DirectDemocrats.com

Some people say: “one danger of direct democracy is the tyranny of the majority.”

For example, Wikipedia, says “the majority of an electorate pursues exclusively its own objectives at the expense of those of the minority of factions. This results in oppression of minority groups comparable to that of a tyrant or despot, argued John Stuart Mill in his 1859 book On Liberty,” Wikipedia”.

John Stuart Mill wrote that in 1859. Wikipedia should know that since 1867 Switzerland practices representative-direct democracy, John Stuart Mill fears have not materialized. In fact, Switzerland has a far better history of respect for minorities than the UK and any multicultural representative democracy.

Swiss elected politicians work as in representative democracies, but there is one crucial difference; any issue, any law, the Swiss people want to reject they can reject. They do it by a popular referendum, they do it regularly. In this way, they ensure the politicians do not stray from the interests of the majority.

Another argument against direct democracy is that it may lead to excess centralisation; “when the centralized power of a federation makes a decision that should be local, breaking the commitment of the subsidiarity principle.”. “Subsidiarity”, Wikipedia says: “is a principle of social organisation that holds that social and political issues should be dealt with at the most immediate (or local) level that is consistent with their resolution.”

No country respects lower governments more than the Swiss Federal Government, no national government anywhere has fewer powers than the Swiss national government.

But many of the Framers of the US Constitution feared direct democracy. The elites of the US, and of all other representative democracies, still fear direct democracy.

The Framers were against the King of England. They felt the American people should rule themselves…, up to a point.

The Framers felt “ordinary” people lacked the wisdom to make big political decisions. As if among “ordinary” people there were few extraordinary, but not famous, people.

The Framers for the US Constitution also set the US in such a way that direct democracy is not possible at the national level.

In the US the people only may elect the President (indirectly) and the right to elect the people in Congress, but the American people have no direct decision-making power on laws and policies.

All the decision-making power in the US lies in the hands of the politicians. It lies in the Executive, the Legislative and the Judiciary. Among them, there are some checks and balances. But the people can not “check and balance” on any of their decisions. From election to election, the American people have zero decision making power to stop laws and policies. The Swiss people have that power, and they use it.

For the US, and the rest of representative “democracies” to become real democracies, they will have to introduce the final “check and balance”; the people must be the ultimate authority on anything they want to decide.

Such power is not mob power. Mob power is what the crowds have when they have been driven insane by elected leaders who do not govern for the majority, who govern for themselves and for those near them, because of business ties, campaign contributions, political affinity or family ties.

In a direct democracy, the mob does not have power at all, power is exercised in the voting booth, not on the street. In a direct democracy, the majority prevails, but only after ample orderly discussion of the issues, and orderly voting.

Mob power can happen in representative democracies because the elected politicians do not really govern for most people. As a result, the anger of the majority grows steadily, until it explodes. Regularly we see the riots in the US, France, the UK and other representative “democracies”. The riots are the tip of the iceberg; even if the majority does not side with the rioters, the majority is also fed up with the politicians, although, in most cases, for different reasons.

The majority in the US, France, etc., but are unhappy with politicians. It is from such environment that people like Hitler rise if a deep economic crisis arises and the faith of citizens in the system collapses.

Direct democracy makes for assertive majorities, for the will of the majority to prevail, as it has to be in a democracy. This prevents the alienation of the majority. When the majority feels and knows their will is respected, they become more self assured, more respectful, more willing to accept minorities.

Direct democracy is the best insurance against mob rule and against centralisation.

Direct democracy offers the best protection for the majority and minorities.

Victor Lopez

The American Founding Fathers and the American Framers of the Constitution were inspired by the same French thinkers behind the French Revolution but, for whatever reason, the Americans never considered direct democracy for their nation, although some American towns, particularly in New England, practice direct democracy at the local level. The French considered direct democracy, but they blew it.

French revolutionaries brought to the rest of the World many of the advances of the American Revolution. They also toyed with the idea of direct democracy. Unfortunately, the enemies of direct democracy ended up controlling the Revolution; they came up with the euphemism “representative democracy”. Representative democracy is an oxymoron; if it is representative, it is not democracy because it is the representatives, not the people, the ones making the political decisions.

It is interesting to know that the King of France, Louis XVI, helped the Americans free themselves from the British King; just a few years later, French Revolutionaries turned on the King, overthrew him an all the elite and executed them in the name of the people. When the dust settled, France had a better system than the monarchy, but the system, to this day, is not a democracy.

The French Revolution killed the first opportunity humans had, in 2500, years of bringing real democracy back.

Ancient Greek democracy was direct democracy, not representative “democracy”. If the Ancient Greeks saw the “democracies” we have now in France, in the USA, etc., they would tell us; “your leaders are fooling you, this is not democracy, what you have it is an elected aristocracy; the people do not govern in the US, in France, in Canada, etc., the only country where we can recognize something resembling democracy is Switzerland, perhaps Taiwan too”.

Some French revolutionaries realised “representative government” can not be democratic government. For example, the Jacobin Deputy Pierre-Francois-Joseph-Robert said, in early 1793: “I know well that in a democracy, it would be the people who would judge the tyrant, because in a democratic state, the people do everything themselves; but what we are here, in France, is not a democracy.” In 2021 the same words still apply in France and all other representative “democracies.”

