Estonian austerity, Paul Krugman, and Tw

March 19 [Tue], 2013, 20:44
Whencolumnistandgot into an online spat last summer over the success of austerity in the small Baltic nation, they probably never considered that their argument might find its way to the rarefied world of opera.

But that's just what an American expatriate writer and a Latvian economist-cum-composer have done, turning the kerfuffle into the opera "Nostra Culpa" (Our Fault in Latin), which is set to come to the stage this spring.

For -based writer Scott Diel, authoring a financial opera wasnt necessarily his initial objective. I started thinking about topics which were Estonian but also of wider interest, he says.


In the last few years of course, there have been few topics of wider interest inthan economics and austerity. And Estonia has been one of the few bright lights in the , turning in the best GDP growth rate in the bloc in 2011 at almost 8.0 percent despite having implemented a series of austerity measures that hit the country across the board.


But last June, the New York Times columnist,academic, andwinning economistto critique the poster child for austerity defenders," questioning the merits of the Estonian governments cost-cutting measures. "So, a terrible Depression-level slump, followed by a significant but still incomplete recovery," he wrote. "[T]his is what passes for economic triumph?"

Krugmans comments prompted an animated response from President Ilves on hisaccount.

Ilves, whose position in Estonian politics is ceremonial the real power lies with tweeted in response to Krugman: Lets write about something we know nothing about & be smug, overbearing & patronizing: after all, theyre just wogs and But yes, what do we know? Were just dumb & silly East Europeans. Unenlightened. Someday we too will understand. Nostra culpa.

It was this back-and-forth that spoke to Diel, who wrote the libretto, or text, of the opera. The so-called Krugman-Ilves twitter war seemed to recommend itself, he says.

Indeed, Krugmans comments and the Estonian presidents tetchy rejoinder reminded Diel of condescending advice thrown Estonias way over the years.

I thought about all the times the West had been wrong about Estonia and most of them that came to mind were economic in nature. In the 1990s, the West took issue with Estonia about the way it was handling privatization; the West suggested Estonia devalue its currency; the West counseled not to go to the euro so quickly. These notions were distilled by the Krugman-Ilves controversy and became the libretto.

The music for Nostra Culpa comes from a young artist with a unique perspective. Latvian-born Eugene Birman is both acomposer, whose works have been performed throughout Europe and , and a Columbia-trained economist.

For me, the subject matter of 'Nostra Culpa' was initially interesting from the economics point of view, naturally, Mr. Birman says. But he found his role as an artist was to give meaning to the words stimulus and austerity, which he felt had been hollowed out by overuse.

This is when music has a real role, in giving perspective and adding 'art' to something that has become starved of meaning.


Karsten Staehr, professor of international and public finance at Tallinn University of Technology, notes that Estonia had special motivation for righting its fiscal ship through a tough plan, something Krugman ignored.

Krugman made the rather innocuous point that the production level in Estonia had still not reached the level from before the crisis and asked whether this can be called an economic success, he says. It should be emphasized that the aim of the fiscal retrenchment was to gain entry to the euro area, not to combat the crisis or soften its impact on production and unemployment."

Thelaying out rules for euro ascension required Estonia to attain a budget deficit below the limit of 3 percent of GDP, and it was efforts to that end that allowed Estonia to become a euro club member in 2011. "The decision was taken since rapid euro-area membership had been an explicit goal of the Estonian government for many years, Prof. Staehr says.

But he admits that austerity has been tough on Estonians. The economic downturn was very severe in Estonia; production fell by almost 20 percent over the two years from 2008 to 2009, while unemployment shot up to 20 percent at the beginning of 2010.

Despite the trauma of government cuts, lowered production, and unemployment, Estonia is uniquely positioned compared to its eurozone counterparts. The Estonian government has run surpluses the past two years and has virtually no public debt. This means the sovereign debt crisis hitting the likes of , , , andis unlikely to land in Estonia anytime soon. It also means the Estonian government has greater leeway with discretionary fiscal policy.

Staehr, however, notes that this small nations fortunes are very much tied to its bigger, richer neighbors. Prospects hinge on developments in , , and . It is in this pivotal context that the debt crisis in the euro area will be resolved and confidence will be restored in the near future.

For the artist Birman, the human dimension to the financial crisis is what matters, there is no winner in this austerity versus stimulus thing because, fundamentally, this is about cutting back in some way. If it's today, or if it's for future generations, someone has to pay."

"In 'Nostra Culpa,' there's not going to be a winner either. I would like the human spirit to emerge out of it stronger, and that's what I hope to do with the piece.

Nostra Culpa, a cantata for string orchestra and dramatic soprano, premieres in April in .


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