18 February 2011

Governments do not understand small businesses

A recent article in the Kyiv Post quoted leading Ukrainian economist Oleksandr Paskhaver saying that "The authorities would rather have small businessmen work in factories."

Paskhaver said President Viktor Yanukovych’s administration will have a hard time changing the Soviet mentality of top officials, as well as rampant conflicts of interest between the president’s oligarch backers and government.

Paskhaver, a former adviser to ex-President Leonid Kuchma, said that in order to understand the authorities’ motives, it’s important to remember that they are “representatives of Soviet management in an industrial region.” Many top officials come from the industrial Donetsk Oblast, he added.

“They genuinely believe that whoever has power has ownership, that administrative pressure is better than economic stimuli, monopoly is more efficient than competition and informal pressure is more effective than the law,” Paskhaver said speaking at a roundtable organized by Frishberg & Partners law firm.

The same could be said for most governments. In the UK we now have what are called 'professional politicians'. Most of the people in the UK government have never worked in 'industry' or owned/managed their own businesses.

However, with regards to Ukraine I think Paskhaver has a good point. Many in the cabinet are old style 'soviet management' and are familiar with 'soviet administration'.
But at the same time I know many successful Ukrainian business people who have built businesses the hard way. Unfortunately (or fortunate for them) they stay clear of the cabinet.
Some of them are members of parliament who just focus on their OWN business interests and here is exactly the heart of the problem in Ukraine.

Those in cabinet (The Government) only understand power and control for obtaining results both in the economic and social sectors. The ones that do understand business (mainly big business) are MP's but take care of THEMSELVES.

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