Bureaucratic Rat Vision
- By Boris Kagarlitsky
- Feb. 05 2009 00:00
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Import tariffs on used autos is a perfect example of how bureaucrats suffer from acute "rat vision." Our officials chose what they thought was the simplest solution: raise import tariffs on foreign autos. But there was no coordinated strategy, long-term planning or thorough analysis that took into consideration the likely consequences of this policy.
What is the result of this ill-conceived decision? Auto sales have plummeted, and layoffs at the country's plants continue. Moreover, companies selling, transporting and servicing used foreign automobiles in the Far East are closing their doors. In the end, thousands of people have lost their jobs in auto-related industries.
Russian bureaucracy is infamous for its uncoordinated and self-contradictory decisions and strategies -- lots of left hands not knowing what their right hands are doing. For example, when one federal agency jacks up import duties, another tries to protect free trade and open markets in preparation for Russia's bid to join the World Trade Organization. Meanwhile, the government is developing a new strategy to modernize up until 2020, but that strategy has absolutely no connection to the current crisis and economic conditions.
Laboratory studies have shown that, just like among bureaucrats, different rats have different IQ's. But rats have one clear advantage: They can make their decisions independently without having to consult with other rats. When officials try to reach a consensus, the result turns out even worse.
Russian bureaucrats are far from unique in their failure to see the big picture. U.S. strategists, both in the government and private sector, often suffer from this type of shortsightedness. Nonetheless, Russian officials are clearly a cut about the rest. Russia's strategy for combating the economic crisis is a case in point. You would have trouble finding a more hodgepodge sequence of Hail Mary government policies than the Kremlin's anti-crisis measures. The government throws hundreds of billions of rubles into the economy without any attempt to increase companies' overall performance and without addressing the underlining reasons why the companies got into trouble in the first place.
Government intervention is clumsily combined with free-market measures, and the result at the end of the day is that the two approaches effectively cancel each other out. Government agencies buy up products for which they have absolutely no need, justifying it as "support for manufacturers." Municipal authorities hand over huge sums for empty apartments in an attempt to prevent a fall in real estate prices -- the very thing middle-class Russians have been praying for. Meanwhile, Russians follows events with a mixture of confusion and horror, trying to find logic in the incoherent resolutions, announcements and decrees that are packaged as "anti-crisis measures."
A friend of mine who has long experience working with laboratory rats said, "Rats are stupid, but their sense of awareness and perception is amazingly versatile. They don't understand anything, but they are capable of learning quickly. In this respect, they have one up on the bureaucrats."
Boris Kagarlitsky is the director of the Institute of Globalization Studies.