Eesti Elu
Globe and Mail: Estonia compares favourably to advanced economies
Arvamus 17 Sep 2010  Eesti Elu
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The next Estonian parliamentary elections will be held on schedule in March of 2011. The current coalition minority government of the Reform Party, and Pro Patria and Res Publica union have held unrivalled power for the last two of the four year terms.

Elections in Estonia are not dissimilar to the process which has evolved in the west: most parties make promises which are impossible to fulfill; the frenzy of reaching voters begins much earlier than the officially established elections campaign period; the debate is vigorous, full of hyperbole and venom; serious election fraud has never been an issue. As opposed to Canada, seats in parliament are allotted, via a complicated formula, according to the accumulative vote gained by each party. At this stage no one can predict the outcome of the vote in Estonia in six months.
One could draw an inference from a recent Globe and Mail article by Neil Reynolds that if the Estonian voter were to be influenced by Estonia's economic well being as easured by international standards, the indicators would have the logical voter return the current government back to power.

In spite of the difficult year of 20089 when gross domestic product fell by 14%, Estonia is the former Soviet-occupied country with the best “freedom-record”. Of the all the liberated states on central and eastern Europe, Estonia was the first to adopt a flat tax at 26% which dropped to 21% in six years. During the same period Estonia’s GDP grew from 34% of the European Union’s average to 65%. This was accompanied by a rise in the per capita income to $18,000 (US), which gave it a “high income country” designation from the World Bank.

Reynolds makes reference to economist Jeffrey Sachs who stresses that government spending cannot ensure the eradication of poverty. Estonia quickly implemented his advice 20 years ago and refused to spend its way out of the economic crisis last year. The results? Estonia’s national debt is a low 3.8% of the GDP, the same per cent as Canada’s annual deficit.

Low taxes, a limited debt and, according to the Fraser Institute, the absolute size of the government, the quality of its legal institutions, the soundness of its currency, the freedom to engage in both the domestic and international marketplace and the quality of its regulatory processes gives countries the “advantages of greater economic freedom”. Last year Estonia was placed in the no. 11 position on the Economic Freedom of the World rankings – right above Denmark and Austria. Canada holds 8th place, Poland is 74th and Russia is 83rd. Research has shown that countries at the top of the economic freedom scale enjoy per capita incomes greatly higher than those ranked low.

While Reynolds’ observations could adorn the government parties’ election brochure, governments cannot depend on international approval and envy of their economic performance to gain voter favour. In Estonia, unemployment in May was 19.8%, the third highest in Europe, compared to 11.4% for the same period in 2009. This alone will make voters sceptical about outlandish promises and hesitate before giving the nod to any party.

While the current economic condition would make anyone nervous about a country’s future, Estonians take the accompanying hardship as something inevitable that one must endure. When government employees were told about necessary pay cuts, when thousands of workplaces disappeared Estonians didn’t take to the barricades, even symbolically. This collective stance might give a hint as to the upcoming election results.
 
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