In the end this is why democracy with all its flaws is better than any other system we can dream up.
I agree with most of what you said, but I respectfully disagree with the last line, quoted above.
Democracy at its worst, is worse than a dictatorship at its best. The key feature to remember in many crowdsourcing (or even something like open sourcing) environments is that the talent pool of contributors is exceptional - or above average at least. Ask a crowd of auto mechanics, coal miners, and construction workers how to restructure the financial system and...you'll probably end up with a mess not unlike what we have right now.
Hell, Congress as it stands is a microcosm of the 'crowd' that is the heterogenous melting pot of the US. This Congressional "crowd" time and again fails to come up with sustainable, timely, and equitable solutions to the problems they are tasked to deal with - instead weighing down legislation with pork barrel spending and minority interest concessions that ultimately subvert the bill's ability to accomplish its stated goal (see the American Reinvestment and Recovery Act as well as the Obama's health care plan).
For even worse examples of how a crowd can completely botch things with terrible effects, look at how the crowd that runs the Greek government systematically sold out its own population via kickbacks to bureaucrats and irresponsible allocation of public money for private interests - and how this irresponsibility has the potential to destabilize the economy of an entire continent.
Everyone talks about how great democracy is, and how much better it is than any other system. What they fail to mention is that democracy is only at its best in a culturally homogenous society that places a high premium on education - so basically the Nordic/Scandanavian countries. Every other democracy has huge swaths of the population that are perpetually in the minority, and so are constantly voted down and marginalized, as well as huge patches of uneducated citizens who are used as fodder in political battles.
What we seem to be moving towards anyway is a global system in which the primary conduits for money and resources are multinational corporations, while democracy (and the national agendae) are increasingly co-opted and driven by an increasingly powerful news media that is accountable to no one. Politicians and companies play the PR game, appealing to values like freedom, environmentalism, etc to gain legitimacy (as power by force is no longer acceptable), while actually doing the opposite.
That is the reality of democracy in a capital driven economy