Panocracy 36

Misery

“It’s hard to beat a democracy in which most major decisions can, if enough of the electorate insists, be put to a popular vote.” - The Independent

A shout out here to David Simpson

for drawing our attention to this interesting example.

Which is the least miserable nation in the world?

We turn to Steve H. Hanke's misery index (HAMI) to find out. Hanke calculates this for each country using its unemployment rate, inflation rate, central bank rate and real (inflation adjusted) GDP growth. Although these criteria are somewhat arbitrary the HAMI isn't really about how many of the citizens are dancing in the street. (Though they may well do so for all we know). The lower the HAMI score, the better and the country we're going to talk about has the lowest HAMI score of all.

No one knows why this is so, although many theories have been put forward.

One idea is that it's partly due to the country’s 'debt brake', which controls government spending. We look at this in more detail below.

We venture to suggest that the constitutional arrangements in this country are conducive to relatively high public trust in her institutions.

To say a nation is happy is to say its people are satisfied that its institutions are doing a good job.

A Little Cheese

Of course, it’s Switzerland that’s the country that arguably comes closest to our panocracy in its attachment to democratic ideals.

It's not that close but is certainly closer than anyone else mainly in its use of referenda.

The Swiss don't have the benefits of huge natural resources (unless you count scenery).

Their education system is not noticeably different from other major Western countries – it's mandatory, free and open to all. So their relative success isn't that either.

They do have national service and an Army, Air Force and Navy (not a big navy, though). Switzerland cannot be considered a military superpower but its neutrality seems to need defending.

The Swiss healthcare system is neither tax-based nor financed by employers. Instead, the system is funded by mandatory contributions to a basic insurance scheme. Many people top up the basic cover with supplementary private health insurance (apparently they can afford to do this). Switzerland has one of the largest private healthcare markets in the world, with plenty of freedom of choice and competition.

However, Swiss health insurance isn't cheap - they spend a little more than double what we each spend on our NHS here in Britain, somewhat less than what's spent in the USA. It’s still a public health system (and highly regarded too).

What's noticeably different is the system of government that has evolved in Switzerland.

Politically, the country is made up of about 3000 communes divided between 26 geographical areas known as cantons.

The Federal government handles things at the national level: foreign policy, national defense, federal railways and the mint for example. The cantons and Communes are responsible for education, labor, economic and welfare policies and this results in diverse social systems.

The political diversity means that different policies can compete with one another at local and 'county' levels. If one does better then the others may follow.

The national parliament has two houses: the popular house, which is elected by proportional representation under a 'free list' system which allows all shades of political opinion to be expressed; and the Council of States, which has two representatives from each canton and one from each 'half-canton' (with a low population), is elected in most cases by a simple majority.

The federal government’s jurisdiction is limited to those areas specified in the constitution.

So it's still a system in which a relatively few people ‘represent’ the interests of everyone – a constitutional representational democracy – but it has a sting in the tail.

Once approved by both houses, new legislation is also subject to approval by the people in an optional referendum. The citizens have a six-month period during which a referendum can be called by any individual or group able to obtain 50,000 signatures on a petition. If the proposed legislation is rejected by a simple majority vote, it falls away.

Of the 216 constitutional amendments proposed between 1874 and 1985, 111 were accepted by the voters and 105 were rejected.

One that was approved was the so-called 'debt-brake'.

The Debt Brake

Unlike most western countries, Switzerland’s debt-to-GDP ratio has been falling for the last two decades. Ever since it enshrined the idea of a debt brake into its constitution in a 2002 national referendum.

In 2002, central-government debt stood at 29.7% of GDP but by 2018 had been reduced to 18.7%.

This should be compared with the USA at around 123% of GDP (and counting) and the UK at around 100% of GDP.

Unlike the USA, Switzerland does not have a debt ceiling. Especially one that's raised every year to cover increased Government spending.

Debt Ceiling Theater

The debt brake works this way: “over an economic cycle, the federal budget is balanced with the debt brake: surpluses must be generated during a boom to offset the deficits of the subsequent recession. Expenditure is limited to the level of structural, i.e. cyclically adjusted, receipts. This allows for a steady expenditure trend and prevents a stop-and-go policy.” (my bolding)

The bit that most governments leave out is the surpluses. When times are good, governments ramp up their spending rather than putting some tax revenues aside for a 'rainy day'. They perhaps hope that the rain will fall on the next administration.

The Debt Brake was ratified by a national referendum in 2002 which enshrined it in the constitution.

Do you think our own political classes would ever offer us the same opportunity to regulate their spending?

This example shows how important it is to devolve decision making to those who are affected by it. It also demonstrates that the public will act responsibly when given a reasonable proposition. The Swiss voters could easily have decided to have more money spent to 'promote equality and diversity' or whatever but they took the sober approach. Why should be not expect the same of our own populations?

Repeating Referenda

Panocracy extends the principles which have worked well for Switzerland where national referenda are relatively frequent. Decisions affecting you are best taken by you. You might make a bad decision but you'll change your mind when reality bites and you will reverse the decision. This is in stark contrast to those who purport to represent you, who take decisions on your behalf and who simply cannot lose face when reality confronts them and the rest of us with their bad choices.

Effectively, our panocracy represents the realisation that we can capitalise on modern technology to offer a referendum on every issue to every voter. There is no face to be lost in the event of a bad decision.

Switzerland has a political ecosystem that encourages trying out new ideas on a small scale and supports a certain amount of political competition between communes and even between cantons. This is a healthy alternative to the one-size-fits-all diktats handed down to local and regional authorities in other jurisdictions.

Next time we'll be delving into the security, privacy and anonimity aspects of the proposed panocracy.