Mike Pouraryan
"Outsiders" 2010 SP Edition Year in Review (Vol IV): The Withering Away of the Social Compact
The World-Wide Great Recession has caused a profound rethink of how Governments deal with Social Issues. As populations continue to grow, leaders in the World have to some how figure out a future that does not seem to be so bright right now. This was brought to bear with how everything began to fall apart in Greece and Ireland throughout 2010.
America began the process to realize that somehow things have to be different during Teddy Roosevelt's Presidency. Whether it was protection of natural resources, Civil Service Honesty and Accountability and other actions, it began a process that was somehow stopped during the go-go years of the 1920's until FDR came to office and understood that there needed to be a sense of insurance to insure that Americans had to be supported during times of economic calamity and during their old age. The insurance schemes (Social Security, Unemployment Insurance and then Medicare during the "Great Society" program of Lyndon Johnson) continued America's transformation as a just and humane country that saw to it that the poor and dispossessed were taken care of. Europe also began this compact after World War II with the advent of the National Health Service in the UK and other advances in Social Welfare throughout the years after World War II.
This unwritten "Social compact" that also became prevalent in Europe after World War II is unravelling before our very eyes. Even Iran is imposing austerity!!! I note Iran because The State seems to be totally incapable of being the bridge and the equalizer in times of trouble and difficulty. There is not much to expect when America is faced with trillions in deficits and a 14 Trillion Dollars National Debt.
The lesson of the Great Recession was that the road being traveled so far is the road to no where. I understood that. But, there seems to be no solution except to cut, cut, cut. One example of it is California that is facing a 28 Billion Budget Deficit which means that draconian cuts will be coming down. For 2011, though, there needs to be even more boldness shown that simply to cut. What Mckinssey talked about for Britain is very much applicable for the rest of the World:
• Focus on raising productivity sector by sector to drive overall growth
Government can lead efforts to improve productivity by working with sector participants and new entrants to remove barriers to growth (such as regulatory burdens, land use restrictions) and support improvements in managerial quality and employee skills.
• Secure the UK's position as the location of choice for multinationals
Multinationals may only account for fewer than two percent of UK businesses. But they drive overall economic growth and large scale innovation, accounting for 80 percent of UK R&
and growing productivity eight times faster than smaller firms. Government should work with leading multinationals on a ten year plan to make the UK the most attractive European location for multinationals, addressing skills, immigration, infrastructure and tax.
• Unlock infrastructure investment
The UK will need to spend more than £350 billion over the next 20 years merely to maintain its existing transport infrastructure and a further £120 billion – £170 billion to support our energy infrastructure. This level of investment will require greater regulatory certainty and improved economic returns to attract private capital.
• Innovate at scale
Government efforts to stimulate the growth of clusters have often ended in failure. Achieving success requires concentration of investments in research into large and connected centers, access to global best practice through the recruitment of top talent and cluster-specific support that builds on existing competitive advantages (e.g., in biosciences).
• Unleash the growth potential of education and health
Policy makers should view these sectors as international growth opportunities rather than public sector cost centers. This will require new and existing universities to add capacity and capability to attract international students. In addition, NHS organisations need to be able to restructure and compete for private patients without restrictions, while additional private capital will be needed to meet rising health care demand in the UK.
• Pilot devolution to dynamic cities
Cities have been responsible for 78 percent of the UK’s economic growth over the last ten years. Given the urgency of supporting growth across the UK, now is the time to experiment and give cities much greater city-wide coordination roles and financial responsibility, including, for example, the flexibility to negotiate regional as opposed to nationally-agreed public sector pay.
• Address generational imbalances
Demographic trends pose two challenges for major developed economies such as the UK. The first is how to maintain growth in the face of a declining working population (estimated to be a 0.3 percent annual drag on GDP growth). The second is how to fund long-term health and social care, whose cost is set to rise by more than 70 percent in the next 20 years. The UK needs a radical increase in employment of older workers, leveraging the practices of innovative firms and ensuring these are spread more widely. Unlocking the £1 trillion of unmortgaged housing wealth owned by those over 60 through equity release would also enable older generations to make a to make a greater contribution to paying for the public services they need.
I believe that instead of the unrivaling of the "Social Compact, there needs to be total and profound transformation of the "Social Compact' that looks to the future. This is what should happen in 2011. I believe that the birth of "no labels" and the general frustruation of the lack of action in Washington can be the catalyst. "Outsiders" will certainly not be silent and build upon this--our Future depends on it.
