By David Paul Kuhn - January 8, 2010

The philosophical casualty of the Great Recession was supposed to be libertarianism. But signs to the contrary are thriving.

Americans are increasingly opposed to activist government programs. The most significant social movement of 2009, the Tea Party protests, grew out of that opposition. Libertarian heroine Ayn Rand is as popular today as ever. Rand's brilliant and radical laissez faire novel "Atlas Shrugged," sold roughly 300,000 copies last year, according to BookScan, twice its sales in 2008 and roughly triple annual sales in recent decades.

We are witnessing a conservative libertarian comeback. It's an oppositional advance, a response to all manners of active-state liberalism since the financial crisis. It's a pervasive feeling of invasiveness. It's an enduring conclusion among many voters--independent and conservative, working and middle class alike--that big government costs in taxes significantly more than it offers them personally. That belief has been aggravated since late 2008. The result? The factional bastions of traditional libertarianism, like Washington think tank Cato, now have an intangible and awkward alliance with a broad swath of the American electorate.

Half the public believes there is "too much" government regulation of "business and industry," an 11-point rise in one year, according to a December CNN poll. Nearly a third of the public, in contrast, said there was "too little" regulation.

As David Boaz, Cato's executive vice president, put it, "because Obama is advancing a big government agenda, it's the small government constituency in America that is energized."

There is no wide-ranging call for government to withdraw from social issues however. A rebirth of traditional libertarianism this is not. It's a more limited libertarianism that it is on the march.

Every year, since the early 1990s, the Gallup poll has sought to measure the degree of libertarianism in the American mind. First question: does the public believe the government is "trying to do too many things that should be left to individuals and businesses?" Fifty-seven percent said yes last August, the highest level since 1998.

Gallup's second question asks whether Americans believe "government should promote traditional values in our society" or "not favor any particular set of values." A traditional libertarian would side with the latter point. But 53 percent favored the state promoting "traditional values" in 2009, a five-point rise since 2008.

Those who believe government is doing "too many things" and should also not favor any moral value system sum to slightly more than a fifth of U.S. adults in recent years. This is the loose libertarian bloc of American politics. Today, roughly another third of the electorate allies with this bloc on issues regarding government's reach into private industry.

Significantly, Gallup finds, 63 percent of independents believe the government is "trying to do too many things" while only 33 percent said government should "do more to solve our country's problems."

This limited libertarian resurgence has haunted Obama's domestic agenda. The fundamental mistake of the Obama administration in 2009 was underestimating the American public's ongoing tension with active-state liberalism, a fact visible from the outset and one only belatedly confronted by Obama.

The irony is that the stock market collapse began this revival of active-state liberalism. The drumbeat of rising anti-government sentiment grew from the financial bailouts that followed. And yet this libertarian resurgence fractures on one issue, and that's Wall Street. Support for regulating the financial sector has grown, even amid the growth of conservative libertarianism.

Six in 10 Americans believe "big financial institutions" have "too much influence over decisions made by the Obama administration," CNN found. Asked if there is "too much, too little, or about the right amount of government regulation of the stock market and financial institutions," 45 percent of Americans said "too little," while 29 percent said "too much" and 23 percent said "about right."

Sweeping financial reform remains elusive. Meanwhile, health care reform has proven unable to escape the rising anti-government sentiment. Nearly half of the public generally opposes Congressional proposals to overhaul the health care system, while little more than a third support it, according to the Pew Research Center. The chief reason cited by the legislation's opponents: "too much government involvement in health care."

For the first time this decade, more Americans, 50 percent, said providing health care for everyone was not the government's responsibility according to Gallup. Three years earlier, 69 percent said it was the government's responsibility to provide universal health care.

Nick Gillespie, editor of the libertarian publication Reason, sees a straight line between the unpopular financial bailouts, started under the Bush administration, and Democrats' unpopular health care bill today.

"It's the rule of the few at the expense of the many," Gillespie said.

Indeed. Today's limited libertarian revival is a response to a sense of overreaching elite technocrats, skepticism of how tax dollars are spent and a fear of intrusive bureaucracy. Responsiveness to a sense of overreach is the core impulse. Rand's radical libertarianism, where man is an ends in himself and the welfare state is fundamentally immoral, was a response to the radically invasive Soviet state that weaned her as a girl. On a drastically less extreme scale, one side of this American debate could not exist without the other. The Obama administration brought with it ambitions of a resurgence of FDR and LBJ's active-state liberalism. And with it, Obama has revived the enduring American challenge to the state.