Russians attend workshop at Hopkins

A LESSON IN CAPITALISM

June 21, 1991|By Michael Dresser

A delegation of Boris N. Yeltsin's political allies got a stiff dose of Doc Hanke's old-fashioned capitalistic economic medicine yesterday as they visited Johns Hopkins University to soak up ideas for converting the Russian Republic to a free-market economy.

At a workshop sponsored by the conservative Heritage Foundation, Dr. Steve H. Hanke, a Hopkins economics professor and former member of President Reagan's Council of Economic Advisers, laid out a detailed program of pension and currency reforms he contends would help mend the shattered Russian economy.

But his message boiled down to one simple prescription: "Privatize everything."

The 10-person delegation, made up of members of the Russian Supreme Soviet, or parliament, and other officials aligned with .. the newly elected Russian president, listened approvingly as Dr. Hanke praised "bourgeois values" and outlined idea after idea that would have had Soviet delegations of years past stalking out the door in protest.

Among other recommendations, Dr. Hanke said the Russians should:

* Sell off state enterprises to establish a privately run social security system that would be administered by a group of competing mutual funds. Russian workers would be required to pay at least 10 percent of their earnings into individual retirement accounts, but they would be free to move their accounts from fund to fund.

* Avoid the Polish method of distributing shares in privatized companies directly to individuals. He predicted that Poland was heading for a "disaster," with a consumer boom and low personal savings.

* Resist any move to set up a Soviet central bank and instead create a sound currency for the republic by issuing Russian rubles through a currency board that would freely exchange them for U.S. dollars. "The Soviet ruble would disappear from Russia overnight," Dr. Hanke asserted, adding that it would be the fastest way for the Russian Republic to humiliate Soviet President Mikhail S. Gorbachev's central government.

While most members of the Russian delegation listened respectfully, a few challenged Dr. Hanke aggressively on various aspects of his economic plans.

P. S. Fillipov, a parliamentarian and member of the economic reform committee, engaged the professor in a spirited running debate over whether the values of state-owned assets must be valued by free-market transactions.

Vladimir F. Shumeiko, deputy chairman of the Russian parliament's economic reform committee and a top adviser to Mr. Yeltsin, said that the delegation members found Dr. Hanke's presentation "very useful," adding that "we need privatization in order to implement the real democracy."

Mr. Shumeiko said that he especially liked Dr. Hanke's comment that privatization was a bit like going over Niagara Falls in a barrel -- calm at the top, calm at the bottom, but "the transition is a bitch."

Right now, said Mr. Shumeiko, the Russian "barrel" is at the top, about to go over.

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