Saturday, 11 February 2012

Direct Democracy: a safeguard to limit public spending - shock horror!

From Vox comes news of a study by Patricia Funk, Assistant Professor in the Department of Economics and Business, Universitat Pompeu Fabra; and Christina Gathmann Professor of Economics, University of Heidelberg. In summary they found that:

  • Having a mandatory budget referendum in place reduces public spending by 12%.
  • Voter initiatives that allow citizens to propose new laws also lower public spending. For every 1% reduction in the signature requirement, public spending declines by 0.6%.
  • The constraints imposed by direct democracy at the state level do not result in more local spending. This result suggests that state politicians cannot avoid the disciplining effect of direct democracy by simply shifting responsibilities to lower levels of government.
A further paper that is worth reading is: "Preferences Matter! Voter Preferences, Direct Democracy and Government Spending" (Unpublished Manuscript) a paper written in December 2011.

5 comments:

Richard said...

Good spot!

Sean O'Hare said...

Having a mandatory budget referendum in place reduces public spending by 12%.

Actually, that is a disappointingly low percentage. I would have hoped for something nearer 30%.

Voter initiatives that allow citizens to propose new laws also lower public spending

I suspect voter initiatives to strike down existing laws would much more effective.

DP111 said...

From EU Ref: Furthermore, the constraints imposed by direct democracy at the state level do not result in more local spending. This result, they say, suggests that state politicians cannot avoid the disciplining effect of direct democracy by simply shifting responsibilities to lower levels of government.

In Switzerland the majority of tax revenue is collected at the cantonal level i.e., local. A part of it then passed on to the Federal level. Thus, it is the Federal level that is constrained, not by example, but by force of the total budget.

right_writes said...

That's a nice piece WfW…

The significant thing about DD is that it pays lipservice to the idea that the individual is sovereign, as we know all democracy is to an degree, a discussion between two wolves and a lamb in regard to the lunch menu, but DD by operating bottom up (rather than top down) tends to ameliorate the excesses of the "professional" politician/bureaucrat.

Raedwald gave a good example of this earlier this year…

http://raedwald.blogspot.com/2012/01/welfare-must-be-local.html

When one is talking about one's own dosh, everyone is a conservative.

WitteringsfromWitney said...

R: Thank you - liked your follow-up post!

SO'H: It allows for that too!

DP111: Agreed.

r_w: Thank you.