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 

state and ruler expenditures s3

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 UKgovernment 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.


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.

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