He said that in a debate in the French National Convention to decide if there should be a popular referendum on the judgement of Louis XVI, but others rejected his arguments, “in the name of the people…”

It fell to the Swiss, whose democracy was inspired by the Americans and the French, to go beyond them. The Swiss had the wisdom, the common sense, the popular political intelligence, to recognise that direct democracy is the more democratic and more effective form of government.

The Swiss did not bring back full direct democracy, but they changed Swiss representative “democracy” in one crucial way; the people have the power to prevail over the politicians on laws, regulations and policies. Whenever approximately 1% of the voters sign up to hold a universal referendum, a referendum takes place, the politicians can not stop it. The people, by the popular referendums, are the highest authority in Switzerland, not even the Swiss Supreme Court can overturn the results of popular referendums.

The Swiss do not have full direct democracy because they still have political parties and elected politicians; but the Swiss people have direct control of the politicians with people-initiated referendums.

The people of the US, France and most other representative democracies are losing faith in democracy, but it is because they do not really are democracies, therefore they need to introduce direct democracy at all levels

Like the Swiss did, it is up to the people of representative democracies to demand direct democracy, and not give up until the elected politicians give in.

Victor Lopez

 

 

Just in case you are new to the blog; direct democracy means the people directly make all crucial decisions, the people also elect other ordinary citizens to serve in government and run it.

Once their term is up, those elected ordinary citizens go home; no appointments to other government agencies, no switching ministries, no highly paid jobs as lobbyists to influence government, nothing of that.

That is full direct democracy; no political parties, no professional politicians, and no lobbyists because there is no political establishment of the “Left” or the “Right” to lobby.

That is the democracy the Ancient Greeks developed and practiced 2700 years ago. As you know, we have not caught up to them, not even in Greece. Somehow the people, even the Greek people, accepted the idea that ordinary citizens do not have what it takes to decide issues, that they need “leaders” to run their own affairs, that god, the king, the high priest, the dictator and, now, the elected representatives have the wisdom the people lack.

Of course the Ancient Greeks proved such beliefs in “superior beings”, “the chosen”, “the people with special wisdom”, are false and unnecessary.

During the French and American revolutions, humanity came within a hair of resuscitating direct democracy. Unfortunately, the American Founding Fathers, while no monarchists, they could not bring themselves to direct power by the people. They fell for “pure” representative “democracy”; once in power the elected representatives must have all the decision-making power; more power than the people who elected them. It makes little sense to me, but it did to them, and still does, to many people in the US and other countries, that is why direct democracy is not the norm yet.

Perhaps most Americans, and people in other representative democracies, still believe the elected politicians should run the show, even if the majority is not happy with the way the politicians do things. Isn’t it time to reach the obvious decision; “let us decide the issues, policies and laws ourselves, whenever we want to”?. But they do not, yet, they are stuck, they just blame the politicians.

Blaming the politicians will change nothing because the politicians do what the system forces them to do.

For example, in the US, because of an insane decision by the US Supreme Court; corporations and rich individuals control the US electoral system. This is how it happens; the people with money can contribute so much to the campaigns that if a politician tried to get elected without their contributions, he or she can not win because he or she will not get the recognition necessary to compete with those who accept big money donations.

It is not the fault of the big donors either; they do what the system allows them to do to protect or advance their interests. They know the elected politicians have all the power; they look for ways to have influence over the elected. One way is to make sure only people who accept big donations get elected.

The result is “government of big money, by big money, for big money”, not “government of the people, by the people, for the people”.

But the politicians still need the votes of those who go to the booth. So we have a situation where the politicians need the money of the rich to persuade ordinary voters that they will govern for them and not for the rich, it is ridiculous.

In the US, and many other countries you have the absurd situation where only a wealthy person can get elected without the support of big money. Obviously, it is not possible for such wealthy person to govern for the majority because he or she does not live the life the majority lives.

There is only one way to increase the approval rating of politicians in democracies; make sure the politicians do what the people want them to do. The way is if the people give themselves power over the politicians in legislation and policies. The people must have the power to stop or overturn anything the politicians try to do or have done. This power means that if 1% of the voters, or less even, demand a referendum on any issue or law, the referendum has to happen and the results are final; no politician, no supreme court will be able to decide against the will of the people.

That is the sort of representative-direct democracy they have in Switzerland. It is not full direct democracy, but it fulfills the criteria of democracy: “government by the people” because the people are the final decision-makers every time they decide to challenge the politicians.

Direct democracy makes voters very responsible because they can no longer play the “it is the politicians!” blame game.

The responsibility of deciding issues forces voters to inform themselves on issues and also makes them prudent. Ordinary citizens, when they are responsible for the decisions, they weigh much more carefully the issues than the politicians; going to war now means the voters decide they will sacrifice their lives, or the lives of their sons and daughters (perhaps war should be declared only by those who may die in war, but that is another issue); raising property taxes now means those who vote will pay more themselves; voting for lower taxes might mean the schools, or the health system, or the roads, or essential social services will become worse, etc.

