pühapäev, veebruar 10, 2013

thinner

Iron lady. Psychopath?
An interesting commentary by Estonian journalist Krister Kivi on a recent media event in Britain, where an actress who played the former British prime minister described her as having "oversights when it came to thousands of people. No, millions," as "not being in touch with herself or anybody else," and as having "psychopathic tendencies." Kivi notes that it was Thatcher who inspired the architects of post-1991 Estonia, who are still in power, and likens some Estonian officials' fetish for a lean state to anorexia. Estonia stands before its mirror, Kivi writes, admiring "how trim is her waistline, how balanced are her budgets." In the pursuit of this perfect body image, "one stops to feel hunger," even as the organism's "hair falls from its head and its stomach shrivels to the size of an apricot."

Grisly.

It's interesting to give Thatcher another look in the rearview mirror. I knew her as a child, when she was just another 1980s cultural icon: Ronald Reagan, Michael Jackson, Mihhail Gorbachev, Prince, Margaret Thatcher, Madonna. It was the era of personality cults. We kids spent perhaps more time thinking about the source of MJ's white glove or Gorby's magnificent birthmark than we ever did trying to figure out what was the difference between glasnost and perestroika. It's interesting to think that a significant number of Estonia's political elite were my age at that time, that is, fully formed adults with careers and children, and I wonder if they still see the Iron Lady the same way. That is, it might be 2013 on the streets of Estonia, but it could still be 1987 in the heads of some of its leadership.

63 kommentaari:

Marko ütles ...

Thatcher gave us the City of London, the city of bright lights and the extremes of venture capitalists, but she also gave us the Grim North, millions of people living in conditions similar to Estonias Narva, or Lasnamäe. She put millions of aspiring people into middle class, by introducing right-to-buy their formerly rented council homes, but she did not give them skills to hang on to their newly acquired wealth. Anyone eho has ever visited Britain does know how contrasting this country is - extreme riches and extreme poverty go hand in hand. All legacy of Mrs Thatcher.

Everyone remembers how she called upon abandoning Liverpool, her military exercise in Falklands, her stubbornness with the Northern Irish which nearly cost her life and above all the restructuring of heavy industry. Some might say, so what? But these mines and steel processing plants were the backbone of Britain. Its like someone would come in and call off car manufacturing in America, or IT industry in Estonia. Brits were like, what the hell?

Following Thacherism in Estonia discusts me. You can come to Britain and see yourself - it did not work. All it did was it concentrated wealth creation in to a very small area of Britain and gave birth to a new class of elites. Everyone else lost out.

Kivi is spot on and I really hope that new generation of politicians will have enough backbone to put end to this fanaticism.

Temesta ütles ...

The tragedy is that the Estonian state actually is not very lean. Government expenditure as a % of GDP in 2012 (45,3 % according to IMF estimates) is higher than the German level (44,9%) and not so far removed from the Swedish level (49,1%). In 2003 public expenditure in Estonia accounted for only 33% of GDP. This can be explained by the Estonian government's decision during the crisis of 2008-2009 to cut the budget deficit for a big part by means of tax increases, not spending cuts, and a huge increase in the absorption of EU cohesion funds. To spare high income citizens, the income tax was not made progressive, but VAT was increased, a measure that disproportionately hits citizens with lower incomes.

I would prefer Switzerland: low public expenditure (33,4% of GDP), low taxation, but a progressive income tax.

Conclusion: the priority of the current Estonian government is not a lean state, but the stubborn preservation of a low incomes tax for citizens with high incomes, while keeping the economy moving forward through increased public expenditure.

http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/weorept.aspx?pr.x=27&pr.y=8&sy=2012&ey=2012&scsm=1&ssd=1&sort=country&ds=.&br=1&c=138%2C939%2C134%2C144%2C146&s=GGX_NGDP&grp=0&a=

Marko ütles ...

Fair point, Temetsa. But how to get it through to wider public? If you would make this point in one of the country's main newspapers, youd be called a socialist (in a derogatory way) and a communist. The conservatives have brainwashed majority of the society believing that any attempt to narrow individuals right to make money at any cost, literally getting your way no matter what the wider consequences, is equal to Stalinism. Atmosphere is pretty much like 1950 America, and it is very difficult to get any sensible points through.

Temesta ütles ...

The popularity of the social democrats has increased a lot in recent years, and if I understand correctly, they are not averse to a progressive income tax? So maybe slowly something is changing and the idea is becoming more acceptable.

