http://thoughtsfromlatvia.blogspot.com/ ... inter.htmlWhy is Latvia turning into a society with a significant, even dominant population of the aging, passive and helpless poor? Some would say that the cause of poverty is the failure to equally distribute wealth, bringing us back to the socialist argument that all one needs is a centralized system for equally distributing resources in a planned way. This works, more or less, in organizations that are smaller and somewhat less complex than society as a whole. The best example, in rough and general terms, is the military. All soldiers have more or less the same uniforms, weapons, food and medical support and can be relied upon, as a whole, to carry out centrally issued orders and instructions. The military is, looked at this way, an organization that produces the outcomes for its members that are promised by socialism – equality in the fulfillment of all basic needs by central planning and allocation.
However, it can also be argued that the root cause of poverty is low productivity. Here the military analogy breaks down, because functionally “socialist” armies do not produce what they consume. They are not, strictly speaking, “economies”, and it is economic systems that create wealth, multiply and refine resources. Latvia's poverty stems in part from a failure to form an economic system that increases its own productivity and, thereby, the wealth available for “redistribution”, should anyone choose to do so.
Productive and evolving economic systems also need strong institutions that ensure the rule of law, the enforcement of contract and the orderly elimination of non-productive economic entities in favor of those that are innovative and more productive. With all their imperfections and failings, Western European countries have created such economic systems based largely on private ownership and market relations among economic actors.
Latvia: A drab, grey nation in midwinter by Juris Kaža