before 1989,” complains Küng. Küng is not only unwavering in his beliefs, lars. As the clothing industry collapsed in he is also a perfectionist. He has already the wake of the stock market crash in 1929, Life Experience of a World Traveler picked out his plot at the Tübingen Stadt- workers made a collective decision to lower Even at the age of 86, the theologian from friedhof. It lies directly next to his neigh- their wages in order to avoid becoming Sursee does not let things rest by simply bor and friend, the great rhetorician Wal- unemployed. complaining. In his books and articles, ter Jens. Hans Küng would like to put the which he has had published in newspapers spotlight on one word that may sound a like the New York Times or the Süddeut- bit old-fashioned: integrity. “Anständig sche Zeitung, he reveals findings that are wirtschaften” (Doing Business with Integ- the result of decades of research – and the rity) is the title of a book that the theo- life experience of a world traveler. Now logian wrote in the wake of the 2008 fi- he says it is up to the church, the business nancial crisis. In his writing, he borrowed world and politicians to implement at least the phrase “human integrity” from Thomas some of these findings. Mann. After the horrors of World War II, An honorary citizen of many coun- Mann referred to the Ten Commandments tries, he likely published his final book last as the “ABCs of Human Behavior.” Küng year. “Erlebte Menschlichkeit” (Expe- took Mann’s thinking further by calling rienced Humanity) is the third and final the Ten Commandments – and the Golden volume of Küng’s autobiography. The last Rule is basically another commandment – chapter of this 750-page volume drew spe- as religion’s most essential contribution to cial attention. Küng called it “Am Abend Hansjörg Schultz is a moderator for the TV program “Sternstunde Religion” a common human ethic. des Lebens” (Twilight of Life). In it, he (Great Moments in Religion) and until the In this age of globalization, Mann’s speaks very candidly about contemplating beginning of 2014, was religion editor “ABC of Human Behavior” must apply, assisted suicide. for Schweizer Radio and SRF television.

Bulletin 2 / 2014 — 57 — What Lasts? —

HOW TO INVEST IN SUSTAINABILITY The River as Income Stream Conservation finance can help nature and also produce returns: A modern form of nature conservation. By Simon Brunner

Shade is free: Planting trees cools the waters of the Rogue River in Oregon, USA.

58 — Bulletin 2 / 2014 Photo: © eoVision / DigitalGlobe, 2014, distributed by e-­GEOS — What Lasts? —

ur shade is cheap, and it Conservation finance includes all forms of tainably developed goods from an ecosys- has great side effects,” investment in nature conservation: gov- tem. The Freshwater Trust is involved in a says Joe Whitworth, ernment funds, philanthropy, and also, wide range of river programs (its motto is president of the Fresh- increasingly, investments from private “We fix rivers”). There are plans to add the water Trust in Portland, Oregon. The persons with clear goals for returns. In- first fund for investors soon. NG“OO in the Pacific Northwest has devel- come from nature conservation projects oped a natural system for cooling river wa- can come directly from compensation or USD 200 Billion Market ter – which is important for the environ- equalization payments, or indirectly, for According to the report from Credit ment there. And for modern nature instance through the certification of sus- ­Suisse, WWF and McKinsey, the world- conservation, because the Freshwater wide conservation of biodiversity and Trust places great value in the quantifiable ecosystems would require about 300 to properties of the measures it uses. Whit- 400 billion dollars a year. Only 51.8 bil- worth explains: “Measurement is the lin- Conservation Finance lion dollars is currently invested annually, gua franca between nature conservation some 80 percent of which comes from and business.” Conservation finance includes investments governmental sources. in an ecosystem that are aimed at sustaining It works like this: Waste water from The report concludes, “In order to the system over the long term. factories is often heated to kill bacteria, meet global demand, private-sector in- but then it is too warm to be discharged vestment must increase by a factor of 20 USD billion directly into the river and must first be 51.8 to 30, to between 200 and 300 billion cooled. The Clean Water Act requires riv- Market-based: dollars per year, based on the assumption 10.4 ers in the US to be sufficiently clean to be 3.8 Direct sales (e.g. certificates) that governmental and philanthropic drinkable, to allow people to swim in them 6.6 Green commodities (e.g. funds will double.” Are these strong and to ensure that fish can live in them. organic foods) growth rates realistic? The report argues The northwest is home to a large salmon 41.4 that investments in income streams from population, “and the river temperature Non-market-based: nature are attractive because they diver- needs to be less than 13 degrees Celsius for >0.1 Debt-for-nature swap sify a portfolio (nature is not subject to them to survive,” says Whitworth. (debt relief for newly macro-trends) and because returns are Local companies build expensive industrialized countries) generated over a longer period of time. 1.7 Philanthropy cooling systems, and “pay some 25 cents 6.3 Overseas development aid “Individual and institutional inves- per kilo-calorie of cooling,” Whitworth 7.8 Subsidies for agricultural tors have a strong interest in conservation explains, but “the easier way to cool river reform finance,” write the authors of a recently water is with shade.” With shade? “Yes. 25.6 Domestic budget allocation published article in the Stanford Social What we do isn’t magic. We plant trees Innovation Review. However, there is along the edge of the river.” The sys- currently a lack of suitable investment tem is efficient: “For half the price, we Source: Global Canopy Program (2012) properties and both the risk-return pro- can cool twice the amount of water,” he files and the positive impact on nature says. In addition, this protects the banks need to be more transparent. from erosion and develops new habitats Back to Oregon. In 2012, US Presi- for animals. 78% of conservation dent Barack Obama spoke at an en­ But the greatest innovation of the ­finance funds come from vironmental conference about farmers Freshwater Trust is not in planting trees planting trees on the banks of the Rogue but in the measurability of the effect, ­industrialized nations. River to cool water from factories and says Whitworth. “Only because we know 59% of these are invested generate additional income. Obama exactly how effectively a certain num- praised how the problem was being solved, ber of trees can cool per surface unit of domestically; the remainder saying, “It worked for business, it worked measure can a market develop.” Only in is transferred to emerging for farmers, it worked for salmon.” this way can companies outsource and offset the cooling of water, for instance, markets. with certificates.

Investing in an Ecosystem Literature The work of the Freshwater Trust is one example of conservation finance. In a joint - “Conservation Finance: Moving beyond donor funding toward an investor-driven approach,” report by Credit Suisse, the WWF and Credit Suisse, WWF and McKinsey & Co McKinsey&Co., conservation finance is (2014). defined as a “mechanism through which - “Making Conservation Finance Investable,” financial investments are made in an eco- Stanford Social Innovation Review (2014). system aimed at sustaining the system over the long term.”

