Direct democracy – hindrance or driving force for the economy?

Direct democracy – hindrance or driving force for the economy?

mw. The scientific conference on the subject of “Liberalism and Direct Democracy” taking place on 10 October 2015 in Zurich in the scope of the Research Institute for Direct Democracy headed by PhD René Roca presented a diverse and stimulating program. We will choose the presentation by Prof Dr Joseph Jung about “Alfred Escher and direct democracy” as an example for the full range of interesting addresses. His position is that the enormous economic awakening in Switzerland in the period from 1848 (establishment of the state) to 1872/74 – construction of the first railway lines, founding of the Federal Institute of Technology (ETH), founding of the Creditanstalt to finance these projects – was only possible in such a short time because the young Federal State was ruled not by direct but by representative democracy.
At first, Professor Jung’s vivid description of how Switzerland developed from an economic hinterland to a location to be reckoned with by its European neighbours in a few decades of the mid-19th century sounded plausible: Had the Swiss been allowed to vote on the construction of the first railways and the course of their first routes, on the founding of the ETH, and on other large-scale projects, Switzerland would – according to the speaker - have missed the boat and not have appeared on the European economic stage because of the tardiness of all the processes and the fact that they might even have eventually been rejected by the voters.
Though set forth with great rhetorical momentum, this position may yet provoke contradiction. Of course we cannot step into the shoes of our ancestors of 150 years ago and thus answer the question “What would have happened if ...” But we do know the rich economic and historical constitutional material in the series of so far five articles titled “The importance of direct democracy for securing social peace” published by Dr rer publ Werner Wüthrich in Current Concerns since May 2015.
If we look at the democratic maturity and sense of responsibility shown by Swiss voters from all social classes for over 100 years in referenda on partly highly complex economic-social matters we come to realize that citizens are very well able to help shape the state, if, from an early age on, they are properly guided by parents and teachers so as to understand direct democracy and play an active role in it, starting in their own community and from there letting their activities radiate onto the levels of the canton and of the Confederation.
At the same time, the state political model of Switzerland has a direct influence on the business location. Of course we have to appreciate the achievements of innovative entrepreneurs like Konrad Escher or, more recently, for example Nicolas Hayek. But let us not underestimate the importance of direct democratic organisation of our state and its economy! The fact that the location Switzerland is appreciated around the world depends on the one hand on the high quality of its products and services as well as on the reliability and punctuality of services, notably those rendered by SME (small and medium enterprises), which amount to about 95% of all undertakings. This also concerns the Swiss dual vocational training: 80% of school leavers are trained in the Swiss businesses and vocational schools to become well trained professional people and (mostly) reliable human beings and at the same time responsible citizens (whenever that is possible).

Direct democracy results in a stable state

The political stability of the Swiss state is a very important factor of Switzerland’s economic success. This political stability is a result of the responsible management of so many of the diverse common affairs by the electorate. So for example the peace agreement of 1937 between the Federation of Metal and Machine Industry Employers and the Swiss Metalworkers’ and Watchmakers’ Union (Current Concerns No. 19/20 from 29 July 2015) shows that employees and employers are at the same time citizens and voters and as such used to settle social issues on an equal footing with each other. Where the employees had further claims, they solved their problems by means of a number of popular initiatives and referendums, for example, with respect to working hours, social insurance and many other questions.
By the way, there is no harm if the legislative process takes a little longer in our country than elsewhere because of the political rights of voters: Decisions passed exhaustively to and fro between the two chambers of parliament and then subordinated to an optional referendum (the citizens can demand a referendum with 50,000 signatures), might take a few years, but afterwards they stand firm.
Taken together with the dependability of the individuals, this our entire system of state and economy has led not only to an extremely high economic performance and thus the prosperity of our country and its residents, but it has also created confidence of trading partners from all around the world.
Likewise all attempts from the outside to weaken Switzerland’s financial centre have not had the intended effect: The “strong franc” remains – even with minus interest! It is strong, because, precisely in a world of weak and fluctuating currencies, it is particularly trustworthy.
Let us return to the 19th century Swiss liberals’ scepticism towards direct democracy. Among their descendants, today’s economic liberals, we find some who – if they were completely honest – would also prefer a little less direct democracy. For example, some politicians and/or businessmen would rather organize Switzerland’s relationship to the EU without the voters’ participation, and so with unrestricted free movement of persons (i.e. with the cheapest possible labour from abroad) and with an institutional framework agreement (i.e. with so-called “safe”, uniform rules especially for the multinational conglomerates).
Fortunately, we voters have the last word concerning all these issues.     •

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