2012-2013 EVT – Restoring Growth (Panglossy)

Posted on May 27, 2012 by Helene Lavoix

Last weeks’ summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of governance and of the modern nation-state) knows a rising dissatisfaction of its population. Alarmed by the rising difficulties and widespread discontent, the governing authorities decide to do something when new elections start. Dependent upon programmes created to face efficiently past challenges, prisoners of entrenched political groupings, comforted in their vision by the BRICS’ success and renewed optimism, the major parties campaign to come back to the order ante. As a result, habits and the existing system, once the new national representatives are elected and the new government starts ruling, are even more entrenched, almost ossified. Meanwhile, the polarisation and rise of a new opposition that took place during the election is temporarily frozen by the last hope created by the newly elected government.

(The reader can click on each picture to see a larger version in a new tab - a navigating map of posts is available to ease reading).

The new government, thus, decides that it must restore an efficient economy, which is the only solution to come back to a balanced and propitious situation. Its main criteria and aim for this is to re-establish growth and more particularly the growth of the GDP, as the available models of socio-political order dictate.

With growth, the dissatisfaction of citizens will disappear as they will find jobs again and the capability to enjoy the consumer society to which they are used. Meanwhile, all elite groups will be satisfied as they will continue enjoying their status and privileges. Hence the tension will decrease and peace will come back.

Growth will imply wealth and as wealth increases again, debts will not mean deleveraging but, on the contrary, leverage. With the rise of GDP, the ratio debt-GDP will automatically diminish, which will satisfy the financial markets, while the cost of the debt will be much less burdensome. Thus, with growth, the crisis will be solved. Of course, for a short while, public spending will have to be harnessed, but nothing that could deter growth. This will be the opportunity to introduce more efficiency and rationalisation in state’s management, which will only be favourable on the longer term.

Now the vision is laid down, Everstate’s government, with its international counterparts, only has to implement it through sets of policies. Repeating as mantra that growth must be obtained is notably insufficient, especially as the legitimacy of political authorities, and not only of the previous government, is questioned as a result of the ongoing crisis. Trust must be restored, investment and innovation boosted, consumption re-established.*

To achieve this, Everstate’s government decides first to give a boost to minimum wages, which will restore consumption and restart the engine. Furthermore, it will immediately implement “growth mainstreaming” throughout all policies.** Although Everstatans, in general, have a high education level and a large part of the population holds university degrees (see the power of Novstate), education and training are singled out as some of the structural long-term policies that need emphasis to be able to improve Everstate’s competitiveness and thus growth.***

Then, Everstate spearheads the creation of a new international meeting group for the resilience of the financial system, linked to the G-20, and involving the major financial private institutions. The new financial meeting group must bring back trust to markets and allow for a return to a proper flow of liquidity. It is expected that the need for and extent of regulation of financial markets will be intensely debated.

Finally, Everstate participates in an International Special fund for Sustainable Innovation and Green Energy (ISSIGE) that will help polities harnessing the ecological evolution and the increasing complexity of resources, and transform those into opportunities. A specific instrument will be organised around the Regional Union and should “fund pan-Regional infrastructure projects.”**** High level civil servants and famous Everstatans of universities, the classical media and the private sector join their colleagues in this high level new fund, built as a network as networks are more efficient than top down organisations, to determine its strategy and policies, identify projects that need funding, etc.

What are the impacts of those policies on the level of satisfaction of citizens? Will Everstate’s new government succeed, not only in bringing back growth, but also, thanks to the growth restored, in overcoming the main challenges and difficulties its predecessor faced? To know it, we need to re-run the model used for 2012 EVT, while including what happened in 2012 EVT and the Panglossy conditions and decisions, i.e. a level of tension that is high enough to have created polarisation, loss of legitimacy, protests, rise of a non-classical political movement, even if non violent and frozen for the moment.

To be continued…

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References

* For a good summary of a specific, mainstream, approach to policies leading to growth, Tyler Durden, “The Keynesian Emperor, Undressed, ” Zerohedge, 05/21/2012. Contrast with a critical view, the excellent video of Prof Keen’s interview, as recommended by @Greentak: Megan Ashcroft, “In Conversation with: Steve Keen,” The Renegade Economist, 16 October 2011.

Interestingly as of 21 May, although now so many agree on the need for a “growth compact” or “growth pact,” we find few concrete policies and practical explanations regarding the how this will be done. Read, for example among many other, The Financial Times Editorial, “A pact for growth is vital for Europe,” FT, May 4, 2012; Martin Lowy, “The Soon-To-Be-Born European Growth Compact,” Seeking Alpha, May 1, 2012; Shai Ahmed, “‘Sexy’ Europe Growth Compact Inevitable; Greece to Stay: Pro,” CNBC, 17 May 2012; The Telegraph, “ECB chief Mario Draghi calls for euro ‘growth compact’,” The Telegraph, 25 April 2012; Debating Europe, “Will a “growth compact” go far enough?” 14 May 2012; Tyler Durden, “Overnight Sentiment: A Summit Here, A Summit There, A Promise Of Growth And QE Everywhere,” Zerohedge, 05/21/2012; Paola Subacchi and Stephen Pickford, “Broken Forever? Addressing Europe’s Multiple Crises,” Chatham House Briefing Paper, March 2012. Peter Spiegel, “Diplomats back EU ‘project bonds’ plan,” FT, May 21, 2012.

** See the example of “Gender mainstreaming,” as explained in Wikipedia.

*** Tyler Durden, “The Keynesian Emperor, Undressed, ” Zerohedge, 05/21/2012.

**** Adapted from Peter Spiegel, “Diplomats back EU ‘project bonds’ plan,” FT, May 21, 2012.

2012 EVT – New Government, New Opposition, Last Hope (Panglossy)

Posted on May 20, 2012 by Helene Lavoix

Last weeks’ summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of governance and of the modern nation-state) knows a rising dissatisfaction of its population. Alarmed by the rising difficulties and widespread discontent, the governing authorities decide to do something when new elections start. Dependent upon programmes created to face efficiently past challenges, prisoners of entrenched political groupings, comforted in their vision by the BRICS’ success and renewed optimism, the major parties campaign to come back to the order ante. As a result, habits and the existing system, once the new national representatives are elected and the new government starts ruling, are even more entrenched, almost ossified.

(The reader can click on each picture to see a larger version in a new tab - a navigating map of posts is available to ease reading).

Yet, something unexpected, dismissed or rather minimised by observers, is also happening during the months leading to the election: the rise of small and sometimes polarised parties, accompanied by an increase in the political mobilisation outside currently eligible parties. In this, Everstate is just exemplifying what is happening all over the Western world.

For example, in May 2012, in Germany in North Rhine-Westphalia, the new Pirate Party again fares very well. In France, the results of the first round of the Presidential elections shows a strong rise of parties on the extreme left and right of the political spectrum. In Greece, thirty-two parties compete during the first May elections, and seven, including those positioned at the extreme, win seats in Parliament. Meanwhile, the Occupy and Democracia Real Ya! – also known as Indignados – movements, born out of Spain’s mobilisation a year before, show their continuing presence, with various protests staged on May Day, then between 12 and 15 May, with varying participation rates. Signs of polarisation can also be found here. #Anonymous, in general, backs those movements from and in the virtual world, besides other operations, and represent a political force and not a criminal activity as some would like to interpret it.

Indeed free association, free speech and free assembly, enhanced by the new technological means of communication and mobilization, added to the general dissatisfaction while security is still being sought, create new extra-parliamentary organisations and mobilizations because the programmes of the classical parties and existing parliamentary groupings do not answer anymore the needs of the citizens and of the nations. The fluidity of the situation, the diversity of the types of organisations and the various stages of polarisation are symptoms of systems trying to evolve and redesign themselves, of the need for radically new programmes, which are in the making, as the underlying socio-political model are outmoded and do not offer any easy efficient solution.

