I don't think concentrating on democracy is wise. It's but a particular form of human self-organization that is currently popular, but is far from universally good. Some counterexamples to your naive-seeming political assertions:
Democracy grants legitimacy to the government.
So does monarchy or whatever else people agree is legitimate.
Democracy is fair and egalitarian - each person has a single vote.
Depends on your concept of fair and on what constitutes a person. Certainly many readers of this site cannot vote, yet. And those who can cannot really affect the decisions made by the government, anyway.
Democracy aligns the interests of the rulers with that of the ruled.
Most of your country's poor people will disagree.
Democracy is stable - powerful groups can generally seize power within the structure, rather than overthrowing it.
Applies equally or more so to monarchy
Democracy allows the competition of governing ideas.
Yet the #1 democracy in the world is clearly stuck in the governing rut.
Democracy often leads to market economies, which generate large wealth.
Counterexample: China
Democracy often lead to welfare states, which increase happiness.
Is welfare state a good thing? And whose happiness?
Democracy doesn't need to use certain coercive methods, such as restrictions on free speech, that other systems require to remain stable.
If I recall, US jails more people per capita than many non-democracies.
Democracy stops a particular group from hanging on to power indefinitely, which can reduce corruption, inefficiency and excessive use of state power for private purposes.
First, the real power is behind the scenes and non-elected. Second, Pinochet's Chile, for example, was much less corrupt than the neighboring democracies, if I recall correctly. So there is some other factor in play, probably worth isolating.
Anyway, I think a smarter approach would be to figure out possible forms of self-organization suitable for the Em-world, starting from scratch.
Some counterexamples to your naive-seeming political assertions
I am not claiming that these are all true (most are true to a certain extent, as far as I can tell - but that's not relevant here), simply that these are features often believed about democracies, and are good starting points to think about.
Anyway, I think a smarter approach would be to figure out possible forms of self-organization suitable for the Em-world, starting from scratch.
I think an analysis of what kinds of democracies work or don't work for Ems is a first step before the desig...
One person, one vote - a fundamental principle of our democratic government. But what happens in a world where one person can be copied, again and again?
That is the world described by Robin Hanson's "Em economics". Ems, or uploads, are human minds instantiated inside software, and hence can be copied as needed. But what is the fate of democratic government in such a world of copies? Can it be preserved? Should it be preserved? How much of it should be preserved? Those are the questions we'll be analysing at the FHI, but we first wanted to turn to Less Wrong to see the ideas and comments you might have on this. Original thoughts especially welcome!
To start the conversation, here are some of the features of idealised democracy (the list isn't meant to be exhaustive or restrictive, or necessarily true about real world democracies). Which of these could exist in an Em world, and which should?
EDIT: For clarification purposes, I am not claiming that democracies achieve these goals, or that these are all desirable. They are just ideas to start thinking about.