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Baughn comments on Ideas wanted: democracy in an Em world - Less Wrong Discussion
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Well, there's the singleton AI approach.
More generally, even at lower technology levels it may be possible to encode much of the functioning of the state in (open-source) software.
How does that help at all? Whoever controls the program is in charge. Do we decide it democratically? Do we have a dictator write it?
It helps for the same reason that encoding rules in books of law does.