I find the thread title confusing. You speak of literacy tests, but seem to be advocating a civics exam.
As to the question you ask, I favor universal suffrage for all citizens. Our republic, as you correctly point out, does insulate the decision makers from the whims of the populace.
While it is true that not all of the electorate votes in each election, that is no indication that those who vote are any more or less informed than those who do not. Nor is it any indication that those who do vote make better decisions than their non-voting counterparts.
What I find infuriating is this: During my service in the Army, I went to places where people are KILLED for trying to vote. They keep trying. And yet our non-voters can't be bothered to go to the polling place.
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DEMOCRACY is where your vote counts, FEUDALISM is where your count votes.
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