Tag Archives: security

2013 – 2018 EVT – Novstate-Air: Fighting Air Pollution for Profit (Panglossy)

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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, which begins the second scenario, Panglossy. The new Everstatan government, dependent upon past thinking, decides that a return to economic efficiency through growth is the key to the crisis. Its first measure, to raise the minimum wage, fails to boost growth through consumption. As the new international meeting group for the resilience of the financial system IRESFIS does not show any progress, the ISSIGE, the international fund to promote green growth through infrastructure investment contributes to reinforce the power of the lenders’ nexus and appropriation of public power. Moreover, its results are disappointing: selected projects are insufficient to catch up on late investments, and their impact is too small to bring back growth, to show a change towards sustainability, and to alleviate unemployment. Remains one hope, now vested in the ISSIGE flagship project on air quality.

(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.)

Global but unequal fight against air pollution

Air quality is crucial in terms of health and related costs, and a complex challenge as its pollution involves many chemical elements.

Despite efforts, notably within many OECD countries, to struggle against air pollution, air quality remains a severe global problem, all the more so that pollutants travel. Furthermore, much still needs to be done to fully understand the problem and to devise solutions, as detailed by the EPA for black carbon in its chapter on research needs. For example, synthesised global data are still difficult to gather. The array of means used to improve the collection of information, from sensors to satellite image, as exemplified on the US Air Quality: The Smog Blog, and to provide citizens with adequate daily measures and warning on all types of pollutants, as shown for example by the Daily Air Quality Index in the UK, exists, most of the time, only in OECD countries.

In Everstate, as in its neighbouring countries, the fight for air quality must continue and even be reinforced if more and better results are to be observed, especially as pollution does not diminish in other parts of the world, notably in Asia. This is the overall framework for the ISSIGE flagship programme.

The creation of Novstate-Air

Novstate creates a special structure to answer the proposal, called Novstate-Air. It gathers in a friends network covering Everstate and its neighbours, various industries, universities, research laboratories and health institutions, which are all involved at one stage or another in air pollution and air quality, either because their activity and products are potential sources of emissions, because they participate in the design, implementation or monitoring of sensors and models, or because their research or practice is linked to air pollution or to its impact on health.

In early 2014 EVT, Novstate-Air is awarded the ISSIGE contract and the funds. Besides the breadth of the answer, allowed by the variety and number of stakeholders, which thus fits perfectly well the framework programme, the originality of the financial proposal is what determines the ISSIGE to grant the contract to Novstate through Novstate-Air.

Financial boldness rewarded

Novstate-Air underlines first that what stops companies’ efforts towards air quality are the added costs to their products that changes and investments would create, when benefits would not only be delayed but also spread throughout a population that may or may not belong to their clients. Then, it stresses that if the overall effort were to be supported by the state, then the public deficit would increase in the short-term, while benefits, notably in terms of heightened health security and diminished related visible and hidden costs, would only appear in the longer term. Furthermore, it would be difficult to establish a direct link between investments and benefits, which may be unfavourable in terms of promotion and communication.

Novstate-Air thus suggests, to overcome this conundrum, to ask citizens, who are the final beneficiaries, to become directly involved in the effort by paying regularly a small contribution towards air quality. Looking for an analogy, Novstate-Air decides to mimic the way water is delivered and sold to citizens, but adapted to the specificity of air. The alternative was the creation of an indirect air tax, as indirect taxes are a perfect way to collect taxes without creating resentment. The air contribution is chosen over the tax because it allows for the monetization of the service as well as for profits, thus to the involvement of the private sector, which should contribute to growth and economic sustainability, two specific requirements of the ISSIGE.

Monetizing air quality

by William Adams, How Much Air Do We Breathe?

Novstate-Air, working hand in hand with local administrations will make sure the contribution is calculated fairly, while the data gathered to establish the amount owed by each citizen can be used for research purpose. To mimic at best the water system, Novstate-Air decides to estimate the amount of air breathed by each citizens, according to a specific survey of their activities. This quantity will be revised every trimester. Further research in this field will be conducted to confirm previous findings according to age and gender. Finally, the air contribution will be calculated according to the liters of air used by each family during one trimester. The contributions will be used to finance research, update sensors and all monitoring activities and to help private companies improve their emissions. In the name of transparency, activities and achievements will be given to each family, emphasising notably the improvement of air quality in their environment and the impact on their health.

