Wednesday, October 26, 2011

'It's the End of the World as We Know it (and I feel fine).

There's an old REM song, of this title and, today, like many people, with the world economy about to potentially crash into recession I feel, in the here and now, fine. Nothing seems that different. It's the same for many of my friends, be they in business or whatever. The crisis has the same feel to it as famine or natural disasters in other countries. We're concerned, sure, but worried, mostly not.

It's one of those things about economics - the fact that most of us have no idea of the intricate machine that creates the world as we know it. That machine is, so we're told, about to have the equivalent of a massive heart attack which won't kill it but could leave it in a pretty poor state.

So what do we need to worry about most? On a personal level, it is clear that we're looking at flatlining and probably declining personal incomes over the coming years. These will kick in unequally with the middle classes taking a hit but the wider working population probably finding it harder. In turn, this will affect Government income and we could see a haircut on Government spending that makes the Coalition's austerity programme look like a children's tea party.

What does this mean for public services? On the transfer payments side, it means huge cuts to welfare which again hits the most vulnerable hardest and risks social cohesion and, worst case, unrest.

On the delivery side, it means that the whole architecture around health, education, defence and local government spending is vulnerable, built as it is, on the basis of a economy that is essentially sound. If all of this becomes unaffordable, we're into a very difficult conversation about cut backs and the public sector settlement which, again, will make current changes to salaries and pensions seem very modest.

Where this would also take us would be a wider conversation about how we now deliver decent public services. If you go to any conference at the moment about this, there's a lot of talk of 'how we do thing differently?' - then everyone goes home and slices the salami. Or so it seems. This is because, on balance, it's politically and operationally a lot easier than the alternative - which is re-invention.

A crisis of the sort we're probably heading into will, one way or another, make it far more attractive to reinvent than cut back services. Careers - political and professional - will not survive if slash'n'burn is the the modus operandi. For those of us who have long been advocating a reinvention of public services this could end up being, our moment.

So spin-outs, community-based services, co-ops, innovations that allow decommissioning - all of these things could have a political attractiveness that is currently missing. The sadness is that it will take things getting really quite catastrophically bad before that happens.

So, while it could be the end of the world as we know it, there may be one or two reasons to feel fine.

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