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Direct democracy differs from indirect democracy in that, in a direct democracy, citizens decide on policies through voting as opposed to electing representatives to decide on and vote on policies for the people.
Countries that use a representative democratic system will usually use three different methods of reaching a policy-making decision: referendum, initiative, and recall. In a referendum, the entire constituency is required to vote on an issue stated on a ballot. A referendum system also usually allows voters to veto legislation through placing a vote on a ballot. An initiative refers to the use of a petition signed by voters to get a policy on a ballot to be voted on. Through a recall system, voters have the right to petition for and vote on the removal of an elected legislator prior to the end of the the legislator's term.
Switzerland is a form of direct democratic government in which federal laws are initiated and enacted through four different steps. First, federal administration draws up a draft of the legislative policy. Second, the draft is introduced to the public via an opinion poll in which political parties and independent organizations can suggest changes to the draft. Third, the draft is brought before both houses of parliament in which the draft is privately debated. Both houses of parliament later open the debating sessions up to the public. Last, the legislation is put on a ballot if 50,000 citizens sign to require a referendum (The Federal Council: The Portal of the Swiss Government, "Elections and Votes").
In contrast, in an indirect democracy, also called a representative democracy, legislative representatives are elected by the people to make and vote on legislation for the people. Most Western governments are indirect democracies, including the governments of the U.S., Canada, and Great Britain.
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