The Libertarian view is that the institution of government, or “the State”, only exists to secure/promote/protect the rights of the individual. Anything else, even if it seems to be a good thing that government is in a position to do, should be considered to not be the proper role of the government, and should not be undertaken by it. Hence the State is a sort of "necessary evil" in the sense that life without it would be really bad; the criminal would be free to kill you or take your property or make you a slave without such an agency. Hence it is in the interest of every individual to have a rights-protecting agency, and an implicit contract exists even though you have never signed anything and even though there has never been a stateless realm (i.e., a "state of nature").
Note that most political philosophy today has not even considered this view. The thinking seems to be that a person gives up a lot of his freedom when he lives within a political boundary and then must do what the majority votes on in the polls.
It would seem that today in our country, many or even most people vote for what political proposals are perceived to benefit them directly, not on what they think is right, in the sense of what the proper role of the State is (and what its limitations should be). This is very short sighted, if nothing else.
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Your argument here seems to be the following: a state is only justified in so far as the actions taken by the state are in the interest of every individual. Otherwise, entering into an implicit contract could unjustly limit the rights of an individual.
In my view, this argument does not seem to imply that the role of government is limited to what you say. One can argue that many state actions could benefit every individual, for example universal education. Or, more concretely, imagine the following thought experiment: All but one member of a population consisting of 100 individuals would benefit immensely from a particular state action. Let's say that the final result of the action is to give them something that they value at $100 apiece. Now, for the remaining one member, the state action screws them over to the tune of $100 dollars. It seems that the best solution to this is not to abandon the state action entirely --- indeed, it benefits the entire population with a value of $9900. It seems that a good role for a government could be to coordinate the redistribution of $1 each of the 99 benefited members to the one that gets screwed. That way, the entire group benefits, as well as every individual having the equivalent of $99 more than they would have without state action.
This is not an isolated special case: Wicksell's “principle of unanimity and voluntary consent in taxation” states that "If a proposal yields an outcome that is common to all members of a collective, and that outcome provides a preferred social state for the members of the collective, then there exists a compensation scheme whereby those who gain from the outcome can compensate those who lose and the outcome can command unanimous consent." Here is an interesting paper that empirically tests a similar principle, with great results (it is also where I got the above quote).
Of course, there are technical issues with how a state might implement a system like this, but at the very least it does seem to challenge the libertarian notion that state actions should be limited to the extent that you argue.
I would put my position a differently than saying that “a state is only justified in so far as the actions taken by the state are in the interest of every individual”: rather, the state should exist to protect the rights of every individual. And I would suggest that by “rights” we should here mean what are called
“negative rights”. To quote from the wikipedia site that deals with this concept: “….. positive rights are those rights which permit or oblige action, whereas negative rights are those which permit or oblige inaction”. I think this is, in essence, just what the Second Continental Congress meant by saying, in the “Declaration of Independence”, that everyone has a right to “life, liberty, and the pursuit of happiness”.
I really like your example, and more generally the Wicksell principle, and do not think this necessarily contradicts libertarian notions. It appears to be an extremely clever and fair-minded way to make everyone happy with a certain class of collective actions that the state might undertake. Not all actions the state might take could be compensated for in this way, and I would think that it should be used only occasionally, and only for certain kinds of actions. There is, I think, an obvious danger in allowing the state to undertake collective actions that are deemed to be in the best interest of society. There is, in a certain important sense, no such thing as society, there are only individuals. The collective good is a rather nebulous idea, and in any case should not be decided by, for a great many important issues, a majority vote. I am thinking of those instances where a majority might favor measures that actually violate the rights of individuals in the minority. To give an example, suppose the populace voted to persecute in some way, e.g., imprison, the followers of a certain minority religion. This would clearly be wrong, even if it was deemed by a majority of the voting populace to make more people happy than unhappy. Or take slavery, as another example: clearly slavery violates the negative rights of certain members of society, and even if it overall were to make the economy run smoother and make people on the average wealthier, it would still be a great evil. I know most everyone agrees that these examples would involve grave evils; I only point them out here as being instances where the compensation scheme suggested by Wicksell could not be fairly applied.
But take your example of universal education. As you say, there are some dicey practical issues, but this could be dealt with, seemingly fairly and to the satisfaction of all, by applying the Wicksell principle. If most people wanted to have government funded schools for all, those that would like to opt out of funding it could be compensated through the use of that method. The same with would hold with respect to funding roads, the arts, welfare, and many other collective actions that the majority deem to be of advantage to all.
The main objection that I might have is that it establishes a somewhat bad precedent that such actions are the business of the state as opposed to voluntary actions on the part of private individuals and private groups. Also, it is not clear to me that the Wicksell principle is really in effect any different than just letting the market and voluntary actions do the same thing. My suspicion is that there are some things the state could properly undertake in connection with using such a compensatory scheme as described in the previous comment, but for me, more analysis is required to identify such actions.
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