How do we build a strong Russian economy
Alas, the old composition of the government and those theses voiced by V.V. Putin, in his message to the Federal Assembly, does not inspire the slightest optimism: there are no fundamental changes regarding the current methods of managing the economy. And without this, everything will continue as it has lasted for the last 10 years, when for some reason any financial crisis in the USA was felt most strongly in the world in the Russian province.
But there is such a good rule of discussion: criticize - offer! It is easy to blame our government for its economic failures, and you try to suggest how to turn Russia into an economic paradise on earth. And so, in this article we are offering you, we will try to do it.
What do we need to make our economy strong and sustainable? The answer is simple: we need to be formed by strong and economically successful enterprises with modern means of production, producing and selling competitive products. They have to sell it in such volumes in order to earn a profit that ensures expanded reproduction: that is, enterprises should have enough profit not only for current activities and dividends to shareholders, but also for investment and expansion of production. Of course, with the involvement of credit resources, but nonetheless.
And how many such enterprises do we need? How big should the product they produce be? Each country produces for the year products for a certain amount, respectively, it is possible to calculate how much this product accounts for one inhabitant of each country. We should strive for indicators similar to those of the most economically successful countries. If we have these figures are comparable, if our product grows from year to year (which indicates the expansion of production), then our economy is strong. But there is one more criterion: taxes that are collected from goods produced in our country should be enough to ensure the key government objectives - defense, medicine, education, etc. In other words, the country's budget should be formed from taxes levied on production, and not from super-profits, which we extract by selling oil and gas abroad.
So, with the criteria for success, we decided. Now it's up to you: to understand how to achieve all this. On the one hand, it seems to be very difficult, because business management in modern conditions is an extremely complex process, in which you need to take into account a lot of parameters. But on the other hand, it is very simple - it’s enough to remember that the Russian people, whoever doesn’t say anything on this subject, is intelligent and educated, and also has enough savvy to compete with anyone (that he, in general, and argued throughout his stories). That is, the state does not need to try to somehow manage, or otherwise directly influence the enterprises in order to achieve high performance. He needs to ensure equality of conditions with foreign business. And having equal conditions, domestic private owners will cope in fair competition themselves, and our enterprises will be no weaker than their foreign counterparts.
This is how we will define the key task of the Russian government in managing the country's economy: the government must ensure equality of opportunities with foreign business. And what do you need to do for this? Actually - not much, because, by and large, there are few key reasons for our failure - just the fingers of one hand are enough to count them.
The first thing we need is a stable exchange rate of the national currency. For 20 rubles for a dollar or for 100 rubles, but stable. Why do we need it?
The fact is that sharp drops in the course literally kill our businesses. There is no autarky in the Russian Federation for a long time, even the Soviet Union has not pulled it out - we are very closely and tightly connected with foreign manufacturers. As a result, whenever we find that the Central Bank once again dropped the ruble exchange rate, this means that all foreign raw materials and components have risen in price for us (for now we need more rubles to buy the same amount of dollars we spent on them ), but our revenue is about to fall, because other companies that have the same price increase will do ... what? That's right, they will start saving on purchases from a domestic producer in order to raise money for the purchase of the necessary imports.
In addition, as soon as the ruble goes into a steep dive, a banking crisis sets in immediately. It is known that today almost all enterprises have a loan portfolio and constantly renew it - by returning one loan, they immediately take a new one of the same size in return. The amount of credit obligations from this does not grow, but does not fall, thus achieving a stable position of the company. But as soon as the banking crisis begins, the bank quotes the brilliant statement of D.A. to the company that came to negotiate a new credit line instead of ending the current one. Medvedev: “There is no money, but you hold on!”
And, of course, do not forget to pay off the next tranche, you have it in a week ... That is, the company immediately has to not only seek additional funds to pay for imported materials, but also to pay off loans without the opportunity to take a new one, because if the loan is not timely pay off, there will be bankruptcy.
In general, every time the ruble begins to fall sharply, a huge number of enterprises in the Russian Federation are literally on the verge of survival, of course, all investment programs go under the knife, every penny is saved ... and this is not always enough, but even if it was enough, the effects of the crisis are felt for several more years. And as soon as we recover from it ... correctly, the next one comes.
Thus, the task of the state is a stable exchange rate of the ruble against the leading currencies of the world. Of course, it can vary in some reasonable limits, but it is precisely that reasonable, that is, very limited, as, strictly speaking, the world's leading currencies - the dollar, the euro, etc. - do.
