Why Britain should copy Switzerland's referendums

Matthew Lynn has written a piece in MoneyWeek (21/11/14): "Why Britain should copy Switzerland's referendums". Available here.
I'm a fan of the Swiss democratic model. But I'm also a fan of bringing it into the 21st Century by using the internet to make voting cheap and convenient. Interactive Democracy would also facilitate structured debates that could be analysed by voter (age, sex, occupation) and location, allowing voters to aggregate the views of doctors on healthcare issues, for example. Anyone could contribute proposals or initiatives with everyone able to add plus, minus and interesting points and voting if they agree or disagree with each, prioritising and clarifying the issues. Such a system would tap into the creativity and intellect of the population without favour or bias and could, in the future, be considered an important part of our national infrastructure, utilised by many organisations for their own internal issues, as well as at every level of politics.
You can see a mock up of what the ID site could look like by clicking here.

Fragile by Design

Fragile by Design is written by two academics, Charles Calomiris and Stephen Haber, who set out to discover why some banking systems are unstable. MoneyWeek reported that
"They looked at five national case studies: the UK and the US (both democracies, yet prone to crisis); Canada (virtually crisis-free); Mexico (a crisis-prone autocracy); and Brazil (a bit of both).
"What they found was fascinating. Starting from the elegantly simple premise that a crisis occurs when banks hold too little capital and/or too many risky assets, the problem, logically, must be inadequate regulation. So their thesis is that regulatory standards and credit provision are "captured" by political special interests. While democracies generally fare better than autocracies, often this is just a matter of degree. Unfortunately it seems that boom/bust cycles are woven into the very fabric of US democracy."
Would Interactive Democracy change this?
Who knows, but it would change the game: power wouldn't be concentrated in a few hands; whistle blowers would be empowered; education about the banking system would be encouraged and transparency enhanced.
Why?
Because regulators would be more accountable to the electorate (who could call for their dismissal); anyone could create an initiative proposing changes; and the ensuing public debate, supported by probing journalism, professional bankers and academics, would shine a light on the system. This last point, that Interactive Democracy educates through debate, is my favourite advantage of direct democracy. It may also be more adaptable and less prone to opaque influence.
MoneyWeek's verdict on the book: "This is a great history of political interference in banking regulation - but a definitive analysis of the recent crisis it is not."

Inspired by MoneyWeek, 14 March 2014.

The K Street Index

"... the 'K Street Index', after the street that American lobbying firms tend to call home. In the period measured, they spent $1.2trn on lobbying (including campaign contributions).
"Readers will note that lobbying is not productive behaviour, at least not in the ordinary sense. It does not lead to higher output. It does not fund innovation or new inventions. It does not pay workers, nor stimulate additional sales."

Bill Bonner, MoneyWeek [17/5/13]

Contrary to what Bill says, perhaps lobbyists would argue that their activities open up new markets, rid markets of oppressive and dysfunctional legislation or promote political innovation. I don't know. Neither do I know over what period the $1.2trn was spent. But it's a vast sum that shows the power of money in the US politics. Power that subverts the egalitarian ethos of democracy.

Interactive Democracy redresses the balance, facilitating everyone to vote on almost every motion or bill. If you don't vote, your vote is devolved to your Member of Parliament. And you can propose and debate issues, too. All at minimal cost when run on the Internet.

Electorate Votes Itself Endless Privileges

"Perhaps we have reached the limit of what is economically possible within a democracy. Now that the electorate has twigged that it can vote itself endless privileges, our leaders seem determined to feed the beast, even when the larder is bare. The younger generation is going to hate us."
This quote from Tim Price in MoneyWeek (15/03/13) neatly sums up a concern voiced by others. And, so the thought goes, giving more power to the economically illiterate electorate via direct democracy will result in financial armegedon.
Swiss direct democracy succinctly proves that is not necessarily so. In fact their economy is in far better shape than those of most western representative democracies. While the reasons for this may be multifactorial, perhaps one cause of Switzerland's success is that direct democracy educates the masses through debate, resulting in more mature politics and better decisions.
But another perspective is that politicians in a representative democracy actively persuade us that the "bribes" they offer in return for our support are affordable, against the better judgement of the majority of voters who successfully manage the complexities of their household budget and carefully consider the inheritence they would like to bequeath to their offspring. From this perspective politicans are dangerous stewards of the economy, driven to error by the competitive nature of representative democracy.
Or perhaps political ideologies are to blame: those notions counted self evident and held firmly by the party faithful. On the contrary, voters less immersed in political doctrine and informed by wide debate, may take a more realistic and less idealistic view.

