Actually direct democracy seems to be working. Cutting spending is the right thing to do instead of increasing taxes:
How rich countries die http://blogs.law.harvard.edu/philg/2009/03/16/how-rich-count...
FDR's policies prolonged Depression by 7 years, UCLA economists calculate http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonge...
On the other hand, I find chocking how a lot of libertarians say democracy and freedom aren't compatible (I'm thinking of an interview with one of the founders of Paypal that was recently in HN). You get actually the opposite: the more democracy, specifically the more direct democracy, the less oppressive a government can be.