Democracy is direct self-government, over all the people, for all the people, by all the people.
It is a fundamental aspect of the principle of Direct Democracy in Switzerland that the most important political decisions are made - or can be subsequently controlled – by the voters themselves.
This article with permission, draws on a Swiss-published book: ‘The ultimate guide to Modern Direct Democracy in Switzerland and around the world’, Published in 2010 by the Initiative and Referendum Institute Europe.
Authors; Bruno Kaufmann, Rolf Buchi, Nadja Braun.
In Co-operation with the Federal Department of Foreign Affairs, General Secretariat. Presence Switzerland. (Presence Switzerland promotes an authentic image of modern Switzerland worldwide.
(a) The economic effect of the use of Direct Democracy
In order to study whether direct democracy makes a difference to the outcomes of the political process, a natural starting point is to look at public expenditure and revenues. Fiscal decisions are the central activities of most governments and policy priorities are to a large extent formed in the budgeting process. In a sample of 132 large Swiss towns carried out in 1990, the authors replicated their examination of the mandatory referendum on budget deficits. In cities where a budget deficit has to be approved by the citizenry, expenditure and revenue, on average, are lower by about 20%, while public debt is reduced by about 30%.
Purely representative democracies are less efficient
The cost-efficient use of public money under different institutional settings can be directly studied for single publicly provided goods. In a careful study of refuse collection, Pommerehne (1990) finds that this service is provided at the lowest cost in Swiss towns which have extended direct-democratic rights of participation and choose a private company to provide the service. If the service is provided by the municipality instead of by a private company, costs are about 10% higher. Efficiency losses are about 20% in municipalities with purely representative democracy (compared to direct-democratic ones). The average cost of refuse collection is highest in municipalities which rely on representative democratic decision-making only, as well as on publicly organised collection (about 30% higher than in the most efficient case).
A hint as to the efficiency of public services comes from a study that relates fiscal referendums to economic performance in Swiss cantons (Feld and Savioz 1997). For the years 1984 to 1993, a neo-classical production function (an estimated growth calculation showing that accumulation of capital and how it is used important for economic growth ) which includes the number of employees in all sectors, cantonal (regional) government expenditure for education, including grants, as well as a proxy for capital based on investments in building and construction. The production function is then extended by a dummy variable that identifies cantons with extended direct-democratic participation rights in financial issues at the local level. Total productivity – as measured by the cantonal GDP per capital – is estimated to be 5% higher in cantons with extended direct democracy, compared to cantons where these instruments are not available.
In other words, more direct democracy, the greater the economic benefit.
Based on an aggregate growth equation, Blomberg et al. (2004) analyse to what extent public capital infrastructure (utilities, roads, education, etc.) is productively provided and whether there is a difference between initiative and non-initiative states in the United States. The data on gross state product, private and public capital, employment and population are for 48 US states between 1969 and 1986. They find that non-initiative states are only about 82% as effective as states with the initiative right in providing productive capital infrastructure services, i.e. approximately 20% more government expenditure is wasted where citizens have no possibility to launch initiatives, compared to states where this institution is installed.
(b) Initiative right reduces corruption:
The misuse of public office for private gains is measured based on a survey of reporters’ perception of public corruption. It is found that, in addition to a number of control variables, there is a statistically significant effect of voter initiatives on perceived corruption. In initiative states, corruption is lower than in non-initiative states, and this effect is the larger, the lower the signature requirement to launch an initiative.
In a study for Switzerland in the early 1990s, the effect of direct-democratic participation rights on people’s reported satisfaction with life is empirically analysed (Frey and Stutzer 2002). Survey answers are from more than 6,000 interviews. The proxy measure for individual utility is based on the following question: “How satisfied are you with your life as a whole these days?” People answered on a scale from one (=completely dissatisfied) to ten (=completely satisfied).
The institutionalized rights of individual political participation are measured at the cantonal level, where there is considerable variation. A broad index is used that measures the different barriers preventing the citizens from entering the political process via initiatives and referendums across cantons. The main result is a sizeable positive correlation between the extent of direct-democratic rights and peoples reported subjective well-being.