It is not by chance that Switzerland is the best run country in the World; it is because of direct democracy. The Swiss people have no choice; they have to inform themselves and they have to vote prudently because they are the final decision-makers.

Direct democracy is also better democracy, on a level of its own above representative democracy, because it is much closer to “government of the people, by the people, for the people”. By the way, do not be deceived by the rankings of The Economist about “democratic quality”; it places 11 representative democracies ahead of Switzerland; it is a naïve (or perhaps not…) intellectual pirouette.

Stop blaming the politicians for the laws and the policies, do something (peaceful) yourself to bring direct democracy to the US and to all other countries.

Victor Lopez

The Ancient Greeks invented democracy. They practiced it in Ancient Athens and other Greek cities for decades.

It all started in 2528 years ago; an Athenian legislator, Cleisthenes, with the support of other Athenians, introduced democratic government in Athens. Greek democratic ideas precede this date.

To the Greeks, democracy meant “rule by the people”. What else could it mean? “Demos” in Greek means “people” and “kratos” means “rule”. It does not mean rule by elected politicians at all, even if the people elect them. Democracy means the people have the last say.

In Greek-style direct democracy, there are no professional politicians and no political parties, in this democracy the people elect other ordinary people as individuals. Those people return to private life, they may not even leave their regular jobs, once their mandate is over.

In its second version of direct-representative democracy, we have elected politicians and political parties. This is the Swiss-model. The people let elected politicians propose laws, budgets, etc.; the voters do not object to what the politicians want to do, then the politicians can carry out their decisions. If approximately 1% of the citizens decide that the all voters should decide, not just the politicians or the judges, then there is a referendum and the results of the referendum must be applied by the politicians.

This second version of direct-representative democracy is the key reason making Switzerland the best governed country in the World; more prosperity, more peace than anybody else around.

Today, most people in the representative democracies of the World are for more civil and other rights for ordinary citizens, for women, for minorities, etc., but do not claim for the right for all those people, and all other citizens to decide the laws that rule their lands, cities and towns; they let the politicians do that. This is not democracy, it is “elected aristocracy”.

It is surprising citizens do not demand real democracy; most voters are responsible, intelligent, common sense-people; they hold jobs useful to society; they behave responsibly; they are responsible parents, wives and husbands, they pay their mortgages and other loans on time; they look after their families, their homes, their money, etc.

We also know, from surveys, that the people of most representative democracies are not satisfied with the way the elected representatives run their towns, cities and countries.

I am not interested in dictatorships because they reduce their people to the level of not much more than working serfs. The people under dictatorships will have to get rid of their rulers to be free and set up a democracy, initially a representative democracy and later a direct democracy.

I often speak about direct democracy to people in stable representative democracies, such as Canada, where I live. I often get a very positive initial reaction; “yes, it makes sense to take away power from the politicians because they are not doing a good job”.

But the next step is more difficult; some are too busy, others fear direct democracy; they fear direct democracy might turn into “the dictatorship of the majority”. They are wrong; if I cannot trust the majority with direct democracy, how can I trust it with representative democracy?; we know crazy politicians of the Right and the Left can win elections if they are persuasive enough. Makes more sense to make sure no elected politician has much power, that the people keep the right to be the final decision makers anytime they decide to be. History shows that in deep crisis representative democracies can collapse into dictatorship. It is not possible for that to happen in a direct democracy because when the voters decide, they know their lives, and the lives of their children, are on the line; they decide with very level heads, not like politicians intoxicated with power.

One problem we have is that most people in positions of power and influence in representative democracy are not democrats, but they believe they are; they are aristocrats at heart; they believe a person with high academic credentials, or high business credentials, or elected to govern or appointed to a high position, is not an aristocrat because to them, aristocracy means you belong to the “aristocratic class”, that you are born into aristocracy. They seem unaware that by merit, not just by birth, you can become an aristocrat too, a member of the class that rules. That is what the academic or the business executive appointed to high positions becomes. It is also what happens to elected politicians do, they become aristocrats too.

In representative democracies, elected politicians and appointed officials are part of the aristocratic class while they are in their positions. If they continue as lobbyists, or in high public positions, they still are aristocrats, even if they left politics.

As members of the aristocracy, they work to advance their own interests and the interests of other aristocrats.

Such dynamic undermines the interests of ordinary voters. This causes the widespread disenchantment with (representative)democracy we see. It is not by chance, or by the character of the Swiss, that they are the nation that trusts its politicians the most, it is because of direct democracy. Swiss politicians carry the will of the people, they have no choice.

The vast majority of voters are ready to decide issues, not just vote to elect politicians. Let us get moving and push until direct democracy, the only real democracy, becomes reality at all levels; in your town, state, province and country.

Direct democracy is scarce because we do not believe we can make it work, but we can. We know that because the Ancient Greeks then, and the Swiss now, year after year, decade after decade, show humans are capable of direct democracy.

Victor Lopez

Since the Ancient Greeks, no other country has, or has had, a democracy that comes close to Switzerland, on paper and on the ground.

Switzerland is the most democratic country in the World because it is the country that comes closest to rule by the people, rule by the majority. That is what democracy is about; when the will of most voters prevails; “rule by the people” is what democracy is. Democracy is not “rule by the representatives of the people”.

