It is said that everything constantly changes and the only thing that does not change is change itself. Some changes, especially the changes in technology, start a revolution in our life. For example, a computer was bigger and thicker than a person in 1990 whereas people have been getting bigger and computers have become thinner for the last 25 years.
Another example would be mobile phones. There were very few households that owned a mobile phone in 1990, but the statistics today suggest that we have more mobile phones than our population in Mongolia. More importantly, smartphones are used by half of the population and it has become very common to use a mobile phone to get many kinds of services. This revolutionary change took place because of fierce competition between communication companies from the private sector, but not the government.
Meanwhile, Mongolia’s society has undergone a significant change. In our past history, we have never used as many cars, variety of food, and good quality apartments as we have today. Mongolians have never been able to travel to any desired country in the world as we do today. It turns out that the life expectancy in Mongolia grew by 7 years in the last 15 years.
However, one area that produces the least significant effect on the essence of this great change, but is hindering the development of Mongolia, is public governance.
HOW BIG SHOULD THE GOVERNMENT BE?
Professor James Gwartney, an economist and an acquaintance of mine, said that the size of government can be viewed in analogy with how much food a person consumes. If you do not eat at all or do not consume sufficient food, you will not be able to get enough nutrients, which could make you sick and even lead to death. Similarly, if you consume too much food, you will suffer from cardiovascular diseases.
Consuming adequate amount of food helps health. Likewise, the size of government should be adequate to its economy. However, in order to determine the optimal size of government, the first step must be defining why governments exist and what functions they perform.
Economist James Buchanan, a Nobel Prize winner, wrote that the government has two main responsibilities. The first responsibility is to ensure the protection of rights, freedom, and property. The property should be earned or gained lawfully, not stolen or embezzled. The second responsibility is the production of public goods, which can include national security and flood protection dams.
When the government starts doing additional jobs other than fulfilling their main responsibilities, the size of government grows bigger. This process of growth in size without control brings about a political crisis, especially in a country like Mongolia where the government operations are secretive and without public scrutiny.
The costs required by the government to fulfil those two responsibilities are collected from people through taxes. Buying something with someone else’s money and with your own money are two different things that give you two different feelings. The authorities quickly understand this difference, get used to it, and believe that taxes should be high while telling people that taxes should be low.
The classic example would be Mongolian government. It has been a long time since our government willingly assumed the responsibility to regulate the market despite being unable to fulfil its two main responsibilities. As a result, both the government and the economy are suffering from disruptions in their normal flow. Therefore, the slightest disruption now leads to an economic recession.
The main reason why the government has taken over the job to regulate the market is that one can still find the means to do business in the name of the government and seize opportunities outside the law to take part in highly profitable, large projects. Such activities are still taking place in the young democracy of Mongolia.
The biggest channel or the most secretive tunnel where public scrutiny cannot be exercised today is buying off political parties. The first step is to give large amounts of donations to political parties and the second step is to enter the management and governance of those political parties. Afterwards, using the connections, businesses can be expanded.
MONGOLIA GLUTTED ON ITS GOVERNMENT
Another reason why the government is expanding is the increase of state-owned companies. The management of state-owned companies is changed to allow donations and loans to go to individuals or political parties, and procurements to be done at higher prices. These activities are being allowed to take place, which is why Mongolia now has as many state-owned companies as they claim to have privatized.
The total debt of more than 100 state-owned companies today exceeds the debt from Chinggis bond. It is impossible to reduce government involvement in economy without privatizing these so-called state-owned, de facto political-party-owned companies.
When the government talks about cutting expenditure, public servants, including government employees, doctors, and teachers, are targeted. However, if the ownership of those state-owned companies is made clear, there will be less stealing and more profits. Nevertheless, during the recession today, this topic is barely mentioned.
Our government has been on this path for many years and has become too large in size, which made Mongolia glutted on its government. Our economy faces theft, not a crisis. It was not caused by the investors going out of the country, which is being talked about by politicians with great enthusiasm. It was caused by the government becoming too large.
One of the main drivers of this enlargement is political parties. Mongolia’s political parties today, especially the one that currently have the ruling power, are exempt from public scrutiny. Their own party members who are blind followers with a distant hope to go to a senior position someday do not know where the financing comes from and how come they have so much money available. These political parties are the most secretive institutions today.
Political parties have become a secret network where power in the form of seats and positions is traded. Only the most senior leaders are aware of where the financing comes from. This is why it is almost impossible to change and replace the leaders of the ruling political parties.
In order to free the government from corruption, we need to have every political party that has a seat in the parliament to release their revenue report of 2012, the election year, and since. Independent audit with representation from the public must be done. It is set out in the law.
If we manage to disqualify the political parties who fail to provide accurate reports from the next election, Mongolia’s huge corruption network will be brought down. Until then, the incapable government will keep changing its structure, replacing actors to play characters, and switching deels working with the parliament. A lot of time will be lost while they continue increasing government expenditure and acquiring domestic and foreign loans to make up for deficits. Should it continue from an election to an election?
The 2015 budget amendment erased the faith and patience Mongolians had. It was the first time ever that Mongolians made an amendment to the public budget after only two months since the approval. The amendment did not change the government expenditure, but they “zaisan-ed” to change the law to reduce the budget revenue and increase the deficit 2.5 times higher. It is causing ordinary people have red faces out of embarrassment as the ‘actors’ of parliament are not. It proves that no Prime Minister, regardless of who he is, can bring about a change.
Nothing will change unless the roots of Mongolia’s public governance are reformed, the current political parties are changed, and all politicians today are replaced. A new generation needs new political leaders who are young, not affected by corruption, and capable of making a change.