How one can reach such conclusion is beyond me. People will discuss the question, and democratically decide. You'd be surprise the fierce debates that erupts among citizens when a serious question is on the table, and how everyone makes oneself enlightened before vote. This is what actual democracy is. This is how it should work everywhere for any serious issue.
Designating a cherry-picked representative who carries exactly zero obligation to hold his promises is NOT democracy, but elective oligarchy. Almost all countries calling themselves democracies certainly don't deserve the name.
In no place I've lived would the average person walking into the voting box have spent time studying the history of banking law and policy to make a well-informed rational decision. They'd at most have read the opinions of some journalists or listened to a news reporter, and would make their decision after discussions between similar poorly informed friends/colleagues.
Fierce debates != well-informed debates.
We elect representatives because it's known that the body politic, once it reaches a large size, doesn't have the time to be well-informed on all decisions they'd need to make as a pure democracy. To suggest so exposes a serious need for a second look at the situation.
Representative democracy isn't elective oligarchy.
Actually all of them.
> In no place I've lived would the average person walking into the voting box have spent time studying the history of banking law and policy to make a well-informed rational decision.
Because most people have been mercilessly been beaten into obedience, and the belief that they aren't actually able to think by themselves, that they're inferior to the oligarchs in command (hint: they aren't. The President is no better than me and no better than the garbage man).
In 2005, in France, the "referendum on a European Constitution" lit an immense debate, and there was an incredibly well-formed decision on an enormously obtuse tome of legalese.
You can check that similar debates are common in Switzerland. People actually think about the problem, discuss it, and vote in conscience.
If you think people aren't able to think and decide autonomously for themselves, you are actively opposing democracy.
Ordinary elective oligarchy is the ideology that mostly pass as "democracy" nowadays, but please don't stay abused and go on pretending you like democracy when you don't.
Premise 1: if you continue adding people to the voting pool on an issue, at some point (X) you're going to exceed the number of people who have interest / time / capability to render themselves informed.
When you do, mass media begins to exert a much greater effect on the outcome (as these people are more susceptible to having their opinions swayed).
Premise 2: If you shrink the pool of potential voters, but keep the money involved the same, then corruption increases
--
There are of course things you can do legally to fight both of these negative outcomes, but I feel you'll always be fighting the basic tendencies. The solution then isn't direct democracy (where mass media overrides logic) or oligarchy (where corruption rules) but some point in between.
That's why the example of the 2005 French referendum is so important. All of mainstream politics were campaigning for "Yes". All of media, papers, TV, radios were exclusively campaigning for "Yes". However, the "No" vote won by a comfortable margin 55% to 45%, and the campaign for the "No" almost entirely took place on the internet and social networks.
If either traditional/big media or the internet and social networks influenced the vote by pursuading people who didn't do their own research -- that's a fundamental problem.
I don't agree. I've read quite a bit of economics, I read serious newspapers from a range of political viewpoints, and I have a technical degree. All of this merely helps me to appreciate just how ignorant I am, and how complicated the world is.
Imagine that my local council asked its residents how much money this year should be dedicated to renewing the sewerage system, which is a typical example of the small but important decisions that have to be taken on behalf of the public. I don't know the first thing about sewerage engineering. If the council tells me that they recommend $10M then I have literally no idea whether this is the right number, even to an order of magnitude.
The Pointy Haired Boss is a character in the Dilbert cartoons. He doesn't understand the technology Dilbert is working on, but that doesn't stop him from telling Dilbert how to do his job. Direct democracy puts the public in the role of the PHB, and the results would be very similar.
I would be surprised if he would be better than The Garbageman.
On the contrary, the outcome of the referendum was less about the merits of the proposed constitution, and more an expression of growing anti-Establishment social opinion and a demonstration of discontent with the majority parties and President Chirac.
> If you think people aren't able to think and decide autonomously for themselves, you are actively opposing democracy.
If you think people aren't able to determine how to choose reasonable facsimiles of their moral/social/economic position through which to abstract their effect on the daily operation of a state, you are actively opposing democracy.