Swiss Referendum on Executive Pay

"Switzerland is to hold a referendum on executive pay in early March, with measures to be voted on including a ban on golden hellos and a binding shareholder vote on pay", reports MoneyWeek. Emma Thompson on Reuters.com regards it a "stunning turn of events for the land of secret bank accounts."
The uproar that precipitated the vote has also created sufficient social and political pressure to persuade Novartis to ditch a proposed $78m payoff to departing chairman Daniel Vasella.

"A Tsunami of money hits US politics"

According to Richard McGregor in the Financial Times there are three ways of funding US Presidential candidates. Both donations, capped to $40000, and uncapped super-political action committees, must be disclosed. But "non-profit social welfare bodies... can take as much money as they want, anonymously. These are supposed to operate exclusively for social welfare reasons, but everyone knows their sole purpose is to win elections" (quoted from MoneyWeek 6/7/12).
The problem of hidden vested interests buying political support has the potential of corrupting democracy. If individuals vote on each issue, as I propose in Interactive Democracy, the problem becomes far less.

The Sham of Democracy

"The Sham of Democracy" is an article by Bill Bonner in MoneyWeek (24/02/2012). In it he writes
"The Italian city states practised real democracy too. In 15th-century Florence, for example, citizens voted on whether or not to build a cathedral. Then, they voted on what shape it should take. A scale model was built, Citizens knew what it would look like. They understood how it was built and how much it would cost them. They cast their ballots and took responsibility for the outcome. American democracy, circa 2012, has no more in common with real democracy than American capitalism has in common with real capitalism. Both are degenerate, corrupt and geriatric."

Crony Capitalism

"Crony capitalism abounds when government leaders, usually in exchange for political support, routinely bestow favours on private individuals or business. This is not capitalism. It is called corruption."

Alan Greenspan, the Financial Times, quoted in MoneyWeek.

It could also be called crony democracy!

Interactive, or Direct Democracy is far less biased than Representative Democracy. Why? Because when the rich pay money to influence all votes, instead of a few representatives, it is automatically transparent.

Bankrupt Democracy

In a fascinating MoneyWeek article Tim Price wrote "A combination of western governments and those countries' banking sectors is effectively insolvent. The problem is one of democracy itself. The system sows the seeds of its own destruction when a critical mass of voters appreciates that it can vote itself privileges. Politicians who can rarely see further than the next election are happy to provide them. A state of entitlement then sets in, with the wealth-creating private sector crowded out and milked for taxes. In one sense government policy is predestined to fail because, as Mrs Thatcher observed, sooner or later the government runs out of your money."

This may be true for most western governments, but the same problems don't exist in Switzerland, which gives voters much more power. Surely, by Tim's analysis of cause and effect, Swiss voters, in their assumed selfishness, would have crashed their economy sooner. But it remains strong. Why? Because their system integrates everyone into a common society with shared responsibilities and, by being involved in politics, they educate themselves about the issues, the pros and cons, and come to balanced decisions. Interactive Democracy has every chance of doing the same.

("Eurozone governments are now too big to succeed" by Tim Price, MoneyWeek, 25/11/2011)

Effecting Currency

This article, from Money Week, explores the effect of politics and uncertainty on the currency markets. Would Interactive Democracy undermine these markets, and the countries international trading prospects, by begetting uncertainty?

Who knows? But Switzerland has operated Direct Democracy for many, many decades and is renown for its stability and economic success. Is this due to a culture of conservatism (as opposed to radicalism) or is it a function of a political system that balances power between leaders and voters?