The biggest challenge is true uncertainity and a mistaken sense of prioritiestruly America, in the 1930's, began a novel social experiment to realize th
America began the process to realize that somehow things have to be different during Teddy Roosevelt's Presidency. Whether it was protection of natural resources, Civil Service Honesty and Accountability and other actions, it began a process that was somehow stopped during the go-go years of the 1920's until FDR came to office and understood that there needed to be a sense of insurance to insure that Americans had to be supported during times of economic calamity and during their old age. The insurance schemes (Social Security, Unemployment Insurance and then Medicare during the "Great Society" program of Lyndon Johnson) continued America's transformation as a just and humane country that saw to it that the poor and dispossessed were taken care of. Europe also began this compact after World War II with the advent of the National Health Service in the UK and other advances in Social Welfare throughout the years after World War II.
This unwritten "Social compact" that also became prevalent in Europe after World War II is unravelling before our very eyes. Even Iran is imposing austerity!!! I note Iran because The State seems to be totally incapable of being the bridge and the equalizer in times of trouble and difficulty. There is not much to expect when America is faced with trillions in deficits and a 14 Trillion Dollars National Debt.
The lesson of the Great Recession was that the road being traveled so far is the road to no where. I understood that. But, there seems to be no solution except to cut, cut, cut. One example of it is California that is facing a 28 Billion Budget Deficit which means that draconian cuts will be coming down. For 2011, though, there needs to be even more boldness shown that simply to cut. What Mckinssey talked about for Britain is very much applicable for the rest of the World:
• Focus on raising productivity sector by sector to drive overall growth
Government can lead efforts to improve productivity by working with sector participants and new entrants to remove barriers to growth (such as regulatory burdens, land use restrictions) and support improvements in managerial quality and employee skills.
• Secure the UK's position as the location of choice for multinationals
Multinationals may only account for fewer than two percent of UK businesses. But they drive overall economic growth and large scale innovation, accounting for 80 percent of UK R&
and growing productivity eight times faster than smaller firms. Government should work with leading multinationals on a ten year plan to make the UK the most attractive European location for multinationals, addressing skills, immigration, infrastructure and tax. • Unlock infrastructure investment
The UK will need to spend more than £350 billion over the next 20 years merely to maintain its existing transport infrastructure and a further £120 billion – £170 billion to support our energy infrastructure. This level of investment will require greater regulatory certainty and improved economic returns to attract private capital.
• Innovate at scale
Government efforts to stimulate the growth of clusters have often ended in failure. Achieving success requires concentration of investments in research into large and connected centers, access to global best practice through the recruitment of top talent and cluster-specific support that builds on existing competitive advantages (e.g., in biosciences).
• Unleash the growth potential of education and health
Policy makers should view these sectors as international growth opportunities rather than public sector cost centers. This will require new and existing universities to add capacity and capability to attract international students. In addition, NHS organisations need to be able to restructure and compete for private patients without restrictions, while additional private capital will be needed to meet rising health care demand in the UK.
• Pilot devolution to dynamic cities
Cities have been responsible for 78 percent of the UK’s economic growth over the last ten years. Given the urgency of supporting growth across the UK, now is the time to experiment and give cities much greater city-wide coordination roles and financial responsibility, including, for example, the flexibility to negotiate regional as opposed to nationally-agreed public sector pay.
• Address generational imbalances
Demographic trends pose two challenges for major developed economies such as the UK. The first is how to maintain growth in the face of a declining working population (estimated to be a 0.3 percent annual drag on GDP growth). The second is how to fund long-term health and social care, whose cost is set to rise by more than 70 percent in the next 20 years. The UK needs a radical increase in employment of older workers, leveraging the practices of innovative firms and ensuring these are spread more widely. Unlocking the £1 trillion of unmortgaged housing wealth owned by those over 60 through equity release would also enable older generations to make a to make a greater contribution to paying for the public services they need.
I believe that instead of the unrivaling of the "Social Compact, there needs to be total and profound transformation of the "Social Compact' that looks to the future. This is what should happen in 2011. I believe that the birth of "no labels" and the general frustruation of the lack of action in Washington can be the catalyst. "Outsiders" will certainly not be silent and build upon this--our Future depends on it.
The biggest challenge is true uncertainity and a mistaken sense of prioritiestruly America, in the 1930's, began a novel social experiment to realize th
