Improving Our Standard of Living (Wattpad Edition)

Chapter 41: Arguments against Direct Democracy

In this chapter, I discuss arguments against direct democracy that weren't already rebutted in the previous chapter.

Argument: Fiscally Irresponsible Masses

One argument against direct democracy is that people would vote for higher spending to receive more benefits from the government, but they would lower their taxes to avoid paying for anything. The debt would skyrocket.

In the words of Hugo Vandenberghe, a Belgian senator, "The people [in a direct democracy] do not have to carry any responsibility for their decisions. They can perfectly easily decide to scrap taxation and two weeks later increase social security benefit payments." [1]

This was a popular argument against representative democracy too. If people can vote for more benefits without paying for them, then they can elect representatives in favor of the same legislation. Therefore, representative democracy is also bad.

Many individuals don't take direct democracy seriously today for the same reasons people didn't take representative democracy seriously for thousands of years, as limited as the early forms were.

The assumption of the fiscal argument is that the common people are more irresponsible with money than wealthy rulers. In other words, direct democracy would only be worse in terms of fiscal policy if the people were more likely to misuse money than, say, a dictator.

Rebuttal

Switzerland is a direct democracy, yet it has a debt-to-GDP ratio half that of the United States.

One reason is that Switzerland's tax burden is higher. Swiss citizens are happy to pay for their strong social safety net. That means the government doesn't have to go into debt to fund its programs.

Higher taxes, less debt, and a smaller income gap between rich and poor means that higher income individuals are footing much of the nation's bill, just like the Nordic countries.

Let's not forget that Switzerland has, along with the welfare states of Scandinavia, the best quality of life in the world.

While the United States isn't a direct democracy at the federal level, it has very limited forms of it in some states. A study published in the Journal of Public Economics found that states that permit citizens' initiatives spend less on average than states without any elements of direct democracy [2]. (A citizens' initiative is when a state allows its residents to vote on a law. It's also called a referendum.)

According to a CNN poll, three-fourths of Americans are in favor of a balanced budget [3]. The most preferred path to achieving that goal was, according to their responses, a combination of tax rate increases on the wealthy and reduced spending on unnecessary programs like corporate welfare. Republicans were most in favor of reduced spending. Democrats were too, but they were more open to tax increases on higher income earners.

To reiterate, the vast majority of Americans want a balanced budget. Local and state governments that allow referendums spend less money than those that don't.

According to the Cato Institute, most Americans are in favor of eliminating corporate welfare—tax money and other special privileges given to big corporations [4].

Recall that the United States government gives corporations about $100 billion in tax revenue each year. Most of that money goes to the biggest companies. In addition to getting free tax dollars, several of them pay little or no taxes. They and their wealthy shareholders exploit loopholes in the bloated tax code. Loopholes their lobbyists created and that their favored politicians approved. This is a classic example of civil oligarchy.