Austerity Agenda In Latvia Leads To A Tragic Supermarket Collapse, Followed By The Collapse Of The Right-Wing Government Of Krugman Nemesis Valdis Dombrovskis

I doubt most Americans could locate Latvia on a map, even if someone told them it is in Europe. And even the most geographically-astute Americans would have a one-in-three shot of pointing out which Baltic country was Latvia, which was Lithuania and which was Estonia. As for the country's longest serving Prime Minister, Valdis Dombrovskis, the only people who ever heard of him outside of the State Department only heard of him because of his big public spat with Paul Krugman-- until yesterday. Yesterday Dombrovskis resigned and his right-wing government collapsed. That happened because a supermarket collapsed, killing dozens. And that brings us back to what Dombrovskis and Krugman were fighting about: the Austerity agenda that Dombrovskis mindlessly grabbed hold of and shoved down Latvia's throat.

Dombrovskis is an apostle of Austerity and he foolishly attacked Krugman last spring. “Krugman famously said back in December 2008 that Latvia is the new Argentina, it will inevitably go bankrupt, and now he has difficulty apparently admitting he was wrong and so he tries to seek some problems in how Latvia is recovering from the economic crisis,” Dombrovskis told CNBC. “But I think that the mere fact that for the last two years we are enjoying rapid growth shows that it was probably the right strategy.”

Dombrovskis was furious because Krugman had recently written that “[W]e’re looking at a Depression-level slump, and 5 years later only a partial bounceback; unemployment is down but still very high, and the decline has a lot to do with emigration. It’s not what you’d call a triumphant success story, any more than the partial US recovery from 1933 to 1936-- which was actually considerably more impressive-- represented a huge victory over the Depression… [T]he adulation over Latvia really tells us more about what the European policy elite wants to believe than it does either about the realities of Latvian experience or the fundamentals of macroeconomics."

What does this have with Dombrovskis' resignation? The supermarket collapse is a result of Austerity.

President Berzins earlier described the disaster as "murder" and called for foreign experts to investigate what had happened… The prime minister's spokesman told Agence France-Presse news agency that "the government takes political responsibility for the tragedy."

…Structural experts have suggested that the supermarket building itself may have been badly designed and so not able to support a garden that was being built on the roof.

After analysing photos, videos and eyewitness reports, one structural engineer suggested there had been numerous design flaws in the roof's supporting beams - including not enough bolts. Substandard construction materials and corruption are other possible lines of inquiry.

Even Dombrovskis' own Economy Minister, Daniels Pavluts, admitted that the supermarket collapse was at least in part due to "a lack of government oversight of construction projects. The government abolished a national building inspectorate as part of austerity measures that helped pave Latvia's way into the single currency." This is exactly what the Paul Ryan budget, if it is ever passed and enacted, would be bringing the our own country.