As far as Occupy Everstate is concerned, they have to face some very difficult issues. What gave them their strength and made them truly representative, notably in terms of concerns and identification of crucial issues for the overall security of the nation, their faith in a fully democratic process, also constitutes an impediment as it slows and even sometimes block their decision process. Their main means of action, peaceful protests and sit-ins, so far has not allowed seeing their demands satisfied. Their successes are however far from negligible as they are now part of the political landscape, and are thus heard, when one year ago they were systematically ignored, and as they have succeeded in raising awareness to the plight of the many. Yet, the old ideas and habits they fight are as pregnant, powerful and ruling as ever.

Some groups within the movement are getting tired of obtaining nothing, of seeing the status quo continuing, while they start meeting difficulties to mobilise people. They are following the American debate existing over the “diversity of tactics.” Should they move away from the essential original non-violence – including the respect of laws and of property – of the movements to the “diversity of tactics” which includes also “property damage and armed retaliation against the police” but NOT “extremist tactics such as planting bombs and armed insurrection? (Bramhall, March 2012). True to the democratic foundation of the movement, the general answer is to convene a General Assembly to vote. However, lengthy debates have now been going on for days and nothing is solved. Furthermore the example of the Pirate Party also tempts Occupy Everstate. Should they register formally? This would allow them, maybe, entering parliament and developing their programme, and more important, getting things done (for the leadership and organisation debate going on in Spain, see Tremlett, May 2012). Yet, would they not also loose part of their soul, of their raison d’être? The tension is growing within the movement, while some actions abiding to the “diversity of tactics” start, still very rare, but yet, they happen.

The result of the new elections seems to freeze the contractions that agitate Occupy Everstate. Could this new government, maybe, bring Everstate back to where it was before life became so hard, before unfairness became unbearable, before the only way forward seemed to go to the streets to be heard or even worse? Nobody wants to sleep in the street, to be poor, to be condemned to unemployment, and even less to fight and risk one’s life. This hope, this last hope, isn’t it worth giving it a chance?

To be continued…

——

References

Stuart Jeanne Bramhall in “Debating Violence in the Occupy Movement,” Take The Square, 3 March 2012.

Giles Tremlett, “Spain’s indignado protesters face anniversary crackdown,” Guardian.co.uk, 11 May 2012.

Images

Official logo of the Swedish Pirate Party (Piratpartiet) by Piratpartiet [Public domain], via Wikimedia Commons.

The OccupyCal General Assembly approves of… something. November 15 2011 by Daniel Parks from Berkeley, United States (Fingers Up) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons. This image was originally posted to Flickr by D.H. Parks at http://flickr.com/photos/8073513@N03/6349212141. It was reviewed on 21 November 2011 by the FlickreviewR robot and confirmed to be licensed under the terms of the cc-by-2.0.

2012 EVT – Scenario 2 – Panglossy: Same Old, Same Old

Posted on May 13, 2012 by Helene Lavoix

Last weeks’ summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of governance and of the modern nation-state) knows a rising dissatisfaction of its population. Everstate is plagued by a deepening budget deficit and an increasing need for liquidity, with a related creeping appropriation of resources while the strength of central public power weakens to the profit of various elite groups. An outdated world-view that promotes misunderstanding, disconnect and thus inadequate actions presides to its destiny. Henceforth, the political authorities are increasingly unable to deliver the security citizens seek. Risks to the legitimacy of the whole system increases. Alarmed by the rising difficulties and widespread discontent, the governing authorities decide to do something. Of the three potential scenarios or stories that follow, we now start the second, “Panglossy: Same Old, Same Old,”* after having seen the end of “Mamominarch: Off with the State.”

(The reader can click on each picture to see a larger version in a new tab - a navigating map of posts is available to ease reading).

In 2012 EVT, as Everstate’s governing authorities and more specifically national representatives start thinking they should do something to face the various difficulties they meet and notably the rising discontent, a new period of elections opens up. Thus, what matters to the national representatives now is to win the elections for a new term. It is not anymore a fear of losing power because their legitimacy as efficient rulers (being able to deliver what they have been elected for) is questioned. They need now to convince citizens that they are the best to represent the nation and govern it and that they are better than their usual competitors.

As political parties are built around a programme and according to specific lines of thoughts, the rationale of the electoral competition asks them to follow the core of those programmes to demarcate themselves from their adversaries. When each party was formed, this formation led to the construction of a unique program upon which various national representatives and parliamentary groupings agreed. This program was also built to allow for the mobilization of electors needed to see the representatives elected. However, as with the way ideological and normative belief systems and socio-political models are constructed, this mobilisation was done in the past. The problems it sought to answer are past challenges. Furthermore, it could only be built according to the socio-political model and normative framework of that time. Over time, with each election, each of the two programmes has evolved but could do so only within relatively tight boundaries. Hence, the two main parties about to dispute the elections in Everstate are both abiding by the modernizing norm, constructed around materialistic improvement, each representing, as in most of the liberal world, two ends of the same spectrum, one of social-democrat inspiration, the other with a more conservative stance.

Thus, now, if the real severe problems faced by the nation must be considered, solutions can nevertheless only be envisioned within the framework of those existing programmes, as well as within the existing socio-political model and norms. For the two major classical parties, trying to change their framework and their programme in a very substantial way would mean risking changing the existing mobilisation forces and upsetting existing parliamentary groupings, thus risking losing the elections, which, ultimately would imply not being in power.

Battles are thus pitched on relatively minor points, when seen from the point of view of the huge challenges the nation must face. From the point of view of many people who are not only electors, but also those very people who seek security, experience pressures in their everyday life and are increasingly dissatisfied, such battles contribute to further de-legitimise whoever will become the nation’s representatives, thus the government, and indeed the existing parties’ system.

Meanwhile, a combination of apparent renewed optimism, notably expressed through better statistics, for example a slightly rising consumers’ spending, especially abroad, through bullish financial markets and stock exchanges worldwide, a slow down of protests both within Everstate and worldwide, with a fear that those protests could start again, tends to comfort the potential nation’s representatives in the validity of their old aims and programmes and in their wish to come back to the situation ante, i.e. before everything started to unravel. Chief among those aims, Everstate must obtain economic growth again. The crisis is severe, indeed, but it is certainly temporary as those optimistic signs show. Unfavourable, negative trends are still at work, and those must be faced and stopped. But the goal is clear and the framework for doing so is pristine, and it may only work, as it has always worked since the parties were created.

The rise of the BRICS (Brazil, Russia, India, China, South Africa), prompted by the current modernising and materialistic paradigm, only fuels this vision. Be they upheld as a threat against which one must struggle or as new partners with whom one must cooperate, their recent success is one more evidence of the correctness of the existing system. As a result, the awareness of the new pressures that had started to emerge recedes and those are considered as not really important or, if they are, their timing is uncertain, thus, if ever such threats materialise, it will be later.**

Hence, nothing fundamentally changes. On the contrary, habits and the existing system, once the new national representatives are elected and the new government starts ruling are even more entrenched, almost ossified.

Yet, something unexpected, dismissed by observers, is also happening during the months leading to the election. To be continued…

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* The name for this scenario, Panglossy, comes from the famous character Pangloss in Voltaire‘s work Candide ou l’Optimisme (Candid : or, All for the Best – 1759). Candide is an attack on Leibniz’s optimism, seen as absurd in the light of the many ills of the world. The absurdity of optimism is notably conveyed through the explanations for the series of catastrophes met that Pangloss, Candide’s preceptor, gives and that always emphasise that “all is for the best.”

** Note that the absence of interest existing on timing and the sparse research on this factor may only ease the ability to deny reality.

