Senator Elizabeth Warren (D-MA) is not only mulling a run for president in 2020, she’s trying to market-splain to formerly Soviet-occupied Eastern European countries why shouldn’t have embraced “cutthroat capitalism” after regaining independence.
“Champions of cutthroat capitalism pushed former Soviet states to privatize as quickly as possible despite the enormous risk of corruption,” Warren said in remarks at American University on foreign policy. Watch her full remarks below:
Her statement is tone deaf and would be rightly laughed at by nations like the Baltic Republics of Estonia, Latvia, and Lithuania (the latter of which is my ancestral homeland).
They are enjoying free enterprise very much and succeeding at it. Per Heritage Foundation’s Economic Freedom Index, Estonia is the 7th most economically free country in the world. Lithuania is down to the 19th spot, while Latvia is the 28th most economically free country in the world, in this year’s world rankings. They all have free market institutes.
Here’s a good recap of why the three Baltics were quick to embrace free enterprise after their regained independence:
The recessions of the early 1990s overwhelmed Estonia, Lithuania and Latvia. A few years earlier the Soviet Union had collapsed, and with it the economic system that the occupying communist regime had enforced in the Baltic nations. In the span of only two years– from 1991 to 1993 – Estonia’s GDP dropped by 35 percent, while the economic output in Latvia and Lithuania fell by around 50 percent. In response, the three countries introduced an ambitious plan to reform and open up their markets. Flat income tax systems at low rates were put in place; general business-friendly regulations were established; governmental influence on the labour market was minimised.
Many economists viewed these changes as a gigantic gamble. The result was a resounding success. The average inflation adjusted growth rate* in the Baltics states from 1995 to 2014 was, as shown in the image below, over 5 per cent, or nearly four times the EU-28 average. No other European country matched this strong performance, driven in part by catch-up and growth-oriented economic policies. But it wasn’t all smooth sailing. In 2008 and 2009, the Baltic states were again hit hard by economic crises. The three nations were particularly sensitive to the global recession, since they had made the decision to maintain fixed exchange rates. Another factor was that foreign investment had contributed strongly to the rapid growth.When the global financial crisis hit, the flow of capital was reversed, deepening the crisis.
Do people really believe that countries occupied by tyrannical, socialist regimes would dip into that experiment again or allow that to transpire again after the bloodshed that ensued in 1939?
Not all the other formerly occupied republics share the same success, especially as Ukraine constantly struggles to ward off aggression from Russia. However, other countries that were coerced into communism – like Poland, Czech Republic, and Hungary— have also embraced a more market based system following the physical collapse of the U.S.S.R. and succeeded.
As an American of immediate Lithuanian descent, I’m grateful that my parents’ homeland is rejecting global socialism and succeeding economically. In fact, both Estonia and Lithuania are more market-friendly than the U.S. in its current standing.
Senator Warren need not shame Eastern European countries for embracing free enterprise. Perhaps she could learn a thing or two from them about sound economic policies.