Today’s Warm Up  Answer on your warm up/exit ticket sheet:  Which economic system do you feel is the best and why – command, market or traditional?

Today’s LEQ: How and why did many 20 th century command economies move from a command economic system to market?

Methods of Privatization  There is no “one size fits all” with transition from command to market  Countries must decide how to shift from collectivization (gov’t ownership of productive resources) to privatization (private ownership) and whether the changes should be rapid, gradual, or somewhere in the middle

Four Methods We’ll Discuss…  Restitution  Equal Access Voucher Privatization  Sales to Outside Owners  Management-Employee Buyout

Restitution  Property is returned to former owners who can show clear ownership claims For example, showing documents that prove you were the last owner before collectivization

Equal Access Voucher Privatization  Vouchers or ownership shares are evenly distributed across the population  Citizens are free to invest their vouchers as they see fit They may directly invest in firms being auctioned or may pool their vouchers to acquire larger firms

Management-Employee Buyout  Businesses are sold to existing management and employees

Sales to Outside Owners  State enterprises are sold on a case-by- case basis to people other than the current managers and employees – sometimes to foreign investors

Pros & Cons  What are the pros and cons of each method?  Review each method of privatization in the packet provided then summarize the pros and cons for each in the chart

Guide to Completing the Pros/Cons Chart  Better corporate government = will the business have access to better leadership?  Speed = how quick is the transition?  Better access to capital and skills = does the business have access to better, more qualified employees and the tools it needs to succeed (i.e. new productive equipment)  More government revenue = does the government make money off the transition?  Greater fairness = is it a fair process?

Today’s Exit Ticket  Answer on your warm up/exit ticket sheet:  Which method of privatization do you think is best and why?