14 DAY TRIAL // A study published in January 2009 in the journal The Lancet argued that the sudden transition from state-owned businesses to privatized ones was one of the main causes of premature death in the former Communist block of Eastern Europe. That investigation was conducted by researchers at the Oxford University, but now reviewers from the W.E. Upjohn Institute for Employment Research, and the University of Wisconsin–Madison (UWM) find the conclusions to be unsubstantiated. The social scientists at the two organizations show that the correlation was a statistical artifact of particular assumptions.
According to the research conducted in the United States, there are no clear indicators to point at the fact that privatization was a direct contributor to the increased rates of mortality, or even unemployment. The Oxford study argued that the main mechanism through which privatization acted was by reducing the number of people working for former state companies, which in turn led to an increased number of ill side-effects as far as general health went. A direct consequence was the fact that the rate of premature deaths, primarily among adult males, spiked in the years following the fall of the Iron Curtain.
The new review basically shows that the negative social effects of privatization have been exaggerated by the previous investigations. The new findings should, however, be taken with a grain of salt, considering the fact that there are very few investigators willing to highlight the negative effects of capitalism. The American study argues that there was no correlation between privatization and job loss, but this is simply not true. On a personal note, as one living in a former Soviet block country, I can safely say from experience that many people lost their jobs when the capitalistic “efficiency” standards were applied to a host of Romanian industry giants, and smaller businesses.
For most states in Eastern Europe, the early 1990s was a period of great turmoil. In addition to the mass privatization of state-owned enterprises, and massive lay-offs, people also came under a lot of stress for losing their jobs. What the American study failed to consider was that many people that left state companies were not fired, at least not on paper. They were paid a number of salaries at once to leave on their own accord, and most of those that took their chances were middle-aged men, unable to find jobs according to their specialization ever again. It would be interesting to see a study taking that into account.