In this column, Bruce Bartlett explains why the Libertarian Party is bad for the cause of libertarianism. He concludes that the LP "must die for libertarian ideas to succeed." I have held a similar view for years. More precisely, while I think that libertarian ideas can achieve some success even in spite of the LP, they would have more clout without it.
In a "first past the post" electoral system (one where legislative seats go to whichever party has the most votes in a district), third parties cannot achieve any significant success unless their supporters are highly concentrated geographically to a much greater extent than American libertarians are. Although recent studies suggest that 10-15 percent of American voters have significant libertarian leanings, this leverage is not enough to support a viable third party, even if the LP were much better run than it is and actually managed to mobilize a large fraction of these people behind it. This fact dooms LP efforts not only in presidential elections (as Bartlett points out), but also in congressional and most state and local races as well. As Bartlett forcefully argues, the main effect of the LP is diverting the energies of some libertarian activists and donors away from more productive activities.
Some LP defenders argue that even if the Party doesn't have any chance of winning, it can at least help educate the public about libertarian ideas. However, there is little if any evidence that the LP has actually had any success in this task over its 35 year history. Those libertarians who have succeeded in spreading libertarian ideas - people like Milton Friedman, Ayn Rand, and the Cato Institute - have done so without any LP affiliations, and indeed have tried hard to work with the two major parties. Whether fairly or not, the mainstream media and academic world are not going to pay much attention to ideas emanating from a tiny third party that has no chance of winning any elections; therefore, the LP's educative potential is unlikely to be much greater than its electoral potential.
If we had a proportional representation electoral system, like many European countries and Israel, a separate libertarian party would make excellent strategic sense. The party (if better run than the dysfunctional LP) could command 10-15% of the vote, thereby winning roughly that percentage of legislative seats, and would be a potential part of a ruling political coalition. A libertarian party might also make sense if one of the major political parties were on the brink of collapses and the libertarian party stood a chance of taking its place (as the Republican Party displaced the Whig Party in the 1850s). However, in the real world, the US is unlikely to move toward proportional representation and neither major political party is likely to collapse anytime soon. Therefore, the cause of libertarianism will be better off without a separate Libertarian Party.
UPDATE: Several commenters suggest that the LP's lack of success is due more to the poor quality of its candidates and campaign operatives than to the structure of the political system. I agree that many of the LP's leaders have had mediocre political skills, at best. However, this is itself in large part a consequence of electoral structure. Skilled, ambitious politicians and operatives are unlikely to join a party which has no real chance of winning and therefore cannot provide them the prospect of successful political careers. In countries with PR electoral systems, such as Germany, New Zealand, and Switzerland, parties with libertarian ideologies have had leaders as good or better than those of other parties and have enjoyed a measure of electoral success.