The US, Canada, the UK, France, Germany and the rest of Northern and Southern Europe, Japan, India, South Korea, Australia, new Zealand, etc., are not democracies; they are societies governed by elected elites; the elites decide, not the voters.

Elected elites is a better system than dictatorships of the Right, the Left, or in-between, and also superior to one-religion or one-party regimes, but they are not democracies.

Democracy is “rule by the people”, this means the people decide, at least they make all the decisions they consider important enough to decide themselves, they leave the rest to politicians.

In a real direct democracy, the voters decide the issues when they so choose. They also elect ordinary citizens, not professional politicians, to serve in the highest posts of government. That is what the Ancient Greeks did. Amazing we still have not caught up to them 2800 years later!

Those citizen-rulers were selected by lot, not unlike how some countries now select jurors for trials. This does not mean that any citizen would serve, for example, as judge, medical officer, or head of the armed forces, just because his or her name came up by lot. The selection by lot was the first step.

It would not make sense to appoint public servants in special positions just by lot. It would be as dumb as appointing by lot doctors, engineers, mathematicians or car mechanics.

Somewhat like the selection of jurors today, but better; after the selection by lot, there would be panels of citizens to make the final decision. Such panels would be a fair representation of society, large enough and diverse enough to ensure the panel is a fair representation of society.

Le me make something clear; democracy is not about minority rights, or women’s rights, or men’s rights, or universal schooling, or universal health system, or about having a Supreme Court, or government by elected politicians, or about protecting the environment or about worker’s rights, or employer rights, or student rights or teacher rights.

Most of us agree those goals are worthwhile, but they are not democratic measures if the voters directly, by majority, did not decide they wanted them or approved them. Most of the laws and regulations we have in representative democracies are not democratic because the people did not explicitly approve them, or had the opportunity to do so.

In a democracy, the people decide all that, plus the level of taxation, the size of the armed forces, the government budget, the contents of the constitution, the changes to the constitution, what countries to trade with, etc.

There is only one type of real democracy; direct democracy. The so-called “representative democracies” are not democracies because the voters do not decide; the elected politicians and the supreme court judges, appointed by the politicians, make the decisions. The only decision the people make is to elect the politicians.

Representative democracy is much better than the “people’s republics”, because in representative democracies the people can change the rulers, can also criticize them, and can also challenge the rulers in court (although most individual citizens can’t, because they lack the money to pay the lawyers.)

Switzerland comes closestto being a real democracy. IT Is not a full direct democracy because those who run government are the elected politicians. But Switzerland surpasses all representative democracies in democratic level. Switzerland used to be a representative “democracy” like the others I mentioned. At one point almost 200 years ago, the Swiss people decided they had enough of just representative democracy.

They introduced a radical modification; if a Swiss citizen can gather around 1% of signatures of the eligible voters, any law or decision by the government, including parliament, will go to a popular vote.

The Swiss have three levels of government; national, cantonal and municipal. In all levels, if the citizens gather the required number o signatures within a certain period, the law, the decision, the treaty, the proposed change to the constitution has to go to a popular referendum. The number of signatures and the time allowed makes it easy to collect them too.

Depending on the issue, the referendum can be national, cantonal or municipal.

The people also draft the questions in the referendum, not the government, not parliament.

Just as important, the results of the referendums are binding on governments; not even the Swiss Supreme Court can invalidate the results of popular referendums. Governments have no choice but to apply the results of the referendum.

The Swiss have not yet caught up with the Ancient Greeks, but they are closer than any other nation. There is now also talk in Switzerland of having ordinary citizens occupy the most important government positions, and do away with professional politicians.

While the Swiss still have politicians, most of them are almost ordinary citizens because they serve, even at the national level, part-time.

The direct responsibility Swiss voters have in the running of the nation,  the cantons and the municipalities, has turned Swiss voters into the most responsible voters in the World. This is why Switzerland is the best run country in the World.

I have no doubt the voters of other countries will vote as responsibly as Swiss voters once the have similar decision-making power; the peoples who decide know they are responsible for the effects of their decisions on themselves and their nations.

Direct democracy also overcomes the silly division of countries into Right-Left, Progressives-Conservatives. Such split does not happen because the people decide on the issues, not the politicians.

Elected politicians of all sides distract ordinary voters with ideology, with polarization; they leave the decisions to themselves, to decide as they see fit. This includes pleasing the various lobbies who are interested in issues related to money, to taxes to favour this or that group or business, etc.

It is time to wake up and, as a first step, demand Swiss-style, almost-direct, democracy. Direct democracy is necessary now to stop the growing disenchantment with representative “democracy” in all countries and save democracy. The support of the Swiss for their direct, or almost direct democracy, is higher than the support for representative democracy in any other country.

By the way, direct democracy has nothing to do with proportional representation. Proportional representation, instead of “first past the post” electoral systems, still leaves all decision-making power in the hands of politicians.

Proportional representation, without direct democracy, is a “bone” thrown at the voters to keep them distracted from power. Likewise, other gimmicks like “deliberative democracy”, etc.

Do not settle for less than, at least, Swiss-style democracy; it will turn your country into another Switzerland, perhaps even more stable and more prosperous.

