No free beer when frugal Swiss get their say July 21, 2012Posted by tkcollier in Economy & Business, philosophy & politics.
Tags: California, Democracy, European Union, Financial Crisis
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Swiss research shows that giving citizens a direct say over how their taxes are spent leads to lower public debts, more cost-efficient services and even less tax evasion. “Because Swiss citizens feel they can control politicians’ spending through referendums, they are more prepared to give the government money and have a more positive attitude towards the state,” said Daniel Kuebler, co-director of the Centre for Democracy Studies in the northern Swiss town of Aarau.
To be sure, direct democracy is not the only driver of the Swiss success story. The country’s neutrality, bank secrecy, liberal labor market, low taxes and stable government have all played their part in drawing investment and driving growth. But the system has forced politicians to be more frugal than elsewhere.
In the United States, direct democracy is frequently blamed for the fiscal mess in California, where a 1978 referendum known as Proposition 13 changed the state constitution to ban increases in property taxes in line with inflation. Supporters say the measure put a sensible limit on state spending, but opponents say it warped the property market to benefit the rich, forced other taxes up and made it impossible for towns to keep pace with the cost of public services. This year, three Californian cities filed for bankruptcy in the space of weeks.
Kuebler said Switzerland’s referendums, which allow voters to overrule spending decisions by the legislature, do a better job of encouraging fiscal responsibility. “You might think that direct democracy would lead to greater public spending because anyone can put forward an initiative, for example, proposing free beer for all,” said Kuebler. “But it would never have a chance, because the preference of Swiss citizens is fiscally conservative and not redistributive.”
California Doesn’t Learn From China’s Train Wreck July 7, 2012Posted by tkcollier in Economy & Business, Enviroment, News and politics, Technology.
Tags: California, China, High-Speed Rail
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In California’s Legislature just authorized to spend, with Federal assistance, an under-estimated $100 billion to build a route between San Francisco and Los Angeles that will consist of a government monopoly riding on tracks near one of the largest earthquake faults in the world for most of its length, all to deliver passengers slower and at greater overall cost between two fixed points. Airlines give consumers a choice of carriers and airports on either end of that route, will deliver passengers more quickly, and probably with a much wider choice of departure and arrival times.
In China the problem — beyond the idea of spending untold billions on the antiquated technology of static choo-choo trains — is that the three people making all these wonderful decisions now have a high-speed rail system plagued by failure, corruption, out-of-control costs and legitimate safety concerns
The fact is that China’s train wreck was eminently foreseeable. High-speed rail is a capital-intensive undertaking that requires huge borrowing upfront to finance tracks, locomotives and cars, followed by years in which ticket revenue covers debt service — if all goes well. “Any . . . shortfall in ridership or yield, can quickly create financial stress,” warns a 2010 World Bank staff report.
Such “shortfalls” are all too common. Japan’s bullet trains needed a bailout in 1987. Taiwan’s line opened in 2007 and needed a government rescue in 2009. In France, only the Paris-Lyon high-speed line is in the black.