Systemic politics and the failure of classical liberals

I just posted an essay I wrote,and I'd love feedback--Classical Liberal Thought--revival or interpretive crisis? .  Its an issue I want to try to flesh out as i'm not quite clear about some of my contentions.

To expand I wanted to talk for a second on the reality of living in a democracy.  It means there are systemic obligations (and hence realities about how bureaucracies do (and don't) work) and theory needs to reflect this.

 We have systemic politics--two massive bureaucratic parties financially backed by big money fighting it out in Public Relation campaigns for winning the plurality of the voting population (note: the voting population doesn't reflect the actual population).  This means any classical liberal theory is going to be eaten alive and all the ideals will be eroded and mutated to fit the requirements of the political class.  Refusal to acknowledge this--which is quite common with classical liberals (right-libertarians)--means we are destined to repeat the predation seen during the Bush II administration.

Granted you'll see these small government libertarians decry that Bush was nothing of the sorts that they mean when they talk about small government conservatives.  But the point is we have a political process that isn't going to bend to the purity of theory.  I tried on a few occasions to move the health care debate away from ideology to the pragmatic aspects of what does and doesn't work---to which I would always get the "look we just don't agree on this issue.  This is quite amusing as agreeing or disagreeing in terms of keeping health care costs low is an empirical question that can include facts.   

"Predation" says James Galbraith in his excellent book The Predator State, is "the systemic abuse of public institutions for private profit or, equivalently, the systematic undermining of public protections for the benefit of private clients."  This reality means, "what we see is not, in fact, a principled conservative drive to minimize the state.  It is a predators drive to divert public resources to clients and friends." 

The refusal to adapt theory to the reality's of society and political power speaks volumes to both the failure of classical liberal policy advocates to recognize the historical development of modern industrial capitalism and the realities of human animals in a social setting.