Kosygin digitalization. What will the economic bloc of the new government (Carnegie Moscow Center, Russia)

the new Russian government headed by Prime Minister Mikhail Mishustin, lively debate and even became the source of the rumors about a certain update. However, the key for the Russian economy, the leaders of the Ministry of Finance and the Central Bank — retained their posts. But the changes clearly illustrate the principle of recruitment applicable at the highest levels of the Russian government since Stalin’s time.

As the alleged words of comrade Stalin: “If under enemy fire, swam across the Dnieper river and drowned — so the bad soldiers and the Red army is irrelevant.” The approach is simple and straightforward — for the vacant post is assigned to a random person. Previous career is of little importance. And then comes a simple observation of how the appointee to cope in a new place. If, from the perspective of the decision maker, all is well, then this process stops. If no, the appointee is removed.

this principle of great importance is the tenure of the official in his post — the longer, the stronger his position. Especially if during the work, he had to pass through the solution of important problems. Generally speaking, the fact that the successful solution of the important problems is the main criterion for selection.

under this logic the current permutation bypassed a large part of the monetary unit — Ministry of Finance and the Central Bank (but not the Ministry of economic development). These two agencies are critical to ensuring low deficits (and preferably a surplus) the Federal budget and its job for many years cope.

the Reason so much attention of the head of state to the budget deficit are understandable. The resignation of Boris Yeltsin and as a result, the arrival of Vladimir Putin to power is a consequence of a default 1998. And this is the default if you look at the root — a consequence of the high budget deficit. The notorious “GKO pyramid” was a clumsy attempt to compensate for this high deficit at the expense of loans to delay default. Now we know why: they were strong hopes for IMF loan, which potentially would allow to avoid a default. In this scenario, the entire history of post-Soviet Russia could go the other way.

the Main lesson, which made the current Russian leadership of those events is simple. Anything, anything but the Federal budget deficit should not go beyond the relatively safe level of 3%, and ideally there should be a surplus. And the accumulation of international reserves is also highly desirable.

the International reserves it bailed out in 2008 and 2014-2015 than demonstrated its usefulness. It is interesting to note that when the concept of the stabilization Fund only nominated, few governments criticized Kudrin. But the successful passage of the 2008 crisis showed in practice the benefits of reserve accumulation. Showed so clearly that even after his disgrace Kudrin has retained considerable influence.

the Importance of a balanced Federal budget is that the deficit is, in fact, the failure of States to fulfil their obligations. The most sensitive of pensions, salaries of state employees and security forces. It is very very dangerous. And very wise not to bring this up.

So the latter than to sacrifice the government’s budget deficit. Inflation, devaluation, rising fiscal burden and the rising retirement age is a lesser evil than the deficit. At least from the point of view of stability of the current Russian government.

To maintain a balanced budget is very important to coordinate the work of two Institutoin the Ministry of Finance and the Central Bank. From the Ministry of Finance require strict budget policy and Central Bank strategy, close to the provisions of the classic monetarism. Only this combination ensures a good balancing of the Federal budget in strong fluctuations in oil prices.

the ContextPrime Minister Mikhail Mishustin held a meeting of the government of the Russian FederationOSW: Russia’s new transitional government?Ośrodek Studiów Wschodnich24.01.2020 Country: how Mishustin taught the Russians to pay neologismen.ua21.01.2020 Direktno: Mishustin — “bulldozer of public administration”, which many in Russia мечталиDirektno.hr20.01.2020

Generals always fight the last war, especially if they won it. So successful, in terms of sustainability of public finances the passage of the crises of 2008 and 2014-2015 — the best criterion of the correctness of the policy of the Ministry of Finance and the Central Bank. The criterion is so important, it makes the position of heads of the Ministry of Finance (Siluanov though, and was replaced by Kudrin, but in their views and approaches are almost completely agrees with) and the Central Bank virtually invulnerable to criticism. Too important these people are to ensure the sustainability of the current Russian state. And Ministerial reshuffle has not affected them — in order to avoid.

But the choice of Minister of economic development, in contrast, is not so important. Change carries great risks. The Russian economy is stagnating for a long time and steadily while maintaining a triple surplus: the trade balance, current account and Federal budget. International reserves are also rising.

This makes the Russian economy very resilient, including to external shocks. But economic growth, though desirable, but in current situation is not exactly a necessary condition for maintaining the stability of the power system. And low growth for decades to maintain stability. An example of the late Soviet Union — a clear demonstration of the importance of a budget and the secondary economic growth. Therefore, the candidacy of the Minister of economic development, you can safely experiment: if successful, growth will accelerate, in case of failure, nothing bad will happen.

From a new social unit requires only one thing — to reduce the degree of dissatisfaction to a safe level, to “not go with a pitchfork.” It is necessary to improve the lives of 10-20% of the population with the lowest income. It is not very expensive, albeit not technically. In Russia there is no effective system of determining who is actually poor. But the experience of the current Prime Minister and the successes of the FTS suggests that in this part of the progress will come quickly.

Generally speaking, a high level of nationalization of the Russian economy in addition to the disadvantages (low efficiency) is advantage — good handling. And the rise of technocrats with an understanding of information technology — a good chance to improve the quality of management and to raise efficiency of the Russian economy.

you can Expect big breakthroughs there is no reason, but a moderate upturn is likely. On the scale it may be comparable to the Kosygin reform, 1965-1970 years. But this will happen or not will depend on how long it will last technocratic government, and external shocks: a sharp drop in export revenues (whether due to the decline in oil prices or new sanctions limitations) very quickly forced to go to the budget of the survival and growth of any phave to forget. There’s no technocracy and digitization won’t help.

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