Friday, November 27, 2009

Grey Nation Down

I'm playing on the title of a 1970s disaster film, Gray Lady Down, about a nuclear submarine that collides with a freighter and sinks to beyond where it can be rescued. But what I really mean is that Latvia is more and more a gray nation -- in terms of aging, the weather, the unique gray light of November -- and it is down in several senses, depressed economically, depressed psychologically, and headed for stagnation -- a state of, for the foreseeable future, permanent down.
I don't mean to disparage the gray of age, but this is an aging nation and probably was even before the economic crisis. Now the gray scale is being cranked up by the emigration of the young, among other things, because they see the growing hopelessness of the old and gray. Those are the ones with no option, the ones whose entitlements can be cut with relative impunity and probably will be cut. A family in Ireland or Great Britain can at least financially support its gray generation which will get little or nothing for years of social taxes paid. Indeed, Latvia if not now, then soon will be a country with a high negative return on taxation. Instead of getting some kind of services for taxes (the schools work, the police come, there is health care), Latvians will be paying more for less and subsidizing out of pocket what their higher taxes no longer support.
One need only to look at Latvia's foreign trade statistics (despite fanfares about approaching balanced trade, the current account and all that) to see that this is a country in economic depression. Almost all imports (a sign of the health of the domestic economy) are down by huge double digit figures. The same for exports . Imports of manufactured goods in September were down by 53.3 % from the year earlier, imports of clothing (textile and textile articles) down by 37 %.
Exports rose for such seasonal and world-market affected categories as foodstuffs (mainly grain), but even here, the fish and pharmaceutical exports that had been rising were off again. The country, according to some statistics, is maintaining a good trade surplus in manufactured goods, but at a depressed level and only because imports in these categories have collapsed. As indicators of domestic purchasing power, the trade statistics show that, like a wounded submarine, Latvia is plummeting to the bottom and will probably stay there for the next decade. The 2011 budget, which has to pass the Saeima probably weeks after next year's general election, MUST cut at least another LVL 500 million if there are no surprises. This year, according to how one counts, LVL 500 million were cut, but the international lenders objected, and another 50 plus millions had to go. So with tax revenues mechanically depressed (down) because of salary cuts. So for all we know, the new, very likely populist and inexperienced new government that will be clunkered together in the fall of 2010 will face demands to cut, perhaps, LVL 600 million. Who knows?
All of this is quite justifiable grounds for down as in depression. OK, there is probably nothing to gain from wallowing in this emotion, neither is there reason for euphoria because of occasional statistical blips. Emigration -- both foreign (as in leaving the country) or internal (refusing to cooperate with a failed system) is certainly not an irrational step and it is at least some kind of action, rather than passive acceptance of the consequences of an prolonged economic stagnation exacerbated by gross misgovernance.

5 comments:

Romans said...

I've heard that Eskimos have more than 100 words for snow. Maybe Latvians need to figure out how to nicely term different shades of gray, to bring some variety to the grim surroundings? To create some more radiant outlook? I guess, taking ourselves less seriously could also be a good start, I am saying it as a Latvian myself. Romans

Anonymous said...

what about thinking of some SOLUTIONS rather than just cultivating the thought of emigration? does that help, to your mind? besides, you should read a bit what economists say about our (Latvia's) future. it's better than in your 'analysis'.
Dita
p.s. sorry, in case it sounded offensive, it wasn't meant that way. but if this blog is being written in english to let the world know what's happening in Latvia (which is overall a great and supportable initiative), you should consider better the content.

Jezgotājs said...

For those who understand Latvian. Good article about self-confidence and that the difficulties Latvia now have is not a reason to give up.. I would like that everyone reads and thinks a bit.. The title is "We are what we say about us". Simple, isn't it?

http://www.db.lv/b/2009/11/27/Mes_esam_tas_ko__pashi_pa

Lingüista said...

Even though I don't disagree that one has to say what one sees -- and Juris does have data to back up his gloomy view of Latvia -- I also do think that desperation doesn't help. This isn't a case of "blaming the messenger"; it's simply that Latvians are humans, and humans have gone through bad times before, and recovered. Hard times can also be a moment to learn, and profit from learning. (Again, my country -- Brazil -- went through very bad economic phases, including some of the world's worst inflation bouts, before getting to today's apparent upward prosperity.)

How does the current economic situation of Latvia compare with that of the former SSR Latvia, for instance?

TRex said...

I urge you to look at Iceland and how fast and hard their crash was. What did they do? They changed their approach radically as opposed to relying on feel good cliches and the same old "penis competition" players. http://www.spiegel.de/international/europe/0,1518,620544,00.html
There is no reason this country should become a backwater, even with the horrible numbers.

I just put my wife on a plane to Moscow this morning to take care of some business. Now there is a mess!

Take heart Latvia, go for something new and get rid of the old.