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Government based on choice but not geography presents problems.

Someone forms a government based on the plunder of others. They simply use force.

Each business, would need to be the existing laws of some but not all governments, so they would loose markets.

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All forms of human social organization present problems, so you're certainly not wrong. But panarchy precludes anyone from forming an association based on force or the plunder of others. Instead, participants agree ex ante to whatever rules/governance form they wish as a civil association -- socialist, market, religious, secular, or whatever -- then resolve disputes in common law courts. It's pretty elegant. I encourage you to check out the original 1860 article on Panarchy here: https://www.panarchy.org/depuydt/1860.eng.html

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