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"support for the disastrous privatization of the economies of the Post-Soviet states that's lead to massive human suffering" Lack of privatization in Post-Sovi

by alienjr 11y ago

"support for the disastrous privatization of the economies of the Post-Soviet states that's lead to massive human suffering" Lack of privatization in Post-Soviet states lead to massive human suffering. In Poland the government constantly subsidies all companies that weren't privitzed in 90s. What's worse quality of products and services in these industries is terrible. That's why for instance electricity in Poland is one of the most expensive in Europe. And it is impossible to change anything because all these companies are highly unionized and have huge political influences during elections. Little state ownership may work fine in countries that has different culture in rest of the economy has been capitalistic for last 200 years. In Post-Soviet world it is disastrous. Look at Russia for intance - Gazprom and other state companies were overtaken by the Putin's mafia.

RobertoG 11y ago
"Gazprom and other state companies were overtaken by the Putin's mafia" That is called "privatization".
- jahewson 11y ago
  Sort of. The Russian government still owns a majority stake in Gazprom and Putin's conquests have been under the banner of moving corrupt private oil companies back into the public hands of Gazprom. So it's really a landgrab by the state, which happens to own a private company. But it was the US's policy of rapid "shock" privatisation which resulted in the unmanaged sell-off of the original state assets in the 1990s and the creation of those oligarchs. It's like selling USPS for $1m - that's not privatisation, it's madness.
  - RobertoG 11y ago
    I agree that Russia is a very extreme case, but it would be difficult to find any place in the world where privatization was not done in the benefit of a few friends of the people in power. Mexico and Carlos Slim comes to mind for instance.
- ArkyBeagle 11y ago
  It was a reaction to a power vacuum. A very severe power vacuum. Frontline's "Putin's Way" is highly instructive. Failed states are dangerous.
zurn 11y ago
Many European countries have very large (dominant even) state owned power companies that work pretty well. But really the argument about Russian privatization is that it ought to have been executed less poorly, for example not donating most state property to a few corrupt oligarchs.
- xixi77 11y ago
  I would not use words "poor execution" to describe a process that achieved its exact intended effect. Nor does it have anything whatsoever to do with any American economic advisors. It only looks like a failure if we assume that the Soviet (and post-Soviet Russian) state considered its subjects as stakeholders, which has never been the case.
nemo 11y ago
I haven't got a problem with privatization per se, and recognize that some approach to privatization was called for. I have major problems with the disastrous "shock therapy" approach to privatization that was actually applied where the US economic advice was what created the mafioso oligarchs.
- xixi77 11y ago
  You are grossly overstating the influence of the "us economic advice", which was zero. The mafioso oligarchs needed and used none of it.
  - jahewson 11y ago
    You might want to read up on this. It was US economic advice which led to the rapid sell-off of public assets which resulted in the creation of the oligarchs in the first place.
    - xixi77 11y ago
      Seriously, I do not need to read up on this, I was there. But one does not really need to have first-hand experience to see the deliberate deception in klein's "shock doctrine" and the like: for example, different countries in the region had markedly different timings, different implementation of reforms, different rhetoric, and different resources; but the outcomes pretty much fall into two groups: places where people demanded and expected accountability on part of government (ie. baltic states, and a few former warsaw pact countries) did relatively fine, and others devolved into oligarchies (ie. the rest of the former soviet union).
- drumdance 11y ago
  Here's Jeffrey Sachs' account of his role: http://jeffsachs.org/2012/03/what-i-did-in-russia/ http://jeffsachs.org/2012/03/what-i-did-in-russia/ You can see he did NOT advocate shock therapy and resigned when he realized he could do nothing about growing corruption.
  - 11y ago
Mikeb85 11y ago
> Look at Russia for intance - Gazprom and other state companies were overtaken by the Putin's mafia. You must have missed the Boris Yeltsin era...
eli_gottlieb 11y ago
>Lack of privatization in Post-Soviet states lead to massive human suffering. No, lack of rule-of-law and stochasticity (allowance of firms to succeed or fail on their own merits) lead to massive human suffering. If you "privatize" everything without solid rule-of-law and with bank bailouts, you get massive human suffering and no growth. If you "nationalize" things without solid rule-of-law and without allowing experiments in new ways of doing things, you get massive human suffering and no growth.
- meatysnapper 11y ago
  thank you. people take "rule of law" for granted.