Being able to choose when and how to make decisions must be a core component of the free exercise of democracy.
Or in 90%+ of the case they just follow the opinion of the federal council.
I suspect you live in a bubble. Have you met many average voters?
Voters do not have much incentive to make informed votes since the expected impact of their vote is very small. As a result, they tend to use their vote for signaling purposes, as a way to reflect the type of person they want to be, rather than based on what they anticipate the consequences of their vote will be.
If voters are so astute and informed, how do you explain that they radically disagree on the consequence of various policies, and that their disagreement can be predicted based on their parent's politics? How do you explain that in polls, voters position align so well with the left-right axis?
We aren't just talking about values here, but about a non subjective assessment of the consequences of policies. How odd that it would cluster in this way!
True. This is called learned helplessness. But people can also learn autonomy, emancipation instead, given the possibility to make an impact.
I'm not pretending that people are "astute and informed", they aren't; but they're definitely able to become so.
[1] https://en.wikipedia.org/wiki/Swiss_immigration_referendum,_...
What about the Swiss referendum on an absolute ban on the construction of minarets? (note: not a ban on building mosques)
Switzerland, like many other European countries, has planning laws that decide on the architectural appropriateness of a building in its surrounding environment on a case-by-case basis. But this referendum, passed by a majority of the Swiss population, placed a complete ban on a minaret ever being built again in Switzerland. That was a completely democratic decision by the people of Switzerland. But was it based on informed debate? Or reactionary and emotional appeals? [1]
[1]http://blogs.reuters.com/faithworld/files/2010/11/ch-1.jpg
It is the responsibility of those advocating for a position in favour/against fractional reserves to inform voters and debate in front of them. Experts who can't or refuse to communicate to laypersons on matters than concern the latter are near useless.
It's kind of funny, because when I looked up the word oligarchy, I noticed that Wikipedia had an entry for the US:
Do they study laws, ethics, psychology, sociology, or criminology before making laws? The average voter on any issue is not educated. Why should any issue be given special consideration for this? And if this is an issue with every issue, then the issue is with democracy itself.
It is getting really absourd. Next year we have a vote about if we should enforce a vote back from 2010.
Participatory democracy is the lesser evil from what we know so far, and it's not absurd that only the people interested in the subject at hand go to the voting booth.
Maybe just a representative democracy like the rest of Europe.
The problem is that representation in politics is not transitive. B might represent A and C might represent B, but this does not mean that C represents A.
In my experience, most people simply vote for the opinion shouted loudest
and the one their relatives/friends vote. Only a very few investigates
the topic independently, but their votes are lost in the noise. I would
not trust decisions, that require specific knowledge and that can't be
explained in layman terms, to the masses.
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Personally I don't trust politicians as much anymore these days to make choices in the benefit of the people. Most often the politicians' votes seem more aligned with business interests compared to the people interests, especially in large powerful constructs like the EU. I've also seen politicians make plenty bad choices in my country.
My opinion is that we should get more referenda in the future. The innovation of internet makes it possible to do this very cheap.
How long does it take for someone to be competent to vote on monetary policy?
It's ridiculous to expect a voter to spend that amount of time on every issue.
It's ridiculous to believe that citizens have no business in important matters. If you're not deciding, you're not acting, and your voice doesn't matter at all.
I do not feel competent to take part in a decision about the reserve requirement.
I guess you could set up a system where you delegate your vote to a third party on an issue-by-issue basis. An interesting thought experiment, but quite a few things to work out. My guess is, at the end, it would be similar to the system we have.
For a interesting thought, what about matters of brain development and ability to reason? Why should voters get to decide on matters such as when we are considered adults or when consenting to contracts or sex is possible. For nuclear or medical expertise, there is at least expertise. For matters of brain development, the science is still very young and limited. Or even on a greater extent, why should a voter be given power in matters that require ethical expertise? Matters that require legal expertise?
