For the last week, I’ve had the arduous duty of traveling across beautiful Switzerland, studying their very robust system of voter initiative and referendum. An important issue came up: is so-called “direct democracy” good or bad for business, for economic growth?
Years ago, a Swiss professor suggested that allowing voters a direct say “will ruin the Swiss economy.” (Sound familiar?) But a 2002 analysis by a Swiss business group, Economiesuisse, found that the facts showed otherwise.
Swiss cantons (states) with greater initiative and referendum rights had on average 15 percent greater GDP than those with lesser processes. Municipalities that required budgets to be approved by voter referendum spent 10 percent less per head. Also, public services cost noticeably less in cities and towns with voter initiative rights.
St. Gallen economist Gebhard Kirchgässer put it plainly, “In economic terms, everything is in favor of direct democracy — nothing against.”
But what about in America, where we hear so much about ballot initiatives “ruining” California?
Well, the recent American Legislative Exchange Council report “Rich States, Poor States” found a similar pattern. ALEC ranked all 50 states on a combined measure of their last ten years of economic performance and various factors of “economic outlook.” The top seven spots (and 12 of the top 15) were all held by states that enjoy voter initiative rights.
Ranked 46th, California was the only initiative state in the bottom five states. But even the Golden State’s low rank belongs to the legislature, not voters.
This is Common Sense. I’m Paul Jacob.