Latvia: A drab, grey nation in midwinter

I am writing these recent impressions of Latvia while visiting the US East Coast (the Boston area). While life is no picnic here at all, there are “shiny happy people” around instead of what I saw just before departing. I will be going back to the drab, gray nation on Friday.

One of the things I have been doing as a hobby is to walk around Riga and photograph people, buildings, street scenes and the like. A place I have gone a couple of times with my camera is the Riga Central Market, with its former Zeppelin hangar halls and open-air area. To get there, one way is to go through the Central Station, which has partly been turned into a multi-level shopping center with clothing stores, electronics shops, restaurants, newsstands and a supermarket.

To go from this modern 20^th or even 21^st century environment (shops selling iPads etc.) into the Central Market is a remarkable and depressing transition in terms of the people one encounters. It is a socio-economic leap to another world of mostly old, haggard, grey, apathetic and resigned faces and bodies. Listless, old, greyish-pale expressionless or ravaged faces abound, almost like a contingent of people shuffling away from some disaster just around the corner or over the horizon, too burned out to move very fast. Is this the Third World, the photos of Somali or Ethiopian war victim and refugee faces, only white and better nourished?

The impression one gets is of a society from which the life-spark has vanished, or more precisely, emigrated. There is only a scattering of young people in the otherwise old and worn masses shuffling about the market with tattered plastic bags (almost like the Soviet era, except that then plastic bags were a sign of privilege, net bags and cloth abounded). The young are tourists or shoppers seeking fresh, organically grown vegetables and other foods from the countryside. The sellers, too, for the most part are babushka type country women, with a bit higher energy level than their often morose shoppers.

I fear this somehow illustrates the state and fate of the Latvian nation (including non-Latvians, too). Drab, haggard, impoverished, drained of any hope for the future and of an age when, given the overall demographics and state of health care, there probably is little time left for many of the individuals one encounters. All this just a few hundred meters from the modern center of Riga, where tourists and somewhat better looking locals gather, as well as the significant but visibly dwindling young, who are often livelier and happier.

What is going on? As a colleague working for a foreign news agency said, it appears that the local Latvian media don't really care. Poverty and long-term unemployment statistics are big news in many other countries. A shift in the number of poor generates considerable media attention, analyses, searches for root causes and the like. Not in Latvia. Even the annual Human Development report seems to focus on issues of identity and emigration/immigration (to be honest, I have only skimmed parts of the document).

It would be facile to say that the root of all this is the transition to a capitalist market economy. There were similar scenes in the Central Market of huddled, grey masses of socialist citizens waiting in huge lines (sometimes crowds bordering on mobs) for a piece of gray frozen meat to be hacked off a huge block with an axe. One of the roots of the seeming exhaustion and demoralization of Latvia's people is fifty years of occupation and a totalitarian, centrally planned economy that did provide a dull, monotonous subsistence for most people living under the system. It was the era of stagnation, shortages and little apparent hope that anything would change, though with a certain reliability that rents would be low, electricity cheap, bread, fish, potatoes and other basic foods generally available and the occasional sausage or fruit waiting at the end of a long queue if you were lucky. Being a victim was nothing new to Latvians leaving socialism and entering the new system of the 1990s.

The problem was that the new “system” in the 1990s consisted of most of the ex-Communist elite of an entire country trying to imitate the behavior and lifestyle of characters on the American TV show Dallas, since this best approximated what they had been taught about capitalism. The idea was to immediately spend money – the more, the better – on huge houses and big cars. Dishonesty and cheating – whether on wives or business partners – was part of the deal.

To be sure, stuff like that happened in the real world, so that the picture of how things were in non-socialist economies as presented by Dallas was selective, but not entirely inaccurate. There was no show made called Central Committee, which could have shown the depravity (now documented) of the Communist elite running a state-owned, planned socialist economy and succeeding poorly, sometimes pointlessly and often sloppily at providing what are still the promises of socialist movements everywhere – free healthcare, free education, and full employment.

It is obvious that a grab-whatever-you-can economy will generate inequality, or rather, exaggerate existing inequalities among a population that had been indoctrinated that complete equality was possible and that, indeed, a semblance of it existed in the low, but barely adequate standard of living shared by most of the population. Among the old and hopeless, memories of this have turned to nostalgia for “better times” under the old system.

Why is Latvia turning into a society with a significant, even dominant population of the aging, passive and helpless poor? Some would say that the cause of poverty is the failure to equally distribute wealth, bringing us back to the socialist argument that all one needs is a centralized system for equally distributing resources in a planned way. This works, more or less, in organizations that are smaller and somewhat less complex than society as a whole. The best example, in rough and general terms, is the military. All soldiers have more or less the same uniforms, weapons, food and medical support and can be relied upon, as a whole, to carry out centrally issued orders and instructions. The military is, looked at this way, an organization that produces the outcomes for its members that are promised by socialism – equality in the fulfillment of all basic needs by central planning and allocation.

However, it can also be argued that the root cause of poverty is low productivity. Here the military analogy breaks down, because functionally “socialist” armies do not produce what they consume. They are not, strictly speaking, “economies”, and it is economic systems that create wealth, multiply and refine resources. Latvia's poverty stems in part from a failure to form an economic system that increases its own productivity and, thereby, the wealth available for “redistribution”, should anyone choose to do so.

Productive and evolving economic systems also need strong institutions that ensure the rule of law, the enforcement of contract and the orderly elimination of non-productive economic entities in favor of those that are innovative and more productive. With all their imperfections and failings, Western European countries have created such economic systems based largely on private ownership and market relations among economic actors.

Since the early 1990s, Latvia has had a long parade of advice and instruction on how to reform and transition society from a failing socialist economy to a modern market system, including the necessary institutions to underpin such an economic system. To be sure, a lot of the advice given to Latvia over the past 20+ years has been condescending, oversimplified, overoptimistic, and presented with little understanding of how the presumed audience – homo (post)sovieticus saw the world. But at the end of the day, or rather, the two decades, Latvia was given almost all of the basic and much of the sophisticated knowledge on reforming its society that was needed to build a socio-economic system that would increase productivity and increase the total wealth of society.

So it can be said that much of the poverty in Latvia, exacerbated by the emigration of productive and potentially productive individuals, was caused by a failure of politicians and institutions and, to some extent, society as a whole, to learn the lessons repeatedly given to them since 1991. They can be summed up as – don't bribe, don't steal, deal honestly, pay fairly, invest for the mid-to-long term, educate your workforce, streamline government, make bureaucracy small, smart and efficient, make the benefits of tax-paying visible and obvious, keeping taxes moderate, etc. etc.

Too little of this has been done. Instead, the political elite has discredited itself to an extent unheard of since modern polling methods have been used. The collapse of trust in institutions in Latvia is very likely irreversible and has already mutated into a kind of social paranoia as witnessed by the run on Swedbank. The end result is that we have a society that, at least by street-level observation, is ravaged by poverty and has failed to implement the practices that would have significantly reduced that poverty. It is too late to retrain the older part of the population to do the work, say, of five Chinese while getting paid three times Chinese wages (probably a bad comparison), and the young are making decisions every day to leave a country they perceive as failing and futureless. The drab, gray, haggard, exhausted, aged population that one sees behind the socio-economic divide of the Riga Central Station (and probably in many rural areas) is the result of a series of choices over the past 20 years that, whether intentional or simply clueless, have resulted in an act of “futuricide” agains the Latvian nation.