Most libertarians are not utopians. So no one claims everyone would be happy. Especially since all have different notions of happy.

Human egotistic emotions makes government fall apart even more. The notion that big government somehow keepa this i check is ridiculous and against everything you see in history.

The market is the best way to channel these emotions to productive gains. Because you need to i order to profit. If you can just tax well no need to be efficient