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of resources while the strength of central public power weakens to the profit of various elite groups and with an outdated worldview that promotes misunderstanding, disconnect and thus inadequate actions, the political authorities are increasingly unable to deliver the security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.

Structure of general government expenditures 2008 (OECD 2010)

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



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.