Read a comment by Valdas Samonis for the article European Commission’s proposed EU aid distribution principle does not satisfy Lithuania, which was published on the Lithuania Tribune on March 30.
Who cares about LT in Europe or even understands the devastating impact of the Soviet communism on its development level?
The Palemonas Legend: A Tale of Two EU Nations
By Valdas Samonis
Since the annus mirabilis 1989 the theory was that Central and Eastern Europe, CEE, would use its abundant and relatively educated labor force to grow faster and on a more sustainable and consumer-oriented (prosperity) basis due to shift to markets and euro-integration.
What got in the way is the theory of (rational?) expectations?
True, CEE did receive a sort of a very modest version of Marshall Plan from the EU. True to four EU freedoms, Western Europe is opening to labor movements (emigration) from CEE. So when new CEE policymakers were implementing liberal market reforms, they should have anticipated some substantial outflows of labor force to higher bidders in Western Europe due to simple demonstration effect.
What got in the way is the law of unintended consequences in complex processes?
When the British opened their labor markets to the East, they anticipated some 10-12 thousand immigrants from Poland, for example, what they got is some one million and rising. Who knows what the figure is after Germany opened last May?
The tale of two EU nations: What got in the way is the paradigm of hard-to-calculate policy externalities?
The current Kubilius Government of Lithuania adopted a very ambitious (no IMF help even sought!) and rather harsh austerity modeled on the reigning EU thinking in order to clean the Augean stable of Lithuania’s finance wrecked fo by former Soviet nomenklatura hijacked governments that largely used EU money to place their cronies in plum jobs (to the exclusion of younger generation of course!), “prikhvatize” real estate and keep it from any taxation, etc. Consequently, Lithuania did not attract much Western direct investment so the productivity remained at low post-communist levels at the time when emerging Asia provides stiff global competition.
Before they realized what is going on and who was robbing them, the Lithuanian people got clabbered by this new ambitious austerity policy and the younger ones started emigrating in catastrophic numbers, seeing no future in the country whose GDP was reduced (from a low post-Soviet level) by some 20% by the combination of the old nomenklatura rent-seeking policies and the global Great Recession. Lithuania is hollowing out rapidly, unfortunately!
While the Lithuanians sobered rather in time, the Greeks have been continuing the party until the last bottle, and then they got another, and will get another one:)
Greeks won, Lithuanians lost! This is the tale of two EU integrating nations: they are even related since ancient times according to a Greek Palemonas legend.
Wishing you all the best, I remain