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orthonormal comments on Histocracy: Open, Effective Group Decision-Making With Weighted Voting - Less Wrong
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Markets are a way of doing this, but they're optimized for ease-of-setting-up, not predictive power. There's no particular reason to expect them to do better than a good algorithm. They have well-documented irrationalities. I've seen Intrade go through tulipmania, and I've personally bought Sarah-Palin-To-Withdraw-As-VP-Candidate stock I thought was overvalued because I knew it was about to rise even further. Better to have no incentives to do anything other than be right and influence policy.
Funny thing, I'll bet somebody else did the exact same thing just before the price crashed. The fact that you made money in that instance doesn't prove that it was a sane decision.
(I do agree that Intrade suffers from market failures of various kind, but many of them are caused by high barriers to liquidity- like the fact that you couldn't make all that much money by shorting a fringe candidate's chances, even if that candidate's supporters were irrationally buying a 1% chance up to 5%.)
But that sort of thing is sometimes going to be a sane decision, if you're sufficiently confident you understand the market (in this case, I wasn't trading on momentum, it was just that she made a major gaffe and the market hadn't responded yet). In an ideal system, misrepresenting your beliefs should never be rewarded with increased voting power. It's not an anecdote, it's an existence proof.
I'm being kind of glib because I haven't really read my Hanson on this.