media punk

Anders Aslund seems to never give up on preaching the gospel of Latvian success story. A book with Latvian PM Dombrovskis was apparently not enough, and now he has written yet another article, where he tries to prescribe Latvian medicine of austerity for Greece.

Ok, besides the obvious ideological bias of Mr. Aslund (and also the fact that he as a Swede is of course happy that Latvia did implement austerity instead of devaluing and thereby crushing Swedbank)… A few remarks have to be noted.

1st of all it is wrong to compare Latvia and Greece in this straightforward manner. Greece had and still has an enormous amount of state debt. This was never the case in Latvia. Our problem was way too expansive Swedish banks which gave credits unwisely in an irresponsible manner, as well as Parex bank which was gravely mismanaged by 2 corrupt businessmen – and instead of letting them pay for their mistakes taxpayer money was used to save both the bank AND those fuckers (they still live their luxurious lives while many Latvians had to suffer — great success for them indeed!).

2nd, the claim that “pensions and social benefits were barely reduced” is just plain lies. Social benefits were indeed severely cut, for example unemployment benefit scheme was almost destroyed and a weird “100 lats per month” almost slave like social program was introduced for unemployed. The chief of World bank, while visiting Latvia, first thought that 100 lats (~­150 euros) was payment per day — and this amount was in any case below the mininal wage stipulated by the law. Also, the pensions were cut by 10% in 2009 which is a lot considering the level of Latvian pensions. This decision was reversed by the Constitutional court the year after, but the money was returned a) without any interest rate b) the new, higher income tax was aplied. It was basically a loan with negative interest rate, taken from one of the most vulnerable groups in our society.

3d, the fact that PM DOmbrovskis “reached agreement on his stabilization program with the trade unions” was possible only because there are no trade unions worthy this name in Latvia. And those agreements were in any case reached behind the closed doors and in a manner of blackmail. So of course it was a peace of cake! Strikes, protests etc are almost non-existent in Latvia mainly because of historical reasons.

4th, unemployment “has fallen substantially from 20.7 percent in early 2010 to 13.5 percent in the fall of 2012”, that is correct. But this has largely happened because of enormous emigration, depleating our country of our human resources. A brain-drain is a fact in “post-crisis” Latvia.

5th, while on a smaller scale “new manufacturing companies are expanding”, this is not really affecting the economy in general. Our tax system is still very unfriendly for smaller businesses. And most entrepreneurs depend on exports, which of course depend on the situation in Europe, which as we know is far from stable.

6th, Aslund does not mention the fact that the crisis has increased the ethnic tensions in Latvia – Latvian nationalist radicals are in the government, and shovinists from both Latvian side and Russian side are using the still quite harsh (yes, here the point about inequality is very important) situation for their own ugly agendas.

And finally, just a small number correction – our flat income tax is not 21% but 24%.

In any case, I am sure many more points could be made (like the fact that our government has not a long time ago increased export subsidies, which is of course a kind of stimulus, so why this stimulus bashing by Aslund?). All in all, Aslund’s analysis feels superficial and not fully corresponding to all the aspects of reality in Latvia. I really doubt if Latvia can be described as a success story in the manner as done by Aslund. And once again, comparison with Greece is just absurd.

Didzis Melbiksis

Multilingual citizen. Europe, Sweden, media, politics.



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