David Dunning of Cornell University inspired this article, People Aren't Smart Enough For Democracy To Flourish. To summarise, his research suggests that many of us are poorly equipped to judge the brilliance of the best ideas or the best leaders but are able to detect bad ones. This results in leaders and ideas that are just above average.
An alternative view is to give experts and technocrats the leadership roles. But, democracy isn't just about good decisions, it is also about agreeing fair values that may have no independent criteria except what a majority of individuals want.
Democracy also serves to counteract tyranny: the dominance of the majority by an individual or small group that impose their values and decisions. Experts may be just as tyrannical as megalomaniacs, or may become so. The ability for democracies to dismiss their leaders not only allows those that have been proven to be incompetent to be removed but ejects tyrants from office, too.
Politics is also about solving problems and perhaps this is where Interactive Democracy has some merit. By allowing everyone to contribute we may come up with far more creative ideas and solutions. It taps into the vast well of experience and practical knowledge that resides in the population as a whole.
The debate that Interactive Democracy offers is intrinsically educational too, as point is parried with counter-point, raising the abilities of those involved along the way. It may also build consensus and grassroots support that foster the effective implementation of policies.
However, as I mentioned on a previous post, measuring the results of each new law and initiative against the objectives declared for it provides an empirical feedback loop that should also impel the "majority" to reassess their decisions, fostering continuous improvement.