direct democracy is the only way

[lucy]

How interesting!! I was not aware that the Swiss system was so different. I must read more about this - or do you happen to have some really good links you'd like to refer to?

A simple Goolge-search should yield lots of results. I don't think I got some really good links.
The Wikipedia article on Voting in Switzerland isn't bad except that we cannot challenge any law at any time. We can challenge any part of the constitution at any time or start an initiative for new articles to the constitution, but the hurdles are pretty high. But once a law is in effect, it can't be challenged directly.
Or this one. Rather basic, but it gives a good first idea. And if you have questions you can always send me a pm.

I'd be interested to know how Switzerland compares to the rest of Europe for income differentials and concentration of wealth.

I'm too lazy to go searching for statistics. Usually OECD has pretty good data on such topics. But as I've stated before, income and wealth disparity aren't any different here than in other OECD-countries. And growing, too.

However, from my point of view you've hit the nail pretty neatly on the head with this statement:

Actually, what we usually see is several million sheep being persuaded by a handful of wolves that the only issue they can decide is whether mutton should be roasted or stewed.

It's about the same here. Not all that long ago we've had to vote pro or contra the abolition of inheritance tax in the canton of Zurich.
Imho, the inheritance tax is the fairest tax of all and probably one of the best ways to make sure that wealth distribution doesn't get more and more disparate. One can argue that this doesn't matter, but I believe that a too disparate wealth and income distribution isn't consistent with democracy, not in the long run anyway. (If I had my way, the inheritance tax would be at a sound 100%, with some precautions set aside that the owner of a small business can leave it to his/her heirs. Let them work for their wealth, not having it served on a silver platter.)
Although it was obvious that at least 70 % of the population would never, ever profit from the abolition of that tax and that it would only lead to the rich being able to hand down their dough to their heirs without paying any taxes, thus increasing the disparity in wealth distribution, it was voted down with about 60 %