According to Jacob Weisberg in Slate:

A source of mild entertainment amid the financial carnage has been watching libertarians scurrying to explain how the global financial crisis is the result of too much government intervention rather than too little. One line of argument casts as villain the Community Reinvestment Act, which prevents banks from “redlining” minority neighborhoods as not creditworthy. Another theory blames Fannie Mae and Freddie Mac for causing the trouble by subsidizing and securitizing mortgages with an implicit government guarantee. An alternative thesis is that past bailouts encouraged investors to behave recklessly in anticipation of a taxpayer rescue. There are rebuttals to these claims and rejoinders to the rebuttals. But to summarize, the libertarian apologetics fall wildly short of providing any convincing explanation for what went wrong. The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history. Like all true ideologues, they find a way to interpret mounting evidence of error as proof that they were right all along.

Well, I would suggest that he goes off the tracks as soon as he says that we “fall wildly short of providing any convincing explanation for what went wrong.” I hear a hell of a lot more cogent analysis of what went wrong and how than either Republicans or Democrats have offered.

In fact, the whole article is a strawman. Weisberg essentially says that the whole mess was caused by deregulation, and that deregulation equals libertarianism. Further, since the crisis was “caused” by deregulation, that invalidates the argument for deregulation and thus makes libertarianism intellectually bankrupt.

He does have one thing right, though. Libertarians will be painted with the same broad brush as the socialists, who– when faced with the collapse of socialist nations such as the USSR, Cuba, etc– claim that socialism would work if only it was really tried. The problem is that his conclusion is based on the premise that anyone believes libertarian has been attempted — a premise that he’s actually trying to generate rather than to reflect. Libertarians have never claimed that the society that we advocate has been remotely enacted in America, and the whole time we’ve been criticizing the hodgepodge of regulation and non-regulation by government as evidence that government is captured by special interests.

This, more than any other reason, was why I’ve removed my support from the FairTax. I love the FairTax proposal, but my cynicism of government has proven correct too many times to believe that Washington would allow a proposal to go through without modifying it into a monster. If I believed they’d enact the FairTax as proposed, I may support it. But since I do not, I don’t want my name behind the horrible tax scheme that would eventually be enacted under the moniker “Fair”Tax.

Sadly, though, some would claim that Weisberg– if not right about the issues– accurately captures public sentiment towards libertarianism. This mess will undoubtedly give deregulation or non-regulation a bad name, completely glossing over the fact that we libertarians have been complaining about the perverse incentives cause by this supposed deregulation all along. They’ll follow this up as electorates always do, by running away from liberty into the waiting arms of their nanny-state saviors.