Vladimir Mau Interviewed by Snob Magazine

18 June 2021
Vladimir Mau Interviewed by Snob Magazine

Why does the “human-centricity” of the Russian state, which has been around for a thousand years, no longer work; how is economic growth actually measured today; and can the “happiness index” be the main indicator of the quality of life? Economist Vladimir Mau, Rector of the Russian Presidential Academy of National Economy and Public Administration (RANEPA), talked to the Snob on these topics during the recent St. Petersburg International Economic Forum.

– One of the main points of the panel session you moderated at SPIEF, and the Forum’s business agenda in general, is that the quality of life must always be the top priority for any modern state. Why can’t we be use economic growth as the familiar measure?

– Quality of life is usually measured by the dynamics of GDP, but this indicator does not always correlate to the changes in well-being (or quality of life). After all, GDP is essentially the aggregate of goods and services sold in a year. However, today, when the pace of technological progress is constantly accelerating, the goods and services are getting cheaper not from one generation to another, but over the course of a few years. In these conditions, well-being can grow without adequate growth of GDP in its traditional sense. One example is the large taxi aggregators, which reduce the need for owning a car. Lower demand for cars means less metal needs to be produced, etc. Another example is e-books, which do not require paper to print or bookstores to sell. Your smartphone took over many things you would have to buy separately a few years ago: radio, TV, books, magazines, voice recorder, still camera. All those items together would have cost a lot more than one modern phone. 

A better way to measure economic and social progress is by real earnings, level of private investment, export structure, share of the poor population – and the way these factors change. In any case, these parameters reflect changes in social and economic development more precisely.

The indicator of economic growth in its modern sense appeared less than 100 years ago: it is sort of a product of the American Great Depression, arising as a measure of real well-being. However, as we have seen in recent decades, economic growth can be accompanied by a drop in well-being, as it did in the USSR in the late 1980ies. Japan is the opposite example – in the last 30 years its economic growth has been almost non-existent, while the well-being of the people was growing. 

Governments use various indicators to measure the quality of their work, but these tell little to an average person. A person evaluates the quality of a country’s governance by the way he or she lives, not by the growth of its GDP. Accordingly, economic growth should lead to changes in the parameters people are focused on: disposable income, the purchasing power of their wages, access to education and healthcare, a comfortable urban environment. The task of the economic policy is to produce results in the same terms people think in. 

– What about the problem of inequality in today’s world, which, with the use of artificial intelligence, additive technologies and blockchain, is only getting worse?

– When people talk about inequality, the issue often boils down to its simplest form: inequality in income. However, it is increasingly clear that inequality is determined not so much by income as by access to public institutions. One may have a small salary but have savings; or, one may have a high pay and a large family to support.

Rising inequality, like rising uncertainty, is putting new demands on the role of the state. The pandemic has upheld these trends: the state is expected to assume the function of insurer of last resort, i.e. to come to the rescue in difficult circumstances, by making emergency payments to vulnerable families, supporting people in unpaid leaves, and monitoring the implementation of the necessary response measures in healthcare.

– How does economic science measure quality of life? Is there a universal set of criteria, or is it different for different countries, big cities and small towns?

– To be precise, economic science offers several indicators for assessing the quality of life: the happiness index, the satisfaction index, and so on. None of them are universal, they all come with their weaknesses. For example, if we focus only on the happiness index, we can conclude that people in poor countries live happier than in the rich ones. 

– Another term frequently heard at the Forum was customer-centricity (in particular customer-centricity of the state). Why not human-centricity?

– Throughout more than a thousand years of the Russian history, the state has been specifically human-centered, and understood its task as the need to take care of people according to its own idea of how they should be helped. This is the first time – really the first time – that we are talking about the need for the state to have a dialogue with the people. Customer-centricity means that you should study your “customer”, their needs and requirements, rather than doing what you personally think is right. In other words, while human-centricity, according to our historical experience, implies a monologue of the state, then customer-centricity is all about having a dialogue with the citizens.

It is as important for the state to know its citizens as it is for a business to know its customers. Russian state corporations made great advances in this respect, and it is very important to take this experience into account. 

The phrase “customer-centricity” itself, in relation to public administration, has become widely used thanks to Prime Minister Mikhail Mishustin, who implemented this approach while he was still the head of the Federal Tax Service. Within a few years, the agency became a very taxpayer-friendly service. This is a true intellectual breakthrough in understanding the model of how the system of public administration works: the ability of the state, of the government to tell the citizens: “We are there for you”, and to switch from monolog to dialog. 

– As you said many times in your speeches, in order to ensure more effective public administration, it needs to be transformed into a system of services for the population. How can this be put into practice?

– The introduction of digital services is one significant way to make the government customer-centric. These services are convenient for citizens, save the time, but they also need to become customer-centric. It is about building constant and yet unobtrusive communication with the people over a convenient communication channel; about providing solutions as requested, rather than a formal response to an application; about the state machine working for the results, not for the process, and the result must be in the customer’s interest, which in itself may appear rather unusual for the state machine. This is as much about organizing platforms, products or services as it is about changing the mindset of civil servants.

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