Personal autonomy will always be compromised unless all problems stemming from activities that cause harm to others are resolved efficiently.
That is from p.196 of his latest book, The Darwin Economy. So far, I have just read the final chapter, "The Libertarian's Objections, Reconsidered." On p. 201, he writes,
If a rational libertarian wants to form a society with less productive others, thereby to gain advantage in the bidding for positional goods, those others might respond by demanding compensation through the tax system. It would then be up to the libertarian to decide whether joining on those terms was attractive.
In my view, the key word here is joining. Yes, I might join a regulated water system. I might join an insurance system. I might even join an income-redistribution system.
I think it might help to distinguish between a straw-man act-libertarianism and a more reasonable rule-libertarianism. Act libertarianism would mean that at any given moment you are free to do whatever you want, following no rules whatsoever. Rule libertarianism would mean that you are free to bind yourself by undertaking voluntary contractual commitments, to follow a set of rules. So I could agree to follow a dress code when I go to a fancy restaurant. Or I could agree to the terms of a long-term life insurance contract.
I could choose to live in a society where the successful are taxed in order to console the envious. But the larger point is that I ought to be able to choose the society in which I live, rather than have it imposed on me by a monopoly that we call government.
My libertarianism is a strong preference for exit over voice. If my government disappoints me, I want to be able to switch to a different government as readily as I can change cell phone providers, or join a different gym.
Another way to make my point is that in a modern society I want lots of governance, but I want very little of that governance to come from government. Governance is provided by a rich set of nongovernmental institutions, as emphasized by Tocqueville two centuries ago and Elinor Ostrom more recently. The distinctive feature of government is the absence of a reasonable option for exit. If Frank is conflating government with governance, as I suspect he is, then his argument will fail to reach me.
Of course, the law of asymmetric insight says that in any disagreement, disputant A believes that he understands disputant B's position better than disputant B understands A's position, and vice-versa. So don't trust Robert Frank to characterize correctly the views of a libertarian. And don't trust a libertarian to characterize correctly the views of Robert Frank.