If you read Robert Nozick's Anarchy, State, and Utopia (libertarians also like serial commas, evidently), which was his response to Rawls' Theory of Justice, you will see that his Utopia involves communities that choose their own governing principles as an alternative to Federal government. He, of course, envisioned fundamentalist communities as well as Rawlsian communities of the kind you want to live in. Rawls' answer to this at the philosophical level, is that such an arrangement guarantees rights only as long as freedom of movement is absolute, and it never is. Your system won't look so great if you're an African-American born in Texas and you're told the solution to your problems is to move to Nordic Washington. We won't even consider the community that decides to reinvent slavery.
The EU's response to the financial crisis as well as its current failure to enact massive financial aid in the face of the Cornona virus, shows just how badly the lack of real Federal financial systems work. Life is OK if you are France or Germany, a lot less so if you are Greece, Spain or Italy.