Images

A frontispiece of Voltaire’s Candide (Paris : Sirène, 1759). It reads, “Candide, or the Optimism. Translated from the German by Dr. Ralph.” [Public domain], via Wikimedia Commons.

This file comes from the website of the President of the Russian Federation. Kremlin.ru [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons.

2012-2013 EVT – Implementing the Mamominarch conclusions

Posted on March 11, 2012 by Helene Lavoix

Last weeks’ summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of governance and of the modern nation-state) knows a rising dissatisfaction of its population. To face the various difficulties and widespread discontent, Everstate’s governing authorities decide to follow the conclusions of the Mamominarch Commission that recommend to drastically reduce state expenditures.

(The reader can click on each picture to see a larger version in a new tab – a navigating map of posts is available to ease reading – methodological or research note at the bottom of the post).

The Mamominarch conclusions become policy

All governing bodies thus adopt the conclusions of the Mamominarch Commission. New laws are enacted when needed, which is easily done as the major parties seating in Parliament were part of the Commission. The constitution is even changed to incorporate the new ideals and objectives. As top-level civil servants were also either part of the Commission or represented, legislation can be executed without any major impediment. Indeed, a mix of career and organisation related incentives*, as well as normative material and ideological stakes greatly facilitate execution at all levels.

As the major elite groups, including the lenders, were also present, no elite-prompted hidden opposition exists; liquidity and the various resources mastered by the elite, including the traditional mass media, are largely made available. International and Regional support by those organisations that were included in the Commission is strongly emphasised through various diplomatic gains and prestige attention. A few more Everstatan officials and political figures obtain high level positions in various international fora.

Papers, articles, interviews and books from the various experts, famous people, and academics having been part of the Mamominarch Commission soon reinforce mass media support. “The Mamominarch break-through: reinventing true happiness” written by Novstate’s CEO and founder becomes an international best-seller, while Hollywood starts the production of the next blockbuster on the life-story of the successful businessman.**

As the new measures are heralded as the new type of governance adapted to the reality of Everstate and allowing for a happy future, in line with the worldview and its beliefs, citizens find back meaning and hope and accept the new laws and policies, although with some worries regarding the efforts they will have to consent. A few remain skeptics but their voices are muted by the majority and by the normative deluge of support to the new system. The unions hope that renewed growth will stop unemployment.

As a result, the Occupy Everstate movement loses many of its sympathisers. Furthermore, as the Mamominarch system means less state, the part of the movement that tends to embrace anarchism is satisfied. The presence of Evernet’s CEO within the Commission quells some of the fears regarding over-regulation of the Internet and online networking. Occupy Everstate tends thus to lose even more active supporters and apparently recedes. Its most active members can do nothing else than going back home. Yet, the links between them, notably through social networking are not severed.

Remains now to engineer the reforms and notably the delicate short-term transition.

Implementing the Mamominarch policies

The variable upon which the Mamominarch Commission plays is “ruler and state spending” (see below methodological and research note).

The drastic reduction of expenses will reduce the deficit, stop borrowing and thus stabilise the interests, notably those paid abroad as a large amount of the debt is held overseas. However, the existing debt must also be reimbursed. This should be made possible overtime and as quickly as possible, notably with a positive current account.

First, Everstate must organise a temporary increase of resources extracted to meet the existing expenses, waiting for those to disappear or be significantly reduced. It must do so without impacting either the lenders’ nexus or the elite groups. However, as the overall situation has not yet changed (see 2012 EVT: Budget Deficit and Liquidity), the only way, as recommended by the Commission, is to sensibly increase taxes on personal income and on consumption, the latter being favoured as it is said to be less felt by citizens. To underline the temporary character of the effort a special contribution is created, “the salvation tax,” which will affect all tax payers incrementally and progressively and is perceived on all incomes (rate between 8% and 12%), will be paid as soon as 2013 EVT. Meanwhile a new tax on consumption of 3% on top of the existing ones, “the anti-debt tax” is applied immediately. Those taxes will be suppressed in five years.

The drastic reduction of public expenses is planned over a five-year period. All public services related to infrastructure will be decentralised and sold to the private sector within the next six to twelve months. All heath care related activities, and the whole pensions and retirement sector will similarly be privatized over the next two years. By 2017, aiming at reducing the central civil service by 50%, whole sections of ministries will be priced and then sold, if the mission of the unit is seen as economically viable and better externalised, or transferred to a local administration. Services will then be paid either by the state or local administration through contracts following the outsourcing method, or directly by people, according to cases. Within the central state administration, the management of outsourcing is reinforced on an interagency or interministerial basis, while exchanges with The Regional Union for analysis and direction are increased. The education and university systems are considerably privatised and localised; Everstate, working hand in hand with the Regional Union, will keep only a mission of orientation and accreditation.***

With cuts equally divided in 5 steps, one per year, the foreign and diplomatic services, defense, intelligence and police budget are further reduced. Most operations of cooperation and aid will be the responsibilities of volunteer organisations and private firms within the year. Only the bare minimum of diplomatic presence will be kept, while analysis increasingly will rely on both private contractors and The Regional Union. The army will be further reduced across all functions, with a staggering increase in the use of private contractors, mainly operated by Novstate. The new cyber-division that was about to be created is contracted to a Novstate’s friend company. Police forces become localised and use of outsourcing through private security companies must become the norm. Novstate offers a centralised access to information and communication, besides operating many local police posts.

Within a year, state expenditures are already strongly reduced, but not sufficiently. As hoped, Everstate is upheld as model for having so efficiently and swiftly solved the problems that plague so many countries. The debt has been reduced through the flow of money generated by the privatizations. Income, notably taxes, is still insufficient to pay for expenses, but the deficit is on its way to be reduced.

The success and the favourable environment attracts foreign capital, notably new banks, insurances and financial institutions developing new products, as well as foreign companies taking over some of the state services of Everstate, when those are not provided by Novstate and its friends companies. They mainly settle in Everstate’s capital. Foreign capital is also very active in allowing for the privatization of Everstate’s state infrastructure. CEOs, who think it would be more interesting for them to produce part of their goods in the Western provinces of Everstate, start building factories and hire local people. Meanwhile, medium to high-end tourism, notably in the snowy and mountainous North and on the coastal areas, is flourishing. Interestingly, the seaside area also attracts internet companies specialised in online shopping and electronic payments.

Unemployment, by mid-2013 EVT seems to be stabilised, even if it is not reduced. However, the brutal change of system has introduced a rampant fear, yet compounded by hope, in Everstatans as they see their income reduced and have to adapt to the new healthcare, pension system and to the whole new now privatized services. The answer to fear is a new harshness and selfishness in social relationships as each compete to try to earn more.

After those years of worry and stagnation, a real boom is starting to appear possible for Everstate, and its growth rate, although still low, is above those of its neighbours.

To be continued…

* See for an example of the way those incentives can interact, Nolan, Janne E., and MacEachin, Douglas, with Kristine Tockman, Discourse, Dissent and Strategic Surprise Formulating U.S. Security Policy in an Age of Uncertainty. Washington, D.C.: Georgetown University, Institute for the Study of Diplomacy, 2007; Chester A. Crocker, “Thirteen Reflections on Strategic Surprise,” Georgetown University, 2007.

** For dynamics between national security issues and apparatus and the movie industry, see Jean-Michel Valantin, Hollywood, the Pentagon and Washington. Anthem Press, 2005.

