California's economy and governance have taken a marked turn for the better, and the reason deserves more attention: Credit belongs to the voters of California, and to the leverage they've been able to wield against an entrenched political class through ballot initiatives.

The latest victory came two weeks ago, when Californians once again bypassed their elected representatives in Sacramento and approved a $15 billion debt bond to steady the state's precarious finances. This follows the recall of former Governor Gray Davis, allowing Arnold Schwarzenegger to take over, and even more reforms via the ballot box may be forthcoming.

California gets criticized for repeatedly resorting to this "direct democracy" to set policy. The loudest complaints, as you might expect, come from the political elites and their echo chambers in the press. One irony is that some of the leading critics now are the same "progressives" who once favored a more open form of politics. Yet they now distrust popular voting because liberal special interests have come to dominate many state governments.

This class has found ways to insulate itself from public scrutiny, or even political competition: gerrymandered districts make elections foregone conclusions, while campaign finance laws favor incumbents. In such state capitals as Albany, N.Y., a permanent political class feeds a cycle of ever more spending and taxation. Their mandates and unions have all but ruined the upstate New York economy. The late economist Mancur Olson described how over time democracies can become so burdened by these interest groups that they stop being responsive or accountable.

The initiative and recall process has time and again allowed Californians to break apart this tyranny of the minority for the larger public good. In 1979, they stopped the upward ratchet of property taxes with Proposition 13. In 1990, they imposed term limits that broke up a permanent liberal majority in Sacramento. In 1994 they decided to mete out harsher sentences for habitual criminals (the three strikes law). In 1996 they blocked attempts to raise marginal income tax rates and ended state-sponsored racial quotas.

More recently, the voters have terminated bilingual education in public schools, rejected universal health care and opposed gay marriage (not that San Francisco's mayor seems to care). Little of this would have happened without the public right to referendum.

This power is also now proving to be the most important tool in Mr. Schwarzenegger's attempt to revive the California economy. Prominent Democrats fell in behind him on the bond initiative only because they finally feared the wrath of the electorate more than they feared the retribution of Sacramento lobbyists.

Next on Arnold's agenda is a reform of the state's workers' compensation system, which has been hijacked by the state trial bar and is currently one of the nation's worst. If the Legislature refuses to act, the Governor says he will once again take his case straight to the people. A draft initiative is already in the works for as early as the November ballot.

If Mr. Schwarzenegger wants to leave a permanent mark on the state, we'd suggest he use the initiative for even larger political reforms. One would push for a part-time Legislature. The less Sacramento is open for business, the less mischief its denizens can cause. We'd also favor having bipartisan or nonpartisan committees redraw Congressional maps, which would help get politicians out of the gerrymandering business. In Iowa and Washington, this has led to more competitive races and fewer incumbent coronations.

Yes, bad initiatives sometimes make it on the ballot, and voters do make mistakes. But those can be corrected. The greater danger in modern America is from a professional political elite that controls the electoral levers and makes itself unaccountable.