Thou shalt be surprised…

By 2015, Novstate-Air is able to provide citizens with a preliminary factsheet on the status of their air quality, to start gathering data and, thanks to the use of internet-based facilities, to almost immediately collect contributions nationwide.

Novstate-Air and its network of associated bodies, the ISSIGE and Everstate’s government expect a strong positive reaction. They are thus extremely surprised when, on the contrary, a wave of outrage sweeps over the country, supported by Occupy Everstate, Anonymous, and various unions.

To be continued…

References

Adams, William C., Research Note 94-11: Topic = How Much Air Do We Breathe? California Environmental Protection Agency, 1994.

Dupré, Franck, “Pollution : le diesel, un danger mortel ?” Autonews.fr, 29 Mars 2012.

Durden, Tyler, The Benefits Of A College Education, Zerohedge, 05/21/2012, from Jed Graham, New Normal: Majority Of Unemployed Attended College, IBD, 05/17/2012.

EPA, Black Carbon Report to Congress, March 2012.

European Environment Agency, Chapter 4. Nitrogen emissions and threats to biodiversity, Environmental indicator report 2012 – Ecosystem resilience and resource efficiency in a green economy in Europe, Part 2. 2012.

Janssen, Nicole AH, Miriam E Gerlofs-Nijland, Timo Lanki, Raimo O Salonen, Flemming Cassee, Gerard Hoek, Paul Fischer, Bert Brunekreef, Michal Krzyzanowski, Health effects of black carbon, WHO, 2012.

Lehner, Peter, of the NRDC, Diesel Exhaust Does Cause Cancer, CleanTechnica.com, June 12, 2012.

The Guardian, Global air pollution: what is the most polluted country and city in the world? (WHO data), 26 Septembre 2011.

US Air Quality: The Smog Blog.

WHO, Air quality and health, Fact sheet N°313, Updated September 2011.

2013 – 2018 EVT – Green Growth in Action (Panglossy)

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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, which begins the second scenario, Panglossy. The new Everstatan government, dependent upon past thinking, decides that a return to economic efficiency through growth is the key to the crisis. Its first measure, to raise the minimum wage, fails to boost growth through consumption. The first high level conference of the ISSIGE, the international fund to promote green growth through infrastructure investment, is hailed as a success. However, as the new international meeting group for the resilience of the financial system IRESFIS does not show any progress, the ISSIGE, in such conditions, also contributes to reinforce the power of the lenders’ nexus and appropriation of public power.

(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 Everstatan delegates and members of the ISSIGE are conscious that its success is crucial. The highly unstable situation demands it. They thus start immediately working on the various framework projects’ proposals and their selection. Three more months, which is considered as a very short time-frame in a multinational governmental setting, are needed before the selected projects are publicised to allow companies to bid for them. The project themselves are due to start at the beginning of 2014 EVT, latest.

Meanwhile, the overall situation of Everstatans continue to degrade slowly. Every month now, one or the other area of Everstate is marred by some unusual climatic event. Those, however, are very localised and damages are relatively small. The overall world growth is minimal while energy and resources prices remain very volatile, contributing to a mood in see-saw. As a result, food prices continue to soar. Everstate’s public deficit remains as high as previously, and even rises as interests grow and as more borrowing is needed. The lenders’ nexus profits skyrocket. Many small companies that constitute the productive fabric of Everstate suffer from this environment and either stagnate or are forced to close down. On the contrary, a few well-connected companies, such as Novstate and its friends businesses, continue to be highly profitable, even though they complain that their rate of growth starts to be slow compared with the past. It is very high time that the overall boost expected from the ISSIGE takes place.

Considering the number of countries that are part of the ISSIGE and the relatively small amount of the overall bonds issued to fund them, the infrastructure investments that will take place on Everstate’s territory are few and far between. The very caution used, as this first year of funding must be considered as a test-case, tends to be self-defeating because of the considerable needs faced. The selected projects are not only insufficient in terms of catching up on late investments, but also their impact is too small to bring back growth, as well as to alleviate unemployment.*

WPA road project, Franklin D. Roosevelt Presidential Library and Museum, via Wikimedia CommonsCompared with the past, infrastructure projects are not anymore labour intensive. They are, however, knowledge intensive. Thus, considering the deficit of proper and fair treatment to the Everstatan educated population (see inequality statistics; Zerohedge, 05/21/2012 using Graham, IBD, 2012), the idea of promoting green growth investment, if set and re-imagined within a new socio-political model, might well be a way forward. Here, unfortunately, Everstate tries getting past-style results, when those cannot anymore be delivered.