Get moving!

Victor Lopez

 

 

 

Again, I will concentrate in the United States because if irresponsible government spending in the United States continues its decades-old pattern, eventually it could trigger a crisis that could destroy American democracy.

If that happens, many other democracies will go down too, because the Chinese and other authoritarian regimes will fill the vacuum left by the US. The sinking of US democracy will to many people be proof of the superiority of totalitarian state-directed capitalism.

Eventually the Chinese people will demand democracy, but we do not know when that will happen, we can not afford to put our hopes in that change.

We can not exclude that the Chinese people in continental China are absorbing what is going on in Taiwan; a country that grew from dictatorship to representative democracy and is now becoming a direct democracy following the Swiss model. If the Chinese of Taiwan are doing it, I know the Chinese in the continent can, and will, do it too, but I do not know when it will happen.

The Chinese on the mainland know the Taiwanese have more prosperity, more freedom than they have. They also know they decide who runs the country and they go now beyond that; they now have direct democracy; the people have more power than the elected politicians and the bureaucrats; that is direct democracy. “We pay me decide”.

Direct democracy means the people can stop government decisions. They also have the power to take the initiative and force the government to do things, even things the government does not want to do.

Taiwan still does not have the track record of the Swiss, but their democracy already surpasses in democratic quality (government by the people) all other countries, except Switzerland.

The people of Taiwan have far more power than the people in the US, in Canada, in France, in Germany, in the UK, etc.

You hear little about Taiwanese direct democracy in those countries. Heck! you hear very little about Swiss direct democracy too; the political elites, their friends and the lobbies influencing the politicians, do not want you to know about direct democracy. This includes most of the media. The reporters in representative democracies are free of the power of the state, but are not free of the power of those who employ them.

But that the many, in the political elites of representative democracies, dislike direct democracy is not surprising; when in the 1800s, the Swiss people got fed with representative democracy because it gives all the decision-making power to the elected politicians, the Swiss politicians did not want to give up that power at all, they resisted, but the people did not give up and the politicians gave in when they run out of “noes”.

Because of that change, Switzerland has the best democracy, it is in a category of its own. Ignore the rankings of The Economist’s “Intelligence” Unit, which places 11 representative democracies ahead of Switzerland in “democratic quality”. Such ranking is an insult to the intelligence.

Not only Switzerland has the democracy of the highest quality, Switzerland is the most prosperous, most stable country in the World, as its track record shows.

Not only that, Switzerland is a neutral country. I am sure it has a lot to do with the fact that the Swiss voters, many of them would die in war, or the parents of those who would die in war, have the power to stop the Swiss government to make war.

This does not mean the Swiss are wide-eyed pacifists; they are armed to the teeth and are good soldiers. One reason why Hitler did not invade Switzerland is that he knew his Panzer divisions could not roll at full speed along Swiss roads like they did on Polish, Belgian, French and Russian roads. He knew German troops would die like rabbits in the Swiss narrow valleys.

If the American people are tired of dying all over the World, of being targets of desperate hot heads, if they are tired of the social mess the US is in, if they want the best universal health care system, if they want low-cost university education, if they want to reduce inequality, if they want to improve their standard of living, if they want to resolve the crazy polarization present in US politicians, in the media and the people themselves, they better get going and demand direct democracy now.

American representative democracy is following too closely the steps of the representative democracy of Weimar in Germany. We know how that ended. One of the crazy things that German democracy did was also “Quantitative Lockerung” (according to Google and Microsoft translators); print money until it is worth nothing. As the German joke of the time says; “if you left a wheelbarrow full of money in the street, the thieves would steal the wheelbarrow and leave the money”.

The Swiss modeled their initial constitution after the American Constitution, but they improved on it with direct democracy. It is now time for the Americans to model their constitution after the Swiss one. It is crucial they do it for themselves and for the survival of democracy in the World. Otherwise, again, it could happen what happened after Ancient Greek direct democracy perished at the hands of totalitarian religious and non-religious leaders; the lights went out for almost 2000 years until the European Renaissance resucitated democracy.

Victor Lopez

If you search Internet for Bitcoin, Ethereum and other crypto currencies, you will soon come across the expression: “decentralization” of finance, of information. The new technology, blockchain, will make unnecessary most of the current banks, Google, the YouTube, Facebook, etc.

The new technology of blockchain will simplify and reduce the cost of bank transactions, of buying and selling houses, will give artists control of what they do without intermediaries, etc.

In the cryptoworld, they refer to this as decentralization. This means, for example, that the buyer and the seller of a house will not need real estate agents and lawyers, and will not have their fees. This will happen because the thousand of blockchain computers, that can not be comntrolled by central entity, will have all the information seller and buyer need about each other. As a result, they know who the other party is; they know they can trust each other to satisfy their part of the deal.

Like wise will happen with videos. With this technology, a person will post the video in the new Internet, no need to go to YouTube. Any other Internet user will find the video with the search engine. No need to sign up and supply information to any central entity, no possibility of being censored, etc.

We could say blockchain technology is about decentralisation, about economic democracy, of decisions regarding buying, selling, information, contracts, etc.

