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Direct democracy’s advantage

Can direct democracy work? A Swiss referendum on a national minimum wage suggests it’s not as bad as some politicians would have you believe.

The question was whether to establish an hourly minimum of about $25, which would amount to about $4,300 a month and be among the world’s most generous. Putting it to a popular vote seemed risky: Why wouldn’t people vote to insure themselves against poverty?

On May 18, the Swiss people rejected the proposal overwhelmingly. The referendum suggests that the will of Swiss voters is actually quite predictable: They are somewhat xenophobic but reluctant to tamper with personal liberties and free markets.

The Swiss have consistently reaffirmed their distrust of outsiders. A 2009 referendum famously banned the construction of minarets. Last year, 78 percent voted for a tougher asylum law.

The Swiss have also generally proven to be pro-business. In 2012, they rejected a measure calling for extending vacation time for workers to six weeks from four. Last year, they rejected a proposal that would have capped executives’ salaries at 12 times that of the lowest-paid worker in a company. They did, however, give shareholders the right to approve executive pay.

A study of 22 referendums on matters related to wealth redistribution held between 1981 and 2004 showed that voters’ age, rather than their stratification by income and education, was the best predictor of how a vote would go. Older voters consistently opposed working-time reductions, stricter labor controls and more generous protections for the unemployed. Given that the typical turnout in a Swiss referendum is 40 percent and younger voters, as in other countries, are less likely to participate, older voters’ conservatism and allegiance to the traditional Swiss work ethic ensure that leftist initiatives rarely pass.

The Swiss have proved their wisdom by throwing out most crazy ideas. They are down-to-earth people who recently approved extra investment in rail infrastructure but voted down the purchase of new fighter planes. If a political party had their voting record, it would be reasonably liberal and moderate.

I suspect people in most countries would vote as cautiously and reasonably as the Swiss if they knew their decisions would be immediately put into practice. Like any middlemen, politicians are hanging on to their intermediary role, talking of the populist threat and ordinary people’s lack of specialized knowledge. There is, however, nothing special about the Swiss: They are no smarter than Germans, Thais or Ukrainians, just wealthier - and wealth, according to a study, is not a good predictor of voting patterns. If they can vote responsibly, there is no reason why direct democracy shouldn’t work elsewhere.

Bloomberg View contributor Leonid Bershidsky is a Moscow-based writer.