Nevertheless, one of the infrastructure projects selected for Everstate is elected as ISSIGE flagship infrastructure programme for its deeply innovative character, the breadth of its environmental scope and its crucial character: Air Quality. Could this, at least, herald something really new and forward looking that could continue fostering hope among Everstatans, if overall general results are insufficient?

Starting most probably with the industrial revolution, air quality has degraded globally, notably in cities, but not only. Since its first report warning about those risks in 1987, the World Health Organisation has published its Air quality guidelines – global update 2005. In 2011, it underlines that

“Air pollution is a major environmental risk to health. By reducing air pollution levels, we can help countries reduce the global burden of disease from respiratory infections, heart disease, and lung cancer… Urban outdoor air pollution is estimated to cause 1.3 million deaths worldwide per year. Those living in middle-income countries disproportionately experience this burden…. The mortality in cities with high levels of pollution exceeds that observed in relatively cleaner cities by 15–20%. Even in the EU, average life expectancy is 8.6 months lower due to exposure to PM2.5 produced by human activities. ” (WHO, Air quality and health, Fact sheet N°313).

Among the pollutants singled out by the WHO, one finds notably: particulate matter (PM), ozone (O3), nitrogen dioxide (NO2) and sulfur dioxide (SO2). PM, includes PM2.5, also known as black carbon, which comes, among others, from diesel engines and vehicles, and contributes to both diseases – including cancer for diesel – and climate change (Janssen, et al. 2012, EPA, 2012). NOx contributes to various diseases and acid rain, which impacts negatively freshwater, forests and crops, and, more generally, biodiversity (EEA, 2012). The screenshot below of the excellent interactive and explanatory display done for the French ADEME (Agence de l’Environnement et de la Maîtrise de l’Energie)  summarizes the complexity of the challenge Everstate as all countries face (click on the image to access the interactive application – in French but the visual part can be understood in any language – PM are included in “aerosols“):

To be continued…

* Read on investment and more generally on growth in current conditions the excellent article by Michael Spence, Nobel laureate in economics, “Why Do Economies Stop Growing?” Project Syndicate, May 23, 2012.

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References

Dupré, Franck,  “Pollution : le diesel, un danger mortel ?” Autonews.fr, 29 Mars 2012.

Durden, Tyler, The Benefits Of A College Education, Zerohedge, 05/21/2012, from Jed Graham, New Normal: Majority Of Unemployed Attended College, IBD, 05/17/2012.

EPA, Black Carbon Report to Congress, March 2012.

European Environment Agency, Chapter 4. Nitrogen emissions and threats to biodiversity, Environmental indicator report 2012 – Ecosystem resilience and resource efficiency in a green economy in Europe, Part 2. 2012.

Janssen, Nicole AH, Miriam E Gerlofs-Nijland, Timo Lanki, Raimo O Salonen, Flemming Cassee, Gerard Hoek, Paul Fischer, Bert Brunekreef, Michal Krzyzanowski, Health effects of black carbon, WHO, 2012.

Lehner, Peter,  of the NRDC, Diesel Exhaust Does Cause Cancer, CleanTechnica.com, June 12, 2012.

The Guardian, Global air pollution: what is the most polluted country and city in the world? (WHO data), 26 Septembre 2011.

WHO, Air quality and health, Fact sheet N°313, Updated September 2011.

Images

WPA road project, Franklin D. Roosevelt Presidential Library and Museum, via Wikimedia Commons.

CNES-CNRS/INSU-MEN, Les polluants de l’air extérieur, Agence de l’Environnement et de la Maîtrise de l’Energie, 2009.

2013 – 2018 EVT – Investing for Green Growth without Liquidity (2) (Panglossy)

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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, which starts the second scenario, Panglossy. The new Everstatan government, dependent upon past thinking, decides that a return to economic efficiency through growth is the key to the crisis. Its first measure, to raise the minimum wage, fails to boost growth through consumption. The second, longer term, policy, which promotes green growth through infrastructure investment, starts with the preparation of the first high level conference of ISSIGE. Notably, funding through the emission of bonds, which should promote a lever effect by involvement of the private sector, is decided. The new international meeting group for the resilience of the financial system IRESFIS also convenes, but with no progress as the lenders’ nexus is as strong as ever.

