Last night, I stayed up far too late re-reading the fifth Harry Potter (in Hebrew, actually) and I found that the biggest problem in the wizard world is neither Voldemort nor the Dark Arts, but their own political structure. Unless I am very much mistaken, the Minister of Magic has almost absolute power. He controls the judicial (Harry's trial), legislative (all of Umbridge's new laws), and executive (controlling the Dementors and the executioner in book 3) branches of government. He also seems to control the one real newspaper in the entire wizarding world and can do whatever he wants with the one real school. And, most disturbing of all, there is never any talk of elections, impeachments, or any political opposition. The book mentions the post being 'offered' to Dumbledore, which implies that this absolute dictatorship is awarded by some shadowy counsel to anyone who catches their fancy. Nor do there seem to be any civil liberties, political action committees, or lobbyists. There is no one to prevent the rampant child abuse taking place in Hogwarts, nor does it seem that there's any to complain to. And this ministry seems to be a complicated, sprawling beaurocracy (almost all adult characters are employed by the ministry in some capacity) that legislates almost every aspect of wizarding life.
The only thing that confuses me is why Voldemort needed his reign of terror; it would have been simpler and more effective to have himself appointed Minister of Magic, and then he could rule the world without any opposition at all.