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«Updated Opinion on the Problems of the World Economy»

«Updated Opinion on the Problems of the World Economy»

7 May 2020

02/27/20 in the old mansion of the Turgenev library an event took place at which you performed. Please tell our readers what your main message is about. How did the idea of implementing such a format of dialogue with the audience?

This is an attempt to briefly and figuratively explain what is happening with our economy and us, what will happen to it, why a famous scientist goes into journalism, writing. This is an attempt to tell dozens of stories about how to be someone who thinks, who is rational, who is ready to take all the risks – in their own business and in the management of their family’s property. A guide to action in a seismic, highly volatile environment.

Yakov Moiseevich, you took part in creating the financial market in Russia and did a tremendous job in this sector. They even wrote the first textbook, which studied the entire market in the 90s. Why did you decide to go in macroeconomics?

I didn’t switch, but added. At some point, I realized that there is no point endlessly “improving” the Russian financial market, it will never become large, developed under given conditions. And in what “conditions”? Macroeconomics, ideology, models of mass behavior. So I need to deal with them. Only universal experts who goes beyond the industry segment can be really useful for everyone.

Often you cover the topic of the family institution, in particular its financial aspect. In one of your discussions, you drew a parallel between family budgets and local economies. How do you assess the current state of these institutions, and what changes do you think need to be done for optimal life in Russia?

The question is for ten volumes [vast question]. More than 100 million people live in medium and small settlements in Russia. They are absolutely dominated by the “low-budget” model of the family, when people are forced to feed in the gray economy, in the gardens and kitchen gardens, endless combining – very hard work. The most important thing is that there is little love for the people in our economic policy, the family doesn’t stand at its center, despite to the many magnificent words spoken on this subject. In such a raw material economy as ours, society, people are “bargaining” all time with the state (privatized state) for a piece of bread. And in our “collective model of behavior” we have little hope for ourselves. According to all surveys, only 10-15% of the population is ready to live independently. The rest want more of the state in everything – in ownership, in management, in managing of their lives. All these things – are  huge deformations in the structure of our society – they need to be and can be changed.

Recently, on the part of people with high income periodically raises questions about the right to privacy. How do you assess the current supervision of the financial flow of citizens?

It will be much more. A long trend is a loss of the right to banking and tax secrecy, to secrecy of property, health status, movements. “Big Brother”. After all, it is known that a consolidated database of the population, is under development now and will be completed in a few years. 

All local databases of government departments will be integrated to this consolidated database.

This consolidated database and will include information about each of us. A society of total supervision is something new and, of course, unwanted. It will be necessary to learn how to live in this trend because it is global, although in Russia it may be tougher than, say, in a group of developed countries.

What do you think will allow our country to come to economic independence and stability? Is it necessary to carry out industrialization and how to do it with crazy competition, for example, from China with its massive and cheap goods?

No any one country has an economic independence in the full sense of the word. But we deserve a large universal economy. So each of the 146 million people had a chance to find themselves. How to get away from a one-sided commodity economy, with large empty food niches? How to avoid a deep “Chinaization” of technology (China is now the main supplier of machinery and equipment to Russia)? Answer: “development state”, “development economy”, “stimulus economy” instead of “punishment economy”. All recipes are known, I published them a hundred times. Growth + technological modernization + improving the quality and life expectancy in Russia. There are hundreds of technical tools to do this. The two books that we released in 2015 and 2018 are technical manuals on how the “economic miracles” were done in Asia and post-war Europe.

Yakov Moiseevich, in your opinion, what positive steps are being taken to strengthen not only the Russian, but also the global economy today?

The fate of the global economy is now functionally dependent on the dynamics of the pandemic. When the exponent of new coronavirus infections begins to bend down, an atmosphere of a new start will arise. So far, the global economy is only supported on the move by massive cash injections, tax breaks and other incentives.

Speaking of markets, an unstable atmosphere is being formed around the world in connection with the outbreak of coronavirus. The largest technology companies are struggling in hysteria due to reduced production. How can this situation affect Russia? Share your thoughts – what damage can the global economy bring to this epidemic?

A lot of uncertainties. A turn for the better – only after a reliable fracture of the exponent of the coronavirus. Before that, every day is “bad news.” The basic trend is falling with bounces, no matter what, in the ruble, economy, financial markets. The main thing is not to see how economies begin to gradually collapse, to die into pieces. These are large organisms with the limits of patience. Worst of all, those who work “off the wheels” and have a lot of credits. It is estimated that small businesses have a safety margin of 2-3 months, larger companies have 6-9 months, and large infrastructure sectors (water, energy, heat, food, communications) have much more, they will be supported of government till the end. Money injections will be provided into the largest banks and business, with all the outbreaks of inflation, the economic organism will survive, recover. Many analogies with medicine, while the injury is “moderate”.

What about social risks? For people to “explode,” large breaks are needed in food, water, energy, and heat. And yet – a whistle into poverty. The fall in GDP per capita is approximately 2 times (Indonesia (1998), Argentina (fracture of the 2000s), Ukraine (2014)). Or a complete neglect of their interests in difficult times, a demonstration of uncontrollability.

As for Russia, then all the crises of the past 3 decades, Russia passed “with leverage” to the other 30 largest economies. Yes, I’m worried, I’m afraid of skidding, and this time, I have reason for this, knowing how “everything is work.” I hope that this will not happen, that our ship, rather shabby, will hold. I pray that huge Russia will overcome this challenge.

Photo courtesy of Y.M. Mirkin


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7 May 2020
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