Bulletin 2 / 2014 — 59 — What Lasts? —

LIVING WITH TRAUMA “I wouldn’t have minded dying.” Johan Otter and his daughter, Jenna, were barely an hour into their hike when they found themselves face-to-face with a grizzly bear. Desperately trying to protect Jenna, Otter was attacked by the bear. A conversation with someone who survived against all odds. By Beatrice Schlag and Zohar Lazar (illustration)

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Bulletin 2 / 2014 — 61 — What Lasts? —

n shirtsleeves and with a cap on his the other hikers. The easy but spectacu- even farther than her father, Jenna landed head, Johan Otter seems very young, lar trail above picturesque Grinnell Lake on another ledge. very healthy and athletic – which, is not exactly a secret. Jenna went ahead, She lay down and rolled into a ball. in fact, he is. When Otter, a slim disappearing behind a bend in the path. She knew something that she hadn’t had 53-year-old, removes his cap and rolls up Johan Otter was taking pictures. He time to tell her father: It was a mother Ihis sleeves, he reveals a body laced with couldn’t get enough of the beautiful scen- bear. Round the bend in the path, Jenna scars. His shaved head is a patchwork of ery. All of a sudden Jenna came running, had caught a glimpse of two young bears skin grafts. His right arm is covered with screaming something incomprehensible. before she ran back toward her father. If indentations and scars. “You don’t even Suddenly the bear was right in front of she had played dead when the bear found want to know what my neck, back and him. It was a grizzly, weighing at least her, she might have a chance. The mother thighs look like,” he says. 200 kilograms. Its mouth wide open and grizzly’s aggression was triggered by the Otter, a physical therapist, husband, its ears flattened to its head, it charged fact that Jenna and her father had come too and father of two grown daughters, was at Otter, biting into his left thigh. It bit close to the cubs. born in the Netherlands but has lived in him again and again, his arms, shoulders San Diego, California, for many years. He and back, and tore at his scalp with its A Parent’s Instinct makes an attempt to lighten the mood. “I claws. Johan Otter felt no pain, heard In the meantime, the grizzly had found was never a particularly masculine type. nothing, and didn’t even notice the smell Jenna’s father. The bear ran “faster than Being macho always seemed ridiculous. of the bear as its mouth, wide open, was anything I’ve ever seen” toward the man But to be quite honest, for a skinny guy like directly in front of his face. “There was no lying on the ground, charging at the me to fight a grizzly – that’s not half bad, room in my mind for smells or sounds. backpack that Otter was still wearing. now that it’s over.” It’s not that he’s try- My body was deciding which percep- “Then it picked me up by my backpack ing to sound cool. He allows himself just a and shook me back and forth, like a rag touch of pride, which is nothing compared doll.” Suddenly he remembered that his with the emotional roller coaster ride that He felt no pain, heard daughter wasn’t wearing a backpack. “If Otter has found himself on for the past the bear does this to Jenna, she’ll die,” nine years, a time that has been marked by nothing, and didn’t thought Otter. “So I have to make sure a mixture of incredulity, gratitude, anger that the grizzly stays here.” But doesn’t and fear. even notice the smell your instinct to protect your own life win Asked what first comes to mind when of the bear. out in a situation like that? He imme- he thinks of the encounter with the grizzly diately says no. “I think the instinct to that nearly killed him, he says, “It’s an ex- protect your children is one of the most perience I wouldn’t wish on anyone. But at tions were important and which weren’t. powerful of all. It was much the same for some point it becomes part of who you are. Even today, I’m astonished by how na- the bear, I realize today. It had to get rid You’re left with an incredible sense of grat- ture works. Smells, sounds, pain, fear, of me so that its young would be safe.” itude that you’re alive. It’s a miracle that panic – all of those things were superflu- Otter was still feeling no pain, al- I haven’t just survived, but can even run ous, so they were switched off. I had to though the grizzly was attacking him marathons again. It’s not something money be alert if I wanted to save my daughter. I again and again, and he knew that he can buy. My bank balance didn’t make any don’t think my thoughts had ever, in my was in mortal danger. “If I had died and difference when we were on the mountain. life, been so focused.” Otter knew that the story had run under the headline ’Fa- The people who helped me weren’t inter- he had to get away if he was to survive. ther dies a gruesome death defending his ested in my assets. It’s a gift to realize how To the right of the narrow hiking trail daughter,’ that wouldn’t have been accu- many things in life money can’t buy.” He’s was the mountain wall, to the left was rate,” he says. “It wouldn’t have been grue- embarrassed by the tears in his eyes. “It’s a steep dropoff. But some seven meters some. It would have been very bloody, but hard for me to cry in front of other people,” below him he saw a ledge covered with for me it would have been okay. It wouldn’t he says. “But I can’t help it. I was so lucky. brushwood. Falling on it would hurt, but have hurt.” But his daughter wasn’t yet safe. That thought always overwhelms me. I still it wouldn’t kill him. Otter managed to sit up. He grabbed hold think that I didn’t deserve it.” He dived for it, thinking, “This will of the rough fur at the bear’s neck with his be a good story to tell at the office.” Today left hand and jumped. The bear fell along Suddenly the Bear Was Right There ... that seems incredible. “Who thinks some- with him. He will never forget the look in The trip to Glacier National Park, located thing like that at such a moment?” Land- its eyes: “It had light brown eyes. We proj- on the border between Montana and Can- ing in the branches, he looked up. His ect so many emotions onto animals. But its ada, was a high school graduation present daughter was struggling in vain to open a eyes were completely emotionless. No fear, for his daughter Jenna, who was 18 years can of pepper spray. He heard her scream no anger. I was just something it had to do old at the time. His wife, Marilyn, and Jen- and saw the bear charge toward her. He away with.” na’s sister, Stephanie, stayed home in San yelled for her to jump down to him. Jenna The two of them landed on another Diego. Johan and Jenna were the hikers in says that she didn’t hear him. She doesn’t ledge that was covered with brush. Otter the family. remember whether she lost consciousness didn’t know that it was the same ledge that They set out early on the morning and fell down the precipice, or whether she had broken Jenna’s fall. He had done ev- of August 25, 2005, to get a head start on deliberately let herself roll down. Falling erything he could to keep the grizzly away