(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.)

Actually, the lenders’ nexus has even seen its position reinforced. The ISSIGE, by deciding to issue bonds, which go through the private banking system, and by hoping for leverage, has reinforced the dependency of the nation-states and its governing bodies upon the lenders’ nexus as well as upon any private actor with liquidity. The political weight that is put on the ISSIGE success, notably because it has been framed in terms of growth, which is crucial according to the past worldview, on the one hand, and, on the other, because of the global increasingly urgent need for investment, further strengthens the immediate power of the lenders’ nexus.

However, a large part of the investment deficit has been and is created by companies and lenders that have been seeing more (short-term) profit in not investing than in investing for years. This perception of the profits private companies and lenders could get – the return on investment – affects the perception of risks. It thus, most probably, contributes to lead private actors to ask the public (i.e. the nation-state) to bear the cost of all risks attached to green growth investment, from “where returns cannot be monetized or appropriated by the investor” to “risks that are more perceived than real, e.g. demonstration of a proven technology” (Global Green Growth Forum, March 2012, p.2). Actually, considering the overall investment deficit, it seems that it is not only green growth investments that are concerned.

Furthermore, all actors evolve within a paradigm that enounces that the private sector is best and knows best how to run everything and to provide for any goods and services. This favours the idea (even if it is never couched in such crude terms) that, if the private sector must contribute to invest, then it can do so only by obtaining the same high profit rates it could get by placing its cash surplus – the liquidity – elsewhere, i.e. notably in the bubbles of the financial market. It is thus up to nation-states to pay for the difference. Again, this leads to a blatant appropriation of public wealth and power.

Considering the existing public deficit, the private ownership of the related debts, the prevalent worldview and the various ideological and material stakes to keep it, there is, however, no other solution. To find another way would demand that at least one of the prevalent conditions change, so as to rebalance the negotiating power of actors (see, for a detailed explanation, “The powerful Everstatan elite under threat?” in Everstate, setting the stage (2) and 2012 EVT: Public Resources and Lenders).

Once the ISSIGE funding process is set up, the ISSIGE summit may take place. In a nutshell, the criteria the framework projects’ proposals will have to meet are as follows:

Arbutus menziesii immature fruit by Jina Lee GFDL or CC-BY-SA-3.0, via Wikimedia Commons

  • transboundary projects involving at least two countries,
  • fostering economic growth,
  • innovative,
  • green projects that are environmentally and economically sustainable,
  • improving or creating infrastructures that provide a service and/or allow overcoming identified and felt environmental threats.

Once the framework projects are selected, then a usual legal bid system to compete for and be awarded public markets will be used. Legally, the system of the countries where the project will be implemented can be used indifferently. The delegates, once the summit ends, have six months to define framework projects proposals. Some of those proposals will then be chosen by the network of delegates and become the ISSIGE framework projects for the year. The network will make sure that each member country receives the same value in terms of funding of projects.

The summit is considered a success by the various member states. The very identification and presence of the delegates, on the one hand, having been able to agree upon and set up the process, on the other, are seen as the very first achievement of ISSIGE. A strong communication campaign is organised around this theme.

Yet, in terms of everyday life, for Everstate citizens, there is no improvement whatsoever, besides the efforts of the various administrations they witness. On the contrary, the situation appears to grow worse, slowly and inexorably. The administrative time, notably when it involves the coordination linked to multinational governance, seems to be increasingly disconnected from and ill-suited to a real world where problems follow their own dynamics.

Because of the transparency surrounding the process that allows for proper information, because citizens know that green investments are crucial, while being aware of the complexity of the task and finally because Everstatans hope for a direct improvement in their lives once the projects start, as has been promised, they bear with their rising hardship and fear.

To be continued…

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References

For real life discussions on green growth investment & financing, as well as on investment deficit:

3GF, Global Green Growth Forum, FINANCING Preparatory Strategy Meeting, 26-27 March 2012.

Caranci, Beata  & Chris Jones, “Milking America’s Cash Cow: The Case For Stronger Investment Growth,”  Special Report, TD Economics, May 25, 2012.

