It's an elegant method of ultimate separation of powers. The Queen has a lot of technical power but in practice is never used. Yet it could be used if it really came down to it. This allows for flexibility in the constitution. I'm not completely up to scratch on my history but I know that the monarch had to intervene to set up a government when there was a crisis about a century ago.
I also read an interesting article by a constitutional lawyer recently argueing that the Queen should have disolved parliament about a month ago amidst all the uproar of MP's expenses etc. If she had done, I think the people would have been behind it.
Without such a fail-safe getting through extreme parliamentary crises would be much harder. The monarchy also makes a lot more in tourism than we pay for it. that much is largely agreed upon. Whenever I talk to tourists around Buckingham Palace they seem to find the whole idea of a living Royal family directly descended from Alfred the Great somewhat mystical, which I suppose it is in a way. Not many countries can claim that kind of tradition.
The Queen also plays a subtle but important political role. She is constantly representing Britain to other countries, particularly in the commonwealth, and meeting with leaders. It makes the important social relations between leaders of state flow much more easily since she is politically neutral. I understand that she and Mrs Obama got on particularly well.
I could go on and on, but there are lots of benefits and basically no drawbacks. You get a few people who think the Monarchy should be gotten rid of just because of some general notion of democratic elections, but I think that really misses issue in the context of Britain's Constitutional Monarchy.
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