Source: Stutzer, Alois/Frey, Bruno S.: Direct democracy: designing a living constitution (Zurich 2003)
(c) A much finer/clearer distribution of power
Direct democracy – the right of citizens to be directly involved in political decision-making – is a core element of this next step. Modern Direct Democracy implies a much finer distribution of power, making it not surprisingly just as controversial as the introduction of universal suffrage (voting rights for all men and women) once was. Those who oppose the extension of democracy often use arguments – such as that the citizens are not competent to make important political decisions, for example – which are in fundamental opposition to the democratic principle of popular sovereignty. After all, Modern Direct Democracy is a way in which representative democracy can become truly representative.
That is why the IRI Guidebook to Direct Democracy focuses on the place where the tools which allow citizens to take part in political decision-making are the most extensive and have been used for the longest period of time – Switzerland. Over the past 150 years, citizens’ rights have been continually extended and now cover all the levels of political life (national, cantonal/regional/ and local) and all areas of politics including foreign policy.
(d) A complement to indirect representative democracy (as in New Zealand)
Direct democracy, as a complement to indirect democracy, became established in Switzerland as early as in the 19th century and has been developed further since then. In hundreds of referendums over more than one hundred years, Swiss citizens have learned to make decisions on substantive political issues, whether at the national (federal) level, in the cantons (regions) or in the local municipalities. What does this mean in practice? What political tools are there for the citizens to use? How do they function? What are their direct and indirect effects? These and many other questions are answered in this book.
In Switzerland, direct democracy means that a popular vote process takes place either because a group of voters demands it, or because it is stipulated in the constitution. The government cannot call a popular vote on a substantive issue: direct democracy implies the existence and use of tools for the sharing of political power which are in the hands of the citizens and serve their interests; direct democracy cannot be controlled for party-political or other vested interests by the government or parliament. There is no plebiscite in Switzerland i.e. there is no popular vote procedure which is initiated and executed at the exclusive discretion of the authorities, whether government, president or parliament.
There are three main procedures in Swiss direct democracy. Firstly, there is the obligatory referendum: if parliament wishes to add something to the constitution, or amend it, the constitution itself lays down that the draft amendment or supplement has to be approved (or rejected) in a national referendum vote. Secondly, there is the facultative, or optional, referendum: new laws or changes to laws, which have been passed by parliament, are subject to the facultative referendum, which means that they also have to receive final approval or rejection in a referendum vote – if 50,000 voters support a demand for this. Thirdly, there is the citizens’ initiative: citizens have the right to make legislative proposals which must be decided in a referendum vote if the proposal gains the support of 100,000 voters.
This allows a part of the electorate to place before the whole electorate issues which parliament does not wish to deal with, or which have not even occurred to parliament. Officially validated citizens’ initiatives (i.e. ones which satisfy all the statutory requirements) will proceed to the referendum vote if that is what the initiative sponsors want, regardless of the wishes of either government or parliament.
(e) The land of the contented losers;
Direct Democracy reveals where in society the shoe pinches. Although the government wins most referendums on the national level, the authorities have a harder time of it in the cantons (regional councils) and even more so in the municipalities. And yet, take note, the system produces on the whole contented losers.
“Direct Democracy is far less a disrupting element in politics than it is a way of enlivening it and keeping it on its toes. Much more is expected of all parts of society than in a purely parliamentary system.” The authorities cannot count on a general background of support between elections, but have to be able to get majorities on a number of specific substantive issues. This increases the pressure on government and parliament to provide information and explain their policies.
Regular popular ballots on specific issues promote a political culture which is characterised by participation,
This in turn leads to an increased level of interest in politics, including in the media and to a greater level of political awareness and competence among the citizens. When citizens involve themselves with legislation or amendments to legislation (or a constitution), they increase their knowledge of the law. Ultimately, Direct Democracy increases the legitimacy of political decision making. The possibility of launching initiatives and referendums and forcing votes on real issues also serves as a kind of mirror to society, giving it a sense of itself and revealing where the shoe pinches.
The introduction of Direct Democracy quite unequivocally represents democratic progress. Public debate allows compromises to be worked out and agreed, for example, by means of indirect or direct counter-proposals whereby the final decision goes to the whole electorate by referendum.
The number of those who can get their voices heard in the political process is far greater.
These are all advantages of Direct Democracy by comparison with a purely parliamentary (representative) system, regardless both of one’s political point of view and of the likelihood of securing a majority with a particular political stance. This is a necessary insight, drawn from experience, which contains the secret of the land of the contented losers.
Give people greater opportunity for using the tools of Direct Democracy, the more they will use them.