Climate Policy Initiative and the World Bank Group in collaboration with China Light & Power and the Organization for Economic Co-operation and Development, Inaugural Meeting of the San Giorgio Group: Expanding Green, Low-Emissions Finance, October 2011.

Euractiv.com, “‘Project bonds’ launched as an experiment,” 23 May 2012.

European Commission, Europe 2020 Project Bond Initiative, Investment needs, last updated 19/10/2011.

Hutton, Will  Companies must stop hoarding cash and start investing instead, The Observer The Guardian, 19 February 2012.

Klein, Ezra, America’s capital investment deficit, Washington Post, December 31, 2010.

Pan European Networks, “‘Project bond’ plan approved by diplomats,” 22 May 2012.

World Economic Forum, Financing Green Growth in a Resource-constrained World Partnerships for Triggering Private Finance at Scale, 2012.

Zarroli, Jim,  Companies Sit On Cash; Reluctant To Invest, Hire, August 17, 2011, NPR.

Zenghelis, Dimitri, “Restoring growth and confidence through green innovation,” E!Sharp, June 2012.

2013 – 2018 EVT – Investing for Green Growth without Liquidity (I) (Panglossy)

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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, which starts the second scenario, Panglossy. Dependent upon programmes created to face efficiently past challenges, prisoners of entrenched political groupings, the major parties campaign to come back to the order ante. Meanwhile, the polarisation and rise of a new opposition that took place during the election is temporarily frozen by the last hope thus created. The new Everstatan government, dependent upon past thinking, decides that a return to economic efficiency through growth is the key to the crisis. Its first measure, to raise the minimum wage, fails to bring back the expected result, to boost growth through consumption and thus to restart the engine.

(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.)

As the first measure fails to boost growth, then the income of Everstate remains in the pitiful state into which it was before the elections. It even continues degrading as pressures and related costs do not relent. Meanwhile, as the need for liquidity does not stop, power remains in the hand of the lenders’ nexus.  Yet, the failure of the government is only about the first measure. Two longer term policies are meant to address those very problems that have contributed to derail the whole system: the pressures related to the increasing complexity of resources, including looming scarcity, relative and absolute, through ISSIGE, and the problem of liquidity through the new international meeting group for the resilience of the financial system (IRESFIS).

Those two policies show that, even if they are included under a label, “restoring economic growth,” that is still part of the outmoded worldview, some awareness of the real problems besetting Everstate has started to take place.

ISSIGE will convene its first high level meeting in Everstate’s capital, six months after the elections, to allow for the organisation, for the presentation of first recommendations and to make sure that it will be able to announce the amount of the overall fund. It is imperative that firm and consensually accepted recommendations follow from this conference, considering the urgency of the situation. Heads of governments of the various member-states will be present to show the high level commitment given to the project. Several hundreds delegates of all the countries involved will be present. They will constitute the ISSIGE network, backbone of the effort.

Each delegation prepares a draft determining the criteria for the framework projects they will have to propose in the years to come, the process according to which those framework projects will be selected and, finally, how those projects will be implemented, by whom, with which supervision, etc. Those drafts are, of course, widely shared, read, and amended among delegates over the six months preceding the conference. In this way, no surprise and no intractable dispute will occur during the conference. Considering the administrative work load those exchanges require, and considering the high level profile of the delegates, substantial emoluments are paid to those delegates who are not civil servants, while those civil servants who are now working full-time for ISSIGE within their mother administration are promoted to the rank of Director with corresponding salary increase.

In a wish to promote transparency and show Everstatan citizens the real and genuine efforts and progress of the new government, drafts, exchanges and discussions are precisely documented and uploaded on a dedicated ISSIGE website. Furthermore, a special platform opened to citizens is created, where Everstatans can give their input. This effort is quickly followed by other countries.

More difficult, ISSIGE must also find a way to fund the projects themselves, and decide upon a global amount. Considering the public deficit existing in most countries, the ISSIGE network, the governments and administrations behind them decide that the various members and the Regional Union will issue bonds to fund the projects, which should also, hopefully, promote private investment. The overall amount for the first year is set at EVC (Everstate Currency) 250 millions. ISSIGE hopes that a lever effect will apply and that the overall value of the projects thus funded will be much higher.*

This is a very small amount considering the global current needs existing in terms of investments. According to the Global Green Growth Forum using 2010 IEA estimates, “by 2050 US$ 1.2 billion additional annual investments just in energy supply and use are needed to avoid a temperature increase beyond 2°C.” Meanwhile, the economy needs in terms of investments “for transport, energy and information and communication technologies (ICT) infrastructure projects in Europe are estimated at €1.5 trillion for 2010-2020″ (Euractiv.com, 23 May 2012). According to the European Commission, “infrastructure investment needs” “are estimated to be of EUR 1.5 trillion to EUR 2 trillion to meet the policy goals of the Europe 2020 Strategy for smart, sustainable and inclusive growth.” However, this first ISSIGE funding is a start.

