Debt Free Zone: How Liechtenstein Manages to Live Within Its Means

As you may have heard, the United States’ gigantic national debt means we’re firmly in our creditors’ pockets. But what about countries on the opposite end of the spectrum? Who’s got the tiniest national debt? In that arena, it’s tough to beat Liechtenstein. The tiny European principality has a whopping external debt of zero dollars.

That’s right; Liechtenstein doesn’t owe anyone cash. Its national credit card is carrying a zero balance. Liechtenstein’s not alone. The CIA’s World Factbook also lists Brunei, Macau, and Palau as having no external debts. How do Liechtenstein and its fellow countries pull off this trick? And can the U.S. swipe any of their secrets?

As far as the second question goes, probably not. Liechtenstein has a lot of factors working in its favor when it comes to keeping its debt low. First, it’s extremely small. The entire country only fills 62 square miles of mountainous terrain between Switzerland and Austria. The tiny speck of land is home to just 35,000 citizens or so. With such a small population, the country hasn’t had a standing army since 1868; it relies on Switzerland for its defense. Liechtenstein doesn’t even have its own unique currency. Instead, it uses the Swiss franc.

Open for Business

Not having to deal with fielding an army or running a monetary system shaves quite a bit off of Liechtenstein’s expenses, but its business atmosphere is its real magic bullet.

The country has exceedingly low business taxes that max out at 20 percent, and the rules for incorporating a business are extremely loose. Thanks to this tax-haven status, businesses from other countries can make quite a bit of cash by incorporating in Liechtenstein while really having little more than a post-office box within the country’s borders.

This little loophole has led to Liechtenstein being home to more than twice as many companies (some 75,000) as people (35,000). The government collects taxes from all these businesses, which brings in boatloads of money. Taxes on these nominal offices generate upwards of 30 percent of the country’s tax revenue.

Image credit: Andrew Bossi, used under Creative Commons license

Liechtenstein’s unique financial arrangements haven’t always helped the principality make friends on the international stage. Other countries have accused Liechtenstein of being one big mountainous tax dodge. The principality was actually on the Organization for Economic Cooperation and Development’s list of “uncooperative tax havens” until May 2009. Since then, Liechtenstein has actively been promoting greater financial transparency in its financial institutions.

On top of that, Liechtenstein’s small population props up a flourishing industrial sector. The country’s factories churn out ceramics and small power tools, and it’s a leading manufacturer of sausage casings. Liechtenstein is also the world’s leading exporter of false teeth.

Liechtenstein’s citizens couldn’t possibly buy all of this stuff, so the great bulk of the production is exported. In 2009 the country’s exports totaled $2.83 billion, while its imports were just $1.77 billion, mostly in raw materials and food.

As the CIA’s World Factbook also notes, 51 percent of Liechtenstein’s labor force commutes in from Austria, Switzerland, or Germany. This setup is another boon for the country, which gets to enjoy these workers’ labor without having to foot the bill for their day-to-day social program expenses.

Thanks to all these little quirks, Liechtenstein’s government runs at a significant surplus. In 2008 the government took in $943 million in revenue against just $820 million in expenses. It’s probably not a recipe that the United States could learn from, but it’s an excellent way to have no national debt.

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College Board Wants to Erase Thousands of Years From AP World History, and Teachers Aren't Happy
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One would be forgiven for thinking that the Ides of March are upon us, because Julius Caesar is being taken out once again—this time from the Advanced Placement World History exam. The College Board in charge of the AP program is planning to remove the Roman leader, and every other historical figure who lived and died prior to 1450, from high school students’ tests, The New York Times reports.

The nonprofit board recently announced that it would revise the test, beginning in 2019, to make it more manageable for teachers and students alike. The current exam covers over 10,000 years of world history, and according to the board, “no other AP course requires such an expanse of content to be covered over a single school year.”

As an alternative, the board suggested that schools offer two separate year-long courses to cover the entirety of world history, including a Pre-AP World History and Geography class focusing on the Ancient Period (before 600 BCE) up through the Postclassical Period (ending around 1450). However, as Politico points out, a pre-course for which the College Board would charge a fee "isn’t likely to be picked up by cash-strapped public schools," and high school students wouldn't be as inclined to take the pre-AP course since there would be no exam or college credit for it.

Many teachers and historians are pushing back against the proposed changes and asking the board to leave the course untouched. Much of the controversy surrounds the 1450 start date and the fact that no pre-colonial history would be tested.

“They couldn’t have picked a more Eurocentric date,” Merry E. Wiesner-Hanks, who previously helped develop AP History exams and courses, told The New York Times. “If you start in 1450, the first thing you’ll talk about in terms of Africa is the slave trade. The first thing you’ll talk about in terms of the Americas is people dying from smallpox and other things. It’s not a start date that encourages looking at the agency and creativity of people outside Europe.”

A group of teachers who attended an AP open forum in Salt Lake City also protested the changes. One Michigan educator, Tyler George, told Politico, “Students need to understand that there was a beautiful, vast, and engaging world before Europeans ‘discovered’ it.”

The board is now reportedly reconsidering its decision and may push the start date of the course back some several hundred years. Their decision will be announced in July.

[h/t The New York Times]

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North America: East or West Coast?
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