The prerequisite for this is a stable gold based competing currency system with private mints and media based testing and verification of the coins, notes and digital accounts.
Most 'government' activities would be converted to charities with out a change of address or staff. Projects would be listed on web pages with a donate now button. The money donated comes from a bank account for the purpose. This account is a small or micro account that earns no interest because its not a term deposit. These donations are logged at the account and are tax deductible. The account would be topped up after a cell phone alert. Mixed with the free services an express service to paying customers might be added in the case of some non essential services. Immediate care for later voluntarism; paying with your own hands has been used in the third world often as an out growth of refugee and missionary work. It may come to the first world. The similarity to a co-op or mutual aid society should be noted.
Agencies that waste money wont get may donations. Agencies that are deemed unconstitutional will only get donations from their supporters and employees; that may be enough to keep them going but not enough for expansion. The productive wont subsidise the unproductive. The beseechers wont be rewarded at the expense of the producers.Those in true need will get help.
Long term private bond systems selling either to the public or to vested interest groups would cover long term infrastructure including transport, ports, public parks, recreational and the fixed assets of police, courts, defence, civil defence, etc. Donations, tolls, rents and other usage fees would be accumulated to cover the bonds final payout. The option remains to allow fee access in many cases where donations are sufficient. If they are not then there is an error in how the public asset is operating. Some entities already bill people via their cell phone. Similar systems for large public recreational facilities, parking, camping, etc would be normal.
In the case of some RFID based toll systems the first few rides are free on a section of road you have never been on. Provision would be made for drivers to donate tips to working road crews, where they see them, electronically without stopping. By 2050 many vehicles will be fully robotic with toll functions automated and invisible.
There would be no huge unfunded pension liabilities such as social security and Medicare. Almost all people would have their own pension funds and medical insurance which are fully portable: not just interstate or inter job but internationally as well as nationally, perhaps trans-planetary given that some may no longer be living on planet earth.
Those that lack incomes would still have pensions and health care via charities that pay the premiums. Unemployment insurance would be cheaper because with a gold based competitive currency system there would be no booms or busts just steady growth at a sensible rate. There may be fewer jobs building houses that a housing boom affords but there will be no risk of a bust either. There may be some miscalculations leading to short term large scale losses where technology change, sudden disaster or the end of a fad ruins plans.
3D printed goods, digital matter and other equivalent technology would be cheap and nanofabricators might be available. These lower the cost of living for all making lower wages and smaller pension payments go further than they did in the inflation prone 20th century.
At the time of writing, 2011, new medical technology is coming on stream including adult stem cell cures for arthritic disorders, bone density loss, skin elastin loss, and diabetes. These treatments are cheaper than the many years of pharmaceuticals and doctors visits that they require. Cancer experts think that most cancers will be easily treatable by 2050. Robot cars will reduce road trauma to a fraction of the current rates. This means that most major drivers of rising medical costs. Gene-therapy for many rarer but very expensive disorders are being funded by aging billionaires; a dollar spent there saves five in later hospitalisation.
Defence might be significantly smaller, particularly the US military. I think some of the bases will still be out there in the world and several countries will still have a global reach. New techniques and new technologies coupled with a greater defensive focus, much more civil defence and robotic warfare will contribute to the shrinking of armies. The adult stem cell advances are already being used to repair the ware and tare that force many older soldiers to retire. Most don't leave because of combat injuries but because of strained joints and tendons due to the fitness regimen they must maintain. The cure of this problem coupled with robots carrying the heavy stuff will mean the average soldier wont be a teen or twenty something but will be much older men and women with the experience of decades. This will change war like nothing before it.
Politicians would still exist but their function would mostly be confined to media like functions of oversight, and law making not handling trillions of dollars of someone else's money. Campaign donations may still exist but will be much lower because most will be also donating directly to the genuine needy and other causes. The politician is just another middleman. The pork barrel would be almost empty and those that want a free lunch at the governments expense would find life harder.
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