Moldbug somehow argues that external pressure would keep sovereigns from making their patches into slave labor camps

In my opinion this is very similar to the standard libertarian argument, except that instead of companies on the free market, MM speaks about sovereigns. And it didn't convince me, too.

I am not defending MM here, I am just trying to understand him and pick the parts of his theory that seem correct to me. This is not one of them.

But to be fair, and fight the status quo, imagine that we are both subjects of the Moldbuggian Kingdom in the alternative universe, and we are discussing pros and cons of democracy, as a hypothesis. In that case, Hitler and Pinochet would be actually arguments against democracy. Like: "Let's imagine that we try this democracy thing here. What makes you believe that people would not vote for an evil charismatic leader like Hitler? Also, even a democratic country needs a strong army, somehow isolated from the election process (otherwise a foreign attack during the election day would defeat the unprepared country). So what makes you believe that an army leader could not take over the power, like Pinochet?" And it would be your turn to convince me that it cannot happen, which would be rather difficult, because in reality, it happened.

To be clear, my point is that horrible evil things can happen in any political regime. Including democracy; including libertarian utopia; including MM's utopia. Therefore "it could happen in a regime X" is not a sufficient argument for democracy. At best, it could be made to a statistic argument about how likely do different horrible things happen in different regimes to an average person.

And we should include all the horrible things that happen, not just those caused by the government directly. To take everything that happens in a country as a result of the government action or inaction. If the tyrant executes one hundred people, that's one hundred people dead. If the small criminals independently murder one hundred people, that's also one hundred people dead. The government is equally responsible for both. Just like the tyrant could decide to not execute those hundred people, so could the government decide to spend a bit more money on police instead of something else. Sovereign government has total power over their territory; therefore also it has total responsibility. All crimes that happen in a democratic country are the crimes of the democratic government. And that is a lot of crimes. Again, no government can bring that crime to zero, but we can still discuss whether government X can bring the total crimes in the country to a lower level than government Y. According to MM, the democratic governments are pretty bad at this.