The second, which is extremely necessary for domestic enterprises, is the sufficiency of funds for current operations. Alas, but in Russia there is a strong shortage of money supply. We simply do not have enough money to ensure normal economic relations between firms! In order to explain this - a bit of theory.
There is such a thing as “monetary aggregate”, while our Central Bank calculates four of its types M0, M1, M2 and M3. What are they?
М0 is cash, that is, banknotes and coins (but not non-cash money);
М1 - These are М0 plus your bank cards, demand deposits and balances on the settlement accounts of organizations (except credit);
М2 is М1 plus fixed deposits, that is, deposits made for a period agreed with the bank;
М3 is М2 plus savings deposits.
Naturally, all the above indicators are considered in national currency. If, for example, a certain enterprise will have settlement accounts and currency earnings on them, then such cash balances in the monetary aggregates МХNUMX-М1 will not be taken into account. Usually for the calculations in which the money supply participates, the M3 aggregate is used - that is, the amount of cash and non-cash funds, as well as time deposits in the national currency, and in the future we will use it.
So, here we have the M2 money supply. In the Russian Federation, in October, 2017 g amounted to 39 trillion 668,3 billion rubles. Is it a lot or a little? In order to answer this question, we need to remember that the main function of money is to ensure the exchange of goods, that is, we need to find out not only the amount of money supply, but also the volume of goods produced in the country.
For this we use another economic indicator, which is called gross domestic product, GDP (not to be confused with Vladimir Vladimirovich Putin!). This indicator is the sum of the value of all final goods and services produced in a country for a certain period (usually a year). What does the word "finite" mean in this definition? This is about what - let's say, during the year a certain company made metal for 100 rubles, the second - plastic for 100 rubles, and the third, having spent 200 rubles, bought the first two and both and produced ... well, for example, canteens knives worth 300 rub. So, only the cost of knives, that is, 300 rubles, will fall into GDP, because the cost of metal and plastic is already sitting in this value.
In other words, during the year, three firms were active, but metal and plastic, which were produced by two firms, were used by the third as raw material for table knives. As a result, at the end of the year, there was physically no metal or plastic left, but there are only table knives — their value will fall into GDP.
Well, it is obvious that the money supply must be in some relation with the value of the output. The question is which one?
Let's look at this ratio in the eurozone countries, using data from tradingeconomics.com. GDP of the eurozone in 2016 g amounted to 11 trillion. 886 billion euros. And the money supply (М2) is approximately 10 trillion. 250 billion euros. (there are graphs, so the definition of the exact value is a bit difficult).
Thus, for one euro of a country’s product produced in one year, the euro has approximately 0,86 euro of money. And what about Russia? We have already indicated the amount of М2 money supply - 39 trillion 668,3 billion rubles in 2017. But Russia's GDP in the same 2017 g was 92 trillion. 037,2 billion rub. Thus, for one ruble of produced goods, the economy of the Russian Federation has only 0,43 rubles. Money.
In other words, the money supply in the Russian Federation in comparison with the countries of the eurozone is undervalued by half! That is, in order to ensure the viability of the enterprise, domestic companies are forced, with a similar volume of output, to be content with half as much money as their foreign competitors. This is, of course, a completely unnatural situation that puts our business in a deliberately losing position.
Thus, the government of the Russian Federation faces the task of normalizing the size of the money supply. At the same time, we are well aware that simply “taking and printing money” will not work - a simple injection of money into the economy will simply disperse inflation, the goods produced in the country will become more expensive, and as a result the money supply / GDP ratio will remain at the same level that was before the "throw". Accordingly, it is necessary not only to replenish the money supply, but to find such a way of entering money into the economy, in which inflation does not change at all, or it changes very little.
By the way, about inflation ...
The third thing that our economy badly needs is a stable and low level of inflation. This is pure science - low inflation, at the level of 1-2%, stimulates the economy and is useful for it. Why? Imagine that inflation is equal to 0. In this case, the money put on the shelf (in stockings, under the pillow, etc.) will keep their purchasing value until they are taken from there - you can buy exactly as much as they can today and through 5 years, and through 10. But a small inflation will lead to the depreciation of the money. Of course, they can still be put into the piggy bank, but then they will lose a little each month in value, prompting their owner to invest this money somewhere - at least just to take the money to the bank, which, paying a small interest on the deposit, will make This is for the contributor. That is, a small inflation is useful because it does not make money “stagnate” and stimulates their turnover. What is bad high inflation? The fact is that the prices of goods of various kinds are unevenly raised, and as a result there is an imbalance between enterprises of different industries - that is, with high inflation, there are regular situations when a manufacturing company is forced to buy raw materials and materials at an increased price, but it cannot yet raise the price of their goods - they will not buy. As a result, many companies have reduced profits from the planned, ashes all development plans, etc.