62 — Bulletin 2 / 2014 — What Lasts? —

A medical miracle: Johan Otter in a brace to A long journey: Otter and his daughter Jenna in stabilize his cervical vertebrae. 2007, returning to the scene of the bear's attack. from her, but instead the bear was now per- of her head.” She later told him that the was scared. “Am I going to die?” he asked. ilously close. Jenna was less than 30 meters grizzly had clamped her entire face in its “Not up here,” said the ranger. Secured to away and heard her father scream, some- mouth for a few seconds, biting her skull a stretcher, the grievously injured man was thing he doesn’t remember today. Johan and tearing off the skin on the right side flown to the nearest parking lot, where an Otter lay on his stomach and thought, “I’m of her face, from her lower lip to her chin. ambulance was waiting. a stuntman in a movie. It’s a Western, and He asked whether she could see. She said At the hospital in Kalispell, Mon- the cowboys and Indians are fighting it out. she could, and asked how he was. He an- tana, the doctors could hardly believe that But my injuries are real. Why isn’t the pro- swered that he was in pretty bad shape. Johan Otter was still clinging to life. In ducer yelling ’cut’? At some point some- addition to fractured cervical vertebrae, thing brings you back into your body.” No Strength to Yell for Help bites on his skull and broken ribs, he had He let himself drop a third time, Father and daughter began to call out 25 open wounds. The doctors gave him a thinking that he was going to die any- for help. Jenna didn’t dare crawl to him. tetanus shot and antibiotics, then trans- way. Below him, the face of the mountain Her back hurt. She didn’t know how se- ferred him to Seattle. They lacked the re- seemed to drop straight down. A small rious her injuries were. Johan Otter could sources to treat such a serious case. Jenna boulder slowed his fall, and a short dis- hardly stand. He took off his backpack remained in Kalispell. Along with the in- tance below he landed upright on an out- and pulled out a jacket. Somehow he jury to her face and a fractured skull, she cropping that was just big enough to ac- managed to climb up to the next ledge. had sustained a deep bite to her shoulder. commodate two feet, but too small for him Finally he was able to sit down. He was to sit or lie down. The bear looked down at dizzy. He shivered, lacking the strength No Thoughts of the Future him. It couldn’t jump, the outcropping was to yell for help. Otter’s second cervical vertebra was frac- too narrow. Eventually the animal turned Suddenly he heard Jenna talking to tured, as well as the sixth and seventh. The away. Now Otter was angry. And terribly someone. “Dad,” she called, “There are physical therapist knew that there were tired. He was sure that Jenna had been able people here. They’ve sent for help.” The first only two options: fusing the upper portion to escape. He looked at his injuries, felt the hiker who slid down the precipice to reach of his spinal column or stabilizing it with deep wounds on his head. him looked at him in shock. The hiker later a brace made up of screws and rods. He His head was covered with blood, he said that he had never seen anyone in such didn’t want his spine to be fused; the risk couldn’t see a thing. He managed to open horrible condition. More and more people of lifelong disability was too great. As they one eye: “I thought God, Allah, Buddha, arrived, taking off their jackets to cover tightened the screws of the brace on his whoever you are, thank you.” He didn’t the shivering man with the bloody face skull, he thought his head would explode. care who it was, or whether he really ex- and making sure that he stayed awake. He was bandaged from head to toe. isted. “It was all so surreal,” he says, look- Because all that Johan Otter wanted to do Panic attacks tormented him. “The men- ing back. “Maybe I had to thank some- now was sleep. He was shaking with cold. tal suffering was worse than the physical thing surreal. Even today, it doesn’t matter A young woman lay down over his chest to pain. You’re totally dependent on other to me who or what it was. I think my father shield him from the wind. The thought oc- people.” Otter says that the brace on his is right: Death must be a good thing, since curred to him that she would never be able head was just as intolerable as it looks in no one has ever returned.” to get the bloodstains out of her clothes. the pictures. He was given morphine, Va- Seconds later the worst happened: He will never forget that loving gesture lium and oxycodone for his pain, anxiety He heard his daughter scream. Then from a total stranger. and depression. His sleep while on such there was silence. The grizzly had found It was impossible for a helicopter to powerful medication was not particularly her. Otter knew that he had to be calm, land on the steep terrain. The park ranger, restorative, but at least he was able to rest or the bear would become even more en- who had now arrived, dismissed the idea for a few hours. Otter refused to allow raged. He called out to Jenna. “She an- of carrying Otter on a stretcher to a place himself to think of the future: “My only swered immediately. The grizzly was gone. where a helicopter might be able to land: goal was to survive until tomorrow. I was And Jenna’s voice sounded strong. What He would never survive the transport. crying constantly. I didn’t know what I I didn’t know was that she was crouched Time was running out. A helicopter with looked like, and I didn’t want to look in over, her finger touching a hole at the back a cable winch was the only option. Otter a mirror. Later on I saw the photos

Photos: Otter family (2) Bulletin 2 / 2014 — 63 — What Lasts? —

Happy survivors: The Otter family in early 2014. The scene where the attack took place: Grinnell Lake in Glacier National Park, on the Canadian border.

that were taken when I was admitted to tors came. He didn’t want to burden any- him. “You have to recognize that some of the hospital. Then I understood why the one. He was concerned about his younger them will bring you to tears. But you need people who had found me were so hor- daughter, Stephanie. All of the focus was to trust that nature will not overwhelm us ror-stricken.” on him and Jenna. Would Stephanie be with all of our emotions at once.” able to handle that? During the night Jenna’s response was very different. A Hero for Once in His Life came the nightmares. And when his spinal She never wanted to talk about the bear. After the brace to support his spinal col- brace was removed, after three months, it It took three years for him to talk her into umn came a series of skin grafts, with skin seemed as if a mere gust of wind would going with him to finish the hike they transplanted from his back to his skull. His break his neck. had started. Jenna Otter is now a third- wife, Marilyn, took leave from her school Only a few weeks later he started year medical student in New York. She job so that she could be with him. He cried running again. And he discovered that the recently started seeing a psychiatrist. But when he saw her, feeling both relief and images of the grizzly bear that were con- she only told her mother about that, says a sense of guilt. It was all his fault. The stantly in his head changed when he was Johan ­Otter. “I don’t think that it’s a co- trip had been his idea. It was his fault that running. “It’s been nine years now,” he says. incidence that she’s going to be a doctor,” Jenna was in the hospital, injured and far “For about seven years my mind would only says her father. “Her patients will help her away from home. And it was his fault that let me remember so much. Most people heal herself.” the birthday present for his wife was still in can’t understand that. I knew intellectu- Two months after he returned to his car in Montana. His wife said, “You’re ally what had happened, but I didn’t have a work, his boss offered him her job. He my present.” visceral sense of it.” accepted that position, and while work- After a few days he was able to take ing also wrote the dissertation that would his first few steps. Jenna came for a day Letting His Emotions In earn him a doctorate in physical therapy. from Kalispell. She was walking with a In his memory, the encounter with the He is now senior director of Occupational cane. Her face was swollen. She was wear- grizzly was divided into short scenes. “It’s Health and Wellness, and he is sometimes ing a back brace, and her arm was in a sling. hard to explain,” says Otter. “My body amazed by how easy it is for him to accept “Dad, I have to thank you for saving my decided, little by little, what I could han- criticism in a meeting. “I look at people and life,” she whispered. There was no need for dle. At some point something told me, think: You have no idea what I survived. I thanks, he told her, but it made him happy now you can look as Jenna falls from the don’t care if I’m admitting a weakness or to hear her say it. The story of the hero trail. Now you can accept the fact that she you’re criticizing me. You’re not anywhere who had fought off a grizzly bear made was so frightened that she almost jumped near as terrifying as that bear.” the rounds of the hospital. He saw it more into the abyss. And now you can experi- Last year, Otter achieved what he skeptically. “It’s great, for once in your life ence what it was to nearly bleed to death.” calls his PBP, his post-bear personal re- someone thinks you’re a hero. But I didn’t But it took a long time for him to discover cord. Next year he wants to run in the see it that way. We Europeans don’t tend to that talking was the only thing that really Boston Marathon again. feel as heroic as Americans do.” helped. “Every day, while I was running, Two weeks and two days after be- I told myself what had happened. I would ing attacked by a grizzly, Johan Otter was always reach the point of thinking about able to go home. His wife had arranged what else could have happened, realizing for a hospital bed to be set up in their liv- that I really could have died. Then I’d start ing room. Now he was receiving his med- to shake. We’re programmed to plan every ical care from Scripps Memorial Hospital aspect of our lives. But it just doesn’t work in San Diego, where he had worked for that way.” years as a physical therapist. Physically, he He had to allow himself to recover. was making rapid progress. But there were He had to let other people help him, psychological issues. He was optimistic which was even harder. He learned not to Beatrice Schlag lives in Zurich and Los Angeles and exuberant, almost manic, when visi- be afraid of the emotions that came over and writes for Weltwoche magazine.

