Interesting analysis. So the problem isn't with democracy per se, but with overly centralized democracy. As someone who's lived all his life under a parliamentary democracy [like those too-vaunted "Nordic model" countries are], I can say that relatively centralized democracy requires the ordinary Joe to defer to authority.
Yep: the "Nordic model" structure, along with the more British version of parliamentary democracy, requires a deference to authority that would drive the average red-blooded American nuts.
In addition, centralized democracy only works fairly well (i.e., without tumult) in a culture that's a lot more conformist than the American variety.
Federalism - decentralization - was the key to making democracy work in modern times, as you so well noted. The Founders were well aware of the political philosophers who concluded that "pure" democracy only works at the city-state level; it works best in places like small towns where "everyone knows everyone". It does not scale well; when a democracy gets to the size where voters have to be divvied up into abstract categories, democracy does get creaky.
FWIW, the modern justification of democracy was that it provides a system to ensure the peaceful transfer of power from one government to another: in other words, it nips civil war in the bud. That's all.
And it's a poor justification. It doesn't work, and there's no particular reason it would. If peaceful transfer of power is really desired, limit the power. In democracy power really doesn't change. The factions that control the military ensure titular power changes but the real power never changes. Democracy is the front office for juntas.
So no, I'm no fan of democracy, but I think it can sort of work at a scale where social pressure can still be brought against the electees.
In economic terms the problem with democracy is pretty clear. The idea that you can pool your resources with people more powerful than you, and come out better off, is insane.
In a democracy, or a state in general, the rich can spend money, and leverage the resources of the entire populace, to achieve their goals. Think Soros or Koch, whoever your demon is. And it's of course not just ideologues like them, it's every firm, they can spend a small amount of money and turn that into multiples of return. The state is what allows, and makes inevitable, the rich getting richer and the poor getting poorer. It's what states do. In a weaker state, or a free society, spending money on bribing the state does you no good.
So again, in economic terms, once the the ratio of money spent buying influence to economic return approaches unity.. that government is too powerful to be stable. Corruption has grown to a point where the feedback is positive.
It's true in a free society or limited government the people with resources can more readily achieve their ends by spending money. But then it is spent
With a state powerful enough, they can spend resources on buying government and get more than they spend.
That's the only option. Have a situation where resources must continue to please consumers or dissipate, or have a situation where resources can buy more resources, which is the case when you have an active economically interventionist state.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit