The global landscape is riddled with a silent, yet ever-growing burden: national debt. Trillions
of dollars, euros, yen, and pounds weigh down the balance sheets of democratic nations, often
incurred with little direct consent from the very people who will ultimately bear the cost,
including generations yet unborn. This has led to a profound disillusionment, echoing the
sentiment that “nothing works” and that the inherent greed of human nature, particularly among
those entrusted with public office, leads to chronic fiscal mismanagement.
But what if the very analogy of democracy–citizens as the collective owners of the nation’s
assets, and elected officials as their hired managers–holds the key to a solution? Our discussions
today suggest that the problem isn’t necessarily the tool of borrowing, but the lack of a robust,
explicit mechanism for owner approval regarding its use.
The Owner-Manager Analogy: A Framework for Fiscal Responsibility
In a well-functioning democracy, citizens are the owners of the nation. They collectively own its
land, its resources, its infrastructure, and its public funds. Elected officials are the managers,
entrusted with the sacred duty of stewarding these assets for the common good and long-term
prosperity of the owners.
Just as a prudent homeowner doesn’t take out a second mortgage without careful consideration,
or a company’s board doesn’t approve massive loans without shareholder consent, a nation’s
“managers” should not incur monumental debt without the explicit, robust approval of its
“owners” directly.
The current reality often falls short. While elections serve as a broad form of approval, complex
budgetary decisions, especially those involving significant borrowing, are frequently made by
legislative bodies without direct citizen ratification. This disconnect fuels the perception that
elected officials operate with a “key to the vault” and an unchecked ability to indebt the future.
Constitutions: Stuck in the Past, Fueling the Present Crisis
Nearly every modern democracy bases its constitution on two 18th-century models: the U.S.
Constitution and British common law traditions like the Magna Carta. These were revolutionary
in their time—but their core assumptions no longer fit today’s political, economic, or
technological realities.
The U.S. Constitution was written in a world without digital surveillance, multinational
corporations, or trillion-dollar debt. It was designed to prevent monarchy–not manage modern
fiscal policy, religious pluralism, or global crises. Yet countries worldwide copied its structure
wholesale or merged it with the UK’s unwritten model, expecting stability and fairness to follow.
That’s not what happened.
Instead, outdated constitutional frameworks have become silent accelerants of chaos:
Coup attempts in fragile democracies often stem from constitutional power vacuums.
Riots and protests emerge when people feel their votes don’t matter and their economic
futures are mortgaged away.
Religious killings escalate when constitutions fail to draw clear, enforceable lines between
faith and state.
Corruption thrives when oversight mechanisms are tacked on instead of built in.
A constitution should be a living mechanism for the will of the people–not a relic. Yet most are
treated as sacred texts rather than operating manuals, leading to paralysis in the face of change.
The solution is not just fiscal reform. It’s constitutional overhaul. And that begins by
embedding mechanisms for direct citizen consent, fiscal transparency, and adaptable
governance directly into the supreme law of the land.
Why Governments Borrow: A Necessary Tool, Not an Inherently Evil Act
It is crucial to acknowledge that government borrowing, when managed responsibly, is not
inherently malicious. It is a vital tool for:
- Long-Term Investment: Funding massive infrastructure projects (highways, power
grids, research institutions) that yield benefits for decades or centuries. Future
generations who benefit should reasonably contribute to their cost. - Economic Stabilization: Counteracting recessions by maintaining essential services and
stimulating demand when private spending plummets, preventing deeper and more
prolonged crises. - Emergency Response: Providing immediate resources during national catastrophes like
pandemics, natural disasters, or wars, when waiting to raise taxes is not an option.
The issue, therefore, is not the existence of borrowing as a tool, but the unrestrained and
unaccountable use of that tool.
Learning from Success: The Swiss “Debt Brake”
The idea of a citizen-approved mechanism for borrowing is not utopian; it’s a proven model.
Switzerland stands as a beacon of fiscal discipline, largely due to its “debt brake”
(Schuldenbremse). This constitutional rule, overwhelmingly approved by 85% of Swiss voters
in a 2001 national referendum, mandates a balanced federal budget over the economic cycle. It
allows for deficits during downturns but requires surpluses during booms, effectively curtailing
chronic deficit spending.
The Swiss example demonstrates that “owner approval” for fiscal limits is not only possible but
highly effective in fostering long-term national well-being.