And I keep thinking it is so strange that Estonian liberal-conservatives continue to speak in such a derogatory way about the welfare state, while the economic succes of Estonia depends for a large part on economic links with countries that have the world's most sophisticated and admired welfare systems. If a large degree of social protection would necessarily cripple the economy, surely this would not have been possible?

It also reminds me about how much all this neoliberalism is certainly not something inherently Estonian. It is mainly a reaction to the Soviet past, the desire to be the antithesis of the Soviet Union. But by now it has become a caricature. I think that you'll agree with me that if Estonia would not have been occupied, the socioeconomic organisation would be much more similar to Finland or Sweden. This is an argument I often use when discussing with Belgian communists: the best way to make people open to neoliberalism is to expose them first to fifty years of communist dictatorship.

Marko ütles ...

Very true. Prior to WW2 we were pretty much heading to that direction. We had National HealthService decades before the British, we even ha the WWelfare Minister (hoolekandeminister). First female police officer in Europe was Estonian, I actually had a privilege meeting her due to a family connection. Prostitution was legal, and they paid health insurance and recived specialist care specifically designed for their profession, lol. Disabled people were high on the agenda, thus they were one of the first to board the trains as undesirables in Soviet perfection, only to starve to death in Siberian camps. We fid put an awful lot of effort in, thus the later atrocities scarred the society so deeply. People are sceptical, and rightfully so.

Temesta ütles ...

By the way, today I attended a family party on a farm in a very small village in Võrumaa. As you can imagine, there were some people present for whom the last twenty years have not always been a blessing. These people really feel betrayed and left behind by Ansip and his hollow rhetoric about leading Estonia into the top five of richest European economies. I cannot blame them (and as a far I could understand they do not support the center party).

Giustino ütles ...

I think SDE is now the most popular party in Estonia, Temesta, probably because generations are changing, the younger ones feel less timid about voting for a party with "sots" in its name, and the older ones feel less enthused about staying the course. A lot of the rhetoric does remind me of the Republican Party in the US, who preached about "starving the beast," meaning the state, but, in truth, government expenditures rose more under W. than any American president dating back to his fellow Texan LBJ.

brett ütles ...
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brett ütles ...

What desires championed by the socialists will make Estonia stronger in 20 more years? If spreading the wealth and/or providing for the poor are their main arguments, they will never turn into a top 5 European country.

When the government spends 45.3% of GDP and still has those on the LEFT screaming for more, I feel logic is being replaced with ideology.

For those who enjoyed the comfort and security of the Soviet era may need to wake up and face the responsibility given to the individual. They alone direct their path forward not a government proclamation keeping us all back. In a free society, they should be free to fail or succeed, but never be doomed or entitled to either.

Temesta ütles ...

"When the government spends 45.3% of GDP and still has those on the LEFT screaming for more, I feel logic is being replaced with ideology."

Progressive taxation does not necessarily involve increased government spending. Check out the example of Switzerland, or Ireland before the development of the housing bubble, both with much lower government spending as % of GDP than Estonia, and a progressive income tax.
But personally I would also support a bit more spending on social welfare.

Giustino ütles ...

There is no socialist party in Estonia. Social democracy and socialism are/were two competing political ideologies.

brett ütles ...

There is no Socialist Party in the USA. Yet the government still monopolizes K-12 education and bought GM. We have a President who believes in "redistributive principles". He also thinks we should decrease the deficit by raising taxes on only 2% of the population. Not only is he rooted in a socialist's ideology, he is inherently unfair in his solution for the fiscal whole that is still being dug.

Temesta ütles ...

Yes, it really seems that the US is becoming the heir of the Soviet Union...

Unknown ütles ...

brett wrote: "What desires championed by the socialists will make Estonia stronger in 20 more years? If spreading the wealth and/or providing for the poor are their main arguments, they will never turn into a top 5 European country."

Precisely the reverse is true. What policies has the Reformierakond-led government espoused that would make Estonia stronger in 20 years? (Of which 8 years already past and counting, i.e., 12 left?) Their policies have cemented Estonia in the bottom 5 least rich countries in the EU. Their policies do favour a very small number of individuals in a system best described as neo-feudalism. A society is judged by the wealth of its poorest individuals (see Norway, Switzerland), not of its few rich tyrants (or even its 0.5% - see the US). Spreading the wealth is the best way to guarantee continued growth and not perennial stagnation and flowering of less than 100 individuals.

brett wrote:"In a free society, they should be free to fail or succeed, but never be doomed or entitled to either."

