I think that in this day and age, we need a new method for developing laws. Big software companies will pay bounties for bugs/security holes; why isn't there something like that for flaws/bad incentive structures/tax exploits in government?
The problem with this would be that you would get many people trying to change laws that they don't like, and even groups of people "fighting" over trying to make a loosen/tighten restrictions in a law. For example, just imagine the tug-of-war between pro-gay marriage and anti-gay marriage groups over the statutes governing marriage.
You would probably have to pursue a Wikipedia-like solution and 'lock' sections of law to this kind of input, which at least on its face, would start to make this approach more useless (because you would only be plugging holes in laws that few people cared about).
Perhaps a more ambitious goal would be a marriage of both. Fewer laws through greater empowerment, visibility and accountability enabled only through technology. In order to get there though, I think we have many issues we will need to solve before making matters worse, like who holds root access to the the government servers?
Quis custodiet ipsos custodes?