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, in a first scenario, Everstate’s governing bodies have transformed the conclusions of the Mamominarch Commission into policies. They have thus started implementing the programme of drastic reduction of public expenses through privatization and outsourcing, transfer of responsibilities to local administrations and increased reliance on The Regional Union, accompanied by a temporary increase in income and consumption taxes. The first months of reforms have been successful and the situation appears to improve.
(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 – research note at the bottom of the post).
Everstate’s capacity to reimburse its debt should also come from a positive current account, fed, in part, by a positive trade balance, aggregating results in trade of services and trade of goods.
Trade balance (1)
Initially, the well-educated population and the disappearance of many positions of civil servants leads to an abundance of expert personnel. Through Novstate and its friends companies, benefiting from the positive perception the reforms undertaken in Everstate generate, the export of services skyrockets.
However, with time, it is becoming increasingly difficult to send children to school. The provinces have now to manage the education system alone or with the private sector, and the latter sees no immediate interest in funding primary or high schools. Private schooling becomes the norm, and weights heavily on the budget of the less well-off.
If the best-known universities find some funding with the new inflow of capital, this is restricted to specific branches, namely finance, economics, some areas of politics, war strategy and tactics thanks to Novstate, IT and some technologies of direct interest to the companies having invested in Everstate. As a result, research greatly suffers. To compensate the absence of public funding, universities triple their fees and only the most fortunate families can now send their children to universities. Scholarships almost disappear. The banks are not interested anymore in lending to students as the benefits are too small and as students, most often, have no guarantor. Local administrations send reports on this dreadful evolution to Everstate’s national representatives and to the central government, but the latter can only try to compensate through its yearly orientation paper, which has close to no effect as it is not assorted of any possibility of action. Hence, the number of well-educated and internationally competitive Everstatans rapidly dwindles. Furthermore, those who could receive graduate and post-graduate education are trained exclusively in those approaches at one with the Mamominarch system. Hence, as time goes by, if ever the Mamominarch system is not proving to be the ideal solution expected, will they still be considered as adequate?
After the first months of euphoria and hope following the implementation of the Mamominarch policies, the educated youth finds itself in the same conundrum as previously, but with even less prospects. If new qualified jobs are created by the foreign and domestic companies investing in Everstate and by the new outsourcing contracts, those are given in priority to ex civil servants and to foreigners. As a result, already by the second half of 2013 EVT, except in the IT sector focused on online shopping and electronic payments, most young graduates and post graduates find themselves still unemployed or under-employed, taking whatever jobs they find in tourism or industry. At the beginning of the period, those with the best academic records, and who can afford it, try to migrate, but, considering the still uncertain global situation, few succeed. By 2018 EVT, the relative position of the Everstatan educative system is such that, added to the failure of their elders to escape, hardly any smart young Everstatan still tries migrating.
As far as the export (and import) of goods is concerned, those depends not only on human skills and workforce but also on available resources. Now, as seen, with the exception of the tourism industry, Everstate has to face domestic shortage or sharp increase in prices (stemming among other causes of a relative decline in supply) for the resources it used to transform and to include in the goods it exports.
Furthermore, many of those resources – classical and new – needed by Everstatan producers are not located on Everstatan territory. For example, for many high-tech companies, rare earth elements are a crucial industrial component.* However, those rare earth deposits are not present everywhere and in the same quantity, China being, currently, the lead producer.
This new condition regarding resources, as explained previously, should imply increasing tasks in governing, which, themselves, demand new resources and income for the ruler and its staff (including the need for new staff). This, in turn, would mean further and new state spending, at least until the system is stabilised. However, as supplementary state expenditures are ruled out by the Mamominarch system, then the search for new resources and income cannot even be thought and thus novel strategies of extraction of resources can even less be identified. Thus, the increasing tasks of governing can be neither planned nor carried out. Worse still, the dismantling of so many services of the state makes it impossible to monitor, record and analyse what is happening.
As, worldwide, so many industries are competing for the same resources, national policies and negotiations are more than helpful, they are necessary. However, in Everstate, businesses cannot anymore benefit from such support and each company with supply problems must fend for itself. Each is now alone to find solutions, or it must turn to the Regional Union or to International institutions or try to find other private allies, which, in a world of hardened competition, may be hazardous. Meanwhile, other companies from other countries do benefit from their government’s support. Everstatans businesses thus find themselves at a competitive disadvantage. Indeed, relatively quickly, the young Everstatan industries dealing with those materials involving rare earth elements, for example, lose to competition. Either they go bankrupt or, when their technology is interesting, they are bought by foreign companies, which then re-localise according to their own priorities. By 2018 EVT, no Everstatan industry involving rare earth elements remain.
The situation regarding energy is similar, however with even worse consequences… to be continued.
* Among others, for interesting estimates on the whole rare earth element market, see the analyses made by the South African company frontier Rare Earth, as well as their sources. For an example of use, see articles on the electric car and corresponding batteries (although the importance and scarcity of Lithium for Lithium-ion batteries is disputed) e.g. David Biello, “New Energy-Dense Battery Could Enable Long-Distance Electric Cars: Material changes enable a new battery to store more electricity–and could boost the driving range of electric vehicles,” Scientific American, February 27, 2012; Shane McGlaun, “Science Researchers Create Fluoride Battery, Look to Replace Lithium-ion Technology,” Daily Tech (Blog), October 24, 2011.
As underlined in the previous post, ideally, with more resources, notably a team of researchers and adequate computing facilities, the values attributed to variables should be quantified, when the variables are about quantities. 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 hypotheses could also be tested on qualitative variables, methodology to be defined.