So what is wrong with the libertarian case for extremely limited government? Economics 101 teaches some of the basic justifications for government interference in the economy. Some things, such as the cost of national defense, are "public goods." We can't each decide for ourselves how much defense we want. We have to decide that together. Then there are "externalities," which are costs (or, sometimes, benefits) that your decisions impose on me. Pollution is the classic example. Without government involvement of some sort to override our individual judgments, we will produce more pollution than most of us want.See the full column here.
There are "market-oriented" solutions to this problem, but there is a difference --often forgotten, especially by Republicans -- between using market forces and leaving something to the market. The point of principle is whether the government should intervene at all. How it chooses to intervene is purely pragmatic.
Libertarians have a fondness for complex arrangements to make markets work in situations where the textbooks say they can't. Hey, let's issue stamps, y'see, and use the revenues to form a corporation that sells stock to buy military equipment, then the government leases the equipment and the stockholders vote on whether to user it -- and so on. The point becomes proving a point, not economic or government efficiency.