Planet Money The day Russia adopted the free market
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May 7, 2022 Dive into the tumultuous early 90s as an American economist attempts to reshape Russia's economy amid chaos. Discover the controversial shock therapy reforms, the struggles of transitioning from communism to a free market, and the rise of oligarchs during privatization. Hear about the volatile economic environment, soaring inflation, and the profound consequences of hasty changes, which led to increased inequality and lingering instability. This engaging discussion highlights the lessons learned from a pivotal moment in history.
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Poland's Success Story
- Jeffrey Sachs helped Poland transition to a market economy in 1989.
- Two years later, Poland's economy was booming, leading Russia to seek Sachs's expertise.
Key Market Reforms
- Free prices and trade to stimulate supply and demand.
- Reform currency to facilitate international exchange.
Managing Reform Risks
- Market reforms bring short-term pain like inflation and job losses.
- Implement social safety nets and secure Western financial aid to mitigate this.
