Agreed, but why should the "rest of the world sighs with relief"?
Existing government is sub-optimal and competition tends to increase quality. Is there a special property of government service that makes this principle fail here?
Existing government is sub-optimal and competition tends to increase quality. Is there a special property of government service that makes this principle fail here?
Government is not a product or service. It doesn't follow market rules. Heck, who enforces market norms when at anytime you can send out warships and conquer everyone?
If anything, we have way many small governments that often must bow down to the regional power and become de facto client states with limited autonomy and almost no ability to fight off the regional power if it thinks you've offended it in any way. Ukraine is getting a lesson in how little autonomy they have when they're so close to an aggressive regional power. Just because you are recognized as a country doesn't mean you enjoy the autonomy a country should. Smaller nations are just going to be under the thumb more than larger nations who can put up a proper military deterrent.
We do sometimes see multiple governments competing in the same "markets". We usually call them "warlords" though, and it hasn't really worked out all that well for the people and lands being competed for.
In a sense, but they're subject to a tragedy of the commons (that's almost the definition of a negative externality), so competition does not improve them.
I don't think the "rest of the world" really has any stake in it at all. A few hundred people do, at most. These people may not be completely harmless, but they also lack the capacity to hurt people in any significant numbers. If you can be hurt by a micronation, perhaps you need to reevaluate what your government is doing. How badly do they have to fuck up to the point that a micronation becomes relevant in your life?