How do we know that?
Because there is a very interesting study; “The Political Economy of Direct Legislation:Is There a Role of Direct Democracy in EU Decision-Making?
The study was performed by two Swiss researchers, Lars P. Feld and Gebhard Kirchgässner of the University of St. Gallen’s, Swiss Institute of International Economics and Applied Economic Research.
The researches were interested in how direct democracy could help decision-making in the European Union, but the study is useful for the citizens of any country interested in responsible government.
The researchers conclude that, when the citizens directly decide public spending, the government spend less and taxes are lower, the government is more responsible.
Centering the study in Switzerland helps answering the “two million dollar question”: If voters are responsible for spending and for taxes, do they vote for spending less and controlling tax rates?, do they say “no” to the new road, the expended social program or the new public swimming?
Switzerland is also interesting because not all cities and towns offer voters the opportunity to directly approve public spending and taxes.
The researches found spending and taxes are lower in the Cantons, (a Canton is roughly similar to an American State or a German Lander), where the voters directly control spending and taxes.
They detected an even more important effect in cities and towns where voters directly control spending.
They found that the Cantons with referendums, enabling citizens to control spending, spend 10% less than cantons where citizens did not have that power.
The effects of citizen power were even clearer in cities; wherever voters can control spending, spending was 20% lower. Cities where direct democracy enables citizens to control spending also have lower public debt; the researchers found their debt per resident was 11 000 USD.
But it is important to know one thing; in Switzerland, most taxes are paid at the local and Canton (state) level, in the US and most other representative democracies, even in places where voters can control public spending at the state or local level, voters pays most taxes to the national government.
If citizens can control spending at the local level but most of the spending and taxation is decided at the national level, and there is no direct democracy at the national level, it should not be surprising voters do not feel responsible for taxation and public spending at any level; “the politicians decide, we can not do much about that.” Voters can not do much when most governing parties are big on spending.
In Switzerland, most taxes and spending take place close to the voters, at the local and canton (state) level, but Swiss voters also control the spending of the national government. Swiss voters have learned to become prudent spenders, because they know they pay, and they know how much.
The evidence indicates direct citizen control of public spending and taxes makes citizens and governments more fiscally responsible.
Some people say things like: “Direct democracy may work in Switzerland because it is a small country” (8.5 million people), but most Swiss cities and towns are like cities and towns in other countries.
The study in Switzerland is very interesting also because, by doing the study in the same country, it minimizes cultural differences. The study shows that when citizens of roughly similar cultural backgrounds behave more prudently when they have the final say on public spending. The study did not look at differences among the German, French, Italian or Romansch-speaking areas of Switzerland.
If you want your town, city, region, province, state or nation to be better managed, more responsibly managed, you can start by pushing for direct democracy on issues that are fully controlled in your country at the region, province, town and city levels.
