It's easy to forget this in our era, but the reason the nation-state exists in the first place is that it's the most effective means we know of to defeat an external adversary in a contest of organized violence. The nation-state's internal distortionary effects on its population — which I agree are absolutely real — are simply the collateral damage you get when you optimize hard enough for victory in the external contest. It's not immediately clear how one might do better on this level either, since any serious decentralization effort has to sacrifice some degree of external security — and then you risk just getting conquered by a different centralized nation-state.