American Nobel Laureate of Russian descent, Vasiliy Leontiev once compared the market economy to a ship, with government regulation as a rudder and human initiative and activity as the sails. If so, then 20 years after choosing the path of a market economy, Mongolia has lost its rudder and is now like a little ship being tossed about on great ocean waves.
The Mongolian economy has slowed dramatically, inflation has risen to 15 percent, and the budget deficit has reached 10 percent of the economy. There are foreign trade deficits, the inflow of foreign capital has nearly stopped, the MNT exchange rate has fallen by 30 percent, the public debt has reached 65 percent of the economy, and the amount of nonperforming and overdue loans in the banking sector have reached one trillion MNT.
With macro-economic conditions at this level and an economic crisis looming, instead of implementing policies to increase private sector initiative and expand the tax base, the Prime Minister’s proposal to restructure the Government is not only untimely, but it also draws the economic crisis closer, for it upsets several fragile balances. The internal power “wounds” of the Democratic Party were reopened due to his attempts to keep his post as the Prime Minister by making agreements with anyone, and any party, and finalizing the terms and responsibilities of the agreements. The double crisis of economics and governance is starting.
WHY?
The capabilities of the elected political parties coming to Mongolian political power are weak. This is related, to an extent, with the practice of evaluating individual, rather than political party factors, during elections. Thus, five to ten percent of Parliament seats are taken by independents, and when the parties are tied during vital decisions, these seats can have a significant impact.
The political parties have been unable to determine their fundamental ideologies and policies, such as the state’s participation in the economy. Because there is no real difference between the ideologies of the parties, they all spread populist policies and widespread social welfare and decrease the competitiveness of the private sector, bringing the crisis closer. Due to the lack of clear concepts and operational principles, there is no internal unity or discipline within the parties and parties are slitting into factions based on mutual self-interest.
Also, with multiple parties joining to create a coalition government there is a patchwork of members, and the restructuring of the Government – for any small reason – makes it difficult for government agencies to stabilize and fulfill their main duties with people changing so often.
To make matters worse, the people who reach positions of authority are poorly educated, and lack morals and leadership skills. They use their positions and authority for their own personal gain by appointing their relatives to government positions, using public funds illegally, and perpetrating the pattern of corruption.
WHAT TO DO NOW?
Changing the Government structure, composition, or the Prime Minister today won’t change public governance principles. Nothing will change until the current underlying issues of “double deels” in government are solved, the election commission is reformed by establishing a voter’s commission, the accurate financial statements of political parties and elections are released, and the parties holding seats in Parliament are funded by the public budget. Therefore, the current Parliament has to pass laws that can address and solve these issues, and probably conduct a new election.
Political parties need to define their ideologies and policies, strengthen their internal discipline, appoint their leaders with great care, set in place management that puts the public interest over theirs – based on dignity and principles, and fill the ranks with educated personnel. If we cannot achieve these changes, then there is a real need for a brand new, clean political power to rise from the younger generation.
Afterwards, we need to employ honest, highly qualified personnel in the public sector through a recruitment process based on talent and capability, and provide professional training, competitive salaries, and facilities. Only then, will conditions necessary for conducting long-term public forums regarding social and economic issues, reaching realistic, accepted decisions, and implementing them be constituted.
Within the economic scope, policies to discontinue state participation in business, change state owned enterprises to joint stock companies, support competition within the private sector, and promote labor productivity by getting rid of price regulations from the government need to be implemented. In order to develop the capital markets, we need to make social security activities (as well as healthcare and other insurance funds) transparent, allow a certain amount to be used to purchase stocks, and collaborate with professional management teams to run operations.
The board of directors of all publically owned universities, schools, and hospitals need to be given management rights to select their executive directors and evaluate their work.
A decision to have state officials report their annual income and expenditure statements, asset declarations, as well as activities and discussions they had been involved in during their overseas trips should be made.
Only then, will the lost ship finally gain its own control. The sails will fill with the hard work, energy, and commitments of the people, and by traveling in the direction we choose, the living standards of Mongolians will rise.
2014.10.22