Ratio economica: Privatization 2.0 The Finance Ministry is proposing to privatize stakes in 10 of the largest state-owned companies and banks over the next three years. This is one of the best pieces of economic news of 2010, if not the very best. Even so, this is not yet “Privatization 2.0,” but only the first step toward it. Read in fullThis article is in the blogs[?]
ugfx An interesting article by Guriev/Tsyvinsky. (Just to be clear, those are two different people. Although Grigory Apollinarievich Guriev-Tsyvinsky does have a certain grand ring to it.) Give it a read. Substantively, it’s all correct, although to my taste there’s a bit too much liberal fervor in the rhetoric. And of course phrases like, “What’s needed is real privatization — essentially, ‘Privatization 2.0,’ a reincarnation of the privatization of the 1990s that will free the Russian economy from the dominance of state companies and state corporations,” need to be used carefully if the authors don’t want feedback in the form of heart attacks or rotten tomatoes. “The privatization of the 1990s” was a mix of forced decisions, naive and romantic ideas about the economy (there were no others at the time), and plain fraud (60% of it). “Privatization 2.0” should be a “smart” privatization, one that also pursues a clear political goal: fundamentally broadening the circle of owners and eliminating the overconcentration of capital. In that sense, if during “Privatization 2.0” some enterprise is bought by someone like Deripaska, using a new loan from VEB (Vnesheconombank, the state development bank), then the formal requirements of Guriev/Tsyvinsky will have been met, but in reality we’ll end up with the same thing as before, just in a different guise. What exactly should be sold? Quite a lot. Entirely painlessly for everyone, including those who get very worked up about “the state’s levers of influence over the economy,” the state’s stakes in Sberbank and Rosneft could be reduced to 51%. VTB should be sold off completely; the state has no need for it at all. Right now it’s just a feeding trough. That would be the place to start.