The fall of the Soviet Union was a great example of how not to transition away from a communist economy. The average person lost his life savings, a few oligarchs became filthy rich, and corruption skyrocketed. The Russian leadership still believes they did the right thing.
We have seen here how people react to factory closures and industries being moved overseas; many people are never able to adjust. Just imagine how difficult it was for Russians who grew up under the Soviet system to one day be thrown into an 1800s-style capitalist system.
Germany reunified in 1990, but it never finished the job because unemployment in the East remains double that of the West. Germany could have put its foot down with the European Union and demanded that it be allowed to give German companies tax breaks to open plants in East Germany instead of Eastern Europe or China.
We need a better transition. Countries like North Korea and Belarus may someday be thrown into the same economic maelstrom.
Many inefficient industries will fail almost immediately as we saw in Eastern Europe in the 1990s. The government must be proactive in assisting workers, unlike in the USA where those freshly out-of-work are considered mere collateral damage.
Education programs must be quickly established to retrain people for new careers.
Language training would be an important part of the transition; for the tourist trade and restaurants, it would be essential. A bonus -- not a Wall Street bonus, just a spot-award -- could be issued to every worker becoming fluent in a new language, thereby providing sufficient motivation.
Along the lines of my A cooperative America post, we could create cooperatives in these countries immediately after the totalitarian government is overthrown. Co-ops are halfway between socialism and capitalism, so they would make a perfect transition.
These co-ops would be industries not requiring rocket scientists to manage them, e.g. restaurants, hotels, and nightclubs. It would not be to difficult to create co-ops for clothing manufacture with internal contests for clothing design.
There would be a charter limiting pay. For example, pay could be limited to five times the pay of the lowest paid worker.
There would be no single top manager, but a group of managers voting on important issues.
The money saved by not paying a single owner/CEO an exorbitant salary would be used to hire extra workers and save for unforeseen expenses.
All of the co-ops would work together, e.g. workers could transfer between them to improve their job skills. Each co-op would independently determine their hourly wage, but the cross-training could be valuable.
Most people would probably continue working for the co-op, but the hope would be to empower workers to leave and start their own businesses and employ even more people.
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