The planned fork in the road: what economists suggest Putin

The most dangerous mistake that you can make the Kremlin — to unite all expert group under the auspices of the government for writing a economic program

Experience the country’s socio-economic crisis is systemic. This is clearly demonstrated by the fact that a sharp slowdown in the growth of the main macroeconomic indicators that have fallen in 2014, their decline began in the second half of 2012 with quite a comfortable oil prices (above $100 per barrel) and long before the introduction of Western sanctions.

The necessity of radical changes in socio-economic policy and is aware of the country’s leadership. But consensus regarding the nature of these changes yet neither the ruling elite nor in the expert community. In the end, the President instructed to prepare a reform plan to the government and, in parallel, two working groups are headed by Alexey Kudrin and Boris Titov in tandem with the presidential aide Andrei Belousov.

Three programs

I do not aim to provide a comparative analysis of these programs. Yes, their detailed comparison is impossible, since about the plan of the government we know only that he may 19 was presented to the President. In public access plan no. Moreover, at the meeting with the Prime Minister and the President said that it is necessary to wait for the completion of the work of other expert groups.

Kudrin categorically stated about the program his group: “We are not going to submit for the consideration of the General public, because we are talking about the strategy of the President and the President himself will spend the bulk of the work with his staff to determine what the suggestions of the experts, he shared what proposals he will be able to coordinate with key groups in society.” The President of the findings will be presented in the near future.

A group Titova — Belousov a couple of months ago provided the public with their suggestions as a report of the Stolypin club.

All this mystery is not with the ambitions of the authors of the programs and their natural desire to achieve a maximum support of their ideas. It is obvious that the political risks of radical changes are not allow the President to quickly make a decision, especially in light of the elections in 2018. It is equally clear that any adopted program will be implemented after the presidential election that is a year we are waiting for the continuation of the still vague policy.

Goals and means

Judging from the leaks to the press, insider information, suggestions three groups a lot in common. The main purpose of all one is to provide in the coming years the economic growth rate above the world average, with the attendant increase in living standards and bridging the growing technological gap with leading countries. There are many General and specific areas of the proposed action. This reduction in administrative and bureaucratic pressure on business, the real fight against corruption, liberalization of punishments for “economic crimes” and other measures to create a favorable business climate, as well as getting rid of “oil needle” on the basis of the accelerated development of high technologies.

A single of the expert group and in their alarmist forecasts that a further delay in reforms could lead to long-term stagnation and irreversible backwardness of Russia from the countries-competitors.

The program of the Center for strategic research (CSR) seriously Kudrin not only captures the economic sphere, but also suggests ways of reforming the law enforcement bodies, judicial system, education and other sectors, including through the active introduction of modern information technologies.

Options for financial policy

The main watershed between the CSR programs and the Stolypin club is in regards to pumping money into the economy on the basis of the issue. The group Titova — Belousova regarding specific proposals and this first drew attention to themselves. “Controlled emission” should be complemented by increased government borrowing to Finance priority programmes and projects.

Kudrin also a categorical opponent of the issue and generally the monetary policy easing, including accelerated reduction of interest rates and the introduction of the regulation of the ruble, which is also requested by his opponents. However, recently he made some (within 0.5% of GDP) increase in the budget deficit from covering it at the expense of reserves and even a small increase hozaystvennih.

Partial similarity between the proposals in this part of the (growth of the budget deficit and national debt) is, however, tool to solve fundamentally different problems. If the Stolypin club, are sources for increasing funding for priority production projects not related to oil and gas sector, CSR recommends that additional investments in human capital — in education (financing of not less than 0.8% of GDP, complemented by a change in the entire system of training and retraining) and health. Another priority should be the development of infrastructure and the “digitalization” of the economy.

Control of power

The key to CSR is also a radical change of governance, the inefficiency of which has in recent years become a byword. However, Kudrin delicately avoided the topic of changes in the political system of the country. Many public figures and experts (and I among them) believe that no significant growth of society’s control over the government, including free and democratic elections, there are no purely “technological” solutions (like the use of KPI, big data, etc.) adequately enhance the efficiency of public administration will not give. While maintaining the same level of corruption and insecurity of property rights in conditions of uncontrolled power will reduce all efforts to nothing.

In the end, the President will have a difficult choice. The most dangerous thing that can, in my opinion, happen, is humanly understandable, the decision to unite all groups of developers under the auspices of the government with a proposal to do a single program. But to successfully cross a hedgehog and a snake no one has yet succeeded. In the best case limited to a partial action. Something similar we have already passed almost 30 years ago, when Gorbachev instructed the Prime Minister Ryzhkov to join the program “500 days” Yavlinsky with the practices of the government. Within the endless bureaucratic approvals were emasculated the essence of many of the proposals. Formally, a single document was born, but to save the economy from collapse, he could not.

The authors ‘ point of view, articles which are published in the section “Opinions” may not coincide with ideas of editorial.

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