IMF Managing Director Christine Lagarde has made conflicting remarks in the last few months indicating that she might have doubts – shared by IMF economists – about the self-destructive economic policies that are pushing the eurozone deeper into recession and causing a financial crisis.

But this week, she flipped to the far-right end of the policy spectrum. In a 5 June speech in Latvia, she praised that country's government's economic policy as a "success story" that "could serve as an inspiration for European leaders grappling with the euro crisis".

Weisbrotin mielestä IMF:n pääjohtaja Lagarden ja muiden leikkauspolitiikan ylistäjien viesti Latviasta "menestystarinana" on harhaanjohtava. Hän kirjoittaa, kuinka finanssikriisin ja vuosien 2009-2009 laman myötä Latvia menetti lähes neljänneksen kansantulostaan. Samanaikaisesti työttömyys kasvoi 5,3 prosentista aina 20 prosenttiin työkykyisistä. Jos työttömyyslaskelmiin sisällytetään ne ihmiset, jotka jäivät pois työelämästä tai siirtyivät työskentelemään ainoastaan osa-aikaisesti, työttömyyslukemaksi nousee yli 30 %. Tämän lisäksi kriisien johdosta n. 10 % työtätekevistä lähti ulkomaille, useat pysyvästi.

Latvian talous kasvoi viime vuonna 5,5 % ja ennusteet tälle vuodelle liikkuvat 2 prosentin tienoilla. Työttömyysaste on edelleen korkea, 16,3% virallisen arvion mukaan ja 23,6% kun mukaan lasketaan osa-aikaiset ja työelämän ulkopuolelle jääneet. IMF:n ennusteiden mukaan Latvia tarvitsee vuosikymmenen saavuttaakseen kriisiä edeltäneen BKT:n tason.

Weisbrotin mukaan pahinta Lagarden viestissä on ajatus, jonka mukaan muut euroalueen maat voisivat ottaa oppia Latviasta. Latviassa yritettiin "sisäisen devalvaation" (internal devaluation) avulla laskea maan työvoimakustannuksia ja täten parantaa maan asemaa maailmanmarkkinoilla. "Sisäisellä devalvaatiolla" tarkoitetaan valtion suhteellisen kilpailukyvyn parantamista erilaisin toimin, jotka laskevat tuotantokustannuksia. Työvoima- ja tuotantokustannuksien laskeminen voidaan saavuttaa luomalla suurtyöttömyyttä ja ajamalla sitä kautta palkkoja alemmas, kuten Weisbrotin mukaan uusliberaalien talousoppien mukaisesti Latvian tapauksessa yritettiin. Kun tämän johdosta vienti kasvaisi ja tuonti laskisi, maksutase, joka on karkeasti ottaen viennin ja tuonnin erotus, paranisi. Tämä parantaisi maan taloudellista tilannetta.

Weisbrot kirjoittaa, että Latvia ei kuitenkaan onnistunut työvoimakustannuksiaan laskemalla saavuttamaan kilpailukykyisempää asemaa maailmanmarkkinoilla ja näin parantamaan maksutasettaan. Latvia onnistui kyllä luomaan massatyöttömyyttä, mutta tämä ei saanut aikaiseksi kasvaavaa vientiä tai laskenutta tuontia, joten maan maksutaseen paraneminen ei ollut syynä Latvian talouden "elpymiseen".

Pääsyynä Latvian talouden elpymiseen oli Weisbrotin mukaan se, että he eivät toimineet kuten olivat luvanneet Kansainväliselle valuuttarahastolle ja Euroopan viranomaisille. He olivat luvanneet kiristää huomattavasti budjettiaan, mitä he eivät kuitenkaan tehneet. Odottamaton inflaatio sai aikaan suunniteltua voimakaamman ekspansiivisen rahapolitiikan ja vähensi julkisen velan kasvua. Latvia sai myös paljon rahallista tukea Euroopan viranomaisilta, jotka halusivat varmistaa, ettei Latvia devalvoi valuuttaansa, koska se olisi aiheuttaneet mittavat tappiot mm. ruotsalaisille pankeille.

Weisbrotin mielestä Latvian esimerkistä tulisi oppia, että perinteinen vyönkiristyspolitiikka johtaa laajaan työttömyyteen ja pahaan taantumaan, kuten Kreikassa ja Espanjassa. Työvoima- ja tuotantokustannuksien laskeminen Latvian tyyliin ei toimi. Jos euroalueen maat lakkaisivat harjoittamasta leikkauspolitiikkaa, saattaisi niiden talouksien elpymisestä olla toivoa. Hänen mukaansa on erittäin harhaanjohtavaa kutsua Latvian tapausta menestykseksi. Samalla logiikalla voitaisiiin Yhdysvaltain 1930-luvun lamaa kutsua menestykseksi, koska siitäkin Yhdysvaltain talous lopulta elpyi.