64 — Bulletin 2 / 2014 Photos: Otter family (2) We’re all part of the team Main sponsor since 1993

credit-suisse.com/nationalteams — What Lasts? —

“Solving Universal Human Problems”: Traditional Warriors in New Guinea.

66 — Bulletin 2 / 2014 Photo: Reinhard Dirscherl / dpa / Keystone — What Lasts? —

WHAT WE CAN LEARN FROM TRADITIONAL SOCIETIES “A BMW in Zurich and a pig in New Guinea have similar functions.” Jared Diamond studies people in traditional communities. The American scientist believes that western societies can learn a lot from the tribes still living much as they did hundreds of years ago. Interview: Simon Brunner

Professor Diamond, how close are we to our developed civilizations learn from people ment and learn from their mistakes ancestors who lived in caves? still living like our ancestors? because later, as adults, they will have to We are so close that if you encountered a Traditional societies have conducted be responsible for their own lives. Like cave dweller today, on the streets of Zurich, thousands of natural experiments to solve other Western visitors who have spent dressed in modern clothing, you would universal human problems. We consider time in traditional societies, I am always not be able to tell. The genetic differences some of these tests to be admirable and impressed by the social skills and self-­ between our bodies and those of the cave worth adopting. Specifically, I am think- confidence of the children. dwellers are invisible to modern people, ing of how traditional societies raise their such as teeth that are slightly smaller on children as self-confident individuals, In our Western society, older people are often average today, the invisible enzyme lactase keep older people socially engaged, and excluded. How do traditional societies treat and a genetic resistance to certain infec- develop a clear awareness of danger. their older members? tious diseases in some modern people. However, there are other examples where They’re all very different. In the worst we say “Thank God that we have dis- case, the elderly are routinely killed or But our behavior has changed drastically carded that behavior,” like killing children abandoned. This applies mainly to no- over the centuries. and the elderly in some societies. madic societies and to societies living in Yes and no. Our repertoire of behaviors is marginal environments. In contrast, most not fundamentally different from that of You write, “We seem to have lost the value of sedentary traditional societies afford eleven thousand years ago. We are capable the extended family – in the West, all the people a more satisfying old age than in of killing, and we are also capable of pressure falls on the parents.” What do the modern industrial society, because caring for sick people. Today, as in the New Guineans do better? the ­elderly live their lives surrounded by past, the behaviors we adopt depend on In traditional societies, biological parents their children, relatives and life-long the society and the circumstances. are not the only role models for the child­ ren; practically all the adults in the village We no longer hunt and gather, but we spend serve that function. Having alternative a great deal of each day at the computer. role models is just as important for children Is our mental development lagging behind today as it ever was. I have numerous Jared Diamond, 76, is often referred the progress of our times? friends in America and Europe who had to as a polymath. He studied That’s an interesting question! One could the misfortune to be brought up by over- physiology, later expanding to evolutionary biology and biogeo­ assume, for example, that knowing how burdened biological parents, and who graphy. Today, he is Professor of Geography to read requires special brain adaptations preserved their sanity only as a result of at the University of California, an ornithologist, that have only evolved within the last few contact with another healthy adult – even environmentalist, speaks 12 languages and plays thousand years since the invention of if this was nothing more than a weekly the piano. Diamond belongs to a number of writing. But members of traditional piano lesson with a sympathetic teacher. renowned associations (including the National societies learn to read just as quickly as Such contact is guaranteed in many Academy of Sciences) and has received numerous members of modern societies. This shows traditional societies, but not in ours. awards, including the National Medal of Science and the Tyler Prize for Environmental Achieve- that the human brain is a flexible organ ment. He has published over 600 articles; his book that can carry out tasks that brains were You also praise traditional societies for their “Guns, Germs, and Steel: The Fates of Human never called upon to perform throughout liberal approach to parenting. Is it really true Societies” won the Pulitzer Prize in 1998. He our history until recently, such as reading that children in tropical rainforests can recently published “The World until Yesterday: or now tweeting. spend more time playing outdoors despite What Can We Learn from Traditional Societies?” wild animals and hostile tribes? (Viking Press). Diamond and his wife live in You have spent decades researching indige- These tribes usually believe that children Los Angeles; they have two sons. nous tribes in New Guinea. What can highly should be allowed to explore and experi-

Photo: Andreas Labes Bulletin 2 / 2014 — 67 — What Lasts? —

friends and play an important social role in the eyes of those who own none or only societies. New Guineans laugh at the right until the end of their lives. very few. same situations as I do; they cry, get angry, get scared and rejoice about the Traditional societies are often divided into What do we have that traditional societies same things as I do. By contrast, they have small groups of “ friends” and “enemies” and are most envious of? an entirely different relationship with a large group of mostly hostile “strangers.” During my first season of fieldwork, when their spouse, friends or dangers. What can a globalized, open society learn asked what he would do with the money from such closed communities? he had just earned as my co-worker, a New Has your own behavior at home in America We can be grateful that our own world is Guinean responded, “I am going buy changed? no longer so rigidly divided. But tradi- myself an umbrella!” That showed good Yes, especially in that I have learned to tional societies do derive one advantage judgment, since there was annual rainfall develop a realistic awareness of danger. In from the small, stable circle of “friends.” of 500 mm per square meter in the area the West, we are afraid of terrorism, war They gain proximity to life-long friends. and rare epidemics. But driving is a much In Europe and especially in the US, where greater danger for us. Or for an older man people are more mobile and move fre- There is no advantage like me, falling and breaking something. quently, old people often no longer have A slippery shower floor can be a greater any contact with their childhood friends. in the higher levels danger than the jungle – this is something In my case, at 76 I still have contact with of ­violence in traditional that I have learned. only two people who I know from my own childhood. A friend of mine who worked societies. for many years in a remote, rural area of This interview was conducted on March 3, 2014. Africa puts it this way: “The lives of rural where he lived. In general, traditional Africans are materially poorer, but so- societies are envious of our access to tools cially richer, than the lives of Americans – like the umbrella – to modern medicines, and Europeans.” to education and to food.