Meanwhile, the IRESFIS meets a couple of times, but each player camps on its position, and no progress is made. Those, which include Everstate’s government, who want more regulation, are immediately countered by most financial actors, who oppose it, as well as by some governments, who believe that more regulations will hamper financial transactions and thus diminish the power of their countries as financial centres.

As the income of the nation-state continues to be insufficient, the bargaining position of the lenders’ nexus is as strong as ever. It is even stronger because of the ISSIGE needs… to be continued.

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References

For real life discussions on green growth investment & financing, as well as on investment deficit:

3GF, Global Green Growth Forum, FINANCING Preparatory Strategy Meeting, 26-27 March 2012;

Caranci, Beata  & Chris Jones, “Milking America’s Cash Cow: The Case For Stronger Investment Growth,”  Special Report, TD Economics, May 25, 2012.

Climate Policy Initiative and the World Bank Group in collaboration with China Light & Power and the Organization for Economic Co-operation and Development, Inaugural Meeting of the San Giorgio Group: Expanding Green, Low-Emissions Finance, October 2011.

Euractiv.com, “‘Project bonds’ launched as an experiment,” 23 May 2012,

European Commission, Europe 2020 Project Bond Initiative, Investment needs, last updated 19/10/2011.

Hutton, Will  Companies must stop hoarding cash and start investing instead, The Observer The Guardian, 19 February 2012.

Klein, Ezra, America’s capital investment deficit, Washington Post, December 31, 2010.

OECD, Infrastructure to 2030, Vol.2, 2007.

Pan European Networks, “‘Project bond’ plan approved by diplomats,” 22 May 2012;

World Economic Forum, Financing Green Growth in a Resource-constrained World Partnerships for Triggering Private Finance at Scale, 2012;

Zarroli, Jim,  Companies Sit On Cash; Reluctant To Invest, Hire, August 17, 2011, NPR.

Zenghelis, Dimitri, “Restoring growth and confidence through green innovation,” E!Sharp, June 2012.

2013 – 2018 EVT – Increasing wages: not enough, too late? (Panglossy)

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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, which starts the second scenario, Panglossy. Dependent upon programmes created to face efficiently past challenges, prisoners of entrenched political groupings, the major parties campaign to come back to the order ante. Meanwhile, the polarisation and rise of a new opposition that took place during the election is temporarily frozen by the last hope thus created. The new Everstatan government decides that a return to economic efficiency through growth is the key to the crisis. It chooses and starts implementing specific policies. 

(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 before the references).

The logic underlying what presides to the level of satisfaction of Everstate’s population, or to any population for that matter, does not change according to the decisions of a government. Everstatans will assess the security that their government provides through the lenses of their expectations, of their constructed beliefs, considering all the pressures, present and anticipated, to which they are subjected and that impact, directly or indirectly their lives (for more details, see the whole series of post on 2012 EVT, starting with Rising Discontent).

All those pressures lead people to seek a security that becomes increasingly more difficult to achieve, which implies that the task of governing for any government becomes more complex, more demanding. Besides, the new pressures also directly affect the way to govern, contributing to make the task of governing even more difficult.

Meanwhile, the newly elected Everstatan government chose to focus all its policies on restoring growth, which means, in its eyes, the efficiency of the economy. The increase of the minimal wage, to start with, definitely gives a short breathing time to those Everstatans who are paid through wages.

However, it changes nothing to the anxiety and low-income created by imposed temporary employment and economic short-term employment, or to the fear to be laid off and only find back mini jobs, as is increasingly common in Germany.  It does not either impact this unknown share of the population who finds work only in unpaid jobs, such as the voluntary sector, internship, or the virtual “gift economy,” or in jobs where it is less paid than it should (wage dumping – Der Spiegel 2012).

