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I often think about that myself.
I think the two main problems are security, arsedness, and know-how (or lack thereof). Suppose each person is given a password along with their social security number: what's to prevent another person isn't from voting on their behalf, if there's no one looking? In that sense, having a permanent voting booth would be a better idea as, here in Brazil, votes are processed electronically.
As for the lack of arsedness, how often would people vote without losing interest on the process? Discussing laws would be also a bit problematic, unless we relied on public channels broadcasting the opinions of the most vocal citizens. However, who on Earth would watch a channel like that?
Also, politicians can usually count on advisers. Given how most people know very little about most subjects (experts are, after all, experts in their respective field, and their respective fields only), what would stop the politics of a country from going completely astray? You'd need a stellar education programme to tackle this problem.
On the bright side, however, a good share of money spent on politicians would eventually go to more useful stuff. I mean, what wouldn't be more useful than that? Laws could also be much more dynamic, if voters had the opportunity to ask for the revision of certain laws.
Insofar as we find solutions to the problems above (and I'm sure something must've slipped my mind), this would be infinitely better than the current system.
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