Direct democracy is similar. It is about decentralizing decision-making. In a direct democracy, the voters elect the politicians, like in traditional democracy, but they also have the power to decide and prevail over the decisions of the politicians. They do not need to do that all the time, just when 1% of the registered voters decide they want all voters to decide in a referendum if they accept or reject any decision the politicians make. They also give themselves the right to force the politicians to do things the politicians might not do otherwise.

The people in a direct democracy have the power, for example, to stop a law to raise taxes, or a law to privatise health insurance. But they also have the power to do the opposite, to reduce taxes, or to institute universal health insurance.

I believe the decentralisation of much of the economic decisions dovetails with the decentralisation of political decisions. We could say that political direct democracy and economic direct democracy reinforce each other.

The new technology of blockchain may also help carry out elections without cheating and corruption. But if a country has direct democracy, cheating and corruption are not a problem because the people have the power to force the politicians to pass the laws.

With the mainstreaming of Bitcoin, Ethereum, ADA-Cardano, Chainlink and others, we have another factor to help current representative democracies grow towards direct democracy.

By the way, blockchain technology is a better technology, just like using fire to cook meat was a clear improvement over eating raw meat. There is some resistance to anything new, even when it is a clear advance. The same thing happened with microwaves, TV, cars, mobile phones, etc., it is normal, but as time passes people accept the new advance. That is why practically all of humanity eats cooked meat, uses phones and cars.

This is also why there is also resistance to direct democracy among ordinary citizens, even if it empowers them and is beneficial for them. Politicians in representative democracies no not like direct democracy because they prefer centralized decision-making, centralized in themselves. For the same reason, the industries, and governments, that will be disrupted by blockchain initially resist it. However, like in the case of cooking meat, TVs, cars, etc., direct democracy will become the normal democracy.

Direct democracy bring better political management to our lives, blockchain brings to us better economic management.

So, now we have two things to fight for; political direct democracy and decentralize “direct” economic decision-making.

Victor Lopez

I ended my last post saying that the American government, pressed by US auto industry executives, US business experts and the unions, threatened the Japanese manufacturers with tariffs if they did not manufacture cars in the US.

You might recall from my previous posts that the reasoning to pressure the Japanese was; “the Japanese are killing is because they have cheap labour, docile unions and diligent workers, once we force them to set up car factories here they will lose those advantages, and we will kill them because we have the better managers, trained in the best business schools in the World”.

So the Japanese did what they had to do and manufactured cars in the US.

But cars were not the only US industry defeated by the Japanese, earlier, the Japanese TV fellows did the same thing  to the US TV industry. American TV manufacturers did not receive as much attention, because in terms of jobs and economic value the car industry is much bigger.

Let us go back to the car industry.

The indisputable proof of the superiority of Japanese management over US management is what Toyota did, and still does.

In the 80s, pressured to make cars in the US, Toyota took over an existing car plant GM owned, in Freemont, California.

Toyota did that, instead of building a new car plant, because at the time they were not sure their management practices were superior to American practices. To minimise the costs and the risk, they figured it was better to speak to an American car manufacturer and reopen one of the many American car plants shut down because they could not compete with the Japanese factories.

GM agreed to let Toyota take over the Freemont car plant. This factory was one of the worse factories GM had; it was bad in quality, in productivity, in worker absenteeism, in labour relations and work days lost to strikes. Some say GM let Toyota take it over so that Toyota would fail.

In my next post I will tell you how Toyota, with the same workers, the same unions, the same wages, the same machinery, turned around this terrible factory and its “terrible workers” (according to GM executives), in the best car plant in all of North America, not just among GM plants, in terms of quality, productivity, low absenteeism and harmonious labour relations.

This showed that US management had fallen behind, and not just a little.

But not only US manufacturing management has fallen behind; remember that even the, also Harvard-trained executives of US banks, ran them into the ground in 2008. This is even worse than tha car plants; the banks did all by themselves, without serious competition from Japan or anywhere else.

Sure, the US still has some outstanding business, many related to computer software, and area in which the US, still has the lead in innovation. I do not know it that lead is shrinking but if their top aim is also to maximise profits; not the workers, not quality, not R&D, not the shareholders, not the communities in which they operate, not even the environment (although many talk a good environmental game) the Googles, the Facebooks, the Twitters, may go the way of GM. GM as you know, had to be rescued by the US government; this, in “free enterprise America”.

The US still has other important US manufacturers, like in pharmaceuticals, etc. What I do not know is if their lead is because of the lead the US has had in university research for decades, not related to management. This means that as the lead the US has in research shrinks, even these industries will suffer.

There is also another factor that helps mask the weakness in US management; many US companies have shifted their manufacturing to low cost countries. Instead of competing in quality and features, US companies compete with factories in low wage countries because they are unable to compete from the US. “Surprisingly”, German and Japanese manufacturers continue to be competitive with products manufactured in Germany and Japan. They do it often with higher wages than the US because they produce better products, more advanced products. But to do that you need better management able to produce better-trained employees, better R&D and, also better trained managers.

Yes, better trained managers; the Japanese and the Germans companies show, time and again, that their in-house management training is superior to US business school training. It has to be, the most German and Japanese companies do not believe an MBA degree qualifies people to manage anything, it is just another university degree, mostly concepts and theory, not about real world management skills. As long as American companies do not train their managers in-house they will continue to lose markets.

