Democracy: Dare to be a little more Swiss!

The EU would do well to take on a little more direct democracy. Switzerland’s example shows that more citizen involvement in deciding on and control the country’s policy can make for a leaner state and lower debt. An EU-wide referendum on euro bonds, however, would be a mistake. the left end of the political spectrum, the cry “dare to be more like Switzerland!” can be heard. It’s new, and it’s original. The cause of all the enthusiasm for Switzerland is the Swiss referendum on the “Minder Initiative”– commonly called the “fat-cat pay initiative” in Germany, since hardly anyone here knows the initiator, Thomas Minder, owner of a Swiss family business and independent lawmaker.

The purpose of the latest Swiss initiative doesn’t need weighty analysis: if it leads to shareholders being able to directly decide the salaries their CEOs take home, it will amount to the correction of an institutional framework that could bring together ownership and control.

Political representation and how to exercise control over it

Political representation and responsiveness is a matter of the structure that binds citizens and policy-makers. In a democracy, politicians ought to act on behalf of the people, and theoretically, the citizen is the true ruler. In practice, however, mirroring the relationship of the small shareholder to the giant corporation, it is difficult and unproductive for democratic voters to effectively control their governmental and parliamentary representatives in all the possible areas where decisions are made.

There are two fundamental questions: what effects does direct democracy have in general in Switzerland? And can direct democratic procedures like referenda and popular initiatives be recommended for other European countries, not least when it comes to European policy issues?

Direct democracy in Switzerland

Nowhere is direct democracy as pronounced as it is in Switzerland. Something similar holds true for the financial federalism, which in its Swiss form means relatively strong autonomy for municipalities and cantons. In Switzerland, mandatory or discretionary financial referenda are held at the local level several times per year. Political decisions can also be both prompted and revoked through citizens’ initiatives, if the citizens so desire. And any transfer of sovereignty to a higher level must be confirmed directly by the people.

The results are rather clear and robust: when the citizens have a direct voice in how their own money is spent, regional authorities spend less on government. They spend more prudently, and the fiscal and social security burden is lower. Their indebtedness also tends to be smaller when citizens instead of governments determine the financial management of the public sector through financial referenda.

“Solidarity” does not fall by the wayside, either. In direct-democracy cantons, there is less overall redistribution, but that does not mean that the poor receive too little. In cantons where direct democracy is practised, social inequality is not greater, and much evidence suggests social transfers are even better targeted.

All of this leads to greater economic productivity, with better state services and fiscal policies more solidly grounded than they are in purely representative democracies.

Felix Helvetia! Popular opinion as debt brake, promoter of tax compliance and efficiency, as well as support for subsidiarity: is this not exactly what Europe needs today?

Is the Swiss model transferable?

An EU-wide referendum on the introduction of eurobonds, the expansion of the bailout funds or further tax harmonisation would not contribute towards overcoming the “democratic deficit” in the EU. For one thing, democracy requires a demos, a European people that can create and express a European “solidarity” and a European public opinion. This is not on the horizon for the moment. For another thing, such voting could easily lead to majorities shifting costs onto others through transfers or the gaining of special advantages, in fidelity to the motto “We decide, you pay.”

The European democratic deficit starts at the level of the member states. This is where direct democracy has an important role: the defense of decentralised decision-making and individual responsibility. Government and parliament are there to represent the people. There’s a great risk that heads of state and government will make decisions in the European Council that transfer the sovereignty of the member state to the European level and thus fail to reflect the interests of their citizens.

That is why substantial transfers of powers and sovereignty to a supranational level must not be decided only by governments in crisis meetings held late into the night, but must be legitimised directly – that is, by referenda.

The right thing to do would be to apply direct democracy as it is traditionally and successfully practised in Switzerland: the citizens must be able to decide at a local level what is to be done with their own money. And they must also say how much liability they want to assume for the debts of others.

“More Switzerland” is thus worth recommending as an ambitious reform of political institutions for the whole European Union.


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