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Leading Economic Reform

As a country, Germany has exhibited Europe’s most significant effort dedicated to lasting public sector economic reform while balancing various social contracts. Over time, realizing the danger of long-term union and social contracts, Germany has managed to remain adaptable while building new means of productivity, seeking new efficiencies, and expanding avenues of commerce. Posturing in difficult economic times reflects poorly on political leadership and soon leads to a decline in consumer and general citizen confidence. France, Italy, Sweden, Spain and Britain have all remained reluctant to address public sector pay or contractual amendments. All share in similar economic conditions – lagging economic recovery, marginal options for generating growth and glacial movement toward meaningful reform.

Economic reformation has been less than the rage in the United States, especially at the state and local level. Financial efforts have for the most part focused on reducing programs and services just enough to remain above the red line, a statutory obligation. Rarely is there the will to create a longer-term approach to public financial management that is not contaminated by political overtones, but is governed by true vision and commitment to broad based solutions.

Germany is able to balance public sector fiscal reform while seeking new platforms for economic development that promote private enterprise. Public unions seem to get the ‘All for one’ condition and have not recoiled when jobs are reduced, pay compromised and contracts idled. Is this a model for the United States? In some ways it points the way to at least a new proposition grounded in both a regard for social cohesion and a willingness to alter the social contract. Private employers have downsized, reduced benefits, ceased union contracts, and generally borne the brunt of economic challenges. Public unions, pensions, and welfare programs have been off limits due to the inherent risk tampering brings to reform-minded officials and administrators. To be sure, there are some public employee pensions that create huge long-term burdens for fund managers. Reform would address associated inequities and questions pertaining to why some public employees can retire with six figure incomes while others, just as deserving, barely survive.

True public leadership requires the will to review the entire range of social contracts involving the public sector as well as others dedicated to the poor, unhealthy and disenfranchised. We are a caring and giving nation…that need not change. But, like so many have said, not addressing Medicare, Medicaid, Social Security and various pension funds signals an end to this Nation’s ability to remain an economic force.  When will this finally occur? In some ways, Germany has provided a template – not so much for how to proceed, but that a nation can proceed without incurring the wrath of the citizenry. There, balance was not only maintained, it has been strengthened. Can this occur in the United States? Time will tell but someone must take the lead…and soon.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).

One Response

  1. It doesn’t surprise me that Germany has done well with public sector reform. Their culture is built on a history of efficiency, achievement, and public unity; albeit, some of those traits led them awry during parts of the 20th century.

    I recall speaking with a public school teacher in Germany many years ago. I learned that teachers were very well respected, paid well, and many participated in politics during the months when school was not in session–a striking contrast to what we have for secondary education teachers in this country.

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