It sounds surprising, but you say that in And peace? The evolutionary psychologist some respects, jungle tribes have healthier Steven Pinker says that in pre-state societies, lives than we do. around 15 percent of people die violent deaths They are healthier due to the relative compared to around three percent in the early absence of those illnesses related to our stages of the modern state system, and probably modern way of life: diabetes, cardiovascu- less than one percent in today’s society. lar disease and strokes. In traditional It is true that pre-state societies experi- societies, people are relatively free of these ence a great deal more violence on average ailments resulting from an interaction than societies organized in a state system. between genes and a modern lifestyle. An argument escalates, each act of vio- These include a lack of physical activity, lence results in more violence, and that high calorie intake, high sugar and salt cycle can go on for a long time. There is a intake and insufficient fiber intake. lack of centralized violence and, along However, traditional societies are also with it, the means to deescalate. Just in unhealthier because of the frequency of case you were suggesting it, no, there is no infectious diseases curable by modern advantage in the higher levels of violence medicine but not curable under the in traditional societies, and there is conditions of the traditional societies. nothing at all to be learned from it. Those These result in a lower life expectancy. levels are a tragedy in which societies without state government are trapped. Are there commonalities in social matters between us and the people who you research? You have spent forty years commuting Of course. An astounding example: between New Guinea and the US. What kind A BMW in Zurich and a pig in New of a relationship do you have with someone Guinea have similar functions. Both are who was still building stone axes twenty years status symbols and utilitarian items at the ago? Is it a relationship of equals? same time. A BMW can be used to drive No. Our access to modern technology to the grocery store when it is raining, but and the opportunities it offers exceeds also holds a higher status in the eyes of theirs. Their ability to survive in the those who can only afford to drive a Smart. jungle exceeds ours. I find it fascinating to In New Guinea, a pig can be eaten but it discover where our relations differ and also has a practical utility like a car. A how they are the same compared to person who owns pigs is elevated in status relations between members of traditional

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THE KNOWLEDGE OF OUR ANCESTORS

High Tech in Stone and Bronze People are inclined to rate the present too highly. Many of the achievements that we think of as new already existed in earlier civilizations. Here are a few examples, compiled by Mathias Plüss.

Cinema (4000 BC) Brain Surgery (1450 AD) Fast Food Restaurants (50 AD) Numerous wall drawings have been found Making cranial openings, or trepanning, The Romans called it a “thermopolium” – in Neolithic caves that tell stories of sword was the preferred method for treating cra- which is a fancy word for fast food restau- fights or successful hunts. Some research- nial trauma and brain diseases in some rant. The food, often peas or beans, was ers believe that these caves were prehis- places 10,000 years ago. The technique cooked in advance and kept warm in clay toric cinemas. The scenes are arranged was mastered by the Incas 600 years ago basins on a counter. Customers ate stand- so the images coalesce into a film-like in modern-day Peru. They were able to ing up – there were no seats. Because most ­sequence right before the viewer’s eyes. precisely cut, saw and drill holes in skulls people did not have a kitchen, these fast Accompanied by a narrator’s voice and and were familiar with various disinfection food restaurants were very popular. In music, these Stone Age events were surely methods. More than 90 percent of patients Pompeii, where some 20,000 people lived, no less impressive than a visit to a 3D survived the operation unharmed and excavations have unearthed nearly 100 movie today. lived, in some cases, for decades afterward. such restaurants.

The Sit-Down Toilet (2500 BC) Precision Tunneling (550 BC) The Hair Roller (1400 BC) In the cities of the Indus culture, in mod- Digging a tunnel is not especially diffi- Some Egyptians (both men and women) ern-day Pakistan, there were private toilets cult; all it takes is raw power. Digging a spent hours on their hair, makeup and and bathrooms with fresh water systems. tunnel from two sides is another story. It shaving their body hair. The upper class The toilets were made of brick and had requires intelligence, as well as high-pre- had a full beauty case, replete with cop- wooden seats – waste matter went directly cision measuring instruments that ensure per mirrors, ivory combs, razor blades, into public sewers. The technical standard the height at both ends of the tunnel is eyebrow tweezers, blush, eyeliner and lip- of the construction was extraordinarily the same, and that digging is going in the stick. Some households even had ornate high. The elaborate network of canals re- right direction. If everything goes well, instruments made of bronze for curling quired particularly precise calculations. the two sides will meet in the middle – their hair. and thus save half the construction time. The Greeks were the first to accomplish this endeavor, when they built a kilo­meter- long aqueduct through a mountain on the island of Samos. Mathias Plüss is a physicist and freelance science journalist.

Photos: Hamish Park; Kjell B. Sandved/Okapia; Prisma/UIG via Getty Images; DeAgostini/Getty Images; Berthold Steinhilber/laif; Brooklyn Museum, Charles Edwin Wilbour Fund, 37.654E.Brooklyn Museum photograph Bulletin 2 / 2014 — 69 — What Lasts? —

WHAT MAKES GOOD ART Seriousness and Sincerity The more modern the art, the more difficult it is to judge. Once, you could buy a Picasso painting for less than a penny; nowadays, it would be worth a billion dollars. But how do you know beforehand? An introduction by Will Gompertz Pablo Picasso (1881–1973): Les Demoiselles d’Avignon(Paris, June–July 1907). Oil on canvas, 243.9233.7 x Acquired cm. New York, Museumfrom of the Modern estate Art of Lillie (MoMA). Bliss. P. 333.1939 © 2014, ProLitteris, Zurich. DIGITAL IMAGE © (2014)The Museum of Modern Art/Scala, Florence

Ahead of its time: Picasso’s Les Demoiselles d’Avignon (Paris, 1907).

