January 15, 2015, 08:11 / Finance

Russia - the country of signals

Gaidar Forum: cognitive dissonance of a deputy, 1.5 meaningless trillion and the collapse of capitalism Olga Kuvshinova Dmitry Donskoy / RIA Novosti

“Should we carry out sequestration? And if you shorten it, then how exactly?” - the moderator, in his words, of the “budget section”, Rector of the Academy of Foreign Trade, Sergei Sinelnikov-Murylev, set the agenda for the discussion participants at the RANEPA Gaidar Forum. In the forum program, this section was called “Financial Policy: Normalization or Destabilization?”, and it might seem that we would talk about the financial system, but after the moderator specified it, it became clear what exactly is considered finance. “As I was afraid, the discussion will come down to how much to spend and over what period of time,” German Gref, President of the Board of Sberbank, previously summed up the results of another section about the “healthy future of the economy.”

After a crisis, recovery always comes, confirmed the chairman of the Alfa Bank banking group , Peter Aven: “I remember a very old crisis - the late 1980s.” But the lessons of the past should not be forgotten. Gorbachev started with a 10% reduction in spending, Aven recalled: “This was the first blow of 1987 - cut everyone equally. This does not work". In 1992, the Central Bank believed that enterprises should be given loans, but it ended in disaster, Aven recalled another story. One of the conclusions of all past crises is that managing anything (an economy, a bank) during a crisis and under normal conditions are two different lives. In a crisis, both the Central Bank and the Ministry of Finance are responsible for one thing - stability; growth goals should be forgotten during the crisis, Aven believes: “The only thing you need to think about is survival, everything else is secondary.” Talk that the Central Bank needs to reduce the rate from 17 to 15% to increase investment is some kind of mythology, Aven believes: it is not the rate that is now hindering investment, but uncertainty. For the Central Bank, the main thing is to preserve the banking system and reserves, and for the budget, it is to support the population, Aven concluded: “In a crisis, the population always needs to be saved, enterprises sometimes, and owners never.”

Wherever there were discussions about economics and finance, everything still came down to state trillions, of which in absolute terms there are fewer and fewer, but in relative terms, on the contrary, more and more. Taking into account state-owned companies, the state’s share in the economy is 50%; in 2015, dramatic growth in the public sector awaits it, Gref warned: “Soon our entire economy will be one continuous state.”

“What will we have?”

76% of federal budget expenditures are unproductive, said the head of the Accounts Chamber Tatyana Golikova: defense, security and social obligations. They are not subject to sequestration, so the 10% reduction in spending announced by the Ministry of Finance will primarily affect investments. Moreover, the financial authorities revoked the limits for 2016-2017. and recommend terminating already concluded medium- and long-term contracts, Golikova said: “This is a bad signal for the economy, this is a bad signal for investment, this is a bad signal for development.” The former Deputy Minister of Finance, who was responsible for the budget at the Ministry of Finance, recommended that her colleagues not rush into sequestering at least during the first quarter, but first decide on priorities and explain them to the population and business. “Neither the population nor the business community fully understands where we will go, what areas will be supported and what government subsidies will be supported,” Golikova said.

A delegate from Naberezhnye Chelny immediately excitedly confirmed Golikova’s fears: “I didn’t hear anything about import substitution in the budget. We are a city of mechanical engineers, over the last three months there have been a huge number of applications, but the average age of equipment in Russia is 23 years, and what can be done with it?” “You received colossal economic benefits this year,” Deputy Minister of Finance Alexey Moiseev explained to the domestic manufacturer. “And our task with the Central Bank is the efficient functioning of markets; this year they will work well, which will allow you to attract the necessary financing.” As in the joke about a losing football team, “It’s okay, next time we’ll play even better,” quipped Andrei Makarov, chairman of the State Duma Committee on Budget and Taxes.

Cognitive dissonance arises, Makarov complained: “Today I listened to the prime minister’s brilliant speech, brilliant. And under every [his] word about what we will not have - there will be no restrictions on the movement of capital, we will not close ourselves off from the world - I think everyone is ready to subscribe. And yet, I would like to hear - what will we have?” It is completely unclear what the government wants, the deputy complained. Everyone just keeps saying how good it is that the crisis, the sanctions, now the economy will be better and more beautiful. “What was stopping you before?” - Makarov was perplexed. There are already more road maps alone than there are rubles in the budget, and everyone says the right words, he continued, but there is no point: “I would formulate the main task this way: how to restore trust that did not exist.”

Russia is a country of signals, and this is very sad, Makarov stated: “It is pointless to discuss laws - people do not believe in them. Therefore, the question is whether the signals that are given will be received or not, will be understood or not, and will they be believed or not.” Such a “signaling system” means that all economic problems lie in a non-economic plane, Makarov concluded: without solving the problem of trust, discussing which projects to invest in is pointless, because the lack of trust of business in the state will not allow solving any problems. If the signals are not supported by actions, everything will fail again, Makarov is convinced.

