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Governments sometimes don't achieve a win-win either. In fact, generally they don't even aim for a win-win. They generally resolve things decisively - especially when that's not the best option.
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We are talking about a population in which there are enough very intelligent, conscious and aware people available for goverment functions that are able to achieve win-wins.
If you think those conscious and aware people aren't capable of making win-wins your whole argument is dead.
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Though Government may be one possible solution to some issues, I would suggest that it is a far greater problem to a greater number of issues. (I don't really want to drill down too deeply into this, but the Government acting from self-interest against the wishes of the people is kind of a biggie).
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You suppose a society where they are conscious and aware people. Why should a goverment of those people act against the wishes of the people?
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(Brutha, in your example I suggest concerned individuals on all sides get together and improve the bypass road so City B doesn't need to shortcut through City A).
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How do those people make the decision to come together? Who organises it?
Wouldn't it be more efficent if someone in City A and someone in City B had the job to organise those things. (That job is classically called mayor)
Let take a large-scale example, genetic manipulated plants.
The benifits of having better plants that have more vitamins and need fewer growing time mean that someone will want to do this in your society. Those scientists who want to do this will thing that the benifits are greater than they are in reality and that the risk aren't as big as they are because the belief in the idea of genetic manipulated plants.
Because other people fear that the risk genetic manipulated plants is greater than the benifits it provides.
How does your society decides the issure? What process is used to make that decision?
Their are a lot of similar question where there is a risk for the whole society but a big gain for the one who does it.
I don't think that the one who grows the genetic manipulated plants is the best to ensure that the risk is balanced against the gain.
It is better when there is a goverment who decides (by some progress) what is appropriate.
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Why not? What if this spectacular group of problem-solvers determined a brilliant method for constructing forcefield that prevented this warband from entering their sanctuary? Wouldn't that be considered "matching" them?
The warband is a problem. Why can't it be solved?
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If this spectacular group of problem solvers come together and build a force that can combat the aggressor they form a state in the process of doing so.
Maybe they win, but Anarchy is over anyway. That like "Cutting basic human rights to defend them" it doesn't work on a principle reason.
The other problem is that the aggressor can prepare for it and gather ressources. When he declares war their isn't much time anymore to build a defense.
But if you build your defense before their is aggresson that exactly building a state.
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(and why would you form an army if you were happy!?)
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Being I King could be kind of fun, so even when you are happy you may want to become one.
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But really, the important bit (to me at least) is that a society consisting predominantly of Conscious people should fall into an "Adult-to-Adult" model of interaction rather than a "Parent-to-Child" one.
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Their aren't only individual to individual relationships.
Their are also group to group relationships.