A critical flaw in arguments like this is the embedded assumption that the creation of democratic policy is outside the system in some sense. The existence of AGI has the implication that it can effectively turn most people into sock puppets at scale without them realizing they are sock puppets.
Do you think, in this hypothesized environment, that “democratic policy” will be the organic will of the people? It assumes much more agency on the part of people than will actually exist, and possibly more than even exists now.
Most critical flaw is thinking that any policy on its own would be able to solve the issue. The technology will find a way no matter the policy.
The society built on empathy would have been able to work out any issue brought by technology as long as empathic goals take priority. Unfortunately our society is far from being based on empathy, to say the least. And technology and the people wielding it would always work around and past the formal laws, rules and policies in such a society. (that isn't to say that all those laws, rules, etc. aren't needed. They are like levies, dams, etc - necessary local, in time and space, fixes which willn't help in the case of the global ocean rise which AGI and robots (even less-than-AGI ones) will be like)
May be it is one of the technological Filters - we didn't become empathic enough (and i mean not only at the individual level, we are even less at the level of the societal systems) before AGI and as a result woudln't be able to instill enough of empathy into the AGI.
Normal human communication already does that. Do you really think almost any of the people who share their political opinions came up with them by being rational and working it out from information? Of course not. They just copied what they were told to believe. Almost nobody applies critical thought to politics, it's just "I believe something so I'm right and everybody else is stupid/evil".
I suspect you’ll probably have to determine the nature of free will (or lack thereof) to answer this. Or, well, learn empirically :-)