The three arguments in favour of direct democracy are that it:
Promotes responsiveness
Provides better signals than elections about voters policy preferences
Enhances the legitimacy of decisions made.
Although this sounds all good in theory, there are many problems associated with direct democracy. Firstly, a low level of interest from the general public means that a lot of people don't participate, but the process and debate is ruled by interest groups or political parties. Also the best-funded side has the better chance of gaining the most support.
Second, there is a 'tyranny of the majority' problem which means the biggest groups in society will use referendums against the interests of minorities, no matter how correct/useful the claims of the minorities might be.
Finally, opponents of referendums argue that they are highly irrational. Referendums mean that voters look at the short term politcal outcomes due to them having to consider issues out of context and without being able to weigh them against others. In addition, it would also be very costly and take up too much time to get people to vote on every government decision.
Taking account of these factors, I feel that direct democracy is good for state government in certain situations. For example when the decision concerns something controversial or very important decisions. Otherwise, representative democracy is the option that is much more practical.
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