*** Some countries within the OECD are currently downsizing their civil service sector and using privatization, with noticeable variations according to countries, see, for a study on the EU members, Forward Planning and International Affairs Bureau (B2), General, Directorate for Public Administration and the Civil Service, “Administration and the Civil Service in the EU 27 Member States: 27 country profiles” Republique Francaise, MINISTÈRE DU BUDGET, DES COMPTES PUBLICS ET DE LA FONCTION PUBLIQUE, 2008. With the 2010-2011 renewal of the crisis, downsizing in the public sector has increased, as for example, in the UK; government statistics on civil service employment since 1902. However, compared with the scenario used here, those changes have been or are implanted over longer periods of time. For example, in Austria “The number of federal administration employees has fallen from 300,000 in 1985 to 133,000 at present” (2008). Further research on variations in the speed of the reforms and their impact would need to be undertaken.

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Methodological and research note

Working backward with ego networks

The method remains to use ego networks as previously. However, the model has been created in a forward manner, using existing work on state-building that takes as assumption an increase in needs and resources. Here the decisions taken in the scenario answer to a slightly different logic, as underlined in the previous post: they do not consider needs or state-building, but only a reduction of expenses.
We shall thus, in terms of ego network, sometimes have to work backwards, following the arrows from target to source to identify the value the source node could have, given the value attributed to the target node (this may also be seen as a variation on the method known as backcasting.)

Further research

Ideally, with more resources, notably a team of researchers, the values attributed to variables should be quantified, when the variables are about quantities. This will become even more obvious with the next posts. Notably, it would be very interesting, assuming we were able to enter specific times for each link, to test the variation of those time periods according to changes in quantities, and vice versa. It is indeed possible – or even likely – that thresholds and tipping points may occur according to such variations. More broadly, such hypothesis could also be tested on qualitative variables, methodology to be defined.

2012 EVT – Scenario 1 – Mamominarch: Off with the State

Posted on March 4, 2012 by Helene Lavoix

Last weeks’ summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of governance and of the modern nation-state) knows a rising dissatisfaction of its population. Plagued with a deepening budget deficit and an increasing need for liquidity, a related creeping appropriation of resources while the strength of central public power weakens to the profit of various elite groups and with an outdated worldview that promotes misunderstanding, disconnect and thus inadequate actions, the political authorities are increasingly unable to deliver the security citizens seek and risks to the legitimacy of the whole system increases. Alarmed by the rising difficulties and widespread discontent, the governing authorities decide to do something. Three potential scenarios or stories will be told: “Mamominarch: Off with the State,” “Panglossy: Same Old, Same Old,” and “Genuisy: the Making of History.”

(The reader can click on each picture to see a larger version in a new tab – a navigating map of posts is available to ease reading).

The Mamominarch Commission

Considering the difficulty of the problems at hand, and the need for a consensus among powerful elite groups, as well as regional and international actors, to see the array of measures applied, once they would be identified, Everstate’s government convenes a high level commission that must find out what has to be done.

The highest level of the government thus hand-picks to participate in the work: high level government and state officials, the latter representing civil servants, parliamentary representatives of the major parties, who had been in power alternatively for the last seven decades, famous economists Everstatan and foreign, the director of the Everstatan School of Liberal Politics, management experts, business leaders, notably the CEOs of Novstate and its friends companies, the CEOs of the largest banks and largest financial funds, business consultants, experts in new technologies, high level officials of the IMF and WTO and of the Regional Union. All powerfully stand for the normative order to which Everstate belongs and for the major entrenched elite groups. As an exception to this rule, the CEO of a very performing high-tech Everstatan company, Evernet, is also invited to represent the emerging elite group related to computing and networking.

After two months of intense debates and work, most often done by the staff of those personalities that participate in the high level working group, the Mamominarch Commission, as it is now known, reaches the conclusion that the root cause of the problems is an impossibility to match public expenses with public income, even in times of economic growth, and thus that the obvious solution is to drastically lower public expenses.

Of course, this solution is designed in terms of expenses and not of needs, but is it really a problem? The normative model of the time, which has been just so successful into bringing wealth and growth, upholds free entrepreneurship, free trade and free market as ideal. Meanwhile, the state and especially its bureaucracy tend to be seen as expensive and inefficient, obviously unable to adapt to the new conditions as the deteriorating situation proves, and furthermore unable to contribute to ensure its primary mission, the security of its population as, again, the protests and the increasing tension shows. It thus makes complete sense to push the normative order one step further and to finally apply it fully: to rely on free entrepreneurial forces and on the market to provide for goods and services as much as possible, to always work in this direction, while the state must wither away. After a short period of adaptation everyone will be happy and definitely better off as balance will have been restored and this time permanently.

What will be more delicate to engineer is the short-term future, when further efforts in terms of income will be asked from the population, as existing debts must be reimbursed and interests paid. But, the difficulties will only exist for a very short period of time, as the renewed growth will rapidly make the effort painless.

Some civil servants will have to be laid off but as services will be taken over by the private sector, they will certainly find work again very rapidly, on the model of Novstate. Such a move may even enhance their career, as the economy will certainly be greatly boosted by this new system.

The Shadow Banking System, Conceptualized, designed and created by Zoltan Pozsar, The Federal Reserve Bank of New York, November, 2009

Furthermore, selling whole parts of the state, as has already been started, will bring in more money that will be used to reimburse debts, thus helping stabilise taxes. There will be no need to find really new taxes, except, maybe, for a short period of time, and especially no need to truly start thinking about ways to make the lenders’ nexus pay more tax – which is, anyway, something really difficult to craft as the whole financial system has become so complex, and would ask for international treaties, which would demand too long to obtain, assuming it were possible.*

Finally, as many members of the Commission underline, this will be good for business, attract investment, and put Everstate in rank to compete with the top financial and businesses orientated places in the world.

Only a minimum army and police will remain at state level. Most of the police force will now be under the responsibility of local towns, as, anyway, criminality has to be solved by proximity actions, on the ground, and through a better understanding of criminals. Operations against existing national threats will be shared between what remains of the defence forces, with a rising use of private contractors. Novstate’s CEO has pledged during the debates that his company and its friends businesses would do their utmost to fulfill any need Everstate would have in this matter.

PR, communication and advertisement specialists, as well as lobbyists, are now brought in to make sure that the conclusions and message of the Mamominarch Commission are delivered at best so that they become policy decisions adopted by Everstate’s governing bodies.

Everything goes indeed very smoothly and all Mamominarch’s conclusions are adopted.

To be continued…

——

References

* Zoltan Pozsar, Tobias Adrian, Adam Ashcraft, and Hayley Boesky, Shadow Banking, Federal Reserve Bank of New York Staff Reports, no. 458, July 2010; “According to one measure of the size of the shadow banking system, it grew rapidly before the crisis, from an estimated $27 trillion in 2002 to $60 trillion in 2007, and remained at around the same level in 2010.” Financial Stability Board (FSB), Shadow Banking: Strengthening Oversight and Regulation, October 2011, p.1; Brook Masters (2011-10-27). “Shadow banking surpasses pre-crisis level”. The Financial Times. accessed 2012-02-10.

2012 EVT: Material Stakes in an Outdated Worldview (The Chronicles of Everstate)

Posted on February 26, 2012 by Helene Lavoix

Last week’s summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of the modern nation-state) knows a rising dissatisfaction of its population as authorities cannot anymore deliver security. The last phenomenon driving Everstatan governing bodies’ rising inefficiency in ensuring their mission is an outdated worldview that leads to misunderstanding and disconnect, which is first upheld by ideological stakes.

(The reader can click on each picture to see a larger version in a new tab - a navigating map of posts is available to ease reading).

The knowledge institutions and related people, which are guardians of norms and thus have ideological stakes in upholding an outdated worldview, are also motivated by material stakes in seeing norms respected, upheld and continuing. Indeed, their institutional survival depends on the continuation of those models, for example, through funding and employment.

Even if some or most within those institutions (again with variations according to their exact normative function) are increasingly aware that models have to be revised – but how far and how deep – being the first to do so could mean being cast away and thus losing both status and income. Individuals within institutions are caught in a system similar to traders on the stock exchange in the period preceding the burst of a bubble.

