As I've commented on before, and as has been much discussed in the last couple of years, libertarianism appears to be an ascendant ideology. The visibility of libertarianism, if nothing else, has surely grown. I think that libertarians should understand this: I think that their reactions to the present financial crisis will do a lot to define the public face of libertarianism moving forward.
Libertarianism has long been a minority viewpoint. It's actually pretty startling to me, when I research about how much of an ideological ghetto libertarianism represented for a long time. But as the chattering class has expanded by leaps and bounds, and more and more viewpoints have become available for public consumption, libertarianism has appeared ascendant. In many ways, though, it has maintained some of the culture of an insurgent ideology, in ways both good and bad; I think continuing to grow the franchise will necessary involve sloughing off some of these old habits. On the good side is the clarity and rigorousness that comes from the fierce internecine squabbles that any affinity group goes through. Also, libertarianism has the advantage of being able to work almost exclusively according to principle; when you have no meaningful chance of leading, in most areas, you are free to choose purity over pragmatics.
On the negative side, libertarians tend to embrace the kind of excess and rhetorical flourish that pin many political niches down and ensure your point of view won't be embraced by a broader part of the electorate. When your inter-ideology discussions amount in many ways to a dorm room argument, the person most willing to be unreasonable or coarse is often at an advantage. Thus the libertarians who spend as much time ridiculing their opponents as winning converts. This has a corollary in the other major disadvantage in my eyes: Will Wilkinson syndrome, where your argument is constantly delivered in a argumentative style that insists that your opponents are simply buffoons for failing to see the profound truths that you are enunciating, and where it is self-evident that.... Will Wilkinson is a very bright guy, clearly, but I only have to read his blog for a few minutes to remember again that he has not only disagreement but contempt for me and my ideological compatriots. I know of few people less likely to question the basic assumptions of their point of view than libertarians, and I think that they have a near total preference for expressing disbelief that people disagree with them over doing the necessary work to convince people otherwise.
Now, though, comes this bailout, a time when I think clarity and purity are very important for a minority movement like libertarians. This, I think, is a truly profound moment for their cause. Do they side with what many see as the pragmatic good of the money men, and support their heroes? Or do they stick to principle? I have a hard time accepting that this bailout represents anything else than the opposite of laissez faire capitalism. I can't see a real economic libertarian believing that this bailout is somehow pure and in line with their beliefs. But as libertarianism's influence has grown, it has created an investment (if you'll pardon the pun) in a more pragmatically oriented, governance-ready perspective.
Like others, I have long suspected that what libertarians and other free-market purists really want is not so much free markets as whatever is good for big business. This bailout could represent the absolute confirmation of that notion. I've always felt that, surely, a real free market ideology, that privileged neither the workers or the capitalists, would eventually, in some ways, work to benefit workers. It's a source of frustration for me that for many libertarians that moment never comes. There is never the time when it is necessary to embrace change that helps the lower classes at the expense of the upper. Well, this bailout, if what we're told is correct, would benefit either both or neither, and doesn't represent a sop to working people. What it does represent is a clear moment of free market ideals vs. the needs and desires of big business and the rich. This is an existential moment of the highest order for libertarians. I don't know which way it'll go. I am not nearly smart or studied enough on this issue to be able to decide if the bailout is in fact a good idea for the country. But make no mistake, it represents a pure declarative moment that this is a country with free markets for the poor and socialism for the rich. So where will the libertarians turn?
Update: Cole Porter suggests in comments that libertarianism has historically been less of a ideological minority than I've suggested here, and that I am unfair to (and more annoying than) Will Wilkinson. It's likely all three are true.