Chapter 703

In view of the serious domestic and foreign troubles, Gorbachev announced ahead of schedule the 28th National Congress of the Communist Party of the Soviet Union and the first direct election of the Soviet Union. At the same time, the election of people's representatives to the 28th National Congress of the Communist Party of the Soviet Union and the election of representatives to the Supreme Soviet conference were also put on the agenda. Because this election allowed non Soviet Communist Party members to be candidates, it actually abandoned the one file system that the Soviet Union had always insisted on. This is a key meeting on the future of the Soviet Union. Therefore, this election campaign is really eye-catching, because a series of domestic reform activities in recent years make the Soviet Communist Party not a united whole, including the Conservatives represented by ligachev and the new thinking group represented by Yakovlev, who have many followers within the Soviet Communist Party. However, with Xie liaosha's series of effective reforms in China, many young comrades in the party began to pay attention to him.

On the contrary, Xie liaosha is greatly disturbed by these expectations. Xie liaosha has his own unspeakable difficulties. He is not willing to go to a higher level in his official career. What Xie liaosha really needs is an agent who can be controlled. In his view, Yeltsin, who was abandoned by both conservatives and new thinkers, was the best choice. Xie liaosha is now shouldering the heavy responsibility of the reform of the Soviet Union. He is well aware of the deep economic disadvantages of the Soviet Union, and it will not be overnight to completely reverse them. At present, the economic lifeline of the Soviet Union is still unable to get rid of the exploitation of oil, natural gas and mineral resources. But at present, the world economy is still at a low level. The outbreak of the information industry may be within one or two years, but the information industry has no direct help for the bulk trading of resource products. Only when the world economy recovers and consumption begins to become a new driving force for economic growth, will those countries that rely on resources gain economic growth with the rise of oil prices.

At this time, the world is facing a lack of investment. In Eastern Europe, this is especially true in countries that have just undergone social institutional changes. They are burdened with a large amount of foreign debt, the sluggish economy, the insufficient supply of domestic goods, and the severe inflation, which make the governments and people of these countries suffer. However, this is a rare opportunity for Xie liaosha, who has long coveted industrial enterprises in Eastern Europe. Now, the new governments of Eastern European countries have no choice in the face of huge fiscal deficits and foreign debts.

In order to let the Eastern European countries embark on the radical privatization road that he expected. Xie liaosha invited one of the most popular economists from South America to pay an academic visit to Eastern European countries and set up a platform for the Bank of Columbia. This expert's name is Jeffrey Sachs. He is now employed by the Bank of Columbia as an economic consultant in Eastern Europe. The reason why he hired such a scholar is that he has a crush on his famous name in the economic circle, the father of shock therapy.

Jeffrey Sachs is now enjoying a great reputation in the field of economics, catching up with the Chicago school which successfully carried out economic reform in Chile. Because the "shock therapy" created by Jeffrey Sachs is not an academic concept in the ivory tower. This theory has just achieved great success in Bolivia, a poor country in Latin America.

Although Jeffrey Sachs had a small reputation in the economic circle before, he did not have the current status in the world. He is only a respected professor in the Economics Department of Harvard University. It was not until 1986 that Jeffrey Sachs was hired by the president of Bolivia as an economic adviser to the Bolivian government that his shock therapy really came into use.

Bolivia is a small country in South America. It has almost no industry. Its economy is mainly agriculture. In fact, the most profitable agricultural economy is to provide coca, the raw material for manufacturing drugs, to the drug trafficking groups in escoval. It was such a poor American country that in the mid-1980s, due to a series of investment and decision-making mistakes, it fell into serious economic difficulties. In 1984, Bolivia's foreign debt was US $5 billion, and the interest payable that year was US $1 billion, which exceeded the total income of Bolivia's exports at that time. By 1985, the fiscal deficit of the Bolivian government had reached 486.9 trillion pesos, which was equivalent to one third of the GDP of that year. At that time, the inflation rate of Bolivia had reached 24000%, and the whole Bolivian economy had completely collapsed.

It is the so-called chaotic times with heavy canon, under heavy medicine. In the face of this dangerous economic environment, Jeffrey Sachs' radical shock therapy naturally came into use. Leaving aside those profound economic principles, Jeffrey Sachs' economic reform is nothing more than three secrets, namely, reducing all government expenditure, deregulation of prices, and thorough privatization. When these measures were implemented, immediate results were achieved in Bolivia.

The first week of shock therapy in Bolivia was a combination of massive government price cuts and spending cuts, as well as frantic tax increases. Inflation in Bolivia is finally under control. The money supply of the whole market is not increasing because the government cancels the investment. In addition, the almost crazy tax increase policy makes more and more money return to the government. The money in the market is reduced, so the prices are not soaring.

After controlling the inflation, Jeffrey Sachs began to implement the second reform step, that is, liberalizing the price control, allowing the price and currency to be linked freely. At the same time, he also started large-scale privatization activities. If we just let go of price control, according to the money supply in the market at that time, prices will naturally rise. However, privatization moves prices down. Because of privatization. State owned assets began to circulate in the market like commodities. For example, factories controlled by the government did not enter the market to sell. But when complete privatization began, factories were put on the market like commodities. For a while, as the number of commodities on the market increased, prices naturally began to fall.

Jeffrey Sachs's set of measures achieved great success in Bolivia, and the situation in Bolivia at that time was almost the same as that in the Eastern European countries now, with the same debt, the same falling into hyperinflation, and the same countries holding a lot of assets. This gives Jeffrey Sachs full confidence in applying his shock therapy in Eastern Europe.

So under the arrangement of the Bank of Columbia, Jeffrey Sachs began his trip to Eastern Europe. Xie liaosha is well aware of Jeffrey Sachs' theory. He is happy that Jeffrey Sachs will become an economic adviser and reform promoter for the governments of Eastern European countries, because he has been looking forward to deflation, price marketization and complete privatization for a long time. Seryosha is convinced that if Eastern European countries follow Jeffrey Sachs' shock therapy reform, the Gorky consortium will get the most benefits