For a lot of libertarians, particularly those that espouse a flat tax on everything - like the 26 percent flat tax Estonia has, our little Eestimaa is a dream land of unfettered market, where no evil government stands in the way between a genius and his fortune or a Finn and his cheap bottle of vodka.
But new stats out of the Estonian Statistical Office show that government subsidies do work to increase productivity, at least in one particular case.
The institution of the Parental Benefit Act on January 1, 2004 showed Estonia adopting a more social democratic population policy, providing parents of new Estonian children with their salary and a year of parental leave, "not less than 2,480 EEK (EUR 159) per month" with a "ceiling set at three times the average 2004 salary - 19,191 EEK (EUR 1230) per month."
The result of state-subsidized unprotected sex? More kids. According to the Estonian Statistical Office, 13,992 births were reported in 2004, a 7 percent climb in reproductive out put compared to 2003, and a 15 percent increase from a recent population low of 12,167 in 1998. Results for 2005 are not reported yet, but the noticeable spike after one year of having that act in place shows that some people thought government subsidized children sounded like a good idea.
So the free market may be great, libertarians, and Estonia may be a wet dream for those who are loath to pay taxes, but social democracy appears to still work sometimes, especially in the bedroom.