[This column was written a few years ago on a visit with friend Bob to Latvia. Its theme seems pertinent to the current election debates about what to do with our economic engine in the U.S.]
Capitalism has gotten a bloody nose over the last couple of decades, given the implosion of the financial markets, the incredible greed of certain Wall Street tycoons and the self-inflicted destruction of future wealth represented by our American appetite for debt-financed lifestyles. But lest we think the entire capitalistic proposition is bankrupt, a reminder of the failures of other economic experiments is in order.
I am being treated to a living example of such a failed experiment as I write this. My friend, Bob, and I are in Riga, the capital of Latvia. This country has a history of at least 2,000 years, going back to tribal settlements along the Daugava River and the coastline of the Baltic Sea. It has been subjected to various external aggressions and occupations for the last 800 years, mostly by Germans, Russians and Roman Catholics. The most recent such occupation was from 1940 to 1991. Starting with the incursion of Soviet armies, then briefly Germans, and then the Soviets again, this period of fifty-one years has been a dark era in the lives of native Latvians. Over a half million Latvians were lost to execution, death in Siberian camps, starvation or disease.
Bob and I toured the Museum of the Occupation of Latvia, which chronicled this half-century of subjugation. I observed the independence movements of the eastern European republics that made up the western “cushion” of the old Soviet Union, during the early nineties. But I had no real understanding of the magnitude of the change that freedom from communist rule represented. The Museum building itself is designed to convey the feeling of the occupation. It is a solid, windowless, three-story black brick made of tarnished metal plates. Inside are photographs, stories, memorabilia and artifacts from the occupation period. The most chilling exhibit is a recreation of a camp barracks that housed dozens of people, sleeping on deep shelves made of rough planks, piled like fish so that if someone turned over, everyone had to, by a shouted command.
The communist economic experiment was centrally-planned production, centrally commanded work assignments and centrally determined allocation of resources to individuals. The people of Latvia will tell you that this model creates a lack of innovation, risk-avoidance, poor productivity and meager rewards. In 1991, when the country reclaimed its independence, the door was open once more to private ownership of property and the ability to earn based on what one could individually create. While the economy is under duress, just like almost every other nation on the planet right now, the markets are filled with people, there are many choices of what to buy and the spirit of entrepreneurialism is high. Young people are out on the streets, wearing the styles of the times, ear buds plugged in and cell phones blazing. The restaurants are full of patrons. The local steak house plays Lynyrd Skynyrd over the sound system.
Eighteen years after separation from communist methods, the country has regained its sense of self, its creativity and its Pagan roots of reverence for Nature.
Riga is on its way to being another Prague, although it’s a little harder to get to. And it’s a bit colder. Temperatures today were lower than Fairbanks. But the city welcomes the interested traveler who wants to drink in 800 years of history and experience first-hand the difference between dictated economics versus free-market systems. Yes, our economy is suffering from one of its periodic bouts of the greed flu, but I have no doubt the system itself is robust enough to recover and to propel us into a more balanced future, as long as we don’t overreact with too much central control.
I appreciated Treasury Secretary Geithner’s statements that the Federal intervention was the last thing he wanted to do, but had no other choices, in order to maintain a more stable navigation through these turbulent economic times. I trust that he and our elected officials in Washington will take the time to remember how the experiment of central planning turned out here in Latvia.