70 — Bulletin 2 / 2014 — What Lasts? —

n the 19th century, when mass Of course, there’s nothing new in the in the twentieth century, and if sold pri- marketing was still in its infancy, problem. From the dawn of the age of vately could feasibly fetch a billion dollars. the American businessman John modern art, which can be dated to around Back in 1907, when the paint was still wet, Wanamaker made this observa- 1850, it has been very hard to judge which nobody would have paid a penny for it. tion about the exciting but notoriously works of art will last and which won’t. unIscientific new method of promotion: And that’s because the role of the artist How Do You Separate the Wheat from “Half the money I spend on advertising has changed drastically. Unlike the art the Chaff? is wasted,” he said, “The trouble is I don’t produced in the classical style, in which Picasso was simply way ahead of his know which half.” the artist took old ideas and executed time. Even poet and art critic Guillaume The same could be said for col- them brilliantly, modern art requires the Apollinaire, leading voice of the Parisian lecting art, particularly if you’re in the artist to form new ideas and execute them avant-garde scene, was not yet ready for market for contemporary work. I have brilliantly, and that creates a paradox for him. It would take another thirty-odd walked around many a private collection the collector and critic alike. years before Picasso was acknowledged of what once might have been sold as cut- The truth is, however much we all for his genius. The same is true of Jackson ting-edge art, acquired at great cost by an might protest the opposite, we actually Pollock’s Abstract expressionism and for enthusiastic collector over several years, prefer what we already know. The ambi- Van Gogh’s distorted images rendered but which had palpably not passed the tion to spot the next Picasso or Pollock with saturated colors. Their paintings test of time. are now worth tens of millions of dollars, The Bright Young Thing who was but when first produced couldn’t even be all the rage last year – and in whom the Throughout the modern given away. collectors invested heavily – is now con- That inherent complexity of spot- sidered dull by the artworld cognoscenti, period people have raced ting contemporary art of lasting merit and that video artist who was hotter than is even more acute today. The challenge Venice in July a decade ago has become to buy junk. of sorting the wheat from the chaff has nothing more than a poor imitation. As never been so difficult. The twenty-first unpleasant as this is for collectors, it is century collector has to operate in a mar- not as unpleasant as the comprehensive – and perhaps to take the opportunity to ket that has grown exponentially over re-evaluation of their once much-prized buy his or her work at what would later the past two decades. Never has so much artworks. The market price for work by prove to be a bargain price – is thwarted art been produced for so many. The art an out-of-favor artist drops faster than by our natural conservatism. History market has gone from being a bijou busi- the apple that inspired Newton to for- suggests that even if we were to be pre- ness in which a few wealthy individuals mulate his law of gravity. sented with the chance of buying such propped up the careers of a handful of How then, does a collector avoid an epoch-defining work, we’d probably artists, into a burgeoning global industry such pitfalls, and purchase art that is pass it up. in which thousands of newly rich collec- not only aesthetically stimulating, but Throughout the modern period tors vie for a slice of the art pie. Artistic also retains – or better still increases – people have raced to buy junk while at productivity has gone into overdrive to its value? the same time turning their noses up at satisfy this demand. Artists are produc- artworks by then unknown artists like ing large volumes of artwork for a con- Writing Off 70 Percent Van Gogh, Manet, Pollock and Du- stantly growing market. While for businessman John Wanamaker, champ. Even the young Picasso, whose You can see it in the huge, white- advertising meant wasting half his money, genius was already recognized by the Pa- walled commercial galleries that rub I would estimate that the risk is much risian avant-garde, was told that one of shoulders with stores selling other lux- higher when it comes to contemporary art. his paintings was a failure. The painting ury goods in the world’s most upmarket From an investment point of view I’d say in question was the Demoiselles d’Avi- streets. You can see it in the hundreds of around 70 percent of the money spent is gnon, which he showed to friends and glamorous pop-up shops from Miami to partially or totally irredeemable. And no critics when it was nearing completion Hong Kong, which go under the collec- one is immune to poor judgment. Cura- in 1907. Instead of the gasps of wonder tive name of Art Fairs. And you can see it tors are just as likely to make a mistake as he hoped for, Picasso heard only howls sold expensively at Sotheby’s or Christie’s enthusiastic private collectors. The ware- of derision. Matisse even accused him of at their increasingly frequent contempo- houses of the great museums are packed to trying to destroy modern art. rary art sales. You can see it everywhere, the rafters with works that cost the insti- So despondent was Picasso (1881– you can buy it anywhere, but of all those tution plenty but will probably never see 1973) about the wholly negative reac- thousands of pieces, which are the few the light of the exhibition room. Even Sir tion to his giant canvas, he took it off its that future generations will be queuing Nicholas Serota, the esteemed and pow- stretchers, rolled it up, and left it unfin- up to see at MoMA, Tate or the Pom- erful Director of the Tate galleries in the ished at the back of his studio where it pidou? UK, says he never knows what to think stayed and gathered dust for years. To- when faced with a new piece of work by day the painting, which is owned by the A Urinal Changes the World a contemporary artist. If he finds it hard, MoMA in New York, is considered to be The task of trying to identify the mas- what chance is there for the rest of us? perhaps the greatest work of art produced terpieces and important works of

