Commentary: Estonia a Model for Vermont?

Thirty years ago I spent four days in the small Baltic nation of Estonia, attending a liberty conference. In the Soviet era (1940-1991) communist apparatchiks appointed in Moscow ruled the three Baltic countries as sham Soviet “republics”. The enterprising Estonians were shackled, and by 1946 more than one-quarter of the population had been deported to a Siberian Gulag, or executed, or had fled the country.

But as the Soviet Union collapsed in 1991, Estonia’s  “Singing Revolution” , where hundreds of thousands came together in defiance of their overlords to sing forbidden patriotic songs, had pried it loose from Soviet control, sent its communist overlords home to Russia, welcomed its expatriates, recreated its democratic parliament, and restored its independence. The idea of hosting foreign guests at an International “liberty conference” was a very popular one.

Two things made a lasting impression on me. One was their determination to rejoin the European economy. Since the Estonian language is understood nowhere else except possibly Finland, the Estonians launched a national campaign to make its people fluent in a world trading language – English. For most educated Estonians, this was their fourth language after Estonian, Finnish (related, and heard on Helsinki television), and the official Russian,

The other impression was the pervasive spirit of freedom and independence that appeared everywhere. At last we are free! We can learn, create, build, trade, and make our country a prosperous democratic republic!

Andy Kessler of the Wall Street Journal recently visited Estonia’s capital Tallinn to see what the people of this small country have achieved in those thirty years of independence and freedom. For comparison, Estonia has twice the population and 1.8 times the land area of Vermont; Tallinn is at the latitude of Labrador, Canada.

Now, reports Kessler, ninety-nine percent of Estonia’s government services are digital, with more and more relying on Artificial Intelligence. That puts it No. 1, according to the United Nations. President Kaja Kallas says that her government uses these digital tools to decrease bureaucracy. “That’s how to create small government. It’s cheaper and our debt is much lower as well.” Though it’s rising, Estonia still has the lowest ratio of government debt to gross domestic product in the EU, which it joined in 2004.

Estonia  is also first in democratic development among 29 postcommunist countries, according to Freedom House; first in international tax competitiveness, according to the Tax Foundation (the U.S. is 22nd); and sixth in the 2023 Index of Economic Freedom, according to the Heritage Foundation (the U.S. is 25th).

It has the most startup businesses per capita in Europe, and its 15-year-olds top the Continent in reading, science and mathematics. Its Gross Domestic Product jumped by eight percent in 2021 and its top personal income tax rate of 22% puts it 26th of the 27 EU countries. Estonia has no corporate income tax.

President Kallas says “to attract investments, investors must trust your economy. Under the Soviets, we normalized corruption. When we restored our independence and freedom, suddenly it required a whole new mind-set from all people—it was not OK to steal from the state.”

She added, “We don’t have a lot of people or natural resources. We have our minds and brains. So we actually have to focus on our education system. It focuses on the STEM subjects. All first-graders are taught coding. Estonian kindergartners use robots from a program called ProgeTiger. We are a small country, which means that you have to learn all the other languages. And coding is one of the languages you learn.”

She added a thought that few American public schools would grasp: “We also teach entrepreneurship in schools.” In high school they do role-playing, with bankers and loans and investment and government. Ms. Kallas says she is proud that Estonia “is very high on the list of youth entrepreneurship,” and that her country has the most unicorns per capita — startups worth over $1 billion in manufacturing and information technology services.

Kessler writes that despite some unavoidable problems, like living next door to a truculent Russia, in Estonia “the Reagan playbook is working...[Its political leadership] is working to increase everyone’s equity value. Purchasing power is up 400% since Estonia regained independence”, [thanks to] “Free trade, low taxes, small government, e-services, educated workers, low debt and negligible corruption.”

Today, thirty years after my visit, I am thrilled at what the freedom-loving Estonians have achieved by using their brains, seizing their opportunities, working hard to succeed, keeping government in check, limiting tax burdens, and creating prosperity for generations to come.

I wish I could be more sanguine about how today’s Vermonters , with their acceptance of ever growing, ever more centralized, and ever more powerful government , will create prosperity for their children.

John McClaughry writes for the Ethan Allen Institute.


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