Russia’S Catastrophic Privatization, Thaksin Shinawatra, And Silvio Berlusconi

While egregious, the Philippines electricity industry is far from alone in how privatization gone wrong can be as bad as, if not worse than, the government’s production of goods and services. Examples abound around the world, especially in developing countries but also in advanced countries, of privatization harming the public interest rather than promoting it. Perhaps the most notorious example of socially harmful privatization comes from post-Soviet Russia. In the early to mid-1990s, after the breakup of the Soviet Union and fall of communism, the Russian government embarked upon a massive program of transferring strategic state-owned assets in the industrial, energy, and financial sectors — e.g. oil fields, pipelines, and refineries — to the private sector. Given the impending collapse of the centrally planned socialist economy, it was desirable and even necessary to privatize as much of the economy as quickly as possible. Even so, most of the assets fell into the hands of a small group of politically well-connected oligarchs who have done little to improve their companies or serve the public interest with their new assets. The largely negative perception of privatization among Russian citizens suggests that overall it has been a failure…