Tyler is very wrong to say that libertarians assume that government quality is fixed. On the contrary, I always assume that government quality can go way down.
Seriously, however, a large part of the libertarian/classical liberal program has been about designing institutions to improve government quality just look at Hayek’s the Constitution of Liberty or Buchanan and Tullock’s the Calculus of Consent. The classicals, Montesquieu, Locke, Madison et al. were primarily focused on increasing government quality through constitutional design, things like democracy, division of powers, federalism, an independent judiciary and a bill of rights. The libertarian program of improving government quality has been remarkably successful, and far more successful than any other program.
Are there other methods of increasing government quality? Yes. In my post on Fiasco, I wrote, "Should we be surprised that delays, errors and incompetence are more prevalent at the INS than at bureaucracies which must deal with citizens or which face competition from the private sector?" which implicitly gives two methods for raising government quality – giving customers a vote and creating a competitive benchmark.
Contra Tyler, libertarians are on the forefront of offering
ideas to improve government quality. Term limits, flat tax (as a way
of reducing corruption not just an economic improvement), different voting methods, a balanced
budget amendment, openness and transparency, competition, increased
federalism, and unrestricted media are just a few ideas.
Tyler, in contrast, doesn’t give any hint of how to improve government quality and his examples are not very good. Tyler likes Finnish architecture. Well it’s no surprise that if a lot of governments promote architecture one of them will produce something that Tyler likes. I think this is very cool but I don’t advocate bringing back the funders. Same thing with the highway system or the Internet. Sure, these were good investments but does government investment pay as a rule?
The grand libertarian program has improved government quality tremendously – so much so that we are well into the realm of diminishing returns but we can do better and libertarians are among the leaders in suggesting how.
Addendum: Glen Whitman replies to Tyler also.