Yevgeny Yasin does not share the president’s ambitious plans

On the eve of the conference, scientific director of the Higher School of Economics EVGENY YASIN, in an interview with Kommersant columnist KONSTANTIN SMIRNOV, spoke about the new priority of liberal economists - “social development is much more important than economic growth.” In addition, he warned about the danger of accelerating economic growth by certain dates.
— The Higher School of Economics, together with the IMF and the World Bank, has been holding international conferences on the problems of economic growth in Russia for the fourth year in a row. Three years ago, a number of ideas expressed at the first conference were used by the then government in preparing economic reforms. However, not all reforms have been implemented. Don't you consider these years lost?
“I don’t think we’ve lost them, although I would like to achieve more.” I think that the program that was developed in 2000 and which received the name of Gref (in fact, it is Putin’s program) is correct. The most important thing about it is that the emphasis is on structural and institutional reforms. And in general, these reforms were carried out. But there are two problems here. The first is that any reforms are carried out with long-term results in mind. Because institutions need to be changed. And this takes a lot of time. But if the reforms are not radical enough, then the old institutions will simply digest the new ones, and there will be no result. Another possible option is rejection of the reforms. Given these circumstances, what can be said about the success or failure of reforms? The important thing is that this work was done. And it continues to do so. When it slowed down, the government decided to propose a new medium-term program with the aim of adjusting the way reforms are carried out in order to speed them up.
Another point is that we have a situation in which, regardless of all these reforms, there were high growth rates in 1999-2000. But then they began to fall. The political leadership became concerned: why? But there are no conditions for constantly high growth rates. The economic recovery is not entirely the government's fault. Many factors interact here - the consequences of the 1998 crisis, oil price levels, etc. And it is unrealistic to demand from the government now specific measures that will ensure 8% growth by 2007.
— Do you believe in 8%?
- I do not believe. And it is absurd to make such demands. You can, of course, write in the program that sooner or later, say, these institutional changes, etc., will have an effect. But not by a specific date. And in this regard, I would like to talk about the theme of our conference. We dedicated it to the modernization of the economy and the role of the value system and culture in it. We are increasingly faced with the fact that our development is influenced not just by institutions, but by informal institutions and value systems. Our country is traditional, conservative, with many outdated institutions that hinder development. They either do not let in the new, or reject it, or, on the contrary, envelop it in such a way that then completely opposite things happen. This somehow needs to be taken into account more and more.
- How?
— When work began on Gref’s program, one of its first points was the definition of a value system. At that time, many focused their attention on the fact that in Russia the system of values is far from the Protestant ethic, that the Russian person is imbued with confidence: what can we do when we have such people? No, I myself seem to be okay, but the country is a mess, and therefore nothing worthwhile will come of it. These are our natural properties, instilled by territory, history, etc. In general, we are not suitable for anything better. What if you need to, say, catch up with Portugal? I'm not laughing, this would double GDP per capita. God willing. And it will be difficult for us to do this, because we killed a significant part of our national energy during the 70 years of Soviet power. We have killed the energy that is usually generated in all countries by the agrarian-industrial transition. While we were industrializing and building giants of socialist industry, we simply wasted resources that in other countries went towards serious social transformations and became the basis of a new culture. Now all this plays a paramount role. And in my report at the conference I will try to show exactly this. And secondly, I’m saying that we cannot take examples from Japan, for example, or China. Because their success was due to the fact that they used their traditional values in the industrialization phase. But we, firstly, do not have those traditional values, and secondly, we have already passed the phase of industrialization, and we now have the problem of a post-industrial society, where these values - hierarchy, subordination, discipline and collectivism - are no longer so important.
- So, we have already irrevocably lost the race for civilization?
