This is a pretty simple diagram that shows us a pretty important idea. I'd just like to re-state what each of the boxes says to be sure you understand the idea of the diagram.
The first box has an idea that will seem naturally logical to us, that if John told you that you had to obey him or he would violate you, that would be wrong. By violate, the author means to steal from, kidnap, cage, or murder you. So to put it in other words, it would be wrong for John to make you pay a fine, lock you in handcuffs, put you in jail, or kill you if you didn't obey him. None of your friends, family, or neighbors have the right to do any of this to you.
The second box has another idea that will naturally seem logical to us. Nothing changes about what was said in the first box, even if John can get 2 or 3 or even 10 friends to join him in trying to make you obey him. As a group, they still don't have the right to violate your rights to force you to obey them.
These first two boxes make sense to most people. But the ideas in the third box seem un-natural to most people. Government schools teach you that when people get together and have a vote, that somehow(they never explain how) the winners of the vote get to use the power of the government to force the losers of the vote to obey the winners. The winners of the vote are given control of the police, jails, and courts to force anyone who doesn't agree to follow their rules to pay fines, go to court, be locked in a cage in jail, or even be shot and killed by the police.
What I hope you have been learning from my podcasts and blogging and our discussions is that John cannot give any power to the government that he doesn't have himself. So if there is any action it would be wrong for John to do, the same action is wrong for the government to do. Let me finish with an example: It would be wrong for John to force you to pay him for a piece of paper that allows you to get married. Since that action is wrong for John, it is also wrong for the government to require us to buy a license from them before getting married.