Furthermore, as the lender nexus and other elite groups benefit from the new means to appropriate public power, as those appropriations are permitted by the current model and underlying norms and thrive from the lack of real understanding, then those elite groups also have a material stake in seeing the current model and norms remaining in power. This is even more the case that some of those elite groups gained status as well as income only because of the absence of adequate models. If another model of socio-political organisation existed that allowed Everstate to face the new pressures, ensure security and thus bring back the satisfaction of the population then those elite groups would lose power. They are thus most unlikely to willingly abandon their new found or reinforced privileges.

If or when new understanding and new models, possibly with the slower creation of new norms and beliefs emerge, this will create new elite groups while the discarded model will imply the disappearance of existing elite group. Those new and disappearing elite groups will not only be related to understanding and knowledge as well as needed skills but also to the disappearing and emerging needed resources, that will then be fully integrated within the new model.

Any attempt at proposing something new or different is thus, for now, either muted or remoulded in agreement with the existing paradigm. Its authors, if they are too weak institutionally, are either marginalised or bought in to the price of the novelty of their ideas. In one way or another, new ideas are not heard.

Thus beliefs outlast the situation. As beliefs constrain understanding, which in itself conditions actions, a growing disconnect takes place between reality and actions. As actions disregard reality, they may only imply further dissatisfaction and become essentially increasingly escalating in terms of tension and scope of grievances.

For example, in other countries, protests then violence had followed an escalating pattern. For the initial phases, that looks very much like what is happening in Everstate. There, the trigger had been, surprisingly for the government and the elite, an increase in food prices. Yet, such increases had been constant over the past three years. This new price rise had not even been major. People had been thought to be used to those increases that were, anyway, expected. Furthermore, people had been repeatedly told that such inflation was not that important because the prices of so many other items, including wages, were not increasing, which showed, from the economy and monetary experts’ point of view that there was no real generalised inflation. Obviously, the monetary and economy gurus had forgotten to consider that seeing constant increase in food prices while wages were remaining stable would soon become a major problem in real life for real people. They had also forgotten that despite beliefs in the law of the market, the demand for some vital goods was inelastic, and that related shortage was not an option. Those would be translated in political terms rather than nicely remain within the sole economic field. Thus, the analytical tools set up by experts were congruent with the model and the norms, but so far away from reality that escalation and tension could not only rise unnoticed, but also be dismissed. When violence exploded, it took everyone by surprise. The strength of the norm is such that quickly an explanation fitting the model and avoiding possibly questioning it surfaces: the revolutions that took place could be explained by the need to embrace the democratic model, not by any other need.* Thus, from the normative point of view, Everstate, being a democracy and having been for quite a while, can learn no lessons from those other protests and their escalation, as they bear no resemblance whatsoever with what is happening in Everstate… or so the model says.

The situation into which Everstate and the normative world to which it belongs find themselves is blocked.

The people and the nation, composed actually of the same people, are twice discontented: first, as people, they have to pay for the elite, adjust to new less than pleasant working and living conditions; second, as ruler, they are seeing their power dwindling. Furthermore, fear and anxiety starts spreading as understanding either lacks or appears by bursts, soon to be muted while meaninglessness settles.

The situation is increasingly unsustainable and leads Everstate to its loss.

As the people and the nation start taking actions to express their discontent and see their goals met, their representatives begin considering changing the situation as continuing delivering security to citizens is the only way for them to still govern thus to remain in power.

But what can be done? And by whom?

To be continued…

——–

* The inspiration for this paragraph comes from the 2008 food riots, as well as from the winter and spring protests and rebellions that occurred in the Middle East and North Africa. For a very interesting article on Egypt suggesting very early a different interpretation, read, for example, Walter Armbrust: “A revolution against neoliberalism? If rebellion results in a retrenchment of neoliberalism, millions will feel cheated,” Al Jazeera English, 24 Feb 2011, This article first appeared on Jadaliyya.

2012 EVT: Ideological Stakes in an Outdated Worldview (The Chronicles of Everstate)

Posted on February 19, 2012 by Helene Lavoix

Last week’s summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of the modern nation-state) knows a rising dissatisfaction of its population. The increasing incapacity of the political authorities to deliver the security citizens seek increases the risks to the legitimacy of the whole system. The first two phenomena driving Everstatan political authorities’ incapacity to deliver security are a deepening budget deficit and an increasing need for liquidity, and a related creeping appropriation of resources while the strength of central public power weakens to the profit of various elite groups. The first of this group is the lenders’ nexus. The second type of elite groups is developing strongholds focused on those resources needed by Everstate and is exemplified by an extreme form of outsourcing, crystallized by the company Novstate.

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An outdated worlview leads to misunderstanding and disconnect

As discontent settles in Everstate, with its corollary of slowly rising tension, widening scope of grievances, and creeping feeling of injustice, while people continue, in vain, to seek security, Everstatans try to give meaning to their hardship, to understand what is happening to them and why. Meanwhile, Everstate’s governing bodies also look for ways to solve the various problems they face, which demand understanding the situation.

Such quests mean that the current normative models held in Everstate, and, more broadly, in the liberal order to which Everstate belongs are increasingly dysfunctional and outdated. Indeed, should they be adapted, they would provide the right framework for both efficient and satisfactory actions and meaning. Whilst now, nothing makes sense anymore and the situation worsens almost on a daily basis. The economy is growing inefficient; the political authorities’ actions repeatedly fail to ensure security; discontent increases; the formal bureaucracy of the state apparatus is questioned at many level, including by the bureaucracy itself; the state infrastructure seems to be now unable to fulfill its functions ; appropriation of public resources and power grows. Those are signals or symptoms that something is amiss in the models followed.

But then, if this is the case why has a new model not already emerged? What is happening and why?

Actually, Everstate and its fellow countries have now to face one of the toughest challenges, if not the hardest, that may confront a society. They are facing the intrinsic difficulty that goes with the need to change the various models that frame their lives and related institutions.

Currently, there is only one major model of socio-political order that frames the organisation and behaviour of most countries in the world, including Everstate: the modern nation-state, focused on the sole improvement of citizens’ material well-being, in its liberal democratic version. Other variations, such as Communism, have failed as the Cold War showed, and lessons have been learned from others’ experiences. Nothing else is available. Thus, if there is a need for change, then something new must be created, which is very difficult indeed.

First, ideological stakes are at work. The model of socio-political order is at once grounded in the past and in increasingly deeper systems of beliefs, themselves constructed historically.*

The first layer is a system of norms or beliefs, which can be seen as an ideology (a set of ideas), and quite akin to a religious system of beliefs, with all the sacred connotations and emotional attachment that may go with it. It will also contain the culture and mores of a specific society or country. It evolves slowly with time. From this level are derived, for example, the legal concepts applied in each country.

This layer is then included in and interacting with normative beliefs that act at systemic level and are constructed out of interactions between different systems of beliefs and actors. Here are worked out norms that rule the lives of all actors in the world, such as, for example, the existence of states that are territorial, sovereign, independent, the importance of modernisation (being modern), a norm that was constructed and imposed upon the world starting from the end of the nineteenth century.**

Then, one finds the deepest level of norms that may be called paradigmatic and will contain those values that are most crucial, deepest and most fundamental. For example, at this level may be located fundamental ideas about life and death, about the place of human beings in the universe, about the evolution of the universe, about fundamental ethics, etc.

Each layer of norms results form past evolution and past norms and has emerged out of collective efforts to face past historical situations. Each layer evolves at a different speed and the deeper it is, the more difficult to change it, the more threatening any potential change, and the more chattering the experience of changing it, at both collective and individual level. However, as the more superficial level – the socio-political model in its specific Everstatan guise – is embedded within the others and includes elements of them, then any change similarly involves dread.

