Government has flags outside its offices.
Seriously, there is one real difference: most of the people ruled by governments accept that rule as legitimate. They believe that they have a moral duty to obey its orders ("laws"), and that it is morally wrong to disobey (commit "crimes"). The sanction of the victims -- obtained via the superstition of "authority" -- is what makes a government something more than a gang of thugs.
Recommended reading: The Most Dangerous Superstition, http://www.amazon.com/Most-Dangerous-Superstition-Larken-Ros...
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