In the beginning there was an idea. Unfortunately, the beginning turned out to be too early.
No, I’m not talking about my new blog, though the sentiment may hold for that, too. I’m much more worried about a couple of initiatives here in Russia that, while correct in principle, are catastrophically timed.
The first is a move by Sberbank, the country’s biggest bank and the place where most Russians have to go to pay their utility bills, that will affect all of its clients in Moscow (approximately 11 million people, or 8% of the population). Up until now, when people go in to pay their utility, telephone and other bills, the commission for the transaction has been borne by the recipient (i.e., the heating, electricity or telephone company). But now, Muscovites will have to pay a commission of 3% if they do the transaction at the cash desk, or 1% if they use the ATM.
Aside from the suspect logic of cash-rich companies like natural gas monopoly Gazprom squeezing extra profits out of ordinary citizens in a downturn, the idea isn’t so bad. The current system of paying bills is remarkably inefficient and gets in the way of bank tellers doing more productive work. Using market mechanisms to encourage clients to move to more efficient technologies is textbook economics, and it works. And the middle of an economic crisis might not even be the worst time to do it, as the 2% savings at the ATM vs the cash desk will be more keenly felt.
But the problem is that using the ATM isn’t much of an option. The system requires entering endless streams of numbers, found in the small print on utility bills and difficult enough for me with my 20:20 vision. Most of the people found in line on any given day at the bank are considerably older and harder of sight than I am, as well as less fluent with computers. As a result, working with the machine is likely to take them considerably longer than working with the teller. To make matters worse, most Sberbank branches have only one ATM, meaning that the crowds previously distributed between several teller windows will now converge around a single machine. It will be chaos.
That chaos, however, will be nothing compared to what may happen when planned police reforms move forward. Initiatives already underway will remove, by some estimates, as many as 300,000 police officers from the ranks, a drastic — and much needed — reduction in the force. Russia’s police are untrusted and unloved for very good reason: they are corrupt, abusive and highly unprofessional. It is unclear what effect the reductions will have, but only radical measures can work; incremental change will be counterproductive. President Medvedev is to be commended for taking on the task.
But I have to wonder about the wisdom of throwing 300,000 people — armed people — out into the street in the middle of an economic crisis. Productive employment will be nearly impossible for them to find, but that doesn’t mean they’ll go hungry. Rather, it is likely that they will turn to the private security sector, which already provides a second (and, in some cases, a first) income for many of them. And, as we saw in the 1990s, Russia’s private security sector is one of the few industries in the world where supply easily creates demand: would-be security guards are quite capable of proving to potential clients the need for their services. The result will be increased criminalization and an effective new tax on businesses — particularly small businesses — at a time when the economy is already struggling.
In Russia, it is difficult to say no to good ideas when they arise, so rare it is to see sound policy ideas bubble to the surface. But the proof of a policy is in the implementation, and timing is key. If there were any way to be sure that these policy ideas would be remembered in better circumstances — and, of course, there isn’t — I would much rather see them wait.