Besides the human cognitive difficulty in revising models in front of new evidences***, ideological stakes to keep the model of socio-political order are thus strong considering the difficulties and consequences of altering it. Finally, as those models are normative, questioning them generates a fear to be cast away by the group, with all the internalised dread related to the impossibility to survive alone if one were excluded from the group. Thus, new evidences that could question models are either not seen or consciously and unconsciously dismissed. The likelihood to see this denial happening increases with the depth of the set of beliefs that is touched.

The knowledge and understanding institutions act as guarantor of the ideological and normative system. As such, and according to the norms they uphold and represent, they also provide legitimacy to the governing bodies within society. They tend, at least initially and according to their specific normative position, to further forbid questions and to stop the emergence of new ideas and new models. Meanwhile, prompted by the rising disconnect between reality and the norms and the dysfunction and hardship it generates, a demand for another understanding, one that would be adapted to the current reality, is voiced increasingly loudly, and lends strength to the rise of alternative purveyors of knowledge or to a major renewal within traditional ones.

Considering where Everstate stands historically and normatively, the knowledge and understanding institutions are mainly located within the academia, especially those departments where the latest models of socio-political order have been designed and upheld: economics departments and business schools, with the support of some of the most liberal and economically minded political science studies, as well as some divisions focusing more exclusively on technology and applied science.

Everstate has very good quality universities and those last 60 years they have provided increasingly recognised scientific knowledge and understanding, notably in the areas of main normative concern, such as economics, business and technology. They have educated generations of civil servants and also play the role of think tank. The analyses thus provided are widely recognised throughout the country as being explanatory and providing good advice to the ruling institutions, contributing thus to good governance and sanctifying the legitimacy of the state. Those universities are enmeshed in the global academic network and Everstate scholars travel extensively and can be heard in international workshop, while they contribute to global knowledge.

Interestingly in Everstate, the scientific institution cannot be seen as a single body anymore, that would, as a single actor, protect all norms. The organisation in disciplines that took place over the last centuries, and that played in the hands of those upholding a modernising and materialistic division of the world, giving power to a few, also contains within itself the seeds of a potential renewal. Indeed, as demand for a new adequate understanding increases, if norms must be revised, if some beliefs must be discarded, then the separation in disciplines means that the complete demise of science is not necessary, only part of it will have to be revised or even discarded. This also means that in the near future battles are likely to be played within universities, in Everstate but also at global level.

Some churches, at least those which adapted to the more materialistic part of modern life, can also help upholding norms. However, as Everstatans are relatively uninterested in religion, churches’ influence is so far marginal. One notices, nonetheless, a revival of some religions as citizens look for meaning and understanding, an understanding that mainstream beliefs do not bring anymore. It is thus likely that churches will play an increasingly important role in the years to come, notably if sciences cannot be renewed when needed.

International institutions, such as the IMF, the World Bank or the United Nations agencies, being born of the latest systemic norms and to sustain them, also contribute to enforce their universal, orthodox character. The latest born global institution is private, a powerful global association of companies that influences even heads of states. It upholds all the norms related to business. Efforts towards further or different regional and global governance let expect the appearance of new actors at this level and of coming related normative battles. Any attempt to question or change the norms upheld by those organisations will be fiercely combated.

To complete the structure, we find professionals trained in those institutions and having thus acquired those skills that are so crucial to the functioning of this system created for past conditions also act as guardians of the norm. For example, business consultants or high level executives coming from the corporate world, notably in areas linked to finance, act as unquestioned and unquestionable gurus. Novstate, considering its hybrid character is particularly active in the normative field, from the specific funding of research programs within universities and think tanks to full use of its friend networks, notably within mainstream media.

To be continued…

———-

* The organisation in four layers of norms and beliefs is only sketched here as a hypothesis. Each of them may be constructed as a complex system and more research would be valuable on their interactions, the way they are born and evolve.

** See notably, Bull, H., The Anarchical Society: A Study of Order in World Politics, (London: MacMillan,1979); Bull, H. and A.Watson, The Expansion of International Society, ed. (Oxford: Clarendon Press, 1984); Gong, G. W., The Standard of ‘Civilization’ in International Society, (Oxford: Clarendon Press, 1984), Lavoix, Helene, ‘Nationalism’ and ‘genocide’ : the construction of nation-ness, authority, and opposition – the case of Cambodia (1861-1979) – PhD Thesis – School of Oriental and African Studies (University of London), 2005; for modernisation, see, among others Giddens, Anthony, The Consequences of Modernity, (Cambridge: Polity Press, 1990).

*** Richard Heuer, Jr., Psychology of Intelligence Analysis, Center for the Study of Intelligence, Central Intelligence Agency, 1999, defines cognitive biases as “mental errors caused by our simplified information processing strategies” stemming “from subconscious mental procedures for processing information. A cognitive bias is a mental error that is consistent and predictable.” Chapter 9. At work here among other biases would be the bias known as the “Persistence of impressions based on discredited evidence (difficulty to discard the initial causal model created). – also called Belief persistence after evidential discrediting” Anderson, Craig A., Mark R. Lepper, and Lee Ross. “Perseverance of Social Theories: The Role of Explanation in the Persistence of Discredited Information.” Journal of Personality and Social Psychology 1980, Vol. 39, No.6, 1037-1049.

2012 EVT: the Power of Novstate (The Chronicles of Everstate)

Posted on February 12, 2012 by Helene Lavoix

Last week’s summary: In 2012 EVT, the deepening chronic budget deficit and the rising need for liquidity of Everstate (the ideal-type corresponding to our very real countries created to foresee the future of the modern nation-state) give an increasing power to the lenders elite group, allowing for new forms of appropriation of public power. Everstate sinks into a vicious circle.

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On the difficulty of cooperating with elite groups

The second phenomenon driving Everstatan political authorities’ incapacity to deliver security is a related creeping new appropriation of public resources and a weakening of the strength of central public power to the profit of various elite groups, the first of which was the lenders’ nexus. As many needs beyond liquidity remain, Everstate’s rulers (the modern state, the elected governing bodies and the nation) have no other choice than to turn to those who hold the resources needed, the elite. The need for cooperation with the elite is increased because the new pressures on Everstate mean that new staff is necessary for governance.

Meanwhile, the intensification of the various kinds of pressures implies a renewed need for manpower, which has been so far used by various elite groups (manpower includes here military, police and civilians part of the monopoly of violence of the state; staff includes all other civil servants). For example, the strengthening of cyber threats and the new cyber security field, as Everstate wants to preserve its monopoly of violence, implies that IT specialists and experts that were up until now mainly working for IT multinational groups are now also needed and recruited by the state. Similarly, all military techniques impact the need for manpower of the state. Meanwhile, the capability of the governing bodies to meet this need affects the performance and the size of the army.

Because elite groups seek to protect and increase their power, status and resources, this need for cooperation with the elite has led and is still leading to series of negotiations between Everstate’s government and Parliament on the one hand, and the elite on the other. The result of those negotiations impacts directly the army’s size and performance, the formal bureaucracy of the state, as well as, of course, the various ways to appropriate public power.

Since the 1990s EVT, Everstate has regularly lost to its elite, notably through an extreme form of the phenomenon known as outsourcing. Although, for a state to contract private firms and experts is not a new phenomenon, and is indeed necessary,a delicate balance must be maintained. In Everstate, outsourcing started taking a new dimension during the 1990s. Entire areas directly related to governance are now in the hands of private firms, notably the powerful Everstatan Company Novstate, specialised in strategy and technology consulting. Year after year, Novstate is awarded the same contracts, which end up being seen as almost proprietary, and wins new ones. Yet, a legal bid system to compete for and be awarded public markets exists and is respected. Even the direct security apparatus of Everstate is not anymore fully public, as a few private companies, Everstatan and international, play there an increasingly crucial role, from multi-involvement in the army, which is challenged by its reduced size, to various security functions such as logistics or the screening done at airports.

