New government, old crisis, and solutions with principles

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  • Jul 31,2016
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After the long Naadam break and the ASEM Summit, the Mongolian People’s Party (MPP), which has an  overwhelming majority in the parliament, is still missing four ministers in their newly formed cabinet, despite having meetings day and night. It looks like the MPP Steering Committee is still having internal battles about replacing the four candidates who were supported but ruled out due to conflicts of interest, as determined by the Independent Agency Against Corruption (IAAC). The new government will have 15 ministers and 11 ministries. So far, seven out of the approved 11 ministers have "double deel" status, meaning they also hold a seat in Parliament. The public is crying out for the fulfillment of the MPP's promises to establish a professional government without double deels. Even President Elbegdorj tweeted, “Can't say that the new government is a professional government. No need to talk about single deels and accountability. Money and power have prevailed over principles and promises. How fast their eyes and ears became shut.” There are heated discussions in the media about what constitutes a professional government, how ministerial positions are going to those who made the biggest donations to the party, and whether or not those who have devoted their fullest to the party should be given a ministerial seat. Mongolians now expect that if the government is formed with the "right" people, the economy will recover, jobs will be created, and livelihoods will improve. However, it all depends on the role and involvement of the government in the economy. Therefore, it comes down to how the ministers will work, rather than who they are. Instead of the Prime Minister forming his cabinet, it is the parliament that currently makes de facto appointments of ministers. It weakens the power of the executive branch and diminishes the Prime Minister’s accountability. It is becoming increasingly evident that Mongolia’s society has huge gaps in the understanding of the role of the government. MAIN ROLE OF GOVERNMENT The belief that the government is the institution responsible for solving all problems is leftover from the failed experiment of the socialist era. Twenty years ago, having failed at this experiment, we chose a  path to establish a democracy and a market economy where human rights are protected. However, instead of fully understanding the true qualities of democracy and implementing them step by step, Mongolians still worship the government too much. As a result, we are being deceived by politicians who tell the people that the government creates jobs and solves everyone’s problems. This has led to the economy always being in crisis mode. The current crisis is a consequence of the regulatory policies pursued by the government for the last 15 years. We are currently strangled by a huge debt that was raised to make up for the public funds stolen for all these years due to the increased involvement of the government in the economy. Today our private and public debts combined (22 billion USD) are double the gross domestic product (approximately 10 billion USD). The budget deficit keeps increasing as the economy grapples with debt and interest payments. In the last four years, our budget deficit has reached one trillion USD every year, and it is 1.1 trillion USD as of the first half of 2016. What revives and develops the economy is not the government, but the private sector. Similarly, what improves livelihoods is not the government, but the people and individuals themselves. The government does not create jobs, and their main role is to provide the private sector with an environment that allows for free competition and encourages businesses to create jobs. It has been a long time since every Mongolian state-owned company started running deficits, used the public budget to make up for losses, and acquired soft loans from the government. In other words, the government was giving money to unprofitable companies instead of using the funds to resolve problems. The government is doing what the private sector is supposed to do while not allowing them to do it. The structure of state-owned companies needs to be changed, their monopolies in all industries have to be erased, and free market principles need to be followed. The biggest mistake that has always put our economy in decline is the government policy pursued for the last 20 years to set, control, and restrict the prices of consumer goods. The low interest housing loans, price stabilization program, and agreements to set fixed prices for fuel - which were all implemented by the previous government - are an attempt by government officials to replace free market regulations with something else. Using bureaucratic means to maintain market equilibrium has never worked. It is because the equilibrium is regulated most effectively by prices, profits, and expenditure. Only such economies are impacted the least by a crisis. We will never be able to get out of this crisis unless we change the structure of our economy, let the market set its prices, and make public governance transparent. WHAT CONSTITUTES A STRONG GOVERNMENT? Our government has never let free market mechanisms work freely. Besides the lack of understanding and knowledge, the government has been protecting certain interest groups. As a result, the fruits of development have not reached every household. What has been missing is strong government and leadership to get us out of crisis and establish justice. The concept of the state in a democracy is a completely different institution compared to the understanding Mongolians have historically had. The state services that existed under socialism have been replaced with public services. The people have been slowly realizing that the government is not an apparatus above us, but it is an institution we establish, and it should work for us while we provide oversight of its activities. What strong government means is that the representatives that we elect are passing laws and ensuring their implementation. Today, those who were elected by us are not working for us, but protecting their personal interests and getting wealthier from election to election. This is why our economy is still in decline. Political parties are the only institution that have the right to acquire ruling power through democratic elections. Without revealing how political parties are funded and how they trade seats and power, Mongolia will not develop. When anyone can buy seats in the government by making donations to political parties, the government will never be able to let the market regulate itself. Without free market regulations in place, the economy will not recover and livelihoods will not improve. The government is always looking for channels that they can use to manage public properties in an advantageous way and steal from public funds. The common perception that government positions are an award presented to people who devote themselves to a political party shows how obsolete our thinking and actions are. Therefore, political parties and all other public governance institutions must have transparent "glass" accounting and operations. The state's immunity from corruption requires transparent, fair governance. Without making decisions with principles such as letting the market regulate itself, minimizing government involvement in the economy, and freeing up prices, the new government will not be able to get the economy out of its crisis anytime soon.