It's hardly a strawman when we have decades of firsthand experience of 'libertarianism'. Look around you. The world we are living in is the result of your ideology run amok. The thing libertarians always seem to ignore is that if society removes every limitation against giant corporations
recreating feudalism, that's exactly what they're going to do.
Sadly, Libertarianism has not been running amok, as much as I wish it had been. The free market has been repeatedly attacked by corporations and others colluding with government to put roadblocks in the way of people, such as licensure requirements, excessive regulations that are only enforced on the little guy, and certificate of need laws.
And then there are the times that the little people harm themselves as well, such as zoning laws, the welfare state, etc. All of these have held back America. Then there are the countless other non libertarian ideas that have happened, such as wars, the surveillance state, the expansion of the Federal government, increasing debt, etc.
But also, the story of declining American wealth is simply wrong. First, having a smartphone or even internet access makes one fantastically wealthy in comparison to the 1960s, in much the same way that almost everyone in the US is wealthier than people who lived in the 1800s, etc. Technology makes one richer in ways that aren't easy to calculate, but easy to see.
Second, the concept of the middle class shrinking is also a common misnomer (not the right word, but I'll use it). While technically true, what happened to the middle class is that the moved up into the upper middle class too rapidly to be replaced by people moving up from lower classes.
Go to
this study, on page 8. You'll see a chart, and what it shows is that the percentage of population for each category of Poor/Near Poor, Lower Middle Class, and Middle Class all shrunk, with people moving into the Upper Middle Class, and from there to the Rich.
See, what has happened is that the Upper Middle Class got more of a share of wealth than the equivalent size from other sections, but so what? They all are doing better now than they were.
Next, this idea that somehow America could stay in this supposed perfect 1960s with the world not changing to compete with them is just wrong. More countries saw the way of capitalism and began competing with our labor force, and beat us out. Why? Sometimes, because we went for protectionism, not realizing that that leads to obsolesce as the need for quality declines. Sometimes, because we just thought that America meant better, when it didn't (see: cars). But all in all, there was no reason to think that any decade long trend would last, so there are countless reasons now is different from then, and few have much to do with any policy. The problem here is that you somehow decide to link this decline to capitalism (as you don't even comment on the rest of what libertarianism believes in your post), when capitalism is the only reason that the 1960s happened at all, and also the only reason things are getting better despite government's best efforts to ruin it.
Finally the reason degrees are necessary now is a fucking stupid complaint to level at libertarians. Degrees are necessary because there are so many of them, and there are so many of them because government shoved them down peoples throats and then setup massive student aid programs to fund colleges, which really just made them more expensive, resulting in needing said aid to even hope to afford it. Wow, such libertarian. Much free market.