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Latvia: "Mind the Gap!"

Perhaps the first English phrase many Latvians hear more than any other upon arrival in London is “mind the gap.”  As Latvians exit London’s airports and enter the subway en route to the city, inattention to the gap between it and the platform can lead to a nasty fall. Thousands have left Latvia to find work in the United Kingdom. Indeed, surveys of these migrants reveal that is not merely the inability to support themselves and family with the Latvian economic crisis that drives them to leave, but also the desire for dignity that escapes them in many Latvian jobs. Current data shows that Latvian workplaces are among the most dangerous in the EU and Latvian migrants report workplace abuse is all too common. These austerity and deregulatory policies that have forced Latvia’s labor to pursue the exit option is advanced in the international financial press as the great success for Europe’s crisis nations to emulate.

Perhaps the most dangerous gap Latvians face is their demographic crisis.  With only a little over a million native speakers of Latvian in their home country, the very existence of this culture is at stake. Latvians have survived conquering crusaders, serfdom, invasions from neighboring empires, and finding themselves in the cross hairs of the 20th century’s World Wars, Cold War, and multiple occupations.  Yet, more than ever, it is today’s continuing economic crisis that threatens the very viability of the Latvia nation. It was hoped by many Latvians that the collapse of the USSR would have delivered Scandinavian social democracy and a Latvian national revival. The reality, however, after twenty years of independence has been disappointing.

Instead of democratic renewal, Latvian politics have often descended into an electoral oligarchy played out by competing kleptocrats leaving many alienated from politics. Encouragingly, Latvia’s most recent election in October punished many of these kleptocrats, but unfortunately has not brought policy or ideological change. In contrast to democratic engagement, Latvian elites and ruling circles have adopted a model of democracy and liberty advocated by their favorite son, Sir Isaiah Berlin.  Berlin, born in Riga, and a refugee of from the Soviet Union, distrusted state intervention in the democratic process, instead preferring what he termed a negative form of liberty.  This prevented, in his mind, society’s slide down the slippery slope toward totalitarianism that could start with well-intentioned regulation.  While Berlin’s conception of liberty was intellectually tidy, in practice it only created freedom for Latvia’s oligarchs to loot the country, while many of the nation’s intellectuals congratulated themselves for liberating Latvia’s people from a non-existent intrusive state. Indeed, given the pillaging of Latvia that began at independence, an effective state is precisely what was required, rather than a purging of government’s role in making society work. The damage has been done now and it is difficult to divine how it can be fixed, yet repaired it must be.

The result of these past developments is that many Latvians have taken the exit option, leaving Latvia in numbers surpassing those that Stalin ever deported.  While not presenting a moral equivalency between these two exoduses, it is important to point out the objective fact of that Latvia has again suffered a new demographic bleeding, which this small nation cannot afford.

Related to this great exodus is the issue of reproduction (child births).  Rates of reproduction of Latvia-speakers were at roughly replacement rates in the 1980s, thus while Latvian speakers were in relative decline given significant immigration from other Soviet republics, they were not in absolute decline. In other words, the population of native Latvian speakers was stable and poised for possible increase at independence.

Latvia must mind the gap.  Instead of increasing, Latvian rates of reproduction fell by almost half when the USSR collapsed, and despite some fluctuation, have never returned to anything close to replacement rates since independence.  What this means is that for the next nearly two decades Latvia will have a far smaller demographic base from which to see its population recover.  Even if families begin having children tomorrow at replacement rates (an unlikely scenario) it would be at least another 20 years before these children became adults and could have families.  Several rich and poor countries alike face this problem, but given Latvia’s small population, the risks posed to the Latvian nation are potentially fatal. The question must be asked what Latvia has done to create this situation? Next, it must look at the policies of nations who have come closest to resolving demographic decline, such as France.

It’s time to hit the reset button on 1991 and reexamine how Latvia was brought to this state.  After World War II, war-torn nations that were in far worse shape than Latvia at independence quickly recovered, achieved high rates of economic growth, and did so with an equitable distribution of that wealth across society.  This outcome was enabled by the US extending large grants (not loans) to these war-torn nations, and local governments such as West Germany’s, committed to the idea of rebuilding society. By contrast, in 1991, aid came in the form of more loans than grants, and an ideology demanding adherence to neoliberal policies that nowhere have a record of providing sustained growth or social stability.  While the grants finally came in 2004 with EU accession, what has been absent are the national development policies deployed by West European nations after World War II. This lack of national development strategies, along with predatory finance, is what is responsible for today’s economic crisis across Europe’s periphery.

Indeed, it is not only Latvia that should mind the gap, but the European Union generally. Latvia’s internal devaluation/austerity strategy for handling the recent economic crisis that accelerated their country’s demographic and economic decline, is now being advocated by the Wall Street Journal and other financial observers as an example for other EU crisis nations to follow.  This disastrous policy would dramatically curb investment and demand in the EU and lead to years of potential stagnation.

In short, Latvia’s and Brussels’ policymakers would do well to mind the gap. The current economic crisis is pushing policymakers to make decisions that continue eroding the social environment for creating stable family life and the reproduction of Latvia’s population.  Instead of the dream of national renewal being realized at independence through the then “Singing Revolution” of the late 1980s, Latvia now faces national decline. If Latvia, in cooperation with the IMF and the European Commission, continue on this path there is a risk of seeing a European nation slowly euthanized on the watch of the Latvian government, EU, and the IMF.  All would be well to mind the gap, as history will look unkindly indeed on this preventable outcome.

JEFFREY SOMMERS is an associate professor of Africology at the University of Wisconsin-Milwaukee and an economic advisor to Latvian policymakers .  He can be reached at: Jeffrey.sommers@fulbrightmail.org.

 

 

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Jeffrey Sommers  is a proud Dairy Stater and Visiting Professor at the Stockholm School of Economics in Riga His book on the Baltics (with Charles Woolfson), is The Contradictions of Austerity: The Socio-economic Costs of the Neoliberal Baltic Model

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