Bulletin 2 / 2014 — 71 — What Lasts? —

the future should start with one word: But as the committee was to find out, you tisse and added the magic ingredient: his sincerity. It doesn’t matter what feeling can destroy an artwork but you cannot way of looking at the world and express- an artist is attempting to evoke in the destroy an idea. Duchamp changed art ing himself. viewer, or what message is being com- forever. A great work of art does not have municated – unless the work has been to be beautiful or immediately likable. executed with utter seriousness and to- It Must Be Good In fact, many artworks now known as tal sincerity, it will last no longer than Today the art world can’t get enough great masterpieces were thought highly a piece of summer fruit. Even Marcel of him. And that’s a bit of a problem. offensive when first exhibited, such as Duchamp’s joke-filled art, which at first There’s far too much work being pro- Edouard Manet’s Olympia and Willem glance might appear flippant, verging on duced in the spirit of Duchamp. It is col- de Kooning’s Woman I. Tastes change. silly, was executed with exceptional rigor lectively known as Conceptual Art, most Carl Andre is an US Minimalist artist and intelligence. of which is ill conceived and lame. As the who produced a sculpture called Equiva- When Duchamp (1887–1968) US Minimalist artist Sol LeWitt wrote lent VIII in 1966. It consists of 120 fire- picked up a white porcelain urinal from in 1967, Conceptual Art is only as good bricks which, laid out as per the artist’s J. L. Mott ironworks in 1917 and signed as the idea. If the concept is weak, so is instructions, were configured into a two- it R. Mutt before entering it for inclu- the art. It’s a view that can be applied brick deep rectangle. The Tate gallery sion in what was then New York’s big- to all contemporary art, be it conceptual, purchased the work for 2,000 pounds in gest-ever exhibition of contemporary art, abstract or figurative. If the fundamental it must have seemed a puerile and atten- idea underpinning a work of art is not tion-seeking act by a dilettante artist. compelling, illuminating and important, But art that lasts has to Plenty of people still believe that to be then nor is the work. But art that lasts has the case. to consist of more than just a powerful consist of more than just But it wasn’t an asinine gesture. It idea; it must be executed with great pre- a powerful idea. was a profoundly serious idea delivered cision and skill. with a wry smile. Duchamp chose a uri- Really good art tends to be the prod- nal as his subject to challenge the notion uct of an obsessive mind that has strug- that art had to be beautiful. The reason gled to overcome problem after problem the 1970s and put it on display. The Brit- he bought it from a shop as opposed to in order to construct something of lasting ish press was outraged at this “wasting of crafting or painting his own was be- importance. It is possible that the final taxpayers’ money.” cause he wanted to question the assump- execution is quick – as was the case with Roughly thirty years later, the Tate tion that an artwork had to be physically Duchamp and his urinal – but the pro- once again acquired an unusual artwork. cess of getting there will have been long This time they chose to buy a line of peo- and hard. ple. More specifically, they bought a People must have If you are looking for art that will piece of paper upon which the Slovakian last, look first at the journey the artist artist Roman Ondak had written the in- assumed it was an absurd took to reach the point where he or she structions for a performance artwork. He stunt by a dilettante. is finally making pieces for public view specified that a handful of actors should and possible sale. Understand the intel- create a queue outside a doorway or in- lectual motivation behind the work. Are side an art exhibition. Once in position, the issues being explored timely and vi- they were all to adopt an air of patient ex- made by an artist: He was asking what tal? Does the artist have a personal con- pectation, as if something were about to is art and who is an artist? And the uri- nection to the subjects? Is the work con- happen. The idea being that the queue’s nal gave him a way of demonstrating the nected to art history but breaking new presence would intrigue passersby, who power art has to affect our minds. He ground? In other words, is it idiosyn- might either join it (which, in my expe- took something mass-produced and in- cratic and original? rience, they often did), or perhaps walk expensive and then, by simply chang- alongside it, wondering what they might ing its context by displaying it in an art It Does Not Have To Be Beautiful be missing. ­gallery, turned it into something that Originality is essential in the modern This time it remained calm. There was unique and valued. That was the era. There is little value in copying, un- was not so much as a murmur: no criti- plan anyway, but it didn’t work out quite less the artist makes it his or her sub- cism, no outrage, not even a selection of like that. ject. As Picasso said: “Good artists copy, gently mocking headlines from the wit- Instead of exhibiting Duchamp’s great artists steal.” By which he meant tier end of the tabloid press – nothing. urinal as the rules stipulated it should that if you copy all you are doing is rep- (any artist who had paid the entry fee was licating the pre-existing; copying by its It Must Be Skillful entitled to have his or her work shown), nature is limiting and reductive. To steal Notoriety is harder to come by in the the exhibition committee smashed it into though, is liberating and dynamic. Every world of art nowadays as it has moved a thousand pieces (the Duchamp urinals great work of art is full of the ideas and into the mainstream of everyday life. you now see displayed in museums are a techniques developed by others. Picasso But the fundamental attributes of a re- series of replicas endorsed by the artist). stole from El Greco, Cézanne and Ma- ally good work of art remain the same:

72 — Bulletin 2 / 2014 — What Lasts? — Carl Andre (born in 1935) Equivalent VIII, 1966; Bricks; Object: 127 x 686 x 2292 mm; Collection, Tate © 2014, ProLitteris, acquiredZurich. 1972. Photo: © Tate, London 2014

One hundred and twenty bricks arranged in two rows as a rectangle: Equivalent VIII by Carl Andre, 1966.

It must have authenticity; a seriousness; Trinidad to Peter Doig’s studio and take a sincerity and have been executed with my pick – his work is never dull. I would a brilliant precision. And it must have end my art-buying spree in Berlin, in the something original to say that either company of the Turner Prize-winning makes us look at the familiar afresh, or sound artist Susan Philipsz, and over a to encounter the unfamiliar. It doesn’t leisurely lunch ask if she would accept a matter if you like it or not – that can commission to make a sound work for my come later. garden. And with that haul, I’d go home – a What Should I Buy? very happy man. So, whose work would I be collecting if I had a few million spare to build an art col- lection? I’d definitely be in the market for a piece by the Brazilian conceptual artist Will Gompertz is Arts Editor at the BBC, the first Cildo Meireles. And while I was down person to ever hold the position. He is considered Rio way, I’d pop into Beatriz Milhazes’s to be one of the most influential cultural journal- ists in the United Kingdom. He previously worked studio and pick up one of her beautiful as communications director of the Tate Gallery, baroque-meets-Tropicalia paintings. I’d an art critic and a magazine founder. Gompertz has fly to Chicago to see what Kerry James received numerous awards, and named one of the Marshall was up to and hope to buy one 50 most creative people in the world by New York’s Creativity magazine. His most recent publication of his large acrylic paintings, in which is “What Are You Looking At?: The Surprising, all the characters are of African descent. Shocking, and Sometimes Strange Story of 150 And from there I would take a trip to Years of Modern Art” (Penguin).

Bulletin 2 / 2014 — 73 — What Lasts? —

WHAT DEFINES A CLASSIC STYLE Emancipation Wears Black No other dress is as versatile as the “little black dress” that Coco Chanel designed 88 years ago. The amazing career of a garment that has always been in style, despite having changed very little over the years. By Amy Holman Edelman

What makes a simple black dress, intro- and the demi-monde. With her little black duced by Coco Chanel in 1926, as fresh dress, Chanel was able to blur that line. Her today as it was 88 years ago? There are at career in fashion began in 1912, when she least six explanations: started making hats for women of the demi- monde, kept women and actresses. – It conveys independence, strength, sensuality, glamour – and even a hint of A New Freedom danger – and as such highlights every What changed? The end of the war in 1918 facet of a woman’s life. led to greater prosperity in the United – It is form-fitting and slimming. States. The mid-1920s saw the advent of – It doesn’t show dirt as easily as lighter-­ “flappers,” young women who drank alco- colored dresses. hol and were sexually active. They wore – It is versatile: It looks just as good simple, form-fitting clothing. Prohibition, during the day as it does in the evening. in effect from 1920 to 1933, gave birth to

