I thought about the contradiction embedded in our system of governance. To increase their popularity and hold onto their positions, the rulers organize a “legal” redistribution of earnings from those who create something, allocating it to the needs of the state. Not to mention corruption and theft. All of this is called raising social standards and a state necessity.  

In my opinion, social standards should be set at a level that the state is able to provide, not by redistributing funds taken through taxes and levies, but through earnings generated by the public sector. After all, if you compare the conditions under which commerce operates and those of the public sector—they are worlds apart. With proper, effective, and rational management of state enterprises, the government could not only raise social standards and cover all state needs, but also develop science, new fields, and industries. And all of this would be funded by profit earned independently, not taken from businesses. 

Give any successful businessman the task, as a public duty, to organize the work of any state enterprise and you will see that instead of losses, it will start generating profits within the first year. And what if we apply this approach to state budget management systematically? We have more than enough resources for everyone to live a normal, comfortable life. We just need to provide fair pay for managers and workers, and also organize regular independent audits of their performance.

The state can easily retain a monopoly over certain sectors of goods or services production and, by organizing the work properly, turn from a ‘racketeer’ into the wealthiest market operator. Natural resources, alcohol, medicines, electricity, aviation, space… there are still plenty of areas that could be state-run sectors. How can the railway, or Naftogaz, or Ukrposhta possibly be unprofitable? With such access to administrative and financial resources? Businesses struggle to survive under much harsher conditions.

In our current perception, a state enterprise means decay, neglect, outdated equipment, miserable wages, everything leased out, engineering staff successfully downsized, and so on. But this is nonsense. In any developed country, a state enterprise is a successful business with a 100% guarantee of selling its products and funding necessary working capital.

The public sector should compete in foreign markets, which would help raise the quality of products and services in the domestic market. Privatizing everything may sound modern, but so far it hasn’t really led to economic growth or increased prosperity. Most likely, the right kind of privatizers haven’t emerged yet, and those who are currently there have no interest in developing this country or its economy. It’s a vicious circle: the economy declines, living standards drop, the state requires more and more funds to support social standards and cover needs, the public sector generates losses that fall under ‘state needs,’ pressure on business increases, business opportunities shrink, and the economy continues to fall. I wonder who or what has the power to break this vicious circle. How did this happen in other countries? We can’t be the only ones, can we?

Filyanin S.N.

07.2016