A Proposed Model for Constitutional Amendment: The “Citizen Fiscal Guardian”
To address the pervasive debt crisis and restore public trust, democratic nations should consider
amending their constitutions to establish a “Citizen Fiscal Guardian” mechanism. This model
would embed direct citizen approval at critical junctures of fiscal policy, aligning governmental
actions more closely with the will of the people.
Proposed Constitutional Amendments: - The “Debt Brake” Mandate:
Amendment: Constitutions shall be amended to include a “Debt Brake” rule,
requiring the national government to balance its budget over an agreed-upon
economic cycle (e.g., 3-5 years).
Referendum Requirement: The initial adoption of this Debt Brake rule, including
its specific parameters and escape clauses for severe emergencies, must be approved
by a national referendum, requiring a supermajority (e.g., 60-66%) of the popular
vote.
Escape Clause Conditions: Any temporary suspension of the Debt Brake for
extreme emergencies (e.g., declared war, national pandemic, severe economic
depression) would require a supermajority vote in the legislature AND either:
i. Immediate confirmation via a follow-up national referendum within a
short period (e.g., 6 months).
ii. Or, a predefined, time-limited, and transparent repayment plan for the
emergency debt, also subject to legislative supermajority approval. - Major Borrowing Thresholds & Referenda:
Amendment: Any proposed new borrowing (beyond routine refinancing of existing
debt or minor annual budget adjustments covered by the Debt Brake) that would
increase the national debt by a specific percentage (e.g., more than 1% of GDP in a
single fiscal year, or cumulatively more than 5% of GDP over a 5-year period), must
be put to a national referendum.
Referendum Wording: The referendum proposal must clearly state the purpose of
the borrowing, the projected amount, the estimated repayment schedule, and the
expected impact on future generations.
Supermajority for Approval: Such a referendum would require a simple majority of
votes cast, or potentially a supermajority for particularly large or contentious
borrowing proposals. - Independent Fiscal Oversight Body:
Amendment: Establish an independent, non-partisan Fiscal Oversight Body (e.g., a
Congressional Budget Office equivalent with stronger powers) whose head(s) are
appointed for fixed, non-renewable terms and require broad legislative approval (e.g.,
2/3rds vote).
Mandate: This body would be constitutionally mandated to provide objective
analyses of all proposed borrowing and spending, including long-term debt
sustainability projections, to the public before any legislative or referendum vote. - No Unfunded Mandates:
Amendment: The national government shall not impose new unfunded mandates on
lower levels of government (states, cities, counties) that would force them to incur
debt without their own citizen-approved revenue mechanisms.
The Path Forward: Empowering the Owners
Implementing such constitutional changes would be a monumental task, requiring political
courage and widespread public engagement. However, the existing trajectory of ever-increasing
national debt is unsustainable and undermines the very promise of democratic well-being.
By giving citizens a direct, constitutional voice in the nation’s fiscal health, democracies can
transform their “managers” from potential spendthrifts into truly accountable stewards. This is
not about eliminating borrowing, but about ensuring that when the “key to the vault” is turned, it
is done so with the clear and informed consent of the “owners”–all the people, including those
yet to be born, who constitute the enduring wealth of the nation.
Further Reading - UNCTAD. A World of Debt 2025: A Growing Burden to Global Prosperity. Geneva:
United Nations Conference on Trade and Development, 2024. - A World of Debt 2025: It is time for reform. https://unctad.org/publication/world-of-debt
- Alesina, Alberto, and Francesco Giavazzi. The Future of Europe: Reform or Decline.
Cambridge, MA: MIT Press, 2006.
Page 5 of 5 - Fukuyama, Francis. Political Order and Political Decay: From the Industrial Revolution
to the Globalization of Democracy. New York: Farrar, Straus and Giroux, 2014. - North, Douglass C., John Joseph Wallis, and Barry R. Weingast. Violence and Social
Orders: A Conceptual Framework for Interpreting Recorded Human History.
Cambridge: Cambridge University Press, 2009. - Schaltegger, Christoph A., and Lars P. Feld. “The Political Economy of the Swiss Debt
Brake.” Public Choice 154, no. 1–2 (2013): 261–277. - Tsebelis, George. Veto Players: How Political Institutions Work. Princeton, NJ:
Princeton University Press, 2002.
