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You make a very strong case for what's wrong, and why we should move in the direction you propose. But before plunging into the details, I really felt like I had to address the broader questions of what any sort of political solution can possibly accomplish. There's a very sobering lesson along similar lines in terms of the history of the initiative in America, which differed dramatically from the original Swiss example.
I bring it up because it, too, was a deep and significant reform, but it was almost entirely coopted by the powers that be, at least in the states where it was used the most. And yet, the keys to making it work far more effectively were already known, and already existed in the Swiss system, which provided for a much closer integration of the initiative and the ordinary legislative process. This is the great irony: by recasting the initiative into a superficially seeming "more radical" form, the American proponents ended up creating something that was more easily used to snooker the people, rather than empowering them.
This is why I think we need a broader discussion about the full range of barriers to popular empowerment before focusing more narrowly on the specific details of your proposal. At first glance, those details look pretty good to me. But I really want to take things slow, and consider the broadest questions first.
I'd actually like to have an ongoing discussion about this, and maybe you can write an overview introduction diary that I could front-page next weekend as part of that discussion. As I've indicated, I'm very much in agreement with the spirit of what you're trying to do with this.
"Senate passes expanded GI bill despite Bush, McCain opposition"