by alienjr 11y ago

RobertoG 11y ago

"Gazprom and other state companies were overtaken by the Putin's mafia" That is called "privatization".

jahewson 11y ago
Sort of. The Russian government still owns a majority stake in Gazprom and Putin's conquests have been under the banner of moving corrupt private oil companies back into the public hands of Gazprom. So it's really a landgrab by the state, which happens to own a private company. But it was the US's policy of rapid "shock" privatisation which resulted in the unmanaged sell-off of the original state assets in the 1990s and the creation of those oligarchs. It's like selling USPS for $1m - that's not privatisation, it's madness.
- RobertoG 11y ago
  I agree that Russia is a very extreme case, but it would be difficult to find any place in the world where privatization was not done in the benefit of a few friends of the people in power. Mexico and Carlos Slim comes to mind for instance.
ArkyBeagle 11y ago
It was a reaction to a power vacuum. A very severe power vacuum. Frontline's "Putin's Way" is highly instructive. Failed states are dangerous.

zurn 11y ago

Many European countries have very large (dominant even) state owned power companies that work pretty well. But really the argument about Russian privatization is that it ought to have been executed less poorly, for example not donating most state property to a few corrupt oligarchs.

xixi77 11y ago
I would not use words "poor execution" to describe a process that achieved its exact intended effect. Nor does it have anything whatsoever to do with any American economic advisors. It only looks like a failure if we assume that the Soviet (and post-Soviet Russian) state considered its subjects as stakeholders, which has never been the case.

nemo 11y ago

I haven't got a problem with privatization per se, and recognize that some approach to privatization was called for. I have major problems with the disastrous "shock therapy" approach to privatization that was actually applied where the US economic advice was what created the mafioso oligarchs.

xixi77 11y ago
You are grossly overstating the influence of the "us economic advice", which was zero. The mafioso oligarchs needed and used none of it.
- jahewson 11y ago
  You might want to read up on this. It was US economic advice which led to the rapid sell-off of public assets which resulted in the creation of the oligarchs in the first place.
  - xixi77 11y ago
    Seriously, I do not need to read up on this, I was there. But one does not really need to have first-hand experience to see the deliberate deception in klein's "shock doctrine" and the like: for example, different countries in the region had markedly different timings, different implementation of reforms, different rhetoric, and different resources; but the outcomes pretty much fall into two groups: places where people demanded and expected accountability on part of government (ie. baltic states, and a few former warsaw pact countries) did relatively fine, and others devolved into oligarchies (ie. the rest of the former soviet union).
drumdance 11y ago
Here's Jeffrey Sachs' account of his role: http://jeffsachs.org/2012/03/what-i-did-in-russia/ http://jeffsachs.org/2012/03/what-i-did-in-russia/ You can see he did NOT advocate shock therapy and resigned when he realized he could do nothing about growing corruption.
- 11y ago

Mikeb85 11y ago

> Look at Russia for intance - Gazprom and other state companies were overtaken by the Putin's mafia. You must have missed the Boris Yeltsin era...

eli_gottlieb 11y ago

>Lack of privatization in Post-Soviet states lead to massive human suffering. No, lack of rule-of-law and stochasticity (allowance of firms to succeed or fail on their own merits) lead to massive human suffering. If you "privatize" everything without solid rule-of-law and with bank bailouts, you get massive human suffering and no growth. If you "nationalize" things without solid rule-of-law and without allowing experiments in new ways of doing things, you get massive human suffering and no growth.

meatysnapper 11y ago
thank you. people take "rule of law" for granted.