On Emotional and Populist Decisions (Mortgages, the Auto Industry)

In recent years, a great many decisions have been made on the basis of emotion and populism and, regrettably, this has become a trend. In any sphere there is a balance: if someone is forgiven something, someone else pays for it. If some people gain access to something, others will not get it. There are plenty of examples of decisions that serve the interests of particular groups while appearing to be systemic and to benefit everyone.

Let me cite just a handful of decisions that did not make life better for everyone, though the visual effect was very good.

The "7-20-25" program, subsidized mortgages from Otbasy Bank and the distribution of pension savings were supposed to help people obtain mortgages and improve their living conditions. In practice, housing prices rose, and housing became unaffordable for those who have not yet saved up or do not yet have suitable accommodation. All these programs also fed inflation in the country and made not only the apartments themselves more expensive, but everything around them as well. As a result, young people entering the labor market and young families will not be able to buy apartments. The beneficiaries of these programs were construction companies, importers of building materials, and the wealthy and middle class who had substantial pension savings. In the end, those who did not need housing bought more of it, while those who do need housing will wait even longer.

Or take the auto industry programs. The goal was to make cars affordable for the public, with the opportunity to drive new vehicles. It was decided to produce cars within the country. I have written before that, in terms of production costs, we will never be competitive in the auto industry. There is practically no added value for the country in this production. Duties, recycling fees and vehicle registration fees were introduced, and as a result our cars became 30-40% more expensive than identical cars in the countries where they are made. Cars became unaffordable, although importing them to supply everyone who wanted one would have been far cheaper. The beneficiaries were car assembly plants and car dealers.

There are many more such examples: we forgive debts through money issuance, and the entire population pays for it through inflation; we ban exports of goods, and pay even more in the future when shortages arise; we hold down tariffs, and later get accidents and breakdowns, and so on.

Naturally, the problem lies in how we make decisions. There is no debate, no critical analysis, no consideration of all parties' views, and no subordinates who would tell their superior that it cannot be done this way. In developed countries, a manager's task is to choose the right opinion from the options put forward by his subordinates. There may be disputes and debates, and that is a good thing. But that is not how it works here. Subordinates do what they are told; even knowing that it will have consequences for the country, they will do as instructed. The selection of managers should be based not on personal closeness, not on how comfortable they are to deal with, and not even on years of service in the system, but on results and professionalism.