I doubt that Arnold’s Recalculation story is more than a smidge of the current world recession.  But I can certainly imagine shocks where he’d be dead on – and there are few shocks I enjoy imagining more than the triumph of radical libertarianism.  What would this actually look like?

Needless to say, there’d be a massive decline in government employment.  During the current recession, public sector employment actually increased in the U.S. as private sector employment plummeted.  In the great libertarian Recalculation, we’d see the opposite pattern.

Of course, much of the private sector also depends on government support.  It too would drastically shrink, though not as much as the public sector itself.  For starters, health care and education would both sharply fall in employment and as a percentage of GDP.

What would take up the slack?  While there’s no doubt that something would come along, that’s a hard question to answer even for the comparatively minor shocks we see today.  I predict a big expansion of gated, all-inclusive communities to take over many of the government functions that people are actually willing to buy with their own money.  As long as the radical libertarian reform were limited to the U.S, I’d also predict a large increase in resource extraction and real estate development – both long hindered by regulation.  And needless to say, if radical libertarian reform included open borders, there’d be a huge need for new housing – and probably lots of old-fashioned semi-skilled manufacturing jobs for the new arrivals.  (There’d also be a big increase in employment of personal servants).

If you find this scenario horrifying, it’s tempting just to predict total collapse.  But that’s a cheap shot.  If you’re going to denounce Libertopia, at least denounce it for the changes it could be expected to bring if it “works.”  This ground rule set, please tell me: What would a libertarian Recalculation bring? 

Please show your work.