When an electorate repeatedly votes for socialist governments until they default on their public debt, their financial affairs must be taken over by a trustee in bankruptcy. This occurred in the 1930s when the Dominion of Newfoundland ran up debts of around $100 million against an annual national income of $30 million. Their democracy was then replaced by a British-appointed Royal Commission which administered their government. The commission’s report stated:

The twelve years 1920-1932, during none of which was the budget balanced, were characterized by an outflow of public funds on a scale as ruinous as it was unprecedented … The public debt of the island, accumulated over a century, was in twelve years more than doubled; its assets dissipated by improvident administration; the people misled into the acceptance of false standards; and the country sunk in waste and extravagance. The onset of the world depression found the island with no reserves, its primary industry neglected and its credit exhausted. At the first wind of adversity, its elaborate pretensions collapsed like a house of cards. The glowing visions of a new Utopia were dispelled with cruel suddenness by the cold realities of national insolvency, and today a disillusioned and bewildered people, deprived in many parts of the country of all hopes of earning a livelihood, are haunted by the grim spectres of pauperism and starvation.

As a general statement, it is not too much to say that the present generation of Newfoundlanders have never known enlightened self-government. The process of deterioration, once started, could not be controlled. The simple-minded electorate was visited every few years by rival politicians, who, in the desire to secure election, were accustomed to make the wildest promises involving increased public expenditure in the constituency and the satisfaction of all the cherished desires of the inhabitants. The latter, as was not unnatural, chose the candidate who promised them the most. This might be said of other countries, but in Newfoundland the cajoling of the electorate was carried to such length that, until the recent crisis brought them to their senses, the electors in many cases preferred to vote for a candidate who was known to possess an aptitude for promoting his own interest at the public expense rather than for a man who disdained to adopt such a course. They argued that, if a man had proved himself capable of using his political opportunities to his personal advantage, he would be the better equipped to promote the advantage of his constituents; an honest man would only preach to them (Newfoundland Royal Commission Report, presented by the Secretary of State for dominion affairs to Parliament, November, 1933.).

Thus, when a country, state or municipality defaults on its debt, it should lose its democracy and a trustee should be installed to run the government and educate the citizens in good government. During the interregnum all registered voters should be required to attend civics classes and be examined. Those failing the classes should be removed from the electoral roll. Adolescents reaching voting age should be required to pass similar exams for at least two generations in order to be added to the electoral roll.

This article is an extract from the book ‘Principles of Good Government’ by Matthew Bransgrove