– It makes a great background for a wide the cocktail and the cocktail dress, which Coco Chanel (1936) variety of accessories. replaced the high-necked, full-skirted tea The legendary French designer developed her – It never goes out of style and works for gowns that women had worn until the taste for severe styles and the color black at the almost any occasion. turn of the century. convent where she was raised by nuns. By the mid-1920s, women were Gabrielle Chanel was born in 1883 in gaining a new independence and showing Saumur, in western France, at a time when it in their mode of dress. Suffragettes, who the way a woman dressed marked her had won the vote for women in 1919, were place in society. From the age of 12, she fighting for equal rights, and new clothing lived in an orphanage and was raised by styles that allowed women to move freely nuns. Children from poor families, like were part of this new freedom. Increasing Chanel, wore simple garments made in numbers of women were entering the the convent’s workroom, while wealthier workplace (mostly as shop girls or secre- students wore clothing made of fine fab- taries) and participating in sports. rics. It was here that Chanel developed her Of course, Chanel was not the first taste for severe styles and the color black. designer to create a simple black dress, but Up until then, black was mainly worn by she is the best known. Karl Lagerfeld once servants, nuns and people in mourning. said that Chanel copied everything she did and made it commercial. Richard Martin, Women as Property former curator of the Metropolitan Muse- Men showed their status by dressing their um’s Costume Institute, observed that wives and daughters in ornate clothing and Chanel is most often credited with creat- accessories. As late as the early 1920s, ing the little black dress because it’s easy to women were considered the property of assimilate its characteristics into her phil­ men. They wore corsets, crinolines, floor- osophy of style. In other words, Chanel length skirts and cumbersome hats (be- was her own best advocate. She was glam- tween 1918 and 1928, the amount of fabric orous and independent. She led the way required for a woman’s dress decreased with observations like “Elegance is re- from 17 to 6.5 meters). Simply put, women fusal” and “Simplicity is the keynote to all were invisible – except to their husbands true elegance.” and fathers. Audrey Hepburn (1961) How a woman dressed determined her Its Elegance Continues As Holly Golightly in “Breakfast at Tiffany’s,” worth and social status. There was a clear The names in the fashion world may have she wears a dress designed by Hubert de Givenchy, dividing line between respectable women changed, but the little black dress has lost who worked with Hepburn on nearly all of her films.

74 — Bulletin 2 / 2014 Photos: Boris Lipnitzki / Roger Viollet / Getty Images; moviestore collection — What Lasts? —

none of its elegance. Women today are emancipated, for the most part, but they still wear these dresses (just take a look at the Oscars, or at the celebrities on the green carpet at Zurich’s film festival). Why? Because, in its essence, the little black dress is a blank slate. It is the women who wear it (or the people who see it) who make it interesting. Every woman owns one … or two or three. As did her mother and grandmother. So how can a dress that is more than 80 years old continue to be in style? It doesn’t really have to evolve. A little black dress puts the focus on the wearer, not the clothing. It is simple and not fussy, and thus it will always be part of a modern Jackie Kennedy (1961) She was 31 years old when she became First Lady. woman’s wardrobe. Jackie Kennedy wore a little black dress to White Marilyn Monroe in “Some Like It Hot” (1959) House receptions and when greeting foreign heads Shimmying on the train to Florida, she wore of state. She was a fashion icon of her era. a little black dress with a plunging neckline, long sleeves and a fringed skirt.

Lady Diana (1994) Michelle Obama (2009) The Princess of Wales caused a stir with this low- In her first official portrait as First Lady, she is Amy Holman Edelman is the author of the cut black dress. It was referred to as her “revenge wearing a sleeveless black dress by Michael Kors book “The Little Black Dress” (Simon & Schuster). dress” as she wore it after Prince Charles had pub- that shows off her toned arms and signature style. She worked for many years in fashion, first as licly admitted in an interview that he had been a ­designer and then as a journalist writing unfaithful. for Harper’s Bazaar and other publications.

Photos: Ralph Morse / Time Life Pictures / Getty Images; Hulton Archive / Getty Images; Nils Jorgensen / Rex / Dukas; Joyce N. Boghosian /AP Photo / The White House / Keystone / Everett Collection Bulletin 2 / 2014 — 75 — What Lasts? —

WHAT REALLY COUNTS (PART II) Learning from the Past for the Future If you know where you came from, it’s easier to figure out where you’re going. What grandchildren have learned from their grandparents, and the traditions they are continuing. Recorded by Simon Brunner

Marta Baluch, 24 Majoring in cultural studies, works in a vegan restaurant Wroclaw, Poland “The world is a cold place; you have to be a good person and share your love. In my family, we often give each other little presents. I’ve been in a relationship with my boyfriend for two years – it’s wonder- ful. I want to get married soon. Oh, and something else entirely: When I was a little girl, my grandfather would show me all the trees and birds in the forest. That brought us closer – and none of my friends knows as much about nature as I do.”

76 — Bulletin 2 / 2014 Photos: Lukasz Wierzbowski — What Lasts? —

Nikos Vitogiannis, 13 First year, high school Athens, Greece “I want to be a businessman, just like my father, my grandfather and my great-grand- father before me. I need to study hard and get good grades. I want to study in London, like my father and my uncle did. The most important thing in business – I learned that from them at a very early age – is trust. I want people to say, ‘Nik is a good person, we trust him.’”

Sander Hansen, 15 Entering the upper level of secondary school in the fall Rena, Norway “I see my grandfather and my aunts every day. Close family ties are something I want for the rest of my life. I’ll probably have to leave home when I start university, and I think I might like to spend a few years in a big city. But after that, I know I’ll come back to Rena!”

Photos: Andreas Lux; Lars Botten Bulletin 2 / 2014 — 77 — What Lasts? —

Hansruedi Hess, 27 Farmer Ebnat-Kappel, Switzerland “During the Thirty Years’ War, iron was in short supply and roofs were built without nails. That was true on our farm, too. It dates back to around 1630, I think. I especially like our living room with its old tiled stove. My girlfriend also likes to spend time here.”

Roberto Fonseca Horta O’Leary, 21 Studying art history São Paulo, Brazil “I’ve lived with my grandmother for the past four years; her apartment is close to the university. She’s 90 and I’m 21 – but we get along incredibly well despite the age difference. We like to go to the market, eat sweets and go shopping together. She’s crazy – in a good way – and is always joking. She spoils me, too. She also played a role in my choice of a major. Art is an important part of her life; it’s a family tradition. My mother loves art, too – she draws fantastic comics.”

78 — Bulletin 2 / 2014 Photos: Vera Hartmann; Eudes de Santana — What Lasts? —

Chinatsu Nagata, 11 5th grade, elementary school Kawasaki, Japan “I want to play with my sister as much as I can. I’ll be going to junior high soon and then I won’t have as much time. And I hope that my grandma lives ­forever, I love her so much.”

Refilwe Mpitso, 15 10th grade Soweto, South Africa “My grandmother raised me, so we’re very close. She taught me the most important things in life: show respect and humility, never be arrogant. She’s my role model. But I want to take a different path: I want to be a gynecologist!”

Photos: Keiichi Nitta; Per-Anders Pettersson Bulletin 2 / 2014 — 79 — The Last Page —

The Value Compass

Jörn Kaspuhl is an illustrator in Hamburg. His work appears in such publications as The New Yorker, Monocle, GQ , Wired and Der Spiegel.

80 — Bulletin 2 / 2014 building capacity SIDE bySIDE

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