Ruta Arumäe: Prime Minister wanted no advice

Photo: Toomas Huik

Estonian state’s economic policy is managed by Excel tables, merely adding up the costs and revenues. No-one analyses the broader implications of steps taken, writes Ruta Arumäe, adviser to Prime Minister Taavi Rõivas during the former government and now an independent economist.

It’s nice to be adviser to prime minister. One can do lots of travelling, participate at interesting meetings with interesting people, everybody is very friendly and polite. There are no edges; on the contrary, at times everything is so round that is it difficult to figure out which aspect of the roundness might be discussed at the moment. Trips abroad provided for experiences especially positive, as one was able to strongly feel the very positive reputation of Estonia’s. It felt good to be an Estonian, as everybody was so unanimous in their praise towards Estonians.

What I liked most of all was to go to speaking engagements myself. These past four months were among the nicest in my life. It was all so very pleasant and might have continued. Had I just reached the age of retirement, I may have taken the option. At the moment, however, I desire to continue to offer at least some added value to people. The added value expected from an adviser is too small for me.

All this I claim on basis of personal experience. Having just passed thru this social-economic experiment called «How to be Prime Minister’s adviser». The experiment lasted for four months, as it indeed was meant to last. On the one hand, as an analyst who always takes my job very seriously, I desired to take a closer look at how state management happens; on the other hand, I sincerely wished to contribute to the state, in a way doing my «conscript service» in public sector.  

In my imaginations, being and adviser to Prime Minister was giving advice to Prime Minister. In this detail, however, I proved wrong. The Prime Minister wanted no advice. Nor did anyone else in the public sector, in the broader sense. The public sector is filled with dogmas which have not changed since 2003 when I last worked there. With these, the state is being managed till today. I went into the public sector to perhaps be able to get something innovative accomplished. In my opinion, «firmly forward» [Reform Party election slogan – edit] has long ago exhausted itself and in many areas things should now be done different. Obviously, I ran headlong into a wall.

Exiting the framework of established dogmas and suggesting ideas somewhat different in public sector is taboo. It is amazing how, in one voice, everyone is repeating the song once invented. At times, I felt I found myself in the «The Lego Movie». And just like «The Lego Movie», the repetition works. This becomes especially evident while abroad, where the Estonian legend was firmly stuck in all people’s minds whom I met. Well marketing is marketing, but it would be time to think about some essence underneath the shiny surface. For that to happen, public sector should embrace an attitude a bit more open.

For me, it was a bit funny, as I was speaking abroad, and the topic of the presentations was how investments were supposed to come into Estonia. The slides used in public sector date back to 2003 and these had to be constantly culled out – as the arguments for investing here have thinned. À la stability... What stability are we talking about when the economy is bouncing ten percent up and down like a rubber ball? But new arguments have never been added, as the overwhelming majority thinks we have everything so good that nothing is needed to be done. And thus, perched on our stagnating stability, all we see is the other countries’ heels and think how home they got ahead of us.

How badly the presentation needed some real content created by politicians. But there were no signs it would ever be coming. Being the speaker that time, I was able to invent a thing or two, but whipping up sales foam without the product I’d believe in is not my line of work.

No, being an adviser was definitely not for me. From now on, I will advise the government free of charge, like here today. By the way – anyone can be a minister’s adviser. All it takes is to voice one’s opinion publicly. The Prime Minister, for instance, spends much more time looking at his smartphone screen that his advisers’ faces.

I am all for the state reform, in public sector. For starters, we might do away with Prime Minister’s economic adviser post. Firstly, during these four months, none in the public sector took an interest in macroeconomic wellbeing of the state.

By the way, in the public sector they are producing lots of information of all kinds; for some reason, they keep it close to their chest and hide it from the private sector – for no reason at all. To create these wild amounts of information and materials, huge resources are used up, but even within the public sector these are little used. Let them share it with the private sector, then. Just an idea how to make the state more efficient...

Today, my free-of-charge economic political advice is that pouring all election promises into one pot and keeping them by raising fuel excise is a very bad idea! The advice would have been of much better use, of course, had I only had the chance to give it earlier. 

The sad fact remains: the state economic policy is managed by Excel tables, merely adding up costs and revenues. No-one is analysing the broader implications of such steps, and there is a total lack of a goal where the big picture should be headed. Essentially (slightly exaggeratedly), the entire ideology of our economic policy is a balanced budget. A bit simplified, isn’t it? With taxes, the politicians play the zero-sum game, and there is not much concern about outcome regarding the structure of the economy when one tax is raised and another one lowered.

Taxes ought to be the means to guide the structure of the economy, not so that afterwards we will see what happened and fight the fires of consequences. Thus: economic political advice No 2: in decision-making do use broader analysis than the state budget revenue-expenditure table sent from finance ministry.

Another fact I learned during these four months was that our goal in guiding and planning economic policies are the indexes. The international indexes, and how we look in them. At that, only these are selected wherein we look nice.

As an analyst, I cannot only speak of one side of issues. With all respect towards the indexes, and realising the spell of admiring one’s face in the mirror, we still might have some vision of our own as we shape our economic policy. And we do also need to talk about the areas where we are weak, and to discuss what to do to improve these.

If the only idea to fix these tough spots is tax rises invented at coalition talks, this is no strategy but populism and going nowhere. Like wetting one’s pants – feels warm and wonderful at first, but afterwards it’s cold and wet. The only chart we will be topmost is the fuel prices. It will surely not be manufacturing enterprises’ competitiveness chart, nor the people’s living standards or purchasing power chart.

Good always to tax the vices, be it tobacco, alcohol or the sweet stuff. In the eyes of nature, fuel might indeed be a vice, but in the current economic structure it plays too vital a role as production input – probably underestimated by finance ministry. Even today, Estonia is not a shining example by competitiveness of energy prices. Resulting from the recent electricity price shock, the economy stagnated for years. So we have driven into this ditch before. 

Herewith, I do conclude my free economic political consultation today. Thank you for your attention.