It seems US politicians also share the idea of short term “profits”, in this case “benefits now” for all US citizens means more social benefits, “free” schools, unlimited military, higher minimum wages and on and on, without regard for the real resources of the country.

Now it is the Democrats doing it, but the Republican government under Trump did essentially the same thing, even before “the virus” arrived; “let us live (beyond our means), lets us print money”. Most other representatives democracies do much the same because the voters do not feel responsible at all for the fate of their countries. For the voters, it is always the politicians fault. I reality, it the fault of the voters who tolerate such system.

In representative democracies, the politicians never tell the people the hard truth; “as a nation, for decades, we have been spending money we do not have”. The politicians can not tell the truth because they have been buying the votes of the people with the people’s money and, in a representative democracy, the people never feel responsible for the fate of their country. In their eyes, “it is all the fault of the politicians”.

It is time for voters to stop “protecting” themselves from the hard facts. It is time the voters be and feel responsible for major decisions, it is time for direct democracy.

If the US does not change its ways, there will be no “rescuer” for the US in the way that GM and the US banks were rescued by the US government. The American people need to wake up, or will perish while asleep, and they will take many other democracies down too in their wake.

Victor Lopez

 

I continue with the automotive industry to illustrate how the management thinking of US business schools, from the elite schools to the humblest community college, practically destroyed US manufacturing, including high tech manufacturing.

In another post I will discuss how US schools of public administration undermine, and are unable, or unwilling to fix US democracy.

What happened to cars, happened to most of US manufacturers. It happened to low-tech, mid-tech and high-tech companies across all industries, and continues to happen because most American management has fallen behind. It has happened because American business training, from executives to the most junior worker, has fallen behind in most industrial sectors.

The US still has some exceptional companies, even in the high-tech industry, but they are an exception. Most Americans know and suffer the problem, many lost their jobs and earn now lower wages, therefore the country is now in and ever worsening political and economic crisis.

American car companies lost market share because they fell behind in the design and manufacture of components and in the design and manufacture of the vehicles themselves.

It happened because the business schools preached “profit is the primary goal”. To motivate the managers to produce higher profits, the boards of companies tied the pay of the managers to the profits.

Managers soon figured out that the best way to increase their pay was to maximise short-term profits. Profits 5, 10, 20 or more years down the road lost importance. After all, most managers stayed in the same company for just a few years.

To maintain profits down the road, you need to reduce profits and invest in research, in development and in training. But American managers were and still are, motivated to generate profits right away.

Slowly at first, the “results” of the approach came in.

American cars fell behind in technology, in performance, in quality and in sales.

At first, Mercedes Benz took away market share from GM´s Cadillac, Fords’s Lincoln and Chrysler’s New Yorker. The American owners of Mercedes Benz experienced more advanced features, better handling, better quality of materials, and finish. Soon the “luxury car to have” became Mercedes Benz. BMW did the same; it placed itself as an alternative to Mercedes. To many people, a Cadillac became “a Chevrolet with leather seats and a few gimmicks, not real luxury.”

This is how Cadillac manages destroyed Cadillac; in 1980 Cadillac sold 33% of luxury cars sold in the US, today its share is 7%. In 40 years, American managers were unable, still are, to match their competition. But it was not only the Germans. In 1989 Toyota launched its luxury brand Lexus. This made things even worse for the Americans.

But even more important economically for America was what happened to the American popular car brands.

When oil crisis hit in the 70s, the price of gas forced many Americans to consider compact cars. They bought imported Toyotas, Hondas, Nissans (then called Datsun) and Volkswagens.

The new owners were surprised, not only the imported cars consumed less gas, they were put together better and were more reliable. They noticed that in particular in the Japanese brands.

The owners raved about their Toyotas, etc. Soon the car magazines made everybody aware of what was happening; the sales of the Japanese brands grew even faster at the expense of US brands.

American managers and the American business schools never considered that perhaps the Germans, particularly the luxury brands, and the Japanese had better managers, it never crossed their minds.

To them it would be impossible that Toyota or Mercedes-Benz would have better managers. How could it be?; the Harvard Business school, and the rest of the World’s “top” business schools were all in the US. Nobody ever heard of German or Japanese business schools“comparable” to Harvard, etc., they had none then, they have none now. The Germans and the Japanese do not believe in the MBA, etc.

American managers “reasoned”; “if they trained us in the best business schools it is obvious we are the best managers.”

Because American business schools and American managers thought they were the best, they looked at other factors to explain the success of the Japanese. The Germans bothered them less because Volkswagen was not as successful, and the luxury market was much smaller than the mass market.

The Americans “assumed” the Japanese advantage was due the much lower wages (at the time) of the Japanese auto worker, the “docile” Japanese unions and the diligent Japanese worker.

The American “experts” convinced themselves, and convinced the politicians and the unions, that if the Japanese had to make cars in the US their competitive advantages of lower wages, docile unions and diligent workers would evaporate and, given the “superior” business skills of American managers, the Japanese would be toast in no time.

