Bryan Caplan considers this question in a very useful blog post. He serves up these hypotheses, though I think without committing to any particular one of them:
1. Despite their rarity and absence on the front lines of politics, self-conscious libertarians still strongly shape mainstream conservative politicians’ economic policies.
2. Self-conscious libertarians, though rare, have still managed to sharply shift public opinion in a libertarian direction.
3. Self-conscious libertarians, though politically impotent, are a symbol of what’s wrong with American politics.
And then there are the stories the critics won’t embrace, but perhaps they’re true nonetheless…
4. Libertarians, unlike mainstream conservatives, openly defend many unpopular views. Intellectuals who want to loudly champion popular views have to engage libertarians because there’s hardly anyone else to argue with.
5. Libertarian arguments, though mistaken, are consistently clever enough to get under the critics’ skin. The purpose of the criticism is not shielding the world from bad ideas but giving the critics some intellectual catharsis.
6. Libertarian arguments are good enough to weigh on the critics’ intellectual consciences. They attack libertarians to convince themselves that we’re wrong. And they keep attacking us because they keep failing to fully convince themselves.
But I see more options. Consider a simple model where bureaucracies maximize output, and try to produce correct output. In my view, the more mainstream thinkers criticize libertarians so much because a) it helps them generate output, and b) they think they have the better arguments. There is a clear target, easily explained (not always correctly explained, however), and very often the target can be taken on with a minimum of detailed empirical investigation. Furthermore the arguments against the libertarian often position the critic in a favorable ideological space, especially for left-wingers: “look, there are people who believe this, better come ally with me!”
If we are talking about “The Left,” the libertarian is about the most welcome intellectual opponent there is. The real scourge, correctly or not, is the common sense morality of the center. That’s right, the people who favor and distrust big government at the same time, the people who think the poor deserve welfare support but only so much, the people who distrust intellectual elites and cosmopolitanism, the people who side with police more than they ought to, and yes the people who think Medicare is more based on just deserts than is Medicaid.
That set of views does not describe me well, but the funny thing is — unlike with both far left and libertarian ideas — we do in fact know you can build a workable polity from them. The libertarians are so much more of a tempting opponent.