(f) Vested interests have to take a back seat
Modern Direct Democracy did not emerge seamlessly and painlessly from the form of indirect democracy which came into being with the creation of the Swiss federal state after the French Revolution. The same difficulties presented themselves in the liberal Switzerland of 1848 as can be observed today in many states which claim the title of “democracy”: the elected representatives fought – as they continue to fight today – against the introduction of a direct democracy which serves the interests of the citizens.
(g) Decisions taken by those closely affected
Where possible, decisions ought to be taken locally and by those who will be affected by them; only if absolutely necessary should they be taken at a “trans-local” level (local or national level). In other words, decision-making should be as decentralised as possible, and as centralised only as is genuinely necessary.
(h) Ability to bring to the fore needs, interests and problems that politicians neglect and or deliberately ignore.
Popular initiatives and referendums have a multitude of direct and indirect effects and serve a variety of purposes. They function as supplementary means of contact between civil society and the political system, through which both fears and hopes, resistance to change and the bringing forward of new ideas, interests and needs can be transmitted from civil society to the political system. One of the most important functions of citizens’ initiatives is to place those needs, interests and problems on the political agenda which the authorities and political parties have either neglected or deliberately ignored. Direct democracy measures the pulse of society, acts as an early warning system and a mirror for society and ties politicians more closely to civil society.
(j) improving self-esteem and political competence
The referendum has made a decisive contribution to the transformation of Swiss majority democracy into a consensus democracy. The right to force a referendum (by collecting signatures) on a law passed by parliament puts constant pressure on those in power to take into account the interests of as wide a spectrum of political forces as possible when they are making their decisions. At the same time, groups which are insufficiently integrated into society can use the tools of initiative and referendum to counter the lack of representation – provided that those groups have the necessary communication, organisational and campaigning skills.
The fact that the tools can be used at any time has an integrative effect, countering the danger that relationship conflicts between more and less powerful groups in society can degenerate into violence. As a country becomes more multicultural and/or divided the greater will be the need for the tools of modern direct democracy.
(k) healthy relationship between voters and politicians
The dominance of power by politicians in purely parliamentary democracies shapes the relationship between rulers and ruled, even to the very way they conceive of democracy. Direct democracy shatters that imbalance of power, with the result that the quality of the relationship between rulers and ruled is fundamentally altered. There is a corresponding alteration in the way both elected representatives and citizens see themselves – the image they have of their respective roles in political life. All in all, citizens’ rights reinforce both the self-esteem and the political competence of the voters and counter feelings of alienation and powerlessness. That this kind of added-value can also accrue to the media. In a direct democracy, both media and authorities have to make a special effort to provide accurate and full information to the citizens and to enter into a continuing dialogue with them.
(l) The myth of the incompetent citizen.
In a direct democracy the division of political rights is different from that in a purely representative democracy. The exercise of Direct-democratic rights changes the relationship between politicians and citizens. It influences the political character and habits of both groups. The track record of direct democracy shows that voters can take political decisions as competently as members of parliament can. Political incompetence is not a cause, but an effect of the fact that in purely representative democracies citizens are not allowed to participate directly in polit6ical decision making on substantive issues.
Citizens elect- politicians decide; The image of the politically incompetent citizen can be understood as an expression of the superior power of politicians over “ordinary citizens”. In a purely parliamentary democracy, the individual citizen’s access to political decisions is not really denied because of his/her individual lack of political skills and competence, but because he/she belongs to that group of people who are categorized as ordinary citizens. The question, whether in reality citizens are politically competent or not, does not matter in this context. The important question is: under what conditions do politicians feel the need and are able to represent and treat citizens as incompetent outsiders?
In a direct democracy, citizens and politicians are inter-connected and interdependent in a fundamentally different way than in a purely parliamentary democracy. In a direct democracy, citizens share in decision-making and often have the final word. They repeatedly have opportunities to act in effect as politicians and to become what Max Weber called “occasional politicians”. Thanks to their rights to initiative and referendum, voters have access to political decision-making and to determining the political agenda. The elected politicians are unable to monopolise the power to make political decisions, but have to share it with the citizens. The concentration of political capital or political sources of power in the hands of a small minority of established politicians is thus severely restricted.