Deputy's reply

Sequestration means that the state does not understand which expenses are effective and which are not - so it’s easier to cut everything equally, Makarov explained. Here, for example, are state programs: 39 pieces - half of the budget - were approved in 45 minutes. “This is profanation!” - he was indignant. It is necessary to determine not what the funds are used for, but what results they will bring, he urged: “As of January 1, 2014, we discovered 2.3 trillion rubles. accounts receivable, without state defense orders - either good about it or nothing - 1.5 trillion. Of this, 95% are advance payments: that is, ministries that were unable to spend money effectively, squandered funds in advance somewhere in the future - what kind of efficiency are we talking about here? And after that we talk about a lack of funds and are going to cut something!”

This means that they correctly decided to cut the budget by 10%, Moiseev concluded: “The ministries know better than we do where they have money that they have nowhere to put. Either we have a State Planning Committee, which knows everything for everyone, or we don’t have a State Planning Committee, and the people who spend money know better where their effective and ineffective expenses are.” If you get involved with them in discussions about what and where they should cut, this will only lead to an increase in budget expenditures, as Moiseev knows has already happened.

“I felt a little scared,” Makarov admitted in a low voice. “The Ministry of Finance says - we don’t understand whether the ministries spent money on real projects, and we don’t even try to figure it out, because we don’t have the State Planning Committee,” he was amazed. In a normal country, he turned to Moiseev and continued, raising his voice, “in a normal country you come to parliament and prove every project - what the money will be spent on, what the effect will be, when the object is built, what people will get from it.” And then this object is controlled, on the one hand, by the parliament, and on the other, by the people where this object is being built, Makarov continued, almost shouting: “And if the object is not built, those who took on it either went to prison or at the very least they lost their position! And when you prove the importance of projects in your offices to each other, then the question of the effectiveness of the funds arises.”

They don’t care about deputies at all, Makarov was indignant. The implementation of the Federal Target Program for Kaliningrad for 9 months is 12%, and there are “huge funds” there, and when the deputies proposed to consider the program at a tripartite commission, in accordance with the law, the Ministry of Finance instead quickly agreed on it and submitted it to the government, Makarov was indignant. “And when your bridge collapses in Kaliningrad, it’s because you have no control over the spending of these funds, or what they are allocated for, and you violate even those almost impotent control procedures that exist today,” the deputy branded. “No prosecutor’s office, nor the FSB, nor the Accounts Chamber will be able to control these expenses if you do not give people the opportunity to control them, and the current mechanism for adopting the budget excludes people.” The audience applauded loudly, Moiseev remained silent, burying his gaze at the table - perhaps he was also thinking about a normal country, where the parliament represents exactly the people who elected him. “Let’s leave the room without any questions for now,” the moderator cautiously curtailed democracy and gave the floor to the First Deputy Chairman of the Central Bank, Ksenia Yudaeva.

New old

Yudaeva chose - “for variety” - to talk not about the budget, but about monetary policy. Recalling the difficulties the economy has experienced - changes in Fed policy, sanctions, falling oil prices - she called for adaptation to the new reality: “Oil will be cheaper than we are used to, and money will be more expensive.” The Central Bank will soften policy, Yudaeva promised, but only after inflation expectations have been reduced. “I even put on a pink suit on purpose to try to look not so pessimistic,” she reassured the audience. - Yes, we have a new reality - it happened, yes, we have new times. But we have huge potential. And if we pursue competent policies in all areas, we will be able to release this potential and develop successfully within the framework of this new reality.”

Minister of Economic Development Alexey Ulyukaev also stood up for the population at the plenary discussion about a healthy economy. Her stated topics can also cause cognitive dissonance: “Budget for a person or a person for a budget?”, “Healthy population: expenses or income?” It must be that a crisis is also a time to remember the obvious, although it, forgotten, may seem incredible. “It seems to me that we should move away from the statist orientation, when the state, state obligations, state powers are important, but what happens in business and households is not so important,” Ulyukaev suggested.

But while Russia is trying - albeit in words - to move away from estatism to capitalism, the world is becoming disillusioned with it, said “Marxist sociologist”, professor at Yale University Immanuel Wallerstein: “Something is wrong in the world.” Even the capitalists themselves don’t like capitalism anymore; they themselves are looking for an alternative to it, he said: yes, the capitalist system has existed for 500 years, but that’s not enough for it to survive. The professor does not know what the new order will be: “There is a 50% chance that the system will become better if it is changed, and a 50% chance that it will be worse.” The discussion about whether capitalism has a future was of great interest at the forum: if the world is going crazy or bursting at the seams, then the metaplasia of the economy or a double devaluation are such trifles. Everything is decay.

“This era - the era of blissful development - has passed irrevocably. It gave way to an era that was much more impetuous, spasmodic, chaotic, and conflicting,” Ulyukaev read “the words of an undeservedly forgotten thinker of the early 20th century.” Lenin wrote this 100 years ago, he announced. In many ways, the current situation is similar to that, the minister noted.

Previously on the topic: Merger in the fat industry