So, essentially, steem is a decentralized democracy.

In many ways it is, and I think it could be a working model for what could actually happen (with a few tweaks) to make the ridiculous model of democracy we have now much better. If you imagine that instead of voting a person (highly stupid), people filled a questionnaire of some kind that gave direction and applied rules. However, their answers will also be weighted by their expertise meaning that specialists in an area will carry more weighting than laypeople. This requires a lot of data to feed into it to cover education, work and a web of trust network layer, but one day it could mean a much more sensitive and accurate voting mechanism rather than emotion of popularity.