Praise for Latvia off the mark

I admit to having a soft spot for Latvia — part of my family emigrated from the Baltic nation where, generations ago, they were rabbis, teachers and owners of an amber factory, jewelry from which we still prize as heirlooms. For Republicans, though, Latvia represents not familial nostalgia, but a flawed rallying cry for austerity politics.

In 2009, Latvia’s leaders adopted stringent austerity measures in exchange for loans from international institutions. The government cut spending by almost 17 percent, chopping public-sector salaries by 20 percent and slashing its equivalent of Social Security by 10 percent, while promising to cut government employment by 30 percent.

More to the point for Republicans in the U.S., they lived to tell the tale. The party implementing these painful measures increased its representation by 18 seats in the 100-seat parliament. Bankers declared the young prime minister “an inspiration for his colleagues in the EU; that he can be reelected even after passing austerity.”

Republicans joined the rejoicing, taking little Latvia’s election results as confirmation that pain sells; that voters, recognizing the need for painful cuts, will reward parties that take risks by hewing to their principles. Republican intellectuals quelled doubts about the political wisdom of austerity by bandying about the Latvian example. It was, they claimed, an unambiguous lesson in how their political imperatives and policy commitments converged.

Never mind, of course, the havoc wreaked on Latvians — unemployment doubled and real wages shrank by 14 percent. And never mind that few Americans know anything about Latvia, so the subtleties of an election where ethnicity and post-Soviet politics proved more compelling than economics were ignored by those desperate to find evidence that austerity sells.

Latvia assumed outsized importance in GOP mythology because there is no other example of political success arising from austerity in the Western world. Indeed, voters worldwide are punishing the apostles of austerity, literally, left and right. 

Just weeks ago, Portugal’s Socialist prime minister was forced to resign after his call for spending cuts was rejected. The latest poll shows the Socialists garnering just 25 percent of the vote, down 13 points from their 2009 showing.

Parties of the right have also fallen victim to public anger over austerity. Though two-thirds of France approves of President Nicolas Sarkozy’s intervention in Libya and his efforts in the Ivory Coast have been lauded, his approval rating fell to a record low of 28 percent this week. In local elections last month, Sarkozy’s conservatives could only muster a less-than-credible 19 percent of the vote.

David Cameron’s conservatives have fared no better. The Tories bested Labour by seven points in last year’s general election. After Cameron’s cuts, they lag Labour by seven in the average of April polls. 

If budget-cutting really begot growth, we would rightly applaud Republicans’ willingness to endure political pain for public gain. Unfortunately, their hopes are dangerously misplaced.

Cameron’s Britain is suffering nearly as much from his austerity as it did in the initial phase of the recession, with the economy actually contracting in the wake of his cuts for the first time since 2009. Even Latvia’s economy has been devastated.

To use Republicans’ favorite “family budget” analogy — while a recently laid-off worker might be wise to cut up his credit card, he would be foolish to drop out of school, give up the car he uses to look for (and then get to) work and stop taking his blood pressure medication. He might reduce movie-going and restaurant meals, but should still make the critical investments he needs to improve his lot.

Neither this mythical worker, nor America, nor my ancestors’ Latvia, will succeed in merely cutting their way to prosperity or to electoral success.

Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982. Current clients include the majority leader of the Senate and the Democratic whip in the House.