Libertarian morality basically works around two fundamental property rights. Each person owns their own body, and the bounty of nature is owned by all. By trade, and by fair access to the bounty of nature, things are produced, exchanged, and improved, and the engines of capitalism start to fire. In this model, the important thing is to ensure that property rights and contract law (which is really just an extension of property right to include the right to exchange) are protected. Interestingly, this provides a clear area for the proper operation and implementation of government - counter to the anarcho-capitalist ideas that seem to follow necessarily from libertarianism. Note, that the libertarian arguments for anarchism differ starkly from the arguments I have presented here earlier. Frankly, I find the moral autonomy argument for anarchism much stronger than that of libertarianism, but I think it's worth exploring the libertarian ideas because they seem to dominate political discourse in a lot of ways.
The fundamental moral logic behind libertarianism is that each person possesses his or her own body, and all the things s/he creates using things fairly traded or gotten from the bounty of nature. Now, the commonly recognized flaw in this kind of morality is that the "bounty" of nature isn't all that bountiful when you compare it to the entire needs of the human race over all of history. In some sense, libertarians concede that we collectively own natural resources, but argue that they aren't scarce enough to spend time fighting over. Unsurprisingly, this causes some issues when the resources in question really are scarce. Another way of thinking about this is that libertarians believe that the only truly scarce resource is human labor. Anyway, this collective ownership of natural resources combined with the scarcity problem provides what I see as an interesting niche for government. Here's the plan.
Each nation is the sole owner of "nature" within its borders. In other words, it owns all the land, all the air, all the sea, all the wildlife, basically all the stuff that isn't people or made by people. It derives this right because it represents the people not just now but in the past and future... those people who collectively own all of nature's bounty. They then rent the use of portions of that natural bounty to the entrepreneurs who want to use it. They levy this rent... let's call it a tax... based on the market value of the nature, and on the expected risk of damage to nature by the tenant. Just as landlords charge premiums for pets, the government might charge premiums for, say, high pollution. The government then can invest this money in the protection and improvement of its property. They improve their property by making it a more attractive place to live... increasing competition for the property and allowing them to increase rents. Offering universal healthcare, or utilities, or cleaner facilities, or safer business environments to occupants might all be value increasing ways to spend that money. Now, in some sense, the government is a monopolist, but since the people who are competing for the resources it provides are in fact the owners of the government, the monopoly doesn't provide the leverage necessary to properly enable extortionary pricing. I think we can reasonably argue about whether or not this is the best way to manage the shared ownership of nature, but it does seem to be fundamentally compatible with libertarianism, which is win enough for me. Any problems?