X-Envelope-to: SLOVAK-L@UBVM.BITNET
X-VMS-To: IN%"SLOVAK-L@UBVM.BITNET"
MIME-version: 1.0
Content-type: TEXT/PLAIN; CHARSET=US-ASCII
Content-transfer-encoding: 7BIT
Newsgroups: bit.listserv.slovak-l
Date:         Wed, 16 Dec 1992 01:22:20 -0500
From:         PMUZILA@MACALSTR.BITNET
Subject:      Re: Exchange rates

        In this posting I will try to comment on few issues recently discussed.

PRICE CONTROLS:
        Price liberalization is one of the elementary conditions of the
transfer to a free-market economy. It has been mentioned that the prices should
not be fully liberalized since there is not a "market economy". I would rather
say " there is not an optimal market environment", but creating price-ceilings
would further retard the whole process. I think that the major problem that has
to be solved is the problem of monopolistic behavior of certain firms. Durring
communism, central planning created a great degree of monopolization in almost
every industry. In the present, these firms freely use monopolistic practices
such as stabilizing or lowering production and increasing price. Look at Skoda
car. The price of Skoda-Forman increased to app. 180.000 korunas (correct me
if it is not precise) while it is almost imposible to buy one in
Czechoslovakia. Last month, my brother had to travel to Mlada Boleslav to get
one. It is thrue that the marketing abilities of Wolkswagen helped Skoda with
larger exports, but why should Czechs or Slovaks pay for it? The problem is
that Skoda is a monopoly with a hight level of government protection. In this
case the import barriers for foreign cars should be eliminated. (quotas and
import tarrifs) Do not you think that this would be a better solution ?

CURRENCY EXCHANGE RATES
        It is almost unbelievable how stable CS-koruna was in the last few
months. Partially it is due to antiinflationary policies implemented by Klaus's
Ministry of Finances last year. Another reason is that, after negotiations with
IMF (International Monetary Fond) koruna was fixed at the western market and
its ex. rates with other currencies were set to fluctuate according to the
value of foreign courencies in this market. You can notice that wheUSDSD
increases in value comparing to DM, koruna appreciates comparing to DM but
deppreciates comparing to USD. I hope the division of CS will not cause any
instability  (eg.inflation) that would probably force Czechs or Slovaks to
devaluate. This is essential for futher development of both independent
republics.

WAGES
        The wages described by some of the subscribers were quite precise. It
is impossible to judge these wages according to the value un USD but rather in
its purchasing power. Its is definitely true that the purchasing power of
average CS-teacher salary is much lower than the one of US-teacher.
Newertheless the prices ratios (CS/US) vary very much. Products such as bread
or milk cost app. 5-10 korunas (maybe more) that is app 15-30 cents while
petrol costs a 20korunas/litter that is almost 2 dollars per gallon. Can you
imagine that ? Average CS-citizen can buy app 200 liters of petrol for his
monthly salary while an American can buy almost 10-20 times more. But there is
also another side. I have classmates(US-students) whose parents pay almost
50.000 dollars a year for education of two of their kids while their income is
app 100.000-120.000 dollars a year. There are simply certain things that cost
here a lot, as weel.

        Joe, how is it in Hungary ? (briefly !)

                                                Patrik Muzila
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU