This looks at Swiss public spending over the last century and argues that one reason for its low debt may be its greater use of direct democracy. People vote on individual policies, as opposed to representative democracy, where people elect others to make decisions on their behalf.
The conclusion is that direct democracy indeed causes a decline in public spending. Voters are fiscally more conservative than elected politicians, and the tools of direct democracy help them to get their preferences better represented.
The work is carried out by two academics, Patricia Funk, Assistant Professor in the Department of Economics and Business, Universitat Pompeu Fabra, and Christina Gathmann, Professor of Economics, University of Heidelberg, who thus provide direct evidence that the concept we have come to call Referism actually works.
They themselves call in aid several papers, including one by Feld and Matsusaka (2003), which compare data on post-war spending in states with more or less direct democracy – focusing on the United States and Switzerland, as the two countries which allow for direct democracy.
The empirical evidence, say Funk and Gathmann, points to a strong negative correlation between a region's spending level and the existence of direct democracy in both the United States and Switzerland, and they then are able to quantify the effect, finding a mandatory budget referendum reduces public spending by twelve percent.
Interestingly, they find that voter initiatives that allow citizens to propose new laws also lower public spending. For every one percent reduction in the signature requirement, public spending declines by 0.6 percent.
Furthermore, the constraints imposed by direct democracy at the state level do not result in more local spending. This result, they say, suggests that state politicians cannot avoid the disciplining effect of direct democracy by simply shifting responsibilities to lower levels of government.
If one then takes account of the effect of local referendums, where tax rises have been rejected when put to the people, the case builds for both local and national plebiscites to approve budgets.
Even more, these findings undermine the legitimacy of representative democracy. What might have once been necessary, in the period when it used to take four days by stagecoach to get to Edinburgh, is already rendered obsolete by modern communications and polling technology.
But this work shows that elected politicians are also completely out of step with the people they purport to represent. Their role, it would now seem, is to convey a false sense of legitimacy to the extraction of more money than the people would willingly give.
That says that representative democracy can no longer be considered democratic, without much greater involvement of the people. One can see a case where the executives (local and central) prepare budgets, which are then debated by elected representatives, who then make their recommendations, for the people to then accept or ignore.
We cannot continue, though, with the situation where governments decide how much we shall pay them, with no mechanism for the people to reject their imposts. That is not democracy. It is theft.
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