In the United States, we put economists in the cabinet. In India, they make them prime ministers. In Latvia, they put them in jail--the pessimistic ones, at least. According to the Wall Street Journal, Latvian security agents recently detained university lecturer Dmitrijs Smirnovs after he told an audience, “All I can advise is this: First, don't keep money in banks. Second, don't keep money in lats,” the national currency. Smirnovs was released, but agents seized his computer and told him not to leave the country. Turns out that it’s illegal to speak ill of the Latvian economy--or, in Soviet-speak, spreading “untruthful information.” He’s not the first, and despite a press uproar, he’s unlikely to be the last.
There is no excuse for such a breach of civil liberties, particularly in a country well on its way to full membership in the club of the west. But there is an explanation, and it points to a dilemma at the intersection of globalization and democracy. Latvia’s is a relatively small economy, but it is a dynamic, modern one, fully incorporated into the international market. As a result, it is more vulnerable to economic shocks than larger countries, and more susceptible to private manipulations. In the grand sweep of history, periods of globalization saw small states, like small firms, destabilized and even gobbled up by larger states, and state interventions to control the market or investors were expected. But in the twenty-first century, we expect governments to respect their citizens civil liberties, even when their exercise could undermine national economic stability. So what’s the answer?