- Not certainly in that way. The value system of Russian citizens is changing very much. Of course, not everything is in order yet, but the reforms that have been carried out since 1992 have become the impetus for these changes. And now, after not such a long historical time - 10-15 years - a completely different people, a different system of values, has appeared in Russia. The question is not who votes for whom or what political preferences they have. The vision of the world has changed a lot. At least the sociological studies we conducted showed that liberal values are shared by 45% of survey participants. 27% share Soviet values. The remainder are traditional Russian values. This is the division, this is the dynamic. It is constantly moving towards a market economy, a free country. This seems very gratifying to me. Another thing is that we can now say: no, we are like this anyway. But this is precisely not predestination. Therefore, one of the main ideas of our conference is to show that many of us have already become different. And there is no need to shake this tree (8-10% and so on). It should grow and mature quietly. What is happening seems to me to be a completely normal, more or less stable, peaceful development.
- This is interesting. But still, if we return to government regulation, then it has its own assessment system, which is not based on an awareness of deep historical processes. The President will ask the Prime Minister for the notorious 8% in the very near future. How do you assess the situation when the most important reforms, such as tax reforms, are simply stalled? Who is to blame for this?
- You're right, of course. The president will demand the interest he needs. But he is a reasonable person and will not demand the impossible. And you can explain something to him. Another thing is that they can play on his desire with the goal of, say, eliminating someone. As for tax reform, I suspect that Alexei Kudrin was squeezed, and he took, in my opinion, a not very deliberate step. He agreed to a two percent VAT cut before the government cut its non-interest spending rate. VAT is a very dangerous tax. I would change it last. This is a big loss for the budget and little progress in stimulating growth.
- And what tax then needs to be changed first - the Unified Social Tax?
— We always say out of habit: tax reform, tax reform. For a year and a half or two, everything has already come down to the fact that this tax, this tax is changing. But this is not a reform. In reality, tax reform should be linked to changes in the budgetary sphere. There must be a clear distinction between levels of government. Fiscal federalism must become a reality. It is necessary to implement the principle: one budget - one tax. With full responsibility of the regions for their financial well-being. Transfers: not like now, to cover the deficit in a particular region, but targeted transfers for education to maintain the federal standard, for healthcare. In this sense, yes, this is the next step in reform. But I suspect that there will be no progress here before the elections. From my point of view, this issue is maturing because it is impossible to reduce the number of regional recipients relying on the system of redistribution through the federal center of financial resources. Such a system will only increase the number of recipients and will force the federal center to constantly fight to reduce them. And it’s beneficial for them to receive money from the federal center. I believe this is an urgent issue. In 2000, we resolved the issues of overcoming localism, establishing a coherent system of power, establishing order, and fighting with local appanage princes. We won. But now we need to look back further. Stop moving in this direction. There will be no more harvest there. We must now decide to do what was too early to do then.
And further. Too little attention is paid to cutting government spending. In reality: what is cost cutting? This means that reforms need to be carried out in those sectors where they can be reduced. For example, government procurement is one of the most striking examples where cost reduction can be achieved. Then budgetary institutions. I don’t want to say that it is necessary to close schools and hospitals, but in any case it is necessary to ensure a transition from feeding institutions to paying for the performance of certain functions, certain services. The government admits this. Well, we have to decide! So far there has been little movement in this direction. And then they say: let's reduce taxes. OK then. What will you cover with? In this sense, I think that the only tax that can be risked and reduced is the unified social tax.
But it’s not just about specific economic measures. At the conference we talked about the inescapable Russian tradition of people thinking to themselves that they are in shit. And the authorities think about him that since he thinks so to himself, it means you can’t make porridge with him, it means you can’t trust him. But it's a vicious circle. This way we won't escape. Even towards Portugal. Because if a person is not trusted, he will never change. Yes, this is associated with some inconveniences and troubles. But in this sense, I support the thought of Yegor Gaidar - for us, social development is much more important than economic growth.

Newspaper "Kommersant" No. 57 dated 04/03/2003, p. 15

Authors:

Konstantin Smirnov

"I don't believe in eight percent!"