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Wednesday 19.09.2018 | Name days: Verners, Muntis
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Social anthropologist compares Latvia to termites

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Roberts Ķīlis

The economic policy of the Latvian government can be compared to the life of termites, as they are completely blind, left with nothing but instinct and the sense of smell. They head in the direction they can draw food from, that is how they survive, Roberts Ķīlis, the Stockholm School of Economics in Riga professor, introduces to his comparison.

He believes the problem of Latvia is not in ideas but in distrust in the government and municipalities. It is crucial that people know the government is doing its best to protect their interests. This would create grounds for patriotism and will to work in Latvia.

Kilis indicates the Latvian tax policy is very heavy and political will is necessary to amend it. Similarly, it is not enough with gradual expenditure cuts, because real reforms are necessary. However, the form of them is not clear at the moment, the expert told the newspaper Čas, stressing that if the government does not introduce any changes, it will completely lose taxpayers trust.

He also points out such a scenario is likely, as the state is preparing to join the euro zone and taking away money from pensioners is the simplest way to slow down inflation. Namely, each and every of 500 thousand pensioners will spend 10-20 lats less monthly, thus the consumption drops and the inflation halts. Kilis assumes 20% pension cuts are still optimistical forecasts.

The government is to do everything in their power to introduce the euro, because they see it as a solution to the crisis and financial difficulties, Kilis says.

 

 


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  1. Aleks Blumentals says:

    It is always interesting to see metaphorical comparisons. However it is too easy to be disoriented by underlying assumptions that are misleading.

    Obviously termites do not posses any consciousness, are not capable of creativity and cannot change what they are. People, Latvian or otherwise, on the contrary, have these capacities.

    Should one not ask why others distrust a group of leaders? what could the leaders do to increase this trust?

    Kilis point to the problem. There is perhaps lack of trust, but the question is HOW can this evolve. Trust cannot be forced or demanded; trust that is forced merely constitutes a spiritual gymnastic exercise that inevitably ends in further distrust and diminished self-reliance of the people.

    This is not what leads to creativity and growth which are conditions to overcome the current situation in Latvia. AS Kilis agrees, gradual expenditure cuts are not the answer. But creativity, ingenuity and resolve are only in people fighting together, respecting one another, listening and changing (not the other but oneself).

    The Euro may or may not be an advantage. Judging by the general state of over indebtedness of all major countries, the systemic risk that hit the private banking sector in 2008, has been merely pushed to the government side. There is no doubt about this, and soft-landing from this problem is highly improbable.

    In such conditions a normally no-brainer – like joining a strong partner – the Euro – should be thought about further. I am not sure that the bigger-picture considerations are clearly understood.

    This is an excellent possibility to build trust between business and government. Imagine that: jointly developing a deep understanding that will provide a common view of what is the long term strategy.

    Quoting Senge: “If organizations do not change in the way they inquire into problems or difficult situations, they will keep finding more of the same. But an organization which tries to appreciate what is best in itself will find/discover more and more of what is truly good.” (The 5th Discipline)

    ZIP28 is a process that could help answer this in 28 days – so we say.
    It is a serious approach to a serious challenge.

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