So, what about inflation? In the past, 2017 g, according to Rosstat, the inflation rate was 2,5% (there is a lie, there is a big lie, and there are still statistics, yes). Generally speaking, this would be a wonderful result, if it were true (the price tags on the shelves of stores, alas, Rosstat’s conclusions somehow do not confirm), but the fact is that inflation in our country, even according to official data, is a galloping phenomenon. So, in 2016 g it was 5,38%, in 2015 it was 12,91%, and in 2018 g it was predicted at the level of 4%, but, according to recent forecasts, more is already expected. In the eurozone countries, this is much simpler and clearer - over the past 5 years, their inflation has ranged from -0,5% (that is, commodity prices have fallen!) To a maximum of 2%.
In general, it can be stated that our economy needs inflation, stably staying within 1-2% per year.
The fourth thing that Russian companies need is cheap loans. Money is, of course, also a commodity, and they have their own value. Banks give businesses money in use for a certain period of time, and charge for this in the form of interest on loans. Credit is the driving force of the modern economy, because it allows you to make investments for future profits - we are still only planning to earn it, and these are the investments!
But how can you compete with foreign competitors if they attract loans at a price (the amount of bank interest) many times less than that given by Russian banks to a domestic producer? With other things being equal, there is one of two things - you need to either earn a lot more profit than foreign businessmen, or limit yourself to the size of a loan. So, according to the site tradingeconomics.com. the interest rate on the loan in the eurozone is 2,09%, while in the Russian Federation it is 8,92%, that is, we have a more than fourfold difference ... The author of this article is not quite clear how the “Interest rate on credit” indicator was calculated for various countries, but this the ratio is more or less significant.
By the way, why do we have such draconian interest on the loan? Here, as you know, everything “rests” on the key rate set by the Central Bank, because banks are designed so that they cannot give loans below the CB rate. Simplifying the situation (in order not to try to turn an article into an economics textbook), the key rate is the cost of loans that the Central Bank gives commercial banks, and it is clear that a commercial bank to give someone this money at lower interest rates is a direct loss. So, we have this rate today is 7,25%. Why is she like that? Our pseudo-economists, graduates of the Higher School of Economics (HSE) have even come up with a definition: "inflation targeting." That is, in their opinion, the size of the interest rate of the Central Bank allows you to control inflation in the country.
Maybe it certainly is, but only strangely we control inflation - the stated inflation in 2017 g is 2,52%, but for some reason the interest rate on loans is three times higher - 7,75% (this is in 2017 g, before 7,25% it dropped already in 2018 g). And how to control inflation in other countries? Well, let's take the United States. They have inflation - 2,5%, and the interest rate - 1,75%. Take the UK. The inflation rate is 2,4%, and the interest rate level is 0,5%. You heard right, the countries of the "golden billion" value of money, which can receive commercial banks from the state bank, below the inflation rate. And it really looks like inflation management, because in this case a commercial bank can give loans at a rate of approximately equal to the inflationary one, and still, at the same time, it will remain at a profit. Naturally, nothing like this is possible in our country and the question arises - what goals are actually pursued by this very “inflation targeting”? With such draconian interest rates?
In this respect, the example of the eurozone countries is indicative. They, starting with 2016 g interest rate is zero. You heard right - if a government bank needs a government loan, it gets it for free. Well, our Central Bank, “in full accordance with Western economic science,” “targets inflation” with loans at 7,25% per annum. The explanations here are, in general, two - or CB specialists are completely incompetent, or the real inflation in 2017 g (and not the one about which Rosstat tells) is not 2,52, but more than 8,5-9% - which, by the way, is very seems to be true.
In general, the task of our government in terms of bank lending is to ensure that the banking system functions in such a way that the cost of a bank loan will not exceed the average for the eurozone countries.
And finally, the fifth thing we need is the state’s support of the domestic producer. Everything is very simple here ... and difficult at the same time.
There is the World Trade Organization (abbreviated WTO), which promotes the principles of free trade. The main idea of this organization (officially) is that the “invisible hand of the market” will lead all the countries that have entered it to incredible prosperity, since fair market competition will put everything in its place. Uncompetitive enterprises will go bankrupt, the best of the best will receive new markets, and as a result in the world there will be only the most highly efficient enterprises in each industry, at the same time the ideal division of labor between countries will be achieved. In each country, only those enterprises that have achieved the highest efficiency will remain, and the rest will be bought by these countries from other WTO members.