Everstate’s formal state bureaucracy is powerless to struggle against this new type of appropriation of public power unless it should be seen, as many Everstatans believe as “achieving an efficiency that can only be obtained with private management.”. Indeed, first, this bureaucracy was created and established to face bygone conditions. Then, as it became progressively impacted by outsourcing and as the overall power of the ruling bodies of Everstate weakened, it came to see outsourcing as the norm, even as the sign of a renovated and forward looking bureaucracy. This was even more the case as some of the nation’s representatives, politicians, and political appointees, on the one hand, some of the senior level civil servants, on the other, increasingly often joined those outsourcing companies. By entering this system, they legitimate this extreme form of outsourcing as they are still endowed with the status of their previous position when they make their choice. In this way, those entering the extreme outsourcing system keep their previous status as they continue participating in the country’s governance, while they gain new status, resources and privileges by joining the private sector. As such, they constitute a specific elite group.

Meanwhile, as the same people keep the same functions without allowing for the usual generational change to play its role, entire age classes of younger Everstatans, despite their high level of education are neither incorporated within the political authorities apparatus, nor even, fairly, within the outsourcing one. Volunteering and unpaid internships are promoted and almost the only way new highly educated youth can access to experience and work, even if this increasingly leads only to other internships. As a result, a crucial element of the upward social mobility in Everstate is stalled. In the meantime, the formal modern bureaucracy that had characterized Everstate for so long is nothing else than starting to disappear, even if it keeps its name and pretence.

As renewal and rejuvenation are blocked, outsourcing companies that are also meant to be in touch with new ideas and the evolution of society cannot anymore play this role. How could it be otherwise as Everstatan elite groups that have achieved power are certainly not ready to accept to see any of their privileges diminishing? Any idea that could imply, really or apparently, a loss of relevance would be relenting of the possibility to disappear as elite groups and this, they cannot accept. On the contrary, they are building ever-larger and stronger strongholds based on those resources that gave them, initially, their elite status. For example, Novstate does not only advise governance bodies but also supplies governance services, often in areas where there are also advisors, as it unites in its network of “friends’ companies” – a new business concept derived from social networking – small security firms, quasi armies, high tech start ups, biotech laboratories, etc.

Hence, any new negotiation between the governing bodies and the elite groups is a rush for more appropriation of public power and enlarges the elite groups’ strongholds.

Meanwhile, these struggles for the benefit of exclusive groups just add further pressures on the overall society.

Everstate is in a situation similar to what happened with liquidity, but with different elite groups, even if sometimes connections exist between groups notably through “friends networks.” If the ruler’s power continues to grow weaker than the elite’s power, then the elite will go on appropriating part of public power in a manner that is only hidden by the existing socio-political model and by the way it gets around the still existing norm on the separation between public and private. As a result, the new resources extracted will most likely remain insufficient, with consequences on the state’s infrastructure, on governance and on the army’s size and performance thus on the monopoly of violence of the ruler (the nation, the government and assemblies and the state that assists the former in their tasks), as well as on budget deficit.

Negotiating in such increasingly difficult conditions with elite groups only leads to an appropriation of public property, to a further weakening of the central power and thus to an increased power of elite groups, in a vicious circle. Yet, no other option seems to be available.

As a result, the dissatisfaction of the population increases. The very legitimacy of Everstate’s system has already started suffering. If nothing changes the risks to legitimacy will only increase.

To be continued…

2012 EVT: Public Resources and Lenders (The Chronicles of Everstate)

Posted on February 5, 2012 by Helene Lavoix

Last week’s summary: In 2012 EVT, Everstate (the ideal-type corresponding to our very real countries created to foresee the future of the modern nation-state) sees a mounting discontent of its population because it has become insecure considering the impact of the new still misunderstood conditions. Three related phenomena drive Everstatan political authorities’ incapacity to deliver security. First, Everstate faces a changing set of resources implying an income that is relatively too low while costs and expenditures resulting from accumulated threats and pressures rise inexorably. Added to an Inability to understand the situation and a use of past recipe, this leads to both a chronic and deepening budget deficit and an increasing demand for liquidity. Individually, citizens face the same challenge, which heightens the need for liquidity.

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The need for liquidity and the “lender’s nexus” elite group

The need for liquidity of Everstate on the one hand, and, on the other, the uniformity and interdependence of potential lenders not only within Everstate but also worldwide, resulting in their relative scarcity, gives “the lenders’ nexus” a strong power and elite status. Banks, rating agencies, and various funds as well as those working for them thus find themselves in an immensely strong negotiating position vis-à-vis the ruler, i.e. the people, the nation and its representative government and assemblies.

In turn, this bargaining position allows for a new type of appropriation of public power by this lender elite group: a huge amount of national income, financed through an already insufficient tax income, is transferred to this lender establishment worldwide, including to what is called the shadow banking system, through borrowing – and over borrowing – made on the market whatever the interest rates, payment of those interests, gifts in terms of deregulation and favourable monetary policies, guarantees of protection in case of bankruptcy or more largely whatever the risks taken by those private lenders, favourable tax policies, etc.

Worse still, as the situation deteriorated over the years, with an ever rising need for liquidity, some of the resources of the nation will have to be sold or transferred through long-term lease and various legal means to those who have the necessary liquidity: private elite groups, domestic or foreign, or foreign governments. If such arrangements will hopefully bring short-term relief, on the medium to longer term, they are more than likely to accelerate the vicious circle into which Everstate finds itself: fewer resources (what has been sold or long-leased) may only mean less income later on and thus a need for more liquidity.* Such abandon of national resources also implies a loss of international prestige, which is geopolitically prejudicial. Finally, such arrangements can also be seen as a further appropriation of public property, which will weaken the central power and thus open the door to even more appropriation of public power.

It is not that the Everstatan government and Parliament really want to choose this solution, but what other solutions are available to them?

As for the current strategy of extraction of resources, if the past pattern is to be followed, most of the extraction will have to come from the population. However, as the population is under increasing pressure, it is more than likely that what will be extracted will be insufficient to cover the growing need for income and liquidity. Furthermore, as Everstatans are increasingly dissatisfied, and feel relatively deprived, then it is more than likely that they will resist more taxes by all means, if they do not see their situation improving or to the least stabilising or do not believe such positive evolution is possible.

Most countries that have been in a similar situation before Everstate have adopted this type of policies. As it is a very recent phenomenon, the real impact of such policies cannot truly be evaluated, but Everstate’s governing bodies reason that if this policy has been chosen before, it means that it cannot be that bad.**

Furthermore, from the Everstatan’s governing institutions’ perspective, moving from a public government of the commons to a private management of goods may only be the right solution, as it is in line with the liberal model of socio-political organisation (in its “neo-liberal” – end of the twentieth century, beginning of the twenty-first century – version). Does this model not underline how inefficient the state is compared with the private sector? Has this not been shown times and again, and notably with the collapse of the Soviet Union? Anyway, there is no other model available. Thus, the Everstatan governing bodies feel that they are not only solving temporary problems, but also doing what is truly right for their country and that they should, maybe, have done before.

Considering the expected result of past classical strategies of extraction of resources in the current conditions of needs that stubbornly remain, something else has to be done too: to turn to those who possess what is needed and to ask for their cooperation, i.e. to turn to elite groups. The difficulty is that entering into negotiations with those groups automatically increases their power and their status, which in turn reinforces their elite group status or even, potentially, creates it if it did not exist beforehand. A new episode in the age-old struggle between elite groups and ruler – here as the modern state, the elected governing bodies and the nation – is about to start.

