Over the weekend, David Cunliffe bowed to the inevitable and resigned to seek a new mandate from his party. Good. After such an election loss, its appropriate that a party leader accepts responsibility. At the same time, they may still have something to offer, and its appropriate that the membership gets to decide. That's how we do things at a national level (through the interface of Parliamentary elections), and its how parties should do it too.
The fact that this has been greeted with near-universal horror by our political media tells us a great deal about their sniffy distrust of democracy. They would much rather have seen a deal stitched up behind closed doors and imposed on the Labour membership, without their input or consent. Which really makes you wonder if they'd prefer to see the makeup of Parliament decided in the same way...?
A leadership election will allow the best candidate to emerge, and provide them with a mandate from the party. And that's a Good Thing. The only way it could turn out badly is if the losers refuse to accept the choice of the membership and work to undermine and backstab the winners (as the Labour caucus did with Cunliffe, and as he did to Shearer). But that's a problem with Labour's toxic internal culture of backbiting and self-aggrandisement, not with elections.