Actually, if you don't trust democracy, labeling topics for a referendum as tragic or awful goes without saying.
http://volokh.com/2010/05/24/public-opinion-anti-discriminat...
http://ropercenter.cornell.edu/voting-rights-act/
The idea that the "republic" part of the system protects minorities despite vast opposition from the majority sounds nice, but it's not supported by reality.
That's like saying that it's an animated film, not a comedy. The republic is a form of government and democracy is a way to involve the people in deciding who governs them. Some republics are democracies, some democracies are republics.
> The problem with a democracy is the majority rules.
When the minority rules, like in a plutocracy, you've got a bigger problem.
Really.
That's a strange principle to hold, especially if it wouldn't apply to any other asset. People are generally free to own securities no matter how complicated their structure. But the fiat system seems to conveniently siphon lending power from account holders to account managers -- effectively centralizing economic planning to financial institutions by fiat.
Saying "central banking is good" is like saying "government is good". It definitely can be, but it can also be murderously oppressive. The question is, how did this economic decision maker come to be -- and why are they in control of your money instead of you.
If I said something about causal learning, I could point to Patricia Cheng as a keyword to Google. If I said something about dual systems of cognition in economic behavior, I could point to Daniel Kahneman or Jonathan Evans.
Point me in the direction where one can find this "hard science" with "laboratory tests", so that I may know these are not toy words you threw around.
Obligatory:
"You just got finished readin' some Marxian historian -- Pete Garrison probably. You're gonna be convinced of that 'til next month when you get to James Lemon, and then you're gonna be talkin' about how the economies of Virginia and Pennsylvania were entrepreneurial and capitalist way back in 1740. That's gonna last until next year -- you're gonna be in here regurgitating Gordon Wood"[1]
You should also read up on "natural experiments." They got us things like the elimination of cholera from major metropolitan areas, the link between smoking and heart disease, and Hubble's Law describing the expansion of the universe. Sometimes looking at the world tells us stuff about the world.
You should also maybe check out the work of John Ioannidis, and the hoax research of John Bohannon, and articles on publication bias. Check out how frequently lab p-values cluster just around publishable.
We've reached a weird state where, give me a natural experiment in economics, where the author actually has to think about and discount possible alternative explanations sufficiently to sway aggressive critics on a contentious topic. Then give me a modern nutrition study claiming that some fad food abruptly cures cancer in rats, with a convenient p of exactly 0.05, which becomes an isolated media frenzy before it's never cited again. I'm going to treat the economics with far more deference, despite my general fondness for double-blind RCT.
EDIT: Also, the original reference was a simile, signaled by words like "essentially" and "like." Ease up a bit with the 'toy words' accusations, I was not trying to claim economics is literally indistinguishable from physics, just that the case studies here are surprisingly compelling, and seem to point in one clear direction.
Some approaches are:
- structural models (google Pearl)
- instrumental variables (google Angrist)
But at a macro level, there are no controlled experiments. We can look toward "natural" experiments (e.g., wages and the labor rate of two border towns, where one is in a state that has raised minimum wage and the other has not), but there's nothing like the gold standard double blind randomized trial that you'd find in a drug study.
> If successful, the sovereign money bill would give the Swiss National Bank a monopoly on physical and electronic money creation, "while the decision concerning how new money is introduced into the economy would reside with the government," says Vollgeld.
> But over 90pc of money in circulation in Switzerland now exists in the form "electronic" cash created by private banks, rather than the central bank.
EDIT: Formatting
For the banks? It depends on how quickly the central bank is going to loan them new money.
For the bank's customers who want their easy loans? Best case scenario - nothing changes, worst case - loans are now harder to get because the central bank is shy about increasing the money supply.
It surely has been positive in the past but that does not mean it is positive now or in the future.
We are entering a new era, where (economic) growth is no longer necessary for human development, due to automation and that an increasingly large percentage of innovation is in software. In a world of progress without growth, we cannot have an economic system that requires growth to function properly.
