Learning wrong lessons from Latvia (July 22nd 2012) Learning wrong lessons from Latvia (July 22nd 2012)

Mark Weisbrot the American economist, columnist and co-director of the Center for Economic and Policy Research (CEPR) has published an article on Aljazeera titled ‘Learning the wrong lessons from Latvia’ referring to Europe’s use of the Baltic state’s austerity programmes as an example. In the article Weisbrot states “Latvia, a Baltic country of 2.2 million that most people could not find on a map, has suddenly garnered attention from economists involved in the debate over the future of Europe and the global economy. …This is terrible, because if there’s one simple lesson that most of the world – if not the European authorities – seems to be learning from the prolonged crisis in Europe, it is that fiscal tightening is not the proper response to a recession. …Latvia lost about a quarter of its national income. Unemployment rose from 5.3 per cent to more than 20 per cent of the labour force and, …under-employment peaked at more than 30 per cent. Official unemployment remains at more than 15 per cent today, even after the economy finally grew by 5.5 per cent last year, and about 10 per cent of the labour force has left the country. …the bottom line is that no country with three times the unemployment rate that it had before the world recession, and Latvia’s huge income losses, should be considered even a qualified success story. It would be a shame if these unwarranted conclusions from Latvia’s experience were to help prolong the unnecessary suffering in the eurozone.”


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