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Democratic Tool Used to Manipulate the People

The Greek referendum of July 5 rejected an economic reform proposal from Greece’s creditors on the advice of the Syriza-led Greek government.

The Greek government then introduced an almost identical reform proposal to the country’s creditors, urging the Greek parliament to back it.

This farcical outcome was not dissimilar to the shenanigans surrounding other referenda, which are often a means for governments to manipulate the populace rather than express the popular will.

In fact, I would argue that the entire process is flawed and should only be adopted with the greatest reluctance.

Case in point, this referendum achieved nothing. So why do we even use them?

In the Greek case, the referendum was imposed by the government as a bargaining counter against a package of austere reforms imposed by the EU.

The package had been withdrawn by the time the referendum took place. But the government still campaigned against it, believing that a “No” vote would enable it to squeeze better terms out of Greece’s creditors.

That belief appears to have been unjustified. The terms presented by Greece to the creditor group the following week were very similar to those the electorate had just rejected.

If the EU accepts the terms, the Greeks will be forced to accept policies very similar to those they already vetoed. If the EU rejects the terms and forces Greece to exit the euro, it will be largely due to the bad blood produced by the referendum and the government’s campaign for a “No” vote.

Historical Context

Switzerland started using referenda in 1848, and is probably the most successful example of its use. Time after time, referenda proposed by populist groups have prevented the Swiss political class from taking unpopular actions, such as increasing taxes, loosening immigration, or folding Switzerland into the EU.

In these cases, referenda have played an important role in keeping Switzerland free, independent, and rich.

Outside Switzerland, referenda became common only in the 20th century. An early notorious one was the Saarland “plebiscite” of 1935, which concerned a reunion with Germany. This referendum was heavily influenced by the German Nazi regime, which worked to produce a 90% vote in favor of reunion with Germany.

In fact, the plebiscite’s notoriety is unjustified. It’s likely that the majority of the German-speaking Saarlanders would have favored reunion with Germany even in a fair vote.

The various British referenda show how the system can be manipulated. In 1975, a referendum staged by the government produced a substantial majority in favor of EU membership. This was followed by increasing voter regret as it became obvious how much the information provided to the electorate had been manipulated.

In 1979, a Scottish referendum failed to support devolution. In 1997, a similar referendum favored devolution. Then, in 2014, a referendum narrowly failed to support full independence. There can be little doubt that a further referendum, which will be forced by the Scottish National Party within a few years, will support full independence for Scotland.

Coming up in 2017, Britain (including Scotland, at least for now) is due to vote on whether to leave the EU. If the result is at all in doubt, the full resources of government and industry propaganda will be used to keep Britain in – further reducing the legitimacy of British EU membership among the populace.

Political Manipulators

Other countries have used biased referenda to achieve policy goals.

The Greek referendum on abolishing the monarchy in 1974 may have been legitimate, but the communist-sponsored Bulgarian referendum on the same subject in 1946 certainly wasn’t. This is made clear by King Simeon’s return to win a democratic parliamentary election in 2001, in spite of not having lived in the country for over 50 years.

Russia adopted its 1993 constitution through a referendum in which 54.5% were said to have voted “yes.” But both turnout and the voting figures are believed to be tainted.

And, of course, there’s the notorious Crimean status referendum used by Vladimir Putin last year to justify his takeover of the Crimean Peninsula.

Within the United States, referenda are used as a normal part of the political process in some states, most notably California. Here also referenda’s history has not been particularly distinguished. The 1978 Proposition 13 artificially limited property taxes, thereby pushing up real estate prices. And the 1988 Proposition 98 has caused continual budget difficulties because of its overfunding of education.

Keeping Democracy True

Referenda appeal to many politicians, because they appear to be a way to gain additional legitimacy in a negotiation, as in Greece, or because they allow politicians to avoid taking unpopular stands on controversial issues.

Switzerland suggests that referenda that arise from populist movements may be a useful check on the political class. But the California experience suggests that they may also be ineffective in this role. (Though, California’s politicians are mostly so foolish that it’s possible that without referenda, the state’s problems would be even worse.)

In any case, it’s clear that if called by the political classes themselves, referenda can be manipulated to produce the results favored by politicians. The problem with that, of course, is that those results don’t necessarily reflect the true wishes of the people. As such, they are very dangerous, and should be avoided in almost all circumstances.

Good investing,

Martin Hutchinson

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