The traditional version, often referred to as philosophical or rights-based libertarianism, asserts that government policy should never infringe individual rights or freedoms. Philosophical libertarians oppose virtually all government intervention since regulations, taxes, mandates, prohibitions and the like all limit individual freedoms.
A different version of libertarianism, often referred to as consequential libertarianism, opposes most government interventions because these appear to generate adverse side-effects that are worse than the problems they were designed to alleviate. Consequential libertarians share the policy conclusions of philosophical libertarians for the most part, but they disagree in some cases. In addition, consequential libertarians argue for small government based on consequences rather than rights.
In my view the consequential approach has several advantages over the philosophical perspective.
To begin, the consequential approach allows one to distinguish moderately bad policies from really bad policies. Drug prohibition is a terrible policy from the consequential perspective because it generates a black market and all the attendant negatives. Moderate sin taxation, however, does not create a black market This does not mean sin taxation is a good idea; it harms responsible drug users by raising drug prices. But the ratio of benefits to costs from moderate sin taxation is likely better than for prohibition. Thus consequential libertarians can feel comfortable encouraging sin taxation over prohibition, even if they have reservations about sin taxation itself.
Philosophical libertarianism has a harder time adopting this kind of nuanced stand. Philosophical libertarianism tends to suggest an absolutist “all interventions are horrible” perspective.
A second benefit of the consequential approach is that it can persuade people who do not agree with the principle that policy should never infringe individual rights. Some such people, for example, might agree that drug prohibition causes more harm than it prevents, even if they would impose limitations on individual rights if they thought such infringements were beneficial overall.
Stated differently, consequential libertarianism is just cost-benefit analysis. Ample room exists for disagreement about any given cost-benefit analysis. But few people dispute that society’s choice of policies should consider the entire range of pros and cons from different interventions. In this sense, few dispute the basic approach that underlies consequential libertarianism.
Maybe consequential libertarians should not use the term libertarian at all; it is often more confusing than illuminating. Maybe the right label is just, “Consequentialism.”