Real Austerity in Latvia

I saw an interview on the BBC with the Latvian leader.  The BBC interviewer was quite pressing ins his questions, and was constantly presenting contrarily evidence against what the Latvian leader said.  He did not let up in his pressure.  Now, imagine that kind of interview with Obama.  Instead of endless fawning and softball question, what if we could get a journalist to hold Obama´s feet to the fire, and call him on his BS.  Of course that will never happen.  Just shows to show that leaders of big powerful countries get the royal treatment, and leaders of small insignificant countries get the hard treatment.

What is more surprising is that during the interview the leader of Latvia mentioned that his country back in 2008 cut the budget by 1/3 and reduce government employee pay by another 1/3.  Now, that is austerity, and the country is currently growing fast.  This is what we need, an example of real leadership, something sorely lacking in most of the west.  Meanwhile, in the US even a reduction in the growth of the budget is treated as the end of the world.  The Med. European countries have not even come close to this kind of reform, despite endless talk of austerity.  In reality the austerity has not been overly aggressive (and deriving from bloated budgets), and it has been combined with few efforts to make government more effective and efficient.  Labor and other reforms have been timid and not enough.  On top of that they have consistently raised taxes.  So, the Med. countries are going thru a withdrawal of less spending, their governments are as inefficient and ineffective as always, their rules and regulations are almost as burdensome as always, and they have a higher tax burden.  No wonder nothing is getting better economically.  The old entrenched powers refuse to give up their privileges, and the nation suffers.  And it goes on and on.  We are now in the 5th year of recession with no end in sight.  When countries like Latvia or South Korea bite the bullet of reform and a free market led corrective recession, they go thru a couple of rough years, and then come out of it stronger than ever.  Compare that with the US or the Med. European countries which resist any pain and thus let the pain drag on year after year.  Every problem is met with more promises of government intervention and spending.  If the government just got out of the way, cut spending, cut taxes, cut harmful regulations, stopped rewarding incompetent banks, stopped fiddling with interest rates, then the economy would balance itself and be productive.


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