Private sector regulation

In the US a fast growing form of housing is gated communities operated by Homeowner Associations. These are widely touted as the alternative to intrusion by the state. They are not however without their problems:

On a June day in 1991, Helen Garrett spotted a notice above the mailboxes at her Santa Ana, California condominium. The notice accused Garrett, a 51-year-old financial consultant and grandmother, of "parking in [a] circular driveway ... kissing and doing bad things for over one hour." Her condominium association, which posted the notice, promised to fine her if it caught her doing "bad things" in the future.

Garrett was furious. Her kiss with "a very respected businessman" was brief. People began calling her "hot lips," she said, and asked her what bad things she was doing. The story quickly became national news, appearing in the Los Angeles Times and USA Today. Garrett hired a high-profile attorney. She threatened to sue for defamation and emotional distress, and demanded a public apology. She received it only when the association learned the "violator" was not Garrett but a 17-year-old girl and her boyfriend.

This sort of problem is also picked up in The Voluntary City, in an essay by Fred Foldvary called Proprietary Communities and Community Associations. The sorry tale above and some of those recounted by Foldvary, suggest to me that the real problem is not the existence of states with regulatory powers, but the existence of people with the desire to control. The opportunities for these people to gain power seem to be significantly higher in Homeowner Associations than via the ‘normal’ political processes. As far as I can tell these associations wield considerable power with very few restraints on them.