Gebhard Kirchgässner

This paper discusses several problems of direct popular decisions. In the first part, we consider problems related to the functioning of direct democracy. As a political system it only makes sense if there exists a continuous process and not if only occasional single questions are brought to a referendum. Then, the relation between direct democracy and the rule of unanimity is discussed, a subject of special relevance to the European Union, before we consider the role of quorums. In the second part, some areas are considered in which conflicts might arise. Re¬sults of initiatives might be incompatible with individual human rights or might endan¬ger fis¬cal sustainability, and referenda might impede economic reforms. All these problems, however, do not justify a general rejection of direct popular rights. Thus, we conclude by listing several points that should be observed to safeguard the well-functioning of di¬rect de¬mocracy.

I first discuss two aspects of a social order and cooperation which might be of high relevance: the problem of a spontaneous emerging of a social order, and the relation between exchange and cooperation. In doing so, I also discuss the role of production in separating areas of cooperation from those of competition. Second, I look more closely at the motivations for cooperative behaviour. It is argued that of the four kinds of motivation mentioned by Leist only two, self-interest and altruism, are really necessary to explain cooperation.

In this paper, institutions are described which are designed to reach sustainability of public finances in the Swiss cantons. These are on the one hand direct popular rights, the fiscal referendum in particular, which allow citizens to express their fiscal preferences. These are on the other hand debt breaks, i.e. institutions, which prevent expenditure and revenue from drifting apart too much in order to limit possible deficits. Both together, fiscal referenda and debt breaks, allow cantons to perform a sustainable fiscal policy. This also holds ­ and is particularly important ­ for those cantons that are financially weak. That these institutions are successful is not only demonstrated by descriptive analysis but also supported by econometric analyses. Moreover, they also reduce interest payments cantons have to bear for investment expenditure. Thus, with well-designed institutions federal states might even better be able to follow a sustainable fiscal policy than unitary ones. =>http://EconPapers.repec.org/RePEc:ses:arsjes:2013-ii-4

The weak rationality principle is not an empirical statement but a heuristic rule for how to proceed in social sciences. It is a necessary ingredient of any 'understanding' social science in the Weberian sense. In this paper, first this principle and its role in economic theorizing are discussed. It is also explained why it makes sense to use a micro-foundation and, therefore, to employ the rationality assumption in economic models. Then, we discuss whether the anomalies of individual behaviour as highlighted in modern behavioural economics impair the applicability of the weak rationality principle. This is not the case. We conclude with some remarks on handling the problems of 'free will' as well as 'weakness of the will' within the economic approach.

It is first discussed why a fiscal equalisation system is necessary for Switzerland. The reason for this are asymmetries, mainly in size, but also in location, between the different cantons. Then, the current Swiss situation is presented, before the new system is described which effectively consists of two parts: the first one newly assigns the different tasks to the different governmental levels and organises the cooperation between the national and the cantonal governments as well as among the cantonal governments, while the second one reorganises the financial flows between the different levels. Then, the results of the just expired first period of the new system from 2008 to 2011 are presented, as well as the changes decided for the second, new period, which will last from 2012 to 2015. Today, we can assess that the system has reached some of its objectives, in particular, that the financial autonomy of the cantons has been strengthened and that they have sufficient minimal financial equipment. But contrary to the aims differences in the fiscal potential of the cantons did not decrease, they even increased during the last four years.

Switzerland has experienced extensive institutional reforms at the local level that could influence local debt. These reforms have included municipal mergers, greater inter-communal cooperation, reformed political decision-making mechanisms, and the introduction of new public management measures. Many of these reforms originated at the cantonal level. However, the institutional diversity among Swiss municipalities hardly has diminished. A cross-sectional analysis for the 137 largest Swiss cities and villages in 2004 shows that direct democratic rights and a high degree of fiscal autonomy lead to a lower level of local debt. There is no statistical support for the hypothesis that reforms following the new public management guidelines had an effect on debt levels.

In 2007, the Wall Street Journal published an article claiming that each execution saves more than 70 lives. This example is used to show how easy it is, using simple or advanced econometric techniques, to produce results that do or do not support the deterrence hypothesis. Moreover, we also point to some puzzles which have not been satisfactorily solved so far. We then present a critical survey of the papers published in the last ten years. It is shown how simple changes can produce quite different results using the same data. Finally, we draw some conclusions about the usefulness of statistical arguments in policy debates, but also on the moral questions involved in this particular debate.

Three examples of Fiscal Policy Councils are discussed: Belgium’s High Council of Finance, the Swedish Fiscal Policy Council, and the Government Debt Committee in Austria. Their common aim is to support the government in order to achieve fiscal su...