The unfortunate thing about this ideal is that it assumes a world where everyone is like the libertarian. If we, indeed, had a world consisting of rational, well-meaning, capable, self-motivated people, libertarianism would be ideal. But we do not.
Instead, our world is chock full of people who fall short of this ideal, in ways that cause libertarianism to fail in practice. The instinctive reaction of libertarians is, why can't other people just become like that? Why can't they be capable, self-motivated, well-meaning, and rational? Why don't we just set up libertarian rules, and wait for people to adopt them? Surely people will improve, and things will evolve into harmony.
Except, most likely, they will not. Consider the following.
- A large proportion of parents are incapable of teaching their children skills and habits they would need to be productive and self-sufficient members of society. If children of such parents are left to their own devices, they do not develop such skills, and then you have three options: (1) teach them at everyone else's expense, (2) imprison them at everyone else's expense, (3) kill them.
Public education is necessary.
- A large proportion of parents will teach their children irrational, usually religious, counter-freedom ideas. Combined with rule by majority, this will wreck a freedom-based society in the long run, unless society counters this tendency, by schooling the children.
Public education needs to start at an early age, and must teach a pro-reason value system.
- The IQ spectrum in humans is very broad. The brightest and the sharpest are many times more intelligent than those from the other end of the spectrum. Many of the brightest are well-meaning, while many others are happy to abuse their smarts for their own benefit at the expense of others, and can be considered selfishly evil. The large IQ discrepancy provides enormous quantities of people of whom to take advantage. The dull masses have nothing with which to defend themselves against the selfish smart, unless the well-meaning smart people step in.
We need a government that can protect the stupid from the smart and evil.
- The free market fails in some areas; specifically, medicine. When the wealthier part of the population is given the freedom to pay anything they want, for any medical service they want, this drives up the cost of medical services to such an extent that poorer people can't even afford preventive care. This leads to poor people more frequently developing serious problems, and then you have the following two options: (1) make everyone else pay to treat the now expensive problem, or (2) let the person die, losing everything valuable that person could have contributed if they lived. In the US, this predicament seems to happen a lot - simply because the poor are being priced out of access to preventive medicine.
We can't allow the wealthier part of the population to price others out of access to preventive care needed to avoid problems that cost everyone more in the long run.
These are only a few problems that are most effectively solved through government; i.e., through restrictions of freedom.
There is much wrong with a bloated government. The US federal tax system now consists of 70,000+ pages. Other federal laws and regulations are similarly gargantuan. Such incredible bloat is untenable, and is a sign of bad governance running amok.
But that doesn't mean that government doesn't have a function and a place. Not every country is as dysfunctional as the US. The ideal is a state that ensures most of its people as many freedoms as possible, as long as they don't involve harming others. But this is much more complex than assumed by libertarianism, because the world is more complex than assumed; largely because most people don't, and can't, live up to the libertarian ideal.
In a lot of ways, libertarianism is "let them eat cake". It's smart people refusing an implied responsibility for people who aren't, and expecting they should "just be smart", instead.