The American government told the Japanese; “look fellows, you have to manufacture cars in the US if you want to sell cars here. If you don’t, we will slap huge tariffs on the cars and you will have no market.”

What happened next is fascinating I will discuss in my next post. Movies should have been made about the abject failure, then and now, of the American business schools and the managers they “trained”, ans still “train”.

Victor Lopez

I do not know when American management thinking went off the tracks, but perhaps it happened soon after 1945.

I do not know what caused the shift to put short-term profits ahead of anything else; ahead of employees, ahead of the community, ahead of customers, even ahead of shareholders.

Every year since the 50s, and as the industries of Japan, and of Central and Northern Europe recovered from WW II, it is clear most of US industries lost the huge competitive edge they had at the end of the War.

For a while after WW II, American manufacturers ruled the World; they built the best cars, the best home appliances, the best air conditioners, the best tractors, the best heavy machinery, the best telecommunication equipment, the best chemical industry, the best oil industry, the best civilian and military aircraft, the best marine motors, the best pharmaceuticals, best rockets (although in this area they piggy-backed on the German engineers who developed the V-2 guided rockets during WW II, the best railways and on and on.

But something happened; except for some specific fields, like computers, European and Japanese industry first caught up with, then surpassed the Americans.

Let me give you a few examples; Bayer and BSF have become much larger than Du Pont and Dow Chemical. Toyota, Honda, Nissan, Mercedes-Benz, Volkswagen and BWW soundly defeated GM and Ford. Airbus, despite being a slow semi-government bureaucracy, has caught up with, even surpassed, Boeing. In heavy equipment, years ago the Japanese Komatsu and Hitachi have caught up with Caterpillar. Even in the “hyper American” oil industry, Schlumberger, a French company, is the World leader. Today the top air conditioning brand is not Carrier, but Daikin, Fujitsu and Mitsubishi.

I could go on and on.

All this happened while American companies had to themselves the huge American market with unmatched economies of scale. I mean, it is unbelievable that companies such as Toyota, Mercedes-Benz, etc., with domestic markets much smaller than the US, and with buyers with far less money than American buyers, could defeat American companies around the World and even in the US, in quality and technology.

Today, the US balance of trade in manufactured goods speaks for itself. Even in high tech goods, it is huge and negative. This was many years before the Chinese came into play.

I hear people refer to Google, Amazon, Microsoft and Facebook as high-tech companies, in some ways they are, but they are software companies; the high-tech hardware running their software is no longer made in the USA.

Good software is difficult to develop, and the Americans have many excellent software engineers, but we also know making software does not require the investment, the multitude of technologies and the number of jobs that making high tech hardware requires.

We all know also that software exports are important but do not even come close to the value of high.tech and mid-tech goods and their associated services.

But, why has the US lost its technology and market leadership in so many areas?

This happened; first, the “bean counters” took over most of US manufacturing companies, low tech, mid-tech and high tech. Instead of engineers and scientists with managerial skills in the top jobs, the “bean counters” took charge. For the “bean counters”, “we can make anything a little cheaper and a little worse, without the consumers noticing, in order to increase profits”.

This happened in the 1970s. It is about the same time that American business schools started to “preach” shareholder value as the top priority for managers. “Shareholder value” was a deceiving expression, what it means is: “maximize short-term profits, profits above anything”.

The Nobel Prize winner Milton Friedman was the major pusher of this terrible idea. I hopehe won the Nobel for something else…

To stimulate managers to produce short-term profits, corporations introduced “short term compensation”. This meant managers could earn money when their compensation was tied to quarterly profits.

Soon managers saw, for example, that there was not much point in reducing profits, and their pay, to invest in long-term research. We all know, the managers knew it too, that the long-term health, and profits, of a company depend on research and technology but managers, like most people would, followed the path that made them wealthy “now”.

Initially, American companies were so far ahead that the change in American management philosophy did not seem to make much difference, but not before long it did.

In time, the public noticed US made goods were of worse quality and were behind in technology. Naturally, sales and profits fell.

The “answer” of US managers?; “let us ship the jobs to low wage countries”. That fixed, somewhat, the issue of costs (lower costs-higher profits), but not the low quality and obsolete technology. Low-cost production was not enough to return the companies to their previous success; any unbiased person would have seen that, but money biased the managers.

I use the Automotive industry to illustrate the tragedy, but practically all US manufacturing lived, and still lives, the same disaster.

Because of its size and because it uses lots of high tech and low tech, the car industry is a good example to illustrate what happened.

Cars include a lot of high-tech people do not see. For example, the computers in today’s cars are far more powerful than a PC. Furthermore, to enable the computer to do its job, cars come equipped also with many high-tech sensors. The sensors convert changes they detect in the car and the environment into digital signals for the computer. The computer then activates the many devices that control the car, for example, the stability control system.

Today’s car is far more complex and far more high tech than a smart phone or a laptop, but most people do not consider a car a high-tech device, but it is.

American auto companies fell behind in technology in the late 60s.

As they fell behind, they lost market share, jobs and even profits. Such losses have bad effects on society and undermine democracy.

In my next blog I will continue with the story of American managers and how they undermined, and continue to undermine US democracy, although that is not their intention.

Victor Lopez