Thirty years later, was voucher privatisation a good decision?
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Loading... - Leonardo Rossi
- 14 Jul 2022
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This week marks exactly 30 years since the beginning of the first round of voucher privatisations in post-communist Czechoslovakia. The government scheme made it possible for any Czech adult citizen to buy a “voucher book” that contained shares in a range of state enterprises. I discussed the often derided system with Professor Evžen KoÄenda from Charles University’s Institute of Economic Studies.
“Frankly, it was a very difficult time. There were essentially only two options to choose from. One was the voucher privatisation [as it was undertaken] and the other was to privatise by selling the assets of the companies for real money.
“The problem was that there was no real money among the population. Furthermore, at that time, there was strong popular opposition to selling company assets into foreign hands, although that would actually mean selling them for real money.
“The voucher privatisation was therefore a way to redistribute state-owned property without money with those vouchers substituting the currency.
“The vouchers didn’t come for free, but they were almost for free – it was a sort of giveaway scheme. When you wanted to take part in the scheme, you had to register and pay a fee, which was 1,000 crowns [1,035 crowns including the cost of the voucher book]. At that time, 1,000 crowns wasn’t peanuts. It was a substantial amount of money given the average monthly salary.”
Indeed, the average monthly salary in 1992 was 4,644 crowns, so it was close to a quarter of the monthly salary.
“Exactly, so despite it being a giveaway scheme, there was a monetary incentive which forced one to consider whether they wanted to participate or not.
“There is one caveat though, which I think should not have happened. Namely, that you could register and get the voucher only if you were 18 or above.
“Minors were therefore excluded and I think that was a mistake, because those minors are now adults and are living in this new, transformed economy and society.
“I think that there should have been some sort of mechanism for them to participate. For example, through their parents.”
Critics of the voucher privatisation scheme often note that a select few individuals ended up getting very wealthy, while many of those who invested into a voucher coupon book saw no profit. Indeed, some have still not even claimed the profits that they made from their assets. Some of the economists who came up with the voucher method said retrospectively that there could have been a greater level of legal control. Was there a mistake in how the voucher privatisation was implanted?
“I wouldn’t call it a mistake, but an institutional framework was definitely missing.
“That said, it is understandable that not all institutions were in place at such an early stage of the transformation [from socialism to capitalism]. Read More...
