Why Referendums are Dangerous

Nobel laureate economist and best-selling author Joseph E. Stiglitz, who has just published a new terrific book, "The Euro: How a Common Currency Threatens the Future of Europe" (it's at the top of my TBR list!), told the New York Times, in response to a question about the aftermath of Brexit in Europe:

"The likelihood is there that in one country or another there will be enough support for another referendum, and an exit will occur that will begin the process of a real unraveling of the Eurozone." 

He was probably thinking of France or the Netherlands and there are others too. But just imagine the EU without France or the Netherlands, that's surely the beginning of the end...

So what he is telling us is that in Europe, we now run a very real risk of another devastating referendum, similar to Brexit.

I believe that comment certainly makes my just-published article on Impakter magazine particularly timely. In it, I argue that referendums are not a democratic panacea, on the contrary, they are highly dangerous and can be deeply destructive. I also propose a simple fix. Here is the beginning:

impakter essay: WHY A REFERENDUM IS A BAD IDEA ...And a Modest Proposal to Fix it

The first lesson from Brexit, the UK vote to leave the European Union, should have been this: that a referendum is a bad idea, it weakens democracy and leads to potentially hugely damaging political decisions.
In the economic area, bad news for Britain has already happened, the pound has plunged to its lowest historical level in thirty years and British commercial real estate is reeling, some 20 percent lower, a harbinger of a broader crisis in real estate.
Good news are few: Australia has announced it wants a free trade deal with the UK after Brexit (to replace what is now available with the EU) and you can expect other Commonwealth countries to follow suit; and there is Japanese SoftBank’s recent acquisition of ARM, the technologically advanced British chip designer, a $32 billion investment in the British economy, that, oddly enough, did not provoke cries of anguish from nationalists who (normally) do not like to see “British jewels” sold to foreigners (though it seems that investors in Japan have serious doubts about the deal). But then, the Brexiteers needed to exhibit some good business news in the face of the coming unavoidable recession as the UK slowly exits the EU (it will take at least two years).
Threats to Great Britain in the political arena are far greater: Britain risks losing Scotland and North Ireland. The Scots are already talking about a referendum for independence (that would allow them to join the EU) and Ireland is evoking the possibility of re-uniting with North Ireland, just as East and West Germany joined together. If all this comes to pass, Great Britain will be no more, in its place we’ll have “little England.” Hardly the result that even the most ardent Brexiteer could have wished for…
Yet, in spite of the obvious economic and political risks, the populist far-right parties on the European continent have all latched onto the Brexit example, eager to emulate UKIP’s success with its Leave campaign. They are all clamoring for referendums from Marine Le Pen (Front National) in France to Geert Wilders (Party for Freedom) in the Netherlands, not to mention Germany, Italy, Spain etc.
And matters are not helped by the continuing avalanche of ISIL-inspired attacks in Europe, from the massacre in Nice on Bastille Day to the Afghan teenager wielding a murdering axe in a German train. Such news is fodder to the populist/chauvinist mill.
Add to the mix the extraordinary passivity of our political leaders, with German Chancellor Merkel in the forefront who clearly likes to sit on her hands while her Finance Minister Schäuble shoots down any attempt to strengthen the Eurozone; his chief concern is to defend German banks and German interests and he does not see it as Germany’s duty to sustain the weaker partners in the EU in a collaborative union, even though Germany is Europe’s strongest economy: in fact, collaboration is not in his vocabulary. There is no question that he is the least “European” of all German politicians, and in fact, he would be in good company with Marine Le Pen and Geert Wilders, all bent on shooting down the European Project. Meanwhile, the EU Commission in Brussels keeps mum, trying to stay out of the political melee, and in so doing, increasingly looking like the culprit.
This is why an exasperated population sees referendums as the solution, the only way to push politicians into action. Referendums are seen as “direct democracy” at work, giving voice to the people in a way that normal elections do not.
If only it were so.


A close examination of how a referendum actually works shows something radically different: Far from being a democratic tool, a referendum is an extremely dangerous political exercise that is open to ugly demagogic manipulations, and thus leads to unexpected and unwanted results.
In our Internet-connected society, with Facebook, Twitter and tabloids sharing the voters’ attention like never before, the level of “information noise” is, as a result, higher than ever before, and the “noise,” unfortunately, tends to hide the “information.” In our current technological climate, with news valued by the number of “clicks” and “shares”, information is debased and a referendum is an increasingly dangerous tool, open to distortions.


Voters are not better informed when disinformation is as important as facts – as we saw in the case of Brexit. Consider what happened during the campaign. At first, it looked like it would turn into an interesting public debate, with the facts about staying in or out, brought out in the open.
Every major think tank in Britain and in the world, including the IMF and the OECD, pitched in with their complex economic analyses. But a month before the vote, something happened. The facts turned out to be annoying, even boring, there were too many of them, too much to read, too much to digest.
A large number of voters were turned off and preferred to follow their instinct. It was more emotionally satisfying to show dislike for your Polish or Italian neighbor (finally you could do it without incurring disapproval from your other neighbors). It was easier to believe in non-facts that promised satisfactory results.
Of all the false promises the most famous one was the idea that with Brexit the UK would get back the £350 million it pays to the EU every week and invest it in its National Health system – a patently impossible promise to maintain on two counts: the amount paid to the EU was half that claimed by the Leave Campaign, and once Brexit kicks in, all funds available to the government would need to be used to defend the economy – clearly nothing would be left for the Health system.
In the last three weeks running up to the referendum, far from having a sedate, informed and civil debate, we were treated to a Brexit vs. Remain brawl in the best (loud) American tradition. The Brexiteers were pumped up by a wave of phobia for foreigners and immigrants, and expressed heights of racism and nativism not seen before in public. All this, alas, culminated in the murder by a deranged nationalist of MP Jo Cox, a young mother of two whose only fault was her openly-expressed belief that the UK should remain in the EU.

To read the rest, click here.