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There are great artistic and cultural reasons to let this happen.

After all, look what happened with Kugelmugel - another of these liberal experiments:

Spoiler: the bigger states always win.

Denmark's Christiania had quite a long time of "hippie semi-anarchy", but it was formally reintegrated into society about 10 years ago.

However, this was a product of the Boomer generation, when they were young. It might not be possible in today's more authoritarian world.