Considering self-employed and temporary employment, rather than only full-time employment is indeed crucial. The OECD underlined this point in its December 2011 report (see figure below): when self-employed and part-time workers are included in statistics, the inequality rises. It is likely that if unpaid work were considered, inequalities would be even stronger.

OECD - Levels of earnings inequality are much higher when part-timers and self-employed are accounted for

,

As young people are most often in those unfortunate categories, underpaid and under-recognised, their parents, worried, are more inclined to spare than to consume.

Other factors play in favour of cautiousness for Everstatans. The price of oil remains volatile and relatively high and with it the price of electricity. In turn, this has an impact on the general cost of resources, of trade and thus of manufactured goods.Besides, the price of most natural resources is increasing, be it because supply is reduced, because extraction costs increase, because demand rises, or because of a combination of those three factors.

Even more worrying, nothing has changed compared with 2012 EVT as far as food is concerned and food is increasingly expensive.

Real hourly minimum wages OECD countries (top line Estonia) – Online OECD Employment database

Media, concerned scholars, advocacy groups and social networks all relate, document, and monitor the rising price of all resources, and the inevitability of this trend. Thus citizens anticipate more and worse increases.

As the rise of the minimum wage is not as high as the past increase of prices for the products bought most commonly and frequently (which is very different from the inflation indices that include other types of goods bought much less frequently and for which prices decrease, as well as wages), then the new wages only allow to loosen the straitjacket into which Everstatans feel trapped. They do not permit finding back the level of consumption that existed beforehand, even less catching up, and, considering expectations of continuing soaring prices, the feeling of safety that use to exist remains absent. As a result, the expected boost to growth does not take place.

Meanwhile, the strong and rising inequality that has been at work in Everstate as in the other OECD countries (with variations according to countries) since the mid to end of the 1970s, and that went worse with the crisis in Everstate as in many countries will not change, and will only fuel the feeling of relative deprivation and injustice, despite the new government’s efforts.*

International Institute for Labour Studies (IILS), World of Work Report 2012, ILO

As the new Everstatan government has also planned other policies, could those, giving them some time to bear fruits have more favourable impacts? Yet, if more delays are necessary, will Everstatans accept and be able to wait?

To be continued….

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* Research note:

It is interesting to note that few questioned the rising inequalities not only until the financial and economic crisis but also – and maybe mainly – until food (and resource) prices soared or strongly rose according to cases and thus when the larger mass of citizens became impacted in its everyday life, as suggested by Timothy Harper’s finding in The End of Empire and the Making of Malaya, Cambridge University Press, 2001. Further research should be done on this phenomenon, building upon, for example, work already done such as Marco Lagi, Yavni Bar-Yam, Karla Z. Bertrand, Yaneer Bar-Yam, The Economics of Food Prices and Crises, New England Complex Systems Institute, 2012, but considering all countries, including OECD ones. Harper’s argument is larger than those focusing on food prices and protests.

Although those inequalities were pointed out in some reports on globalisation (including in internal reports of quasi-states organisations and IGOs) and by the initial anti-globalisation movement at the end of the 1990s (notably by ATTAC), it was far from being on the political agenda, outside the aid and cooperation world and, there, was limited to approaches to “the  South” or “the developing world” (see the excellent post by Jay Ulfelder on those outmoded categories). The crisis, with the fear of social unrest, changed this, and, for example, the OECD produced in October 2008 a complete report titled Growing Unequal? Income Distribution and Poverty in OECD Countries, followed by another one in December 2011.

References

Jay Ulfelder, There Are Two Kinds of Countries in the World: _____ and _____, Dart-Throwing Chimp Blog, 25 May 2012.

Eurostat, Unemployment statistics, Data up to March 2012.

Online OECD Employment database.

OECD, Growing Unequal? Income Distribution and Poverty in OECD Countries, October 2008.

Facundo, Alvaredo, Anthony B. Atkinson, Thomas Piketty and Emmanuel Saez, The World Top Incomes Database.

FAO, “The April FAO Food Price Index down slightly from March,” World Food Situation, FAO Food Price Index, 03/05/2012.

International Institute for Labour Studies (IILS), World of Work Report 2012 ‘Better Jobs for a Better Economy’, ILO, 2012.

OECD, Divided We Stand: Why Inequality Keeps Rising, December 2011.

The Local, Germany’s News in English, “Low-paid ‘mini-jobs’ on the rise,” 26 Apr 11.

