Sensational performance of a Lukashenka’s former assistant

Kiryl Rudy called for the protection of business from the governmental coercive pressure.

The reason for current economic recession is not a failure of the reforms, but rather a complete lack of them. And coercive response of the state is only deepening this crisis. Problems are caused not by external factors, but by our own actions, - said Belarusian Ambassador to China and former assistant of the President Kiryl Rudy at the “Kastryčnicki Economic Forum”.

In general, during his speech, Rudy explained why Belarus does not need economists and who it needs instead, transmits tut.by.

So, who and why does not need economists, - Cyril Rudy began in his unique “indirect” style.

Firstly: economy doesn’t need economists as they do not affect its growth.

“Our economy has been growing along with the growth of the commodity markets (potassium, oil) and the Russian market. When these markets fell, our economic growth stopped. Hence, it's not a matter of economists. We were just unlucky. When, in 2014, the capital from developing countries started flowing out – we started having less money.

Since 2015, Belarusian enterprises with foreign investments have been closing much more often than setting up; moreover, their authorized capital has been reducing. We simply have no luck today.

This is exacerbated by the fact that economists care not for the economic growth, but for the preservation of the economic structure. But if the economy does not grow and does not give a surplus product, how can we save it? Through loans! So, economists today – are just sellers of government bonds. But even in this case, the government loans must stimulate the growth, and the rate of this economic growth must exceed the growth of the national debt. Both internal and external national debts are growing, while the economy is falling. Hence, economists do not affect the economic growth.

Secondly: economists are not needed for the society (and, hence, for policy makers), because there is no feeling of crisis.

For the second year in a row, our GDP and real incomes are falling –in the economic theories, such situation is called crisis. But in practice, everyone in a society has their own understanding of crisis on the basis of their own memory and vision. The older generation says: “what is important here is not the money, but the absence of war”; the middle-aged generation’s opinion is based on the 90’s crisis – “well, it was even worse some day, when salary was just $30”; our generation (Rudy was born in 1978) compares us with other European countries and sees that “things in our country look their worst”. And if there is a general sense of crisis, there is no political will to get out of it, so there is no demand for economists.

But this is a collective delusion. Firstly, already now the crisis can be felt by the society. For example, an increase in unemployment by 1%, as a rule, leads to an increase in suicide rates by 1.3%. Secondly, our current economic fall at the background of other countries’ growth creates an overwhelming backlog in the decades ahead that will affect future generations.

Thirdly: economists are not needed for the business, as they only bring chaos.

Firstly, economists are trying to deal with things that are not in their scope, namely – governmental business and the supply side. Instead of conducting the orchestra they begin to play in it. Basing on their own common sense, they try to guess what will be in demand and then they invest budget money into these sectors. For example, into the infrastructure – due to the stereotype of the durability, or into the agriculture and engineering – by inertia, or into other areas – as a fashion statement. It is often assumed that the investment must bring the demand, while, in fact, the contrary is the case – the investments must be dictated by demand. For example, increase of the Internet speed does not cause a boom in the Internet businesses (if there was no other prerequisites for that), but rather increase the availability of entertainment. Also, an increase in the Doing Business ranking satisfies rather methodology developers themselves than the demand from business. This is like building a clean city, which has no residents.

Secondly, economists have no real authority, so they cannot send clear signals to the business. At the same time they passively wait for these powers, that are either concentrated at the top, or redistributed on the bottom between the Directorate and controllers. When there is no authority, economists’ offers are drowning among other disparate alternatives. In the end, either a familiar, comfortable solution is selected for the status quo preservation, or an unpredictable and difficult to understand compromise is accepted. Thus, the uncertainty appears that confuses, distorts incentives, leads to false investments and ultimately to chaos.

And finally, economists themselves don’t need economists, because they cannot fulfill their own potential.

In fact, they already offered all they had. One way or another, they always offer the same thing. In the 1990s, 2000s and 2010s they have developed various “theories”: road maps, five-year plan, the strategy until 2030. It seems that now there is a need for practice technocrats, capable to take responsibility for technical implementation. But they are not in demand either. Years go by, they start feeling unnecessary and stop believing (primarily in themselves) and then go to another self-realization.

Therefore, it is not the economists that are needed to restore the growth.

Who is needed instead of the economists?

First of all, businessmen are needed.

Sometimes we compare economic problems to the war. Yet how the war could be won? Russian scientists have named a major reason for victory in the Great Patriotic War: “a personal incentive, which arose due to weakening of repression in the face of the common enemy. Exactly it has offset the paralysis and helplessness of the authority. Consequently, the sense of personal responsibility for the fate of the country has arose, and freedom skills started to develop”.

Likewise, at the times of economic downturns various countries, such as China, Southeast Asia, Central and Eastern Europe have stopped the fall and were saved by switching to pragmatism and free business. It is evident that higher-level economist has less incentives to solve problems of business, than businessman himself. Therefore, in order to return growth at the times of economic downturn, first and foremost businessmen are needed.

Secondly, lawyers are required.

Exactly lawyers can protect business while its immature and growing. However, from whom it should be protected? From the governmental forceful pressure! In this difficult times we have started to worsen the situation ourselves. The number of administrative affairs on economic crimes has increased from 9 to 13 thousand during 2015, and penalties are imposed in 9 out of 10 court cases. It is possible to try and appeal against the forceful actions. However, the number of such attempts is decreasing from year to year and only single appeals are satisfied. For instance, in 2015, only 6 out of 112 customs service decisions appeals were satisfied, and only 6 out of 78 appeals against tax office were successful. Therefore, in order for the economy to recover, it needs to protect itself.

Thirdly, sociologists are needed.

The society needs to be decoded. We have certain cultural barriers, which slowdown the economy: exploitative attitude towards investors, government and each other, priority of equality over wealth, orientation towards soviet past, megalomania, motivation via threats (the invocation to instincts, not to the common sense), avoidance of responsibility and painful decisions.

Sometimes Belarus seems as a strange country from abroad, but we are trendy today. We are currently undergoing a revival of Russian traditional values, the Chinese national pride, European nationalism, Latin-American populism, and British conservatism.

All of these cultural matrices are similar. For instance, in the middle of the last century, Friedrich Hayek was mentioning the following characteristics of the British conservatism: “caving for authority, paternalism, traditionalism, anti-intellectualism and mysticism”. The decoding with the help of sociology is necessary, but not sufficient. To alter the mind-set, it is necessary to change the format of media, at the same time, to change behavior – exploit mechanisms which influence the unconscious behavior of people.

Conclusions

At the last year conference, there was made a prediction that reforms in Belarus are not possible in 2016. Of course, the year is not over yet, and there were attempts, and some are silently carried out, however, systematic reforms haven`t happened, the climate has not changed.

Now the economy is certainly falling not because of the reforms, but rather due to their absence. Forceful response to the crisis is only deepening it. New problems are now arising caused not by external factors, but by our own actions.

It would seem like here and now the economists are needed. However, the collective memory and belief in our own strength does not allow to look at problems from the perspective of economists and humbly allow economy to recover on its own.

All this reminds a Chinese parable, when the artist painted a dragon on the wall, but was scared all the time that it will fly away, and thus he painted over the dragon’s eyes. Similarly to the dragon`s eyes, our economy requires economists. However, not those, who are being silent and believing that this silence is a loyalty, but those, who are preventing economic issues and believing that this prevention is a patriotism.