Now Latvia is truly famous.
The Wall Street Journal just published a piece about the story with detaining Dmitrijs Smirnovs. Latvian ‘know-how’ in fighting financial crises was also noted by Paul Krugman, this year’s Nobel laureate in economics. The Latvian authorities and the Security Police have a good reason to be proud of their work: millions of people around the world must be having a good laugh at how we fight the crisis here. Of course, one may also wonder what, for instance, foreign investors will think of Latvia after reading this article in WSJ. Could it keep them from having business in our country, thereby reducing the amount of foreign investment? Maybe. Perhaps the Security Police should investigate itself for endangering this country’s macroeconomic stability by scaring off the foreign investors and other sensible people.
But seriously, is this novel piece of criminal code a violation of the freedom of speech? I think it is and hope some day lawyers will have a final word about it. Perhaps Dmitrijs Smirnovs should sue the Security Police for his arrest, bringing the case up to the European Court of Justice, if necessary.
Whatever the legal interpretation of this, I have no doubt that economically we see a stupidity of gigantic proportions. Restricting the flow of information and stifling economic debate will only make things worse. The ‘usual people’ are not stupid. They understand that the government is actively trying to hide information from them. And this is precisely what makes them so jumpy and nervous. People do notice that, from the experience of recent months, it seems that the best predictor for what will happen tomorrow is what the government denies today. If the authorities want to prevent the panic, they should start by sticking to the truth themselves.