Der Spiegel, “Millions Left Behind in Boom The High Cost of Germany’s Economic Success,” 05/04/2012.

Durden,Tyler  Europe’s Scariest Chart Just Got Scarier-er, Zerohedge, 05/02/2012.

2012 EVT: Seeking Security (The Chronicles of Everstate)

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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), the population’s discontent increases – and is bound to continue to do so – as a result of various pressures and threats, most of them inevitable, imperfectly identified, and not understood. Indeed, Everstatans feel both directly and indirectly the impact of those pressures, which affect their sense of security and thus generate discontent.

(The reader can click on each picture to see a larger version in a new tab).

Everstatans seek security

Everstatans continue to seek a security that is appearing as increasingly distant and elusive.

They turn to their political authorities, expecting them to deliver this security. Indeed, Everstatans believe that their government, their state (which assists the ruler in its tasks) and their national representatives, being their legitimate political authorities, should ensure their security. This fundamental belief is inscribed in their collective history, not only as a country, but also as part of the human species (Moore, 1978). Furthermore, Everstate is part of the normative order called liberal democracies. Thus, as Everstatans have elected their representatives and their government, they are even surer of their right to be well governed, i.e. to see their security ensured.

However, most of the time, they have forgotten that, as citizens on the one hand and as part of the collective body of the nation on the other, they are also a part of the political authorities. As such, they not only have a role to play but also a duty to assume it. They cannot just sit there and relinquish their power and responsibilities, all the more so that their security is at stake. This forgetfulness is not a specific trait of Everstatans but widely shared with most of their fellow citizens in other representative liberal democracies.

Initially, Everstatans exerted their power in a rather negative and passive way, witness the growing abstention during elections that had been going on for decades and other worrying weak signals of alienation. Now, their grumbling grows louder and is a first still inchoate way to act to make sure their government, their state and their national representatives consider their demands. Furthermore, other actions, more visible, such as strikes and demonstrations – sometimes with some violence - also take place with an increasing frequency while creeping unrest and rising lawlessness settle in some very specific areas.

As all those actions originate from different groups of citizens and take various forms with different purposes, for most observers, including Everstatans, they appear as unrelated, dispersed and thus of no consequence. Worse still for those witnesses, when a protest movement seems to be a bit more constructed – e.g. the Occupy Everstate movement, part of the global Occupy/Indignados movement – it starts with a specific demand, linked to the impacts having generated dissatisfaction, then, when satisfaction is not obtained, the scope of the discontent in terms of content increases, usually giving rise to another supplementary revendication. This leads most to completely discredit the various movements of protest, all the more so that the new very real pressures Everstate has to face are still very imperfectly perceived and measured. Indeed, seen from the surface, the protests are sporadic, actively involve relatively few people, flare up and then recede. However, imperceptibly, overtime, the overall level of tension increases, the number of people likely to be actively involved in protests rises, while the scope of discontent widens.

Wrong answers

As the responses of Everstate’s government, state, and Parliament generate dissatisfaction, it seems that they are increasingly unable to answer the population’s demands, which stem from the real situation, the citizens need for security and the beliefs they hold.

Things are however more complex than a sudden incompetency or, more absurd, malevolence, as some extremist Everstatan conspiracy theorists try to promote.

Everstatan political authorities, indeed, have  to provide a governance that has become progressively more complex and thus difficult Governance implies more tasks, many of them novel. Security must be delivered to citizens  in overall conditions that have changed. The various pressures for survival and military threats as well as their intensity demand attention, resources, policy and successful responses. Meanwhile, the evolution of resources available, as well as their rising complexity, for example all those related to the virtual and mobile world, again ask for fully novel policies and practice.

Logically those new tasks require new staff as well as new resources and income, past ones having become ill-suited, insufficient or even exhausted.

In this framework and because of it, three related phenomena are at work that drive the political authorities’ current incapacity to deliver security and thus  the rising population’s dissatisfaction, while also directly adding to the discontent: a deepening budget deficit and an increasing need for liquidity, a creeping new appropriation of public resources and a weakening of the strength of central public power to the profit of various elite groups, and finally the use of an out-dated normative model leading to misunderstanding and disconnect as long as the demand for new understanding is not satisfied.

To be continued…

Reference

Moore, B., Injustice: Social bases of Obedience and Revolt, (London: Macmillan, 1978)