The Fraggles don't want to be rulers because they don't want to be ruled, and they extend the same courtesy to others. In the "King" episode they are very eager to point out how they don't think anyone can force anyone to do anything. Even in Junior was a nice king, they wouldn't want one. And they shouldn't have to have one. Especially when, as Junior says, the universe manages to run pretty well by itself naturally. Well remember the Gorgs' system did end up coming with those trappings, with Pa creating and using a bomb. And Pa did intend to keep the Fraggles as slaves in one episode. I don't think we can say that was just because of one particular ruler, and not the system itself. It's like how Communism sounds good in theory, but has never been successfully achieved.