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This is exactly what is happening, especially the US. We've already seen the USSR crumble under the weight of an over ambitious foreign/military policy - and we can already see the beginnings of the US's decline in regards to the national debt, ownership of capital, and growing decadence of the population. It really is only a matter of time. Hopefully it wont cause too much of a mess during the death-throes. Personally, I'd like to see the US break up into smaller, more manageable, independent states.
As for the dictatorial system being flawed - of course it is. Benevolent dictators are great, but at best, will only last for 60 years or so - at which point you have to cross your fingers and hope that the next dictator will also be a benevolent one. Democracy (as we know it) is the same, except each dictator can only last for 4 years if we decide we don't like them.
In this respect, democracy is fine - but like all good things, everything must come to an end - 200 years isn't really that bad - although, if you look at your history books, the United Kingdom (depending on your definition of democracy) has had a democratic form of government for between 800 and 400 years. Not bad going eh?
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