Good post!
Not sure about the state not existing part though. It's hard to dismiss the existence of jackboots coming through your door or the pressure the state can put on you in so many ways. Cognitive dismissal is one thing, but their chains are real. The invisible ones are easier to strive to shake, but if they lock you up that extension of the state exists.
Nock's excellent book, "My Enemy the State", he makes the case for the state being, in some ways, distinct from government. The government is simply the administrative body. The state is the coercive element. The state uses the government and can't exist without it, in fact, not without taking control of it. But government can exist without the state, and be quite efficient and accountable. Maybe, someday, we'll see a good example. I'd move there. :)