To be continued…

——

* The case of Greece was obviously the inspiration for the narrative of this paragraph, written during Spring 2011. See, for example, Elena Moya, “Greece starts putting island land up for sale to save economy,” The Guardian, 24 June 2010; George Petalotis, Letter to The Guardian, “Greece is not for sale,” The Guardian, 29 June 2010; The Telegraph, “China ‘set to invest billions in debt-stricken Greece’,” 15 June 2010; Press Office of the Embassy of Greece, Washington DC, “Chinese COSCO takes over in Piraeus Port,” 01 October, 2009; Dredging Today, “Greece: COSCO Will Spend US$707 million to Upgrade Piraeus Port Facilities,” 15 July 2010.

** This paragraph also uses the principle of homogeneity of Fred Halliday, Rethinking International Relations, (London: Macmillan, 1994); for more on Fred Halliday’s contribution to international relations and political science, see, Alex Colas and George Lawson, “Fred Halliday: Achievements, Ambivalences, Openings”, Millennium, Vol. 39(2) 2010.

2012 EVT: Budget Deficit and Liquidity (The Chronicles of Everstate)

Posted on January 29, 2012 by Helene Lavoix

Last week’s summary: In 2012 EVT, in Everstate (the ideal-type corresponding to our very real countries created to foresee the future of the modern nation-state), people seek security as they increasingly feel the negative impact of various pressures and threats on their life. Henceforth they turn to their political authorities and even start trying to compel them to provide this security. Through those actions, Everstatans start to remember that, as part of the nation, they are also rulers of Everstate. Yet, the situation is growing worse because the tasks of governance have grown more complex while the governing system and the polity are not yet adapted to the new conditions.

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Deepening budget deficit and increasing need for liquidity

The first phenomenon driving Everstatan political authorities’ incapacity to deliver security is a deepening budget deficit and an increasing need for liquidity.

The resources that participate into obtaining the income necessary to govern have started being impacted by the novel threats and by the evolution in general a few years ago. However, this change happened unnoticed by most and is still largely ignored as new pressures are yet to be recognised. In general, the focus of awareness is on forthcoming so-called resource wars*, generated by the probable end of cheap abundance that is likely to affect natural resources such as water, oil or minerals, and the scrambling for components in new substitutes such as rare-earth elements.

Yet, the problem is more complex and also far worse. Some of the resources that used to generate income in the past have dwindled. For example, when Everstatan industries delocalised, related income disappeared. Meanwhile, changes impacting other resources on the one hand, and the emergence of new resources on the other are not yet integrated within the public framework. All affect income.

Governing bodies should be on the watch and receive adequate warnings regarding the need to take in-depth actions.

However, the resources extracted from the polity that have usually generated income are taxes levied mostly on the population, through taxes on personal income and social contributions (direct taxes) or through taxes on consumption (indirect taxes). Hence, the negative impact on resources could not and cannot be directly and immediately felt, and thus goes unconsidered. It is mediated by time and by economic activity as well as by impact of the general evolution of society on the wealth and consumption behaviour of people.

Yet, as new pressures pile, most of them without any awareness and thus unattended, while resources and ecological conditions evolve, an increasingly larger impact on the resources of the nation is to be expected, unforeseen, thus unmonitored and, consequently, without any kind of planning to face it. Very real consequences on the nation’s income, even if they are delayed, are in the making.

Meanwhile, the simple fact to try to make sense of some of the new pressures, those that are already perceived, comes with a cost. To fight constantly against such new military threats as terrorism or such unconventional dangers as cyber-threats uses a lot of the available resources and related income.

The increasingly numerous extreme weather events that are occurring, if they are not always evaluated in such a way, also takes its toll on resources: damages imply a net loss of wealth, while most events such as floods, tempests, or snowstorms immobilise economic activity. The accumulation of those localised and sometimes hardly noticed events has a direct domestic cost that increases expenditures, while it diminishes income and sometimes reduces resources.** Furthermore, when natural catastrophes and extreme weather events hit other countries, Everstate is also impacted through aid and various contributions, lowered trade, potential global ecological impact of disasters and levy on citizens’ savings (which then become unavailable for domestic borrowing, investment or consumption), with further consequences as reduced contribution to taxes.

Everstate is thus faced with a relative (compared with what would have been, had those changes and evolutions not taken place) lowered income, while more resources to face rising expenditures are necessary and increasingly more so, when those new and rising pressures also mean that the task of governing has become harder, which too has a cost, at least initially.

The nation and its governing bodies thus imperatively need to find new resources and income, as well as related new staff, which increases state’s expenditures, which in turn will increase the need for new resources and then income, until a new balance, adapted to the current and foreseeable future conditions, is found.

Solely keeping the system running as in the past is counterproductive because this directly and immediately impacts governance, lowering its efficiency. Being unable to understand what is happening and thus to find the necessary new resources and income means that a satisfactory way to plan for the increasing tasks involved by governance cannot be achieved. This, too, lowers the overall efficiency. As a result, the security that Everstatans seek cannot be ensured. Furthermore, the system is increasingly unable to do so.

Be it perceived and understood or not, this need for new resources and income is very real and upon Everstate. It implies that cash or liquid assets are demanded by Everstate’s governing bodies. First, they have to pay to face all the pressures identified, to assume impacts’ costs when pressures are not identified, and to finance the usual tasks of governing, when Everstate’s income is insufficient as new resources and income have not yet been found. A new adapted strategy of extraction of resources (for the income of governing bodies) would reduce the need for liquidity, but it has yet to be designed.

In Everstate, as in many other countries, this situation has lasted for quite a while already. However, Everstate’s government and Parliament have dealt with it as if nothing new had happened. They thus used past recipes. As a result, the budget deficit has become chronic. In turn, as deficit is now regularly bridged by debt, on the one hand the cost of the debt further increases the deficit, while the need to borrow further heightens the need for liquidity.

Meanwhile, Everstatans’ quest for security in those gradually more difficult conditions also contributes to increase the demand for liquidity as people still need the now lacking or diminishing resources. Thus, the demand for those resources does not recede. On the contrary, for some of them, it increases as usage of those resources is fully integrated within the developed way of life of Everstatans and its expected improvement. For example, some of those resources have to come from further way or, when possible, have to be created or transformed out of other resources, which implies a further demand for liquidity. This situation also contributes to intensify the demand for understanding and meaning, as Everstatans, as any human beings, need to make sense of their perceived new hardship, so contrary to the promises of the materialistic normative order in which they have lived all their lives.

To be continued…

* See, among others, Michael T. Klare, Resource wars: the new landscape of global conflict, Henry Holt, 2002.

** See, for example, Holly Riebeek, “The rising cost of natural hazards,” Nasa Earth Observatory, March 28, 2006, accessed April 14, 2011; Munich RE NatCatSERVICE: Natural Catastrophes in 2010, 2011, Geo Risks Research, NatCatSERVICE ; and corresponding press release, accessed April 14, 2011.

	United States	35 %
	France	22 %
	United Kingdom	7 %
	Canada	6 %
	India	2 %
	Australia	2 %
	Germany	2 %
	Spain	2 %
	Netherlands	1 %
	Italy	1 %
	Romania	1 %
	Switzerland	1 %
	Sweden	1 %
	Ireland	1 %

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Red (team) Analysis

Strategic Foresight & Warning, Anticipatory Intelligence, Political Risk Assessment

Category Archives: Everstate’s future: 2012 EVT

2012-2013 EVT – Restoring Growth (Panglossy)

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2012-2013 EVT – Implementing the Mamominarch conclusions

Implementing the Mamominarch policies

Methodological and research note

Working backward with ego networks

Further research

2012 EVT – Scenario 1 – Mamominarch: Off with the State

The Mamominarch Commission