The people don't have the slightest clue about what the government is doing. This has always been the case and always will be the case.
If the people do not know what the government is doing, then obviously they are not controlling what the government is doing.
One cannot operate a machine which one does not know how to operate.
But someone's controlling the government, someone is directing the machine, and democracy is truly the rule of those individuals, not the voters.
Who are they?
At the first step, they are the politicians. They, not the voters who elect them, determine government policy.
The voters determine which politicians take power, but they do not choose between politicians on the basis of policy.
Voters choose between politicians on the basis of rhetoric.
Thus, in a democracy, the policies which are actually implemented are those of the most skilled demagogues, not those desired by voters.
(N.B. It's not that the policies implemented are contrary to those desired by voters, it's that the voters do not have any preference, because they don't know what's actually happening or what the actual alternatives are).
But the deviousness of the brain of the politician is not the only factor determining his success as a demagogue.
Successful demagoguery, especially in a larger society, requires substantial material resources: to physically communicate the rhetoric.
Moreover, since the audience of this rhetoric is ignorant and intellectually unsophisticated, the quality of the rhetoric need not be very high.
There's no need for a Cicero (who would I suspect lose his primary if he ran today), all we need is a George W. Bush.
The content and style of the rhetoric can be mechanically put together by the science of public relations (reminiscent of Orwell's novel writing machines); there is no need for a rare oratorical genius.
The effectiveness of the rhetoric is determined by money: whoever has the money to hire the best public relations men and purchase the most advertizing.
Thus, the politicians are more dispensable than their donors. For every Sheldon Adelson there are a thousand Newt Gingriches.
consequently, the donors not only have a role in determining policy, they have the dominant role. Politicians are in essence their employees.
So then, democracy is neither rule of the people, nor rule of the demagogues, it is plutocracy.
Stranegly enough, this is almost universally recognized. People know that money controls politics. Yet they don't understand the argument I just laid out, and they don't realize that this is an inherent feature of democracy, rather than an aberration. They mistakenly think the problem can be solved through some clever new campaign finance reform.
P.S. In the popular mind, plutocracy = capitalism. Surely the rich want free markets and low taxes? But of course that's false. Humanitarians, who care about society as a whole, and who understand economics, want capitalism. Rich people, if they are purely self-interested, as are most people in general, the rich being no exception - do not. They want protectionism, subsidies, favorable regulations, legal monopolies, etc. As for taxes, they certainly want low taxes for themselves, but they need high taxes in general to finance all the self-aggrandizing government policies they favor.
P.P.S. Don't misunderstand me, this is not a lament about the futility of political action. To the contrary, understanding how the system actually works is a prerequisite for successful political action. The lesson is this. Education can only go so far; there's a large segment of the population who cannot be reached at the rational level. The purpose of education is to produce a cadre of true believers, who can lead the movement. The path to success for the movement is to play the demagoguery game (as Rand is playing). We will never have the money of our opponents, so we have to spend our resources more wisely. It's an uphill battle but it's far from hopeless.
