Competition and Anarchy

Over at Distributed Republic, Micha Ghertner argues the competitive government position for libertarianism/anarchy:

I personally would much rather take the risk of letting isolated communities victimize their own members than the opposite risk of adopting a social rule whereby those with sufficient political power are free to "reproduce their ideologies and prejudices" upon all members of society, and not just a few sub-communities within it.

Many people tend to take a moral stance on anarchism: a democratic state should set the social rules, otherwise the strongest will brutalize - mobsters will take over and nobody will be safe. But, what if government currently is the mob boss? On the one hand, democracy is supposed to prevent that, but we all know that tyranny of the majority can oppress the minority (Hitler was democratically elected) so this argument is weak at best.

On the other hand, you have the idolization of the state as moral authority, which makes it dangerous. While the miniature states (or private security firms) can also take on this superior moral role, at least there would be more competition and free entry and exit from the states, so that minorities can easily escape persecution. Potentially they would also be less idolized if they were voluntary and competing.

Could this be a consequentialist morality argument for anarchy - that our values are more likely to be protected in a system with competition over moral authority?

Update: coincidentally, Arnold Kling just posted something on the same subject.