States are fundamentally different than HOA's. Maybe you missed the part about having a right to leave the jurisdiction? Or their subservience to federal law? Or the lack of power that it's sub parts have over it?
As far as control freaks. Of course you will have problems with HOA's. Just as there are now, and just as we have with government.
The difference is that the competition breeds better behavior. And gives your recourse (voluntary), if your needs aren't met, or you feel abused. Government based systems provide no such mechanism other than the tyranny of a king or the tyranny of a majority.
For instance, I researched my HOA first. I like 'em. They are never overbearing, they always do their job, and the cost is cheaper than what I would personally pay for cable/water, etc, which are then supplied for free. They don't raise their dues, etc. If that were not the case, I would find another place to live, actually, I would have never moved here to begin with.
The Philosophy Of Liberty -