I have a lot of respect for the pragmatic kind of libertarianism that says: Market solutions might work better than government programs, and we should try them. For example, I think it’s right to experiment with voucher systems as alternatives to government-run schools. This experiment will either work or not (under various circumstances), but it’s worth trying.
A voucher system would not, however, bring about true philosophical libertarianism. The government would still collect mandatory taxes to fund education, and would still make certain educational experiences mandatory for every child. In fact, voucher systems are standard in some of the Western European countries that we call “socialist.”
True philosophical libertarianism says: Government taxation and regulation are affronts to personal liberty. My life is mine, and no one, including a democratic state, may take goods from me or direct my actions without restricting my freedom. At most, minor restrictions on my liberty are acceptable for truly important reasons, but they are always regrettable.
That doctrine simply does not feel plausible to me, experientially. Imagine that all levels of government in the United States reduced their role to providing national defense and protecting us against crimes of violence and theft. Gone would be an interventionist foreign policy, criminalization of drugs and prostitution, and–more significantly–publicly funded schools, colleges, medical care, retirement benefits, and environmental protection. As a result, a family like mine could probably keep 95% of the money we now have to spend on taxes, paying only for a minimal national defense and some police and courts. We would have perhaps one third more disposable income,* although we would have to purchase schooling for our kids, a bigger retirement package, and more health insurance; and we would have to pay the private sector somehow for things like roads and airports.
I have my doubts that we would be better off in sheer economic terms. In any case, I am fairly sure that I would not have more freedom as a result of this change. And freedom (not economic efficiency or impact) is the core libertarian value.
I don’t think one third more discretionary income would make me more free because I know plenty of people who already have that much income and they don’t seem especially free. With an extra billion dollars, I could do qualitatively different things from what I can do now; but an amount under $100,000 would just mean more stuff. Meanwhile, when I consider the actual limits to my freedom, the main ones seem to fall into two categories. First, there is a lack of time to do what I want. I suppose not having to pay taxes would give me a bit more time because I could work fewer hours. But my work is a source of satisfaction to me (and is also somewhat competitive with others’ work). I would be very unlikely to cut my hours if the opportunity arose, nor would doing so feel like an increase in my freedom. The way to get more time is to stop wasting it.
Second, I feel limited by various mental habits: too much concern with material things, too much fear of disease and death, too much embroilment in trivialities. I hardly think that being refunded all my taxes would help with those problems, especially if I then had to shop for schools, retirement packages, and insurance. That sounds like a perfect snare.
I have been talking about me and my family. Whatever the impact on us of a libertarian utopia, it would be worse for people poorer than us. Unless you take a very dim view of the quality of government services such as Medicaid and public schools, you should assume that low-to-moderate income citizens get more from the state than they could afford on the market. They would have reason to worry that they could afford basic services at all, and such insecurity would decrease their freedom as well as their welfare.
Overall, economic libertarianism seems to me a materialistic doctrine. (Civil libertarianism, which I endorse, is a different matter.) You risk being called elitist for saying that we are unfree because we have too much stuff and care too much about it. But it happens to be true.
*I don’t know how much my family spends on total taxes (income, sales, property, local, state, federal, Social Security, etc), but the Statistical Almanac of the United States says that 12% of all personal income goes to taxes, and I am presuming that we pay three times the average rate because we have higher income and live in Massachusetts.