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Two Cheers for (Direct) Democracy

May 19, 2014 in Economics

By Joseph Salerno

As Jeff Deist pointed out in an earlier post, in a national referendum over the weekend, the Swiss heroically and overwhelmingly rejected what would have been the world’s highest minimum wage. Switzerland currently has no minimum wage. The result was hardly unexpected, however, because the “Decent Wage” initiative was staunchly opposed by big business and government, as well as by farmers, small business owners, and employer groups.

A less publicized initiative that received a heart-warming rejection in the referendum, although by a much smaller margin, was the Swiss federal government’s plan to purchase 22 Gripen E fighter jets at a cost of $3.5 billion from Saab, the Swedish defense firm. The deal had been in the works for 6 1/2 years and was thought to be a done deal — at least according to the markets. Saab AB fell the most in 10 months, declining by 7 percent to an intraday low this morning before recovering to a 3.7 percent decline at midday in Sweden. The Swiss public ignored the government’s heavy lobbying in favor of the initiative, which sought to stoke fears of a “security gap” in the defense of its air space. The mechanical and electrical engineering trade group, Swissmem, also gravely warned that rejection of the initiative would cause a prospective loss of 2 billion francs for the ”Swiss economy,” i.e., the crony capitalist firms that compose the trade group and had already negotiated 500 contracts with Saab.

Perhaps part of the reason that the Swiss were unmoved by this government-business hysteria was because of an incident that occurred in February, when French and Italian air forces forced the landing of a highjacked Ethiopian Airlines Enterprise plane in Geneva. The French and Italian jets were needed, you see, because the Swiss air force does not operate outside of business hours.

Although I am not a proponent of democracy — or for that matter government — of any kind, occasional national referendums in the U.S. would certainly throw a good and well deserved scare into our own political and crony capitalist elites, and may even rein in their depredations on citizens’ lives and property.

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