For a country that values liberty so much, why was a libertarian seen as a bad thing?
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Not a thing. As AvGeek wrote, the Libertarians got amazingly far in 2016 because the main two candidates were both so reviled. But in the end the problem with a two party system is that so much money goes to those that any new baby parties get trampled to death. This is exactly what I mentioned was foreseen in the 1700s.
My other half is in our State's League of Women Voters, which means she does a lot of research and helps write the position papers that let voters compare candidates. fwiw - They try pretty hard to be impartial in what they publish because they have a lot of people (men too) from both parties. From their research, one of the most realistic things that could be done to overcome the problem and would be most effective to create better candidates would be to implement Ranked Choice Voting (RCV) in the PRIMARIES, because that is where the candidates are really chosen.
If you have a group of 3 or more candidates, the problem is that two of the candidates could knock each other out because they split the bigger part of the population, leaving the #3 to take the election. RCV has voters rank their choices instead of picking just one, so rather than the one with the biggest number winning with a minority, RCV cuts the weakest THEN sees where those voters go to.
Ballotpedia: The Encyclopedia of American Politics
ballotpedia.org
On the Dem side in 2016, Clinton massively out-polled even combinations of other candidates so still would have been their candidate with RCV. For better or worse, the Republican Party likely would have ended up with Cruz or maybe Rubio as others got eliminated, they would have had more internal support, and there's more of a chance they would have actually gotten a majority of the popular vote. Trump had a core group of 34.4% in the early primaries but couldn't attract the big center of the Republican population who are more moderate. Meanwhile, Cruz and Rubio were splitting the bigger population with about 20% each, so more than 40% total already and their voters had in common, plus the total for one of them probably would have grown faster than Trump's as candidates were eliminated.