As much as we like democracy, a republic is a better idea.

I grew up in a small (but rich) town where the big budget items were voted on at a town meeting. Since the revenue source that paid for these items was property taxes, people were paying for their decisions.

This looks like a particularly fair way to do things, and generally people appeared to make rational choices. Since everybody understood why we needed snow plows, items like that generally received strong support. However, it wasn't always that way.

One year, an item came up early on. Somebody pointed out that buying the item directly (as opposed to a loan) would save money (no interest). My mother (who headed the town council) informed them that buying directly would save money, but the entire amount of the purchase would have to come out of next years budget, which would mean that taxes would be higher. That was fine with people, and they went on to purchase everything up front that year. No bonds at all, but several purchases. Naturally, taxes went through the roof. The town was not allowed to run a deficit, so tax revenue had to be increased to cover the will of the people.

The next year, everybody had forgotten that they did this to themselves. Nobody was willing to buy ANYTHING. A new plow was on the agenda because one of the old ones was barely driveable. Somebody suggested plowing with the road grader rather than buying a plow. It was pointed out that you would be wearing out a very expensive, very specialized piece of equipment. This would mean saving a small amount now in place of a MUCH greater cost in a couple of years. This was ignored, and pretty much every other expense was defeated as well.

They stampeded in one direction the first year, even though they knew it would make their taxes soar in the next year. However, once they actually felt the effect, they turned and stampeded in the other direction the next year....even though they knew it would cost them more in the long run.

This is democracy. It is not wise and it is not visionary. However, it does represent the view of the people at the moment the view is polled. Binding referenda have the same effect. They are as likely to reflect a very short-term irrational view as a long-term directive.