A transatlantic, first-class flight aboard now-defunct Swissair used to feature a course of port wine and several cheeses. It also included a clutch bag of amenities with a tube of herbal toothpaste that smelled of a meadow of heather in bloom.
When Swissair ran out of cash and failed in October 2001, its routes were replaced by another airline called Swiss. The port wine and cheese were gone. The toothpaste remained, but the damage was done. The family business that manufactured the toothpaste, Trybol, had lost revenue. Trybol’s owner, Thomas Minder, became profoundly angry at Swissair’s aggressive (and risky) acquisition strategy. Last weekend, after 10 years of activism, he finally got his way. A referendum in Switzerland gives shareholders an annual say on executive salaries. It also eliminates golden handshakes, golden parachutes, and, yes, bonuses for mergers. It does not bring back the port wine or the cheese.
Minder’s referendum is usually translated as the “Fat-Cat Initiative,” but its German name is more brutal: Abzocker Initiative. An abzocker is someone who fleeces someone else. The translation implies more a sense of theft than wealth. A referendum explicitly aimed at robbing rich people? In Switzerland?
It’s possible we’ve always just misread this snug country and its valleys of capitalists, but it’s important to notice not just the result, but the tool: the referendum. Switzerland holds more of them than any other nation and has developed rules to make sure they don’t cripple the country, the way California’s referendums have. The referendum, used correctly, should produce an unexpected result. In Switzerland, it helps do things that politicians can’t, won’t, or can’t even imagine. We could use more Swiss-style referendums in the U.S.
Bruno Frey, an economist on the faculty at the University of Zurich, thinks that not just managers but also Switzerland’s political class failed to understand citizen objections to outsize chief executive pay. The country’s politicians have misread voter sentiment before. In 1986, the Swiss defied political expectations and voted against joining the United Nations. In 1992, they voted against joining the European Economic Area, effectively decoupling the issue of European integration from party politics.
“That is fundamental to understand how the Swiss are using [referendums],” says Alois Stutzer, an economist at the University of Basel and a frequent collaborator of Frey’s. “They are pretty good at separating voting on issues from expressing a general dissatisfaction.”
Swiss referendums make noise in other countries precisely because they produce results that politicians find uncomfortable. In 2009, the Swiss produced a surprise “yes” on a referendum to ban the construction of minarets. As in other European countries, far-right parties have taken advantage of concerns over immigration to win votes. “The minaret initiative was not expressing dissatisfaction with Muslims,” says Stutzer, “but with how the elite, the political classes, were dealing with the immigration issue.” Politicians, he says, would rather not deal with such touchy topics. “These [referendums] force them to take a stand,” says Stutzer.
In the national election following the vote to ban minarets, Switzerland’s farthest-right party—which had sponsored the ban—actually lost ground. Referendums function as a kind of release valve, says Stutzer, outside of regular elections. “You’re not forced to buy an entire bundle of policies from a right-wing party.”
Most initiatives in Switzerland don’t even make it to a referendum. But the mere existence of a referendum, the knowledge that a check on the system is possible, has an effect. Frey and Stutzer, known for their work on the economics of happiness, have found that citizens of Swiss cantons with more developed institutions of direct democracy are … (wait for it) happier. “You feel that you can change something in your environment,” says Stutzer. And if a referendum fails, it can still change the country. In 1989, a referendum to dissolve the Swiss army, a cherished institution, won 30 percent of the vote, including a majority among voters young enough to serve. This shocked politicians, who expected the referendum to take a 90 percent beating, and Switzerland made changes to military service.
As tricky as it is to interpret the results of a referendum, it’s harder still to understand the meaning of any single national election. In 2012, which part of Barack Obama’s platform, exactly, did America endorse? What significance should we place on continued Republican control of the House? The Swiss “unbundling” of issues through referendums, says Stutzer, helps undo gridlock by allowing political entrepreneurs such as Thomas Minder, the angry toothpaste executive, to engage on a specific issue without having to build a brand-new party.
In the U.S., groups on both sides of the political spectrum are stuck with anger but no outlet. On the right, the Tea Party movement, in working its way into the Republican Party, has failed to repeal the Affordable Care Act or get the rest of the country to agree on its budget priorities. On the left, the Occupy movement dwindled into something more than a protest but certainly less than a party. Both arose out of frustration with the main political parties. Yet neither achieved anything as clear or direct as the 10-year crusade of Thomas Minder.
A national referendum on the balanced budget amendment, or Obamacare, or corporate pay in America would achieve one of two things—confirm these movements with a clear, defined victory or deflate them. And then we could all move on.