Direct democracy gives citizens additional possibilities of making proposals and of political control, independently of the wishes of government and parliament. It is thus better equipped to ensure that “lies are exposed and contracts adhered to, favouritism prevented and emergencies met”. This builds up mutual trust between citizens and helps to strengthen social cohesion. In short, direct democracy is also an institutionalised way of creating political trust between citizens. It belongs among those basic institutions where vital “reinforcement and defence” remains, according to Claus Offe, a “challenge to democracy and the precondition for its continued existence”.
(m) Absolute added value
For years, Direct Democracy was accused of putting a brake on economic progress. We now know that initiatives and referenda promote economic growth, strengthen society, and so help to make people happier. A system in which citizens have a direct influence on the making of major decisions produces much more pragmatic and cost-efficient results than a purely parliamentary democracy where powerful groups may realise their particular interests more easily and at the cost to the people.
In the debate on the potential and the limitations of Direct Democracy, it is often argued that the voter is incapable of balancing short-term costs against longer term benefits when it comes to public finances. Swiss experience contradicts this contention.
There were repeated calls during the 1990s for Switzerland to “get real” about its direct democracy: i.e. to restrict participatory rights by, for example, raising the signature quorum for initiatives and optional referendums and excluding certain issues – such as public finances – from being put to referendum. A significant number of leading figures in the economy had allied themselves to this position after what they had seen as referendum “defeats” in the 1992 decision not to join the EEC and the rejection of liberalised employment law. The then head of the major bank Credit Suisse, Lukas Mühlemann, had demanded as late as 2001 “a restriction of direct-democratic rights”. Less than a year later, it appeared that business leaders – under the mantle of “economiesuisse” – had changed their minds and now believed that the tools of direct democracy were worthy of support because they actually benefited the economy. What had caused this “volte-face”? (about face)
At the end of the 1990s, the routine criticism of direct democracy coming from both academic and business circles had inspired a series of leading academics to have a closer, more empirical, look at the links between direct democracy and economic growth. These academics were able to examine evidence from the USA, where initiatives and referendums have been enthusiastically used for around 100 years in many of the individual states; but they found in Switzerland itself an ideal source of data for comparative research – ideal, because there are significant differences between the various cantons and municipalities in the way that direct democracy is instituted and practised, i.e. in its relative user-friendliness. Thus, every canton except Vaud uses the finance referendum, which requires all decisions on public spending, loans and other expenditure above certain levels to be submitted to either obligatory or optional referendum. Some of the other important variables are the signature quorums (requirements) for popular initiatives and referendums – which vary between 0.9% of eligible voters (in Basle Country) and 5.7%
(in Neuchâtel) of the total electorate – and the length of time allowed to the initiative committees for the collection of signatures, ranging from 2 months in Ticino (Canton) to an unlimited period of time in Basle Country. The range of variability in the possibilities for direct-democratic participation is even greater at the local (municipal) level – between extensive participatory rights and virtually none at all.
(n) Cheaper, more honest, better off
A study by Zurich University economists Bruno Frey and Alois Stutzer showed that the cantons of Aargau, Basle Country, Glarus, Zurich and the two Appenzell cantons are among the most democratic in Switzerland. In 2003, Geneva-based lawyers Michael Bützer and Sébastien Micotti produced a comparative study of direct democracy at the local (municipal) level. It concluded that municipalities in eastern and central Switzerland enjoy considerably greater institutional autonomy than those in western Switzerland and Ticino.
Including earlier research in their investigation, St. Gallen economists Gebhard Kirchgässner and Lars Feld – now a professor at Heidelberg University in Germany – made a statistical analysis of the influence of direct democracy on economic growth. The results were striking:
In cantons with stronger rights of participation on financial issues, economic performance is 15% higher (in terms of GDP per head).
In cantons where citizens can vote on the budget, there is 30% less tax-avoidance – on average 1,500 Swiss francs per taxpayer. Cantonal debt is correspondingly lower. The possible explanation: people are more prepared to support public expenditure when they are involved in deciding how their money is spent.
In municipalities where the budget has to be approved by referendum, public expenditure is 10% lower per head than in places where residents have no such rights. It appears that citizens are more careful with the money taken from them in taxes than the politicians are.
Municipalities which have the finance referendum have 25% lower public debt (5,800 Swiss francs per taxpayer) – the direct result of lower expenditure and greater tax income.
Public services cost less in towns and cities with direct democracy: refuse disposal is almost 20% cheaper.
