After the 1990 democratic revolution, we Mongolians thought we were successfully replacing a centrally planned economy governed by a single-party authoritarian regime with a functioning multiparty democracy and a fair market economy.
But Mongolia today does not look quite like a fully functioning democracy or a fully functioning market economy.
In a market economy, private businesses are the key to economic development, not the government. Livelihoods are improved by the people themselves, not by the government. The government's duty is to provide equal opportunities to, and protect rights and assets of, businesses and people.
However, our government is too directly involved in economic activities and is imposing controls on markets for goods and services. The number of state-owned companies, created by politicians and their cronies to serve their own economic interests, continues to rise, and their debts and losses end up being paid with public money.
The government is now increasingly controlling prices for basic consumer items, such as gasoline, electricity and meat. It subsidizes mortgages, thus distorting the financial industry.
Our political parties, which come to power through democratic elections, serve the interests of a few special groups rather than those of the broad public. Such poor governance leads to inefficient resource allocation and utilization, making economic recession seem almost like a constant occurrence in Mongolia.
TAKEOVER STRATEGY In his book "From Totalitarianism to Defective Democracy," Michal Klima, professor at Metropolitan University Prague, wrote about the "captured state" phenomenon in post-communist Eastern European countries. A weak civic society and blind obedience to political leaders, he wrote, tend to create a lack of self-discipline and checks and balances within government institutions. Eventually, opaque businesses "capture" the state by gaining control of government leaders and organizations, as well as political parties.
These business interests end up making decisions in lieu of the legislature and the government, leading to what Klima called a "defective democracy."
In Mongolia, all of the political parties -- including the largest two, the Mongolian People's Party and the Democratic Party -- have already been effectively taken over by business interests controlled by party leaders. Thus these businesses profit directly from leaders' official political activities.
The businesses run by these political leaders are flourishing -- and they are capturing the state. As soon as they are elected, politicians instantly forget their promises to voters and start appointing their allies and relatives to government posts. Sometimes they even create new ministries and departments to provide jobs for their cronies.
Political party leaders collect funds in the guise of "donations" and hold most of them in personal accounts. In return, they reward those donors in various ways, such as appointing them to government positions or manipulating public-project tenders.
Once a party wins an election and forms a government, party members themselves obtain leading government positions as well. This puts them in a position where they are able to directly steal public funds. A number of billionaires are born from the government.
And if internal sources of funds dry up, those government parasites turn to international loans by inventing pipe-dream projects. They then embezzle funds by manipulating the regulatory bodies that are supposed to oversee the handling of such projects.
Mongolia's judiciary branch is also controlled by political party leaders, so even if corruption is discovered, the damage to public finances is never redressed. Culprits are handed jail sentences of just a few years and are issued pardons soon after.
The government is providing funds for these parasites instead of investing in more socially important areas. And the government intervenes in the economy because the parasites want to benefit from that intervention.
Mongolia will not be able to overcome its economic decline without making public governance transparent and implementing structural changes that allow the market to set prices.
Many Mongolians agree that the root cause of the problem, a defective democracy run by business politicians, must be fixed before the economy picks up and livelihoods improve. There are still no signs that such a fix is coming. We are facing a real risk of wasting another 25 years without meaningful development, as the more capable and educated of our people continue abandoning the country to live better lives abroad.
Jargalsaikhan Dambadarjaa, also known as Jargal Defacto, is an independent current-affairs critic, newspaper columnist and TV news host based in Ulaanbaatar.