Lativa No Austerity Success (extended)

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by JEFFREY SOMMERS and MICHAEL HUDSON A much shorter version of this article appeared in the Financial Times on Friday, June 22.  Austerity’s advocates are declaring victory with Latvia’s battle against the European economic crisis and advocating it as the model for Greece & Spain to emulate.  Curiously, Latvians have been declaring this “win” by exiting their country. The “austerians” are celebrating Latvia as the plucky country that through hard work and discipline showed the way out of the financial crisis plaguing so many countries.  For austerians, Latvia represents a veritable Protestant morality play demonstrating that austerity works.  Indeed, they hope the Latvian example will retread Margaret Thatcher’s “there is no alternative” tire for a European-wide scale austerity tour. Few writing on the subject ...

Latvia No Austerity Success

Jeffrey Sommers & Michael Hudson Cross posted from the Financial Times by permission of the authors Michael Hudson and Jeffery Sommers: a distinguished professor at the University of Missouri-Kansas City and associate professor at the University of Wisconsin-Milwaukee respectively, who have both advised members of Latvia’s government on alternatives to austerity. They are also contributors to the forthcoming book by Routledge Press: The Contradictions of Austerity: The Socio-Economic Costs of the Neoliberal Baltic Model. Austerity’s advocates depict Latvia as a plucky country that can show Europe the way out of its financial dilemma – by “internal devaluation”, or slashing wages. Yet few of the enthusiastic commentators have spent enough time in the country to understand what happened. Its government has chosen austerity, its ...