Professor Kirchgässner and his colleagues conclude: “In economic terms, everything is in favour of direct democracy – nothing against.” They therefore argue that direct democracy should be extended, rather than restricted. In their view, direct democracy is “up-to-date, successful, exportable and has the potential for further development”.
The results of public opinion polls support these conclusions. When the Swiss cantons were compared, it was found that the more people were involved directly in politics through initiatives and referendums, the more contented they were with their lives. According to a study by Frey and Stutzer, the degree of political participation was “even more significant than the level of personal income.” This rather tends to undermine the common claim that people are primarily interested in earning money.
Citizens in favour of specific tax increases
In the debate on the potential and the limitations of direct democracy, it is often argued – especially outside Switzerland – that the general public is incapable of balancing (short-term) costs against (longer-term) benefits when it comes to public finances. Swiss experience contradicts this contention, not only in the cantons and municipalities, where people have a closer relation-ship with political affairs, but even at the federal (national) level.
In a referendum on 7th March 1993, 54.5% of voters approved an increase in the price of petrol and diesel of 21 Swiss cents (about 13 Euro cents) per litre. The main issue in the referendum campaign was not environmental protection, but the need to bolster the public purse. Five years later, more than 57% voted in favour of introducing a distance-related heavy vehicle duty which would increase the cost of transporting goods by road. Again in 1993, two-thirds of voters had agreed to introduce national VAT and to use a future rise to benefit old-age pensions. Similar proposals by both government and parliament between 1977 and 1991 had been rejected, because voters had been asked to approve whole packages of measures rather than specific individual proposals. When the politicians finally came clean and explained to people why there was a need to raise extra money, they were able to secure public approval not only for the change in the system, but also for the tax rise.
Money alone is not enough
Even in those cases where wealthy interest groups are involved, there is no evidence that money can directly influence referendum results in Switzer-land. Quite the opposite: there are plenty of cases where, despite the spending of large amounts of money, voters went against the majority of the political or financial elites. This was so in the case of the price monitoring initiative of 1982, which was accepted against the wishes of the authorities and the business world. Likewise, with the introduction of the heavy goods vehicle duty and the motorway card (an annual fee for using motorways), which had been opposed by such influential and wealthy groups as the Touring Club of Switzerland, the Business Federation and tour operators. EEC accession (membership) was rejected in 1993, even though the commercial world had spent millions in promoting it.
Political scientist Elisabeth R. Gerber from the University of San Diego found that citizens’ groups appeared to do better overall in initiatives and referendums than wealthy interest groups. For example, Californians voted for a ban on smoking in all closed public areas, despite the multi-million-dollar campaign waged by the tobacco companies.
From an economic point of view, therefore, there are virtually no arguments against direct democracy. Rather is it the case that a form of politics based on the principle of consensus, in which citizens have a direct influence on the making of decisions on substantive issues, produces much more pragmatic results than the kind of knee-jerk response common in purely parliamentary democracies, where the response is often excessive and has to be undone later at great cost. It remains to critically monitor the growing role of money in electoral campaigns, including direct democracy processes such as those in Switzerland.
For the direct democracy enthusiast/activist/promoter in New Zealand, the primary objective today is to secure binding status for referenda which come about as a result of citizens’ initiatives, and binding status for the popular referendum that puts the brakes on politicians hastily proposed legislation.
When enabling legislation is put together the signature threshold for initiatives and referendums must be fair, practical and based on good practice as is measured by long use in the country with the most measured results, that is Switzerland.
The available procedures we have in New Zealand are seldom used as they do not promise the free and fair involvement of citizens in the decisions on the matters which affect them.
But even the relatively weak provisions for direct democracy which, despite all difficulties, do already exist can be used to bring the process forward. Studies show that referenda and initiatives together with greater engagement by voters with Direct Democracy is a way to remedy rising dissatisfaction with representative democracy. Further studies, in particular the Flag referendums show that New Zealanders are increasingly supportive of Direct Democracy despite controversies raise by media, comedians, politicians, and other political lobbyists. The time is now, to put the tools Direct Democracy forcefully to the fore front of a campaign for electoral reform.
Edits; D K McKenzie
The Guidebook to Modern Direct Democracy in Switzerland and Beyond can be downloaded in pdf form here: https://www.iri-europe.org/index.php/publications/guidebooks/guidebook-to-direct-democracy