Switzerland and the free-rider problem

I came across an article in the FT and the accompanying letter of response which alerted me to Unit 3 of the CAIE AS Level syllabus “public goods and the free-rider problem”.

Benefits from pure public goods cannot be confined solely to those who paid for it. Non-payers can enjoy the benefits of consumption at no financial cost to themselves – ‘free-rider’ problem.

Last month the Swiss government vetoed a plan to export 96 Leopard tanks to the Ukrainian counter offensive citing neutrality status. The tanks were not acquired by the Swiss army but bought a Swiss arms manufacturer Ruag off the Italian army. The tanks are still in Italy and Ruag intended to refurbish them and then sell on to a third party. However to sell the tanks would conflict with the Swiss’ War Material Act and would end Switzerland’s neutrality. Opinion polls favour a change to the Act but it is up to Switzerland’s parliament to bring about change. Although the Swiss do collaborate with Nato within the Partnership for Peace and the Euro-Atlantic Partnership Council, they don’t contribute anything to its operations. However they do benefit from where they are geographically located being under the defensive umbrella of Nato.

A letter in response to the article suggested that the Swiss neutral stance is an example of the ‘free-rider’ problem and maybe this could replace the textbook example of a ship refusing to pay for the upkeep of a lighthouse that serves as a navigational aid, even though they benefit from its operation.

Source:

Switzerland vetoes export of 100 tanks to Ukraine despite never using vehicles – FT 29th June 2023

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