It is amazing to hear Lagarde, who almost certainly knows better, calling Latvia a "success". It is like calling the Great Depression a success – after all, the US economy did eventually recover in the 1940s. And the US lost a comparable amount of output during 1929-33 to what Latvia lost in just two years (2008 and 2009). Spain, Greece, Portugal, Ireland and the rest of the eurozone will also recover, eventually – and most likely, they will do so after a change of macroeconomic policy.

Lue myös:

Ha-Joon Chang: Austerity has never worked
Weisbrot: EU:n johto ja EKP purkavat hyvinvointirakenteita
Leikkauspolitiikka ei ratkaise Euroopan talouskriisiä

Mark Weisbrot, The Guardian 07.06.2012
Christine Lagarde's perverse praise for Latvia's economic 'success'

The IMF chief surely knows better than to believe Latvia's disastrous internal devaluation is a good plan for the eurozone

IMF Managing Director Christine Lagarde has made conflicting remarks in the last few months indicating that she might have doubts – shared by IMF economists – about the self-destructive economic policies that are pushing the eurozone deeper into recession and causing a financial crisis. This despite her comments that offended many Greeks last week, in which she appeared dismissive of the mass unemployment and suffering in Greece, saying that she worried more about poor children in Niger who "need even more help than the people in Athens".

But this week, she flipped to the far-right end of the policy spectrum. In a 5 June speech in Latvia, she praised that country's government's economic policy as a "success story" that "could serve as an inspiration for European leaders grappling with the euro crisis".

Latvia suffered the worst output losses in the world during the world financial crisis and recession of 2008-2009, sacrificing nearly a quarter of its national income at the altar of austerity. Even worse, unemployment rose from 5.3% to over 20% of the labor force. And if you count the people who dropped out of the labor force or were involuntarily working part-time, unemployment/underemployment peaked at more than 30%.

But even that doesn't measure the extent of the suffering that Latvians have endured. About 10% of the labor force left the country, many never to come back. The Latvian economy grew by 5.5% last year, but is projected to grow by just 2% this year – a sluggish recovery for a country that fell so far into a hole. Much worse, unemployment is still brutally high at 16.3% for the official rate, and 23.6% for the broader measure noted above. IMF projections show Latvia taking a full decade to reach its pre-crisis GDP.

If that is success, perhaps the eurozone governments should start thinking about what the Troika considers failure.

But the worst part of Lagarde's twisted message is the idea that eurozone countries could emulate or learn positive lessons from Latvia's experience. In fact, Latvia did not even have a successful "internal devaluation", even ignoring the social and human cost – as the Troika (ECB, European Commission, and IMF) likes to do. An "internal devaluation" only works if the country can lower its labor costs enough to become more competitive in world markets, and thereby improve its trade balance. This is done, as was attempted in Latvia, through creating mass unemployment and driving down wages. (This is not a conspiracy theory: this is the actual economic reasoning behind a strategy of "internal devaluation", and how it is supposed to work.)

Latvia succeeded in creating the mass unemployment, but it didn't move its real exchange enough for this to cause its exports (or reduced imports) to pull it out of recession. In fact, the country's trade balance contributed very little to the recovery.

So, how did Latvia finally recover from its deep recession?

The main thing was that in 2010 they didn't do what they promised the IMF and the European authorities. They had promised to tighten their budget by a huge amount, but they didn't do it. And they also got some help from unanticipated inflation, which gave them a more expansionary monetary policy than they had planned, and reduced the growth of their public debt. Latvia also got a lot of money from the European authorities, which wanted to make sure they didn't devalue their currency, as that would have left the Swedish banks with big losses.

So, the lesson for the eurozone is the very opposite of what Lagarde is preaching: if you do what the Troika is prescribing, you will have a devastating recession with vast unemployment – witness Greece and Spain. "Internal devaluation" does not work. And yes, if the eurozone countries were to ditch the budget austerity, their economies might begin to recover.

It is amazing to hear Lagarde, who almost certainly knows better, calling Latvia a "success". It is like calling the Great Depression a success – after all, the US economy did eventually recover in the 1940s. And the US lost a comparable amount of output during 1929-33 to what Latvia lost in just two years (2008 and 2009). Spain, Greece, Portugal, Ireland and the rest of the eurozone will also recover, eventually – and most likely, they will do so after a change of macroeconomic policy.

Then, the IMF and their allies in Europe will ignore the years of lost output and employment, and all of the needless suffering and wasted lives, and announce that these countries have "successfully" restructured their economies – because they did what they were told to do.