Instead, we need economic stability.
I can only applaud Switzerland taking seriously this, as well as basic income initiative. If anyone is able to pull it through, it's them. The only pity is that the current discussion is made in German, so most of the anglosphere won't be able to read or contribute to the discussion directly, and would be left to low quality "journalism" as a source of information about the debate.
I agree that this seems like an unusually technical topic to subject to referendum.
https://en.wikipedia.org/wiki/Swiss_referendums,_2015
https://en.wikipedia.org/wiki/Swiss_referendums,_2014
https://en.wikipedia.org/wiki/Swiss_referendums,_2013
https://en.wikipedia.org/wiki/Swiss_referendums,_2012
https://en.wikipedia.org/wiki/List_of_Swiss_federal_referend...
Against mass immigration
Financing and development of railway infrastructure
JAS 39 Gripen (Swedish fighter jet) procurement
Non-renewable energy tax
Fixed book price agreement
Foreign treaties
Hospitality industry VAT initiative
Gold reserves
And my 2 favorites... Increase petrol station shop opening hours
Music lessons
Seems much more than just "public moral position" questions to me.
The central bank does not even need to hold fractional reserves: As the entity creating base money, it can literally create that out of thin air.
Of course, history has taught that unlimited money creation is usually a bad idea, so usually base money is now backed by public or private debt, but this idea is distinct from fractional reserve banking.
This is in no way a proof. A good analogy, but not a perfect one, I agree, is looking at 2 companies where one of them has more capital and so it can undersell its competitor, using prices lower than its production prices. You might win the competition, but that's definitely not a a good system long term.
And another thing that I think is very important to keep in mind is that we went through 2 world wars quite recently, each one performing a reset of the system. It is very hard to say that we are on the right track when the system needs to crash and burn every couple of generations.
See this Econtalk podcast on the topic: http://www.econtalk.org/archives/2015/12/noah_smith_on_w.htm...
That doesn’t make any sense. Runs and crashes are an important part of the free market, keeping banks in reign. Fractional reserve banking would be impossible or very limited if runs and crashes were allowed to happen. This would result in non-inflationary currency, improved value of savings, and decreased volatility of the markets (extreme booms followed by extreme crashes and long periods of unemployment due to constant reallocation of resources in the society).
All of this is prevented by central banks.
That's true for nearly every subject. It's an argument against this referendum as much as it is against democracy in general.
Even representative democracy. Most people are certainly not experts at hiring executives. Seemingly even those whose job it is to hire and fire.
Voters are not experts on matters of laws, morality, ethics, psychology, sociology, or criminology. If it is tragic for this to be put to referendum, then most every referendum is tragic.
Which countries were these?
Measured in what, GDP? A relentless race to extract more and more resources from the earth and lay waste to countries in the process? Easy money only emboldens a race to the bottom for extraction of resources, not a holistic life for the world's population. Such banking only empowers a few.
You perhaps can't print currency, but you can create money in exactly the same fashion that banks do - any time you issue a debt marker, money is created.
I think if I wrote that it might not be worth the full $10 in "publicly traded" circumstances.
There's an interesting exercise in how bank-like you can become before you need to register as a financial institution.
The miseries from bank runs and crashes are real, but even so, the total impact on human welfare from fractional reserves has been overwhelmingly positive.
How do we know?
There were holdouts in Europe originally, some central banks were slow to adopt fractional reserves. They were trounced by the economies of other European nations and their superior access to liquid capital.
We've essentially done the laboratory tests here, it's one of the few areas where econ plays like a hard science. We know the answer here, and it's not 100% reserve requirements.
It's a tragic topic to put to a referendum though, because I don't expect every random person to be an expert on the technical nuances of financial history. And this is a topic where intuitions are a pretty poor guide, one where I'd expect the wisdom of crowds to fail hard. PhantomGremlin's quote from George Bailey is a good example. Most people aren't bankers, and don't really understand how it works as a system, beyond their own account, so it's weird to ask them to make key decisions here.