Now the Progressives are back. They see income inequality as a major problem that must be addressed by government intervention. It doesn't matter to them that everyone is living a more prosperous life than 50 years ago. They want the expansion of government to proceed and feel threatened by anyone who points out the flaws in this.
So, if Libertarian policies are so great then what happened to them? The short answer is Progressives like Dionne. around the beginning of the 20th century they became upset with income inequality and other causes and started lobbying for increased government power to set things right. This was an emotional appeal, not an economic one. Libertarianism didn't exist at the time. It was created by the backlash when socialist and communist policies failed.
Dionne brings up the Great Depression as an example of how expanding government power saved the country from the Great Depression. The truth is that it was a world-wide depression and the recovery happened world-wide regardless of local policies.
Internationally we can see that the US which just significantly expanded the regulatory state is lagging behind most of the developed world in economic expansion.
In the US we can compare Texas with California to see the effect of loose and strict government policies.
In the modern world we have seen countries like China move from communist poverty to capitalist prosperity by adopting libertarian trade policies.
The classic example of Libertarian values is pre-20th century United States.
Historically there have been many countries that have implemented this. All of the great trade empires have strong libertarian elements. This includes Victorian England, 17th century Holland and Renaissance Venice. These were not democracies but the governments still promoted trade.
Before I go further I need to define Libertarianism. It means different things to different people but its heart is a government that protects property rights and the rule of law while allowing trade and innovation to happen with minimal regulatory oversight.
First things first. There are no true, modern libertarian countries just as there are no pure communist or socialist countries. These policies have been implemented in various degrees in many different countries so we can judge their relative merit.
Michael Lind on Salon thinks that he has the ultimate question that Libertarians can't answer: If your approach is so great, why hasn't any country anywhere in the world ever tried it?E. J. Dionne picks up that question and tries to use it to discredit Libertairans.