In practice, of course, nothing of the kind happens.
The first and key error in this logic is idealizing competition, since the WTO assumes that in open competition, in which neither party has “the aces in the sleeve” in the form of government support or protectionism, the manufacturer of the best product will win. This is not true - in such a competition the strongest wins, and not the one who offers the best product.
A simple example - no matter how great soda you come up with, you will not be able to compete with corporations like the same Coca-Cola. You simply have nothing to oppose to their many industries, giant advertising budgets and distribution networks, well-established logistics, etc. etc. Equal competition can be equal, or at least comparable companies - if you start from scratch, then no competition, of course, will not work. Here is another example - only the lazy one didn’t curse the results of the Sukhoi SuperJet program, but ... let us imagine that the Sukhoi Design Bureau worked perfectly, and the passenger plane created by them in its class turned out to be the best of the best, beating up the Boeing competitors. Ayrbasa "and all there" Embraerov ". What's next? Will the airlines queue up for Sukhoi's newest planes?
No, they will not. Because besides the quality of the aircraft itself, there is also the quality of service: the same Boeing can allow (and allows) to have service departments and spare parts warehouses around the world. That is, the airline, wherever it runs its flights, can be sure that in case of any technical problems, they will be eliminated as soon as possible. But Sukhoi will not be able to provide such a service due to a banal lack of finance. As a result, a vicious circle is formed - Sukhoi cannot deploy a worldwide network of “support”, because it requires money that could bring him large-scale sales of aircraft, but there will be no sales until the service is provided.
In other words, competition demonstrates its best qualities only in a “match of equal”, that is, companies that are comparable in their financial capabilities - otherwise, they will simply crush or outbid a competitor. That is why the WTO, in fact, does not create free competition, but claims the dominance of the most developed countries at the moment - their industrial and other products force out the producers of weaker, developing powers, not giving them hope to develop to a better world level. When a new, developing country enters the WTO, it does not gain anything from “free competition”, since its relatively weak industry is not able to withstand much more powerful corporations in more developed countries.
Strange as it may sound, under certain conditions, state protectionism is even more capable of responding to the ideals of a clean market than free competition. Thanks to protection, the state helps the company to strengthen in the domestic market sufficiently to obtain resources for competition with stronger companies in other countries.
In other words, the WTO is, in fact, the assertion of the domination of more developed countries over countries with less developed economies. And what is interesting is that by propagating the formal equality of its members, the WTO, nevertheless, retained very broad rights to support its first members (that is, the most developed countries) of certain sectors of their economies. That is, you, gentlemen, honestly compete with us in those areas where our industry is stronger than yours, but where it is not stronger, excuse me, but we will support our manufacturer. Thus, formally professing equality and healthy competition, in practice the WTO is a tool for expanding the sales markets of the economies of the “golden billion” countries at the expense of less developed countries.
The second problem with the WTO is that no economic benefit can outweigh the country's security concerns. Again, a simple example - no enterprise of the Russian Federation is able to compete today with manufacturers of modern processors for computer equipment, our backlog is enormous. But nevertheless, we cannot ensure the safety of the country using imported components - therefore, the country is simply obliged to create and maintain, even if unprofitable, the production of computing equipment - even if it is several times inferior to foreign innovations. The same with food - agriculture in most parts of our country cannot compete in any way, for example, with an Italian farmer who does not need to think about capital buildings in the winter, about heating, and who easily takes two harvests a year. But food security does not allow us to give up on our own agriculture in the hope that the country will be fed by Italian farmers. In other words, the principles of the WTO are good only as long as peace and friendship reign among its members, but if not, then free competition is immediately forgotten and sanctions begin, for which you need to be ready.
Thus, the state should implement a policy of reasonable protectionism - its meaning is not to protect its manufacturer at any cost, but to equalize chances if possible, making the competition truly equal. By the way, part of this protectionism is the development of science, including the fundamental one - it is clear that relatively small companies cannot support and finance research projects.
That is, in fact, the five basic conditions, according to which we can really hope to create a strong market economy. Perhaps someone will be disappointed if they do not see the requirement to create a sane tax system in the list above. Strange as it may sound, it is to her, perhaps, the least of all questions today - some excessive differences from foreign tax systems for the better or worse, perhaps there isn’t any. However, this does not mean that it cannot be improved by simplifying the procedure for collecting taxes for the state and for business.
So, we have formulated five goals that we need to achieve. Now it's up to you to describe how we can do it. But we will do this in the next article.
To be continued ...
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