>Doug wrote:
>
>>A couple of people have told me that Sachs likes to think of
>>himself on the left. No mea culpas for shock therapy though.
>
>I wonder if this refers to Sachs' role:
>
>"Right after the breakup of the Soviet Union, the Russian government
>wanted to sell the capital stock of the Russian Republic to its own
>citizens, who of course had no money to buy it. In one of the
>grandest innovations in world financial history, the Russian
>government made 'privatization vouchers' freely available to all 147
>million Russians in 1992 and 1993. The vouchers could be used by
>them to purchase shares in state enterprises. Of the 147 million
>vouchers, 144 million, or 98 percent of the total, were picked up,
>making Russia the country with the highest proportion of
>shareholders in the world at the time. The auction fundamentally
>transformed the Russian economy: After the auction, most workers
>were employed by companies with private stockholders. See Maxim
>Boycko, Andrei Shleifer, and Robert Vishny, Privatizing Russia
>(Cambridge: MIT Press, 1995); and Alfred Kokh, The Selling of the
>Soviet Empire: Politics and Economics of Russia's Privatization --
>Revelations of the Principal Insider (New York: SPI Books, 1998).
>There is unfortunately a widespread perception that the Russian
>reformers who designed the auction were deeply corrupt, and that
>this accounts for most of the economic inequality in Russia today.
>But the inequality in Russia today did not result from this auction.
>See Anders Aslund, "Inequalities in Wealth Should Not Be Blamed on
>Russia's Economic Reformers," Financial Times, May 31, 1996, p. 16.
>A balanced view of the workings, and shortcomings, of this auction
>can be found in Chrystia Freeland, Sale of the Century: Russia's
>Wild Ride from Communism to Capitalism (New York: Crown Business,
>2000)."
>
>Robert Shiller, The New Financial Order: Risk in the 21st Century,
>Princeton University Press, 2003, pp. 292-293.
Man, that does it for Shiller's rep. He did some interesting work on excess volatility, but this is ludicrous. (And he's about to launch a vehicle, to trade on the AMEX, that will allow people to sell their houses short.) That privatization was one of the biggest disasters in economic history. It allowed a deeply corrupt elite to scoop up assets on the cheap. Shleifer's in trouble, along with a colleague, because the colleague's girlfriend (now wife) was running a fund investing in the shares they were advising on the disposition of. Aslund is an apologist for the disaster of the lowest sort. Sachs promoted rapid privatization - according to others, with the full knowledge of the risks of corruption, which he ignored (he denies this version, of course).
Doug