Russian Capitalism Part III

[a_unique_person]

http://www.theage.com.au/articles/2004/10/11/1097406493918.html?from=storylhs

Still more information on this topic I have raised before. The Western policy on making Russia capitalist was just too much too quick.

Says Hertz: "It made me think about my own experience with the World Bank and why I decided to stop working as a consultant to them."

When she was 23, Hertz was part of a World Bank team that advised the Russian government on its privatisation program.

"Being more junior, I was the person sent to Russia to live in the factories and feed back information to the bank. I spent months in the factories. In one, I slept in an empty ward in the sanitarium. I realised very quickly that the master plan of privatising Russian industry overnight was going to impose huge costs on hundreds of thousands of people. These factories were producing goods that once they were launched, no one would want in a too-competitive market. They would have to slash tens of thousands of jobs. But also, these factories provided schools, hospitals, health care and retirement — cradle to grave. I raised these concerns in Washington, to say there weren't any safety nets in place. It became clear to me that it was really a political play, that they wanted to take assets out of the state's hands, so the Communist Party wouldn't come back.

previous thread

http://randi.org/vbulletin/showthread.php?s=&threadid=43908&highlight=russia

and

http://randi.org/vbulletin/showthread.php?s=&threadid=43359&highlight=russia

 

[Drooper]

http://www.theage.com.au/articles/2004/10/11/1097406493918.html?from=storylhs

Still more information on this topic I have raised before. The Western policy on making Russia capitalist was just too much too quick.



previous thread

http://randi.org/vbulletin/showthread.php?s=&threadid=43908&highlight=russia

and

http://randi.org/vbulletin/showthread.php?s=&threadid=43359&highlight=russia

That woman sounds like a moron.

These factories were producing goods that once they were launched, no one would want in a too-competitive market. They would have to slash tens of thousands of jobs.

It was not the act of privatisation that was the source of the massive misallocation of resources in the economy, it was the stupid central planning regime that preceded it and led to the economic collapse of the country.

Phrases like "too-competitive" give her away.


Or this one.

But also, these factories provided schools, hospitals, health care and retirement

Right. An to provide these things you need income. Where was that going to come from?


This woman sounds exactly like her own descriptiomn of herself. A young, junior and out of her depth on the matters she is trying to lecture on.

 

[a_unique_person]

Re: Re: Russian Capitalism Part III

That woman sounds like a moron.




It was not the act of privatisation that was the source of the massive misallocation of resources in the economy, it was the stupid central planning regime that preceded it and led to the economic collapse of the country.

Phrases like "too-competitive" give her away.


Or this one.



Right. An to provide these things you need income. Where was that going to come from?


This woman sounds exactly like her own descriptiomn of herself. A young, junior and out of her depth on the matters she is trying to lecture on.

But the whole point is, the transfer was too rapid. look at China for a counterpoint. A gradual transition from central control, and the country is booming.

 

[Drooper]

Re: Re: Re: Russian Capitalism Part III

But the whole point is, the transfer was too rapid. look at China for a counterpoint. A gradual transition from central control, and the country is booming.

They had pushed the economy to the point of near total collapse. There was only one way to go from that point.

The Chinese saw the light a lot earlier. I think it was because they had a stronger historical culture of free enterprise.

 

[a_unique_person]

Re: Re: Re: Re: Russian Capitalism Part III

They had pushed the economy to the point of near total collapse. There was only one way to go from that point.

The Chinese saw the light a lot earlier. I think it was because they had a stronger historical culture of free enterprise.

But they have been doing it under their own control at their own pace. Part of this womans point was that decisions made by theoreticians who stayed at home had no relevance to the existing institutions. If you look at a link to a previous thread, even people such as Friedman admitted they got it wrong, that protecting the institutions that gave peoples lives a structure was vital to maintain order. Without order, capitalism can't flourish.

 

[Drooper]

Re: Re: Re: Re: Re: Russian Capitalism Part III

But they have been doing it under their own control at their own pace. Part of this womans point was that decisions made by theoreticians who stayed at home had no relevance to the existing institutions. If you look at a link to a previous thread, even people such as Friedman admitted they got it wrong, that protecting the institutions that gave peoples lives a structure was vital to maintain order. Without order, capitalism can't flourish.

There was nothing to protect. Most of the capital stock was inefficient, in the wrong industries producing the wrong things. They were overmanned and poorly managed, with infrastructure that was falling apart. There was not way they could gradually transform the economy. Time for that had passed a long time earlier, like the 1960s.

In effect, virtually the entire economy was due for the scrap heap. It had virtually no productive potential in a true, market based, sense.

What you seem not to understand is that in China, they were moving towards a market based from the 1970s in very subtle ways. Over the last few decades of the 20th century The Red Army turned itself into a massive commercial enterprise.

 

[a_unique_person]

Re: Re: Re: Re: Re: Re: Russian Capitalism Part III

There was nothing to protect. Most of the capital stock was inefficient, in the wrong industries producing the wrong things. They were overmanned and poorly managed, with infrastructure that was falling apart. There was not way they could gradually transform the economy. Time for that had passed a long time earlier, like the 1960s.

In effect, virtually the entire economy was due for the scrap heap. It had virtually no productive potential in a true, market based, sense.

What you seem not to understand is that in China, they were moving towards a market based from the 1970s in very subtle ways. Over the last few decades of the 20th century The Red Army turned itself into a massive commercial enterprise.

And you don't seem to understand the role of institutions. There is more to life than an economy.

From the previous thread.

Milton Friedman admitted that his advice to former socialist countries in the early '90s had been to "privatise, privatise, privatise".

"But I was wrong," he continued, "It turns out that the rule of law is probably more basic than privatisation."

The infrastructure was clapped out, but it provided more than just an economy.