To the author:

So if the Latvian govt. had done nothing, emigration would not have increased, and the economic crisis would have disappeared (magically)?

My point is that you ignore the root of the problem. Neither your article, nor your comments here acknowledge that there was an economic crash that initiated problems that had to be addressed and if nothing had been done, it is likely that emigration and other problems would have kicked in even w.out austerity.

From your last post, you argue that a stimulus package would have been the solution.

Isn’t this a similar argument that we have been having in the U.S.? Would Republican austerity save the day or is further stimulus the answer. If everyone knew that one policy would work and the other would result hardship, wouldn’t action have already been taken? There is lively debate. There is uncertainty.

Krugman is pro-stimulus. Other economists are not.

What I find disturbing about your position is that the underlying problem that led to the austerity program has NO role in any of the problems. It is SOLELY the fact that the austerity program was imposed. I can see and admit that cutting wages, jobs, etc. likely to to more emigration, reduced spending which in turn stalled the economy. This argument makes sense. But to say that austerity alone- without the initial impetus of the economic crisis is the sole cause of increased emigration defies logic. The country was crashing - but everyone would have stayed put in Latvia.

I do not see how a scholar can separate the effects of the cause and the effects of the program with such simplicity. Cause resulted in no problems - program produced every problem. Then I guess NO stimulus package would have been necessary or anything else.

Re Western Europe - So France just changed their pension program for the fun of it - essentially to upset the French. The program was sustainable as is? The govt did this even though some other solution that wouldn’t have required changes in the age of retirement would have solved the problem. The politicians didn’t want to be reelected. Why, oh why would they do something this unpopular - when all was good?

To those of you that hate the Latvians of the Diaspora.

It is amazing that there are Latvian Latvians who hate the Latvian Diaspora to such a degree that they can’t read a comment without falling into the evil “trimdas latviesi” bit.

My discussion EXPLICITLY stated that I am not arguing for or against the austerity policy or any policy. My only argument is that the authors of the article blame numerous social ills in Latvia solely on the austerity program AND FAIL TO SAY that the economic crash, in and of itself would have caused many of the same problems (perhaps not to the same degree - perhaps to a greater degree). I simply argued that the conclusions were not supported by the facts of the story.

That’s it.

I have been to Latvia at least 10 times since 1989. Does that mean that I understand the intricacies of the problems? NO. Latvia has so many problems, including low wages, both pre & post economic crisis, that leads to crime, emigration etc. So - going into the whole “romanticizing’ bit doesn’t apply to MY comment

My asking the authors how they can attribute all of the blame on the program and ignore the the economic crash did and would have, in and of itself caused problems does NOT mean that I support the government or that I have some romanticized vision of Latvia. That died long ago when I realized how many Latvians lie, cheat and steal with no shame AND that others who may not, condone such behavior if the victim of is a trimdas latvietis, i.e., they have so much that we are “entitled” to steal it. After someone stole $1,000 from me on one trip and I was discussing it with a Latvian, their response was - that’s not so much for you. There was NO OUTRAGE that the theft occurred. The soviet mentality of theft (from the govt. in the past) as a way of life and virtually an entitlement has to go. In my opinion, no Latvian Latvian is entitled to steal even $1 from anyone. So, no rose colored glasses. And yes, there are economic reasons that make theft and prostitution a way of life - but that does not justify the behavior.

(The numerous thefts tat I was subject to occurred pre-economic crisis and pre austerity program. The authors might be shocked by that since all bad relates to austerity.)

@Vinde.  Appreciate your interest in engaging this important debate.  However, you consistently misstate our position.  We asserted austerity accelerated negative trends already underway, e.g., emigration.

From the article: “Demographers estimate that 200,000 have left in the past decade – nearly 10 per cent of the population – at an accelerating rate that reflects the austerity being inflicted.”

Note the term “decade” and “accelerating.”  Many of Latvia’s problems, to our minds, are rooted both in its neoliberal policies of the past 20 years and its Soviet past.  That said, it’s also clear that post 2008 introduced austerity increased emigration and made worse some already existing pathologies.

With a 750 word limit one cannot properly qualify every statement, yet I stand by everything we wrote.

Regards,

Jeffrey Sommers

Jeffrey,

I like the way you stated the issue in your last response. It is clear. I understand it and I agree with it.

The trigger of my apprehension of your article started with the first paragraph: “Finding no acceptable alternative, much of the labour force has elected to emigrate.” How much is much? This did not have the nuance and colored my interpretation of the 10% over a decade statistic. When I read that statistic, I wanted to know - what percentage relates to before (had 5% already emigrated) & what percentage would have emigrated regardless of the policy - but that the economy simply got worse and how many left b/c of the effects of the policy.

As in the US, people can legitimately argue both sides of the benefits and the shortfalls or drawbacks of TARP. Obama will not be able to say - yes TARP saved (& provided) X jobs. Nor can the the Republicans say TARP has resulted in the loss of X jobs or prove that things would be better otherwise.

I appreciate all that people like you are doing in Latvia. There needs to be debate about economic policies and so many issues. So, I apologize for the vehemence of my comments. My guess is that we both understand each position a bit more. BUT, I realized last night that I was upset with myself for making an immediate response, without thinking through - (whether the article was perfect or not) these people are trying to help.

I would strike this entire line of communication of I could.

And Thank you for helping people in Latvia and throughout Europe engage in this debate.

Vilis Inde

Dear Vilis,

Thanks for your remarks.  Agreed, debate is much needed.  Regarding myself, have lived in Latvia for some 5 years in the past, my spouse is Latvian-American, and our son was born in Riga.  Thus, my interest in the country.

Regards,

Jeff

I am not sure what the below proves?

Europe’s healthiest economies, e.g., Denmark, Germany, Sweden, Austria, etc., have Europe’s most genergous social spending and the greatest share of GDP spent on government.

Europe’ sick economies the opposite. For example, Greek workers have far longer hours worked (with lower productivity) than their German and Scandinavian counterparts.  These countries literally spend twice what Greece does per capita on social benefits.

Chicken and egg. Are those healthy economies healthy because they have the most generous social policies or do they have the most generous social policies since they were disproportionately wealthy in comparison to the sick economies? Don’t get me wrong, if I had to choose between European style social welfare systems and U.S. type social welfare systems I’d pick Europe each time, but I just don’t buy the above argument nor do I see the cause and effect.

Andrejs

Sveiks, Andrej!

Think the relationship is partly causal.  Further examples, Ireland and the UK have both pursued austerity, which has been followed by double-dip recessions.

Effective government spending (realizing there will always be some waste) seems an essential way of recycling capital through economies, thus maintaining demand.  There may indeed be relationships between effective (and high) government expenditures and economic growth.  These are further linked through efficacy in the system that comes through low inequality and sense of societal investment in its people. When achieved, this can help create self-catalyzing cycles of productivity and growth. Note this is different from dependency. 

Regards,

Jeff

Morten Hansen: Stereotypes