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 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



* 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.

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