Heavens, no! (Sarcastic remark) The devil impersonated is an 'entitlement'. People should be doomed to fail, and never entitled to succeed, according to your possible logic. Since when are people divided into those 'entitled' to inherit, steal, or cajole their riches, and the others who are not 'entitled' to receive education, healthcare, research?

When did money eat our brains out? When did government become a swear word?

brett wrote:"There is no Socialist Party in the USA."
Any person with 2 cents of wit will easily recognize that there are only right wing parties in the US, led by the Republicans and Democrats, whose policies differ on minutiae.

brett wrote:"... the fiscal whole that is still being dug".
Shouldn't that be "fiscal hole"? Oh yes, sorry, you don't believe in education. I propose a stupidity tax on morons who cannot spell, as well as mandatory insurance on gun owners, since they own the instruments that generate mass killings.

Marko ütles ...

In America you keep what you kill, in Europe we keep a share. Thats a fundamental difference and makes Europe and America incompatible/incomparable. In Europe we debate how much of the share you can keep, there is no such discussion in America. We are people connected through shared history, culture, language, genetics etc. We iinhabit this little corner of the world as a community. Wr would noy survive if we would not work together, and thats a fact. Socialist element will always be present in Northetn Europe, otherwise we would just die, simple as.

Unknown ütles ...

Rightly said, Marko. It's a dog eats dog world anyway, why give top dog added privileges? Oh, or is brett one of the neo-darwinists, eugenics ever present in his secret wet dreams? 'Let them eat cake', he'd say. Evolution depends on natural selection, but you can't speed that up. The survival and reproductive fitness of an individual are not based on that individual's money-making capabilities. In the end it's the species that evolves, i.e., a community, i.e., a society.

Unknown ütles ...

Money is a tool, not an end to itself.

Unknown ütles ...

There exists mandatory insurance on vehicles because of the chaos and damage to individuals and property that they have the potential to cause. The only logical conclusion is that there should equally be mandatory insurance on firearms (all of them, including second-hand).

Unknown ütles ...
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brett ütles ...

Unknown, would you care to expand on the "desires championed by socialists" which will make Estonia stronger? What I am asking for is a defense of the solutions that fly in the face of Thatcher, Reagan, and/or Rand.

To the USA and Estonia will always b divided in size and history can not be argued. But to ignore history or to doom ourselves to it is to admit defeat. I believe each has plenty to learn from the other.

In the USA: We have socialized healthcare for the poor and disabled Medicaid. We have socialized healthcare for children SCHIP. We have socialized healthcare for those >65 years old Medicare. We have a socialized education system that fails to educate (I do "believe" in education, just not the type that Teacher Unions and Governments are providing). We have plenty of Government involvement and I believe way too much. We have plenty of Union bias and I believe way too much.

What has this all created? A system and democracy, at least in the USA, that is being increasingly populated by takers not givers. We have a system where 50% of the population does not contribute to Federal coffers (except indirectly through the Corporate Taxes transfered to the end consumer). A system and democracy controlled not by those seeking solutions, but those seeking to appease special interests in the most politically correct manner. A system and democracy that no longer encourages individual success and compassion. A system that promotes greed at all levels...through the tax code, through employment contracts, through our welfare systems.

We are no longer a Government by the People: We are Government by the special interests. We are a Government by the Lawyers who only seek to win an argument (left or right), not provide solutions or a way forward.

For those who think that we need to punish the rich or put in place highly progress tax structures...I ask, why is the government set out to punish anyone, especially those who are successful.

For those who think the government is the one who is to provide for the poor....I claim a moral people will provide for their neighbor, because they are the best judges of ones needs, not someone trying to remain in power.

For those who want to combine to two and tax the rich and give to poor.... First, wealth is not finite. Taking from one to give to the other does not expand wealth, in actually further disincentives it's creation. Second, Why do you believe that this will make Estonia stronger in the 20 years?

Can any Socialist tell me why their Estonia will be better off in the next 20 years.

sorry for the typos

brett ütles ...
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Temesta ütles ...

The other Nordic countries, especially Sweden (Norway with it's oil is an outlier), have competitive economies, low public debt, a high per capita GDP in comparison with other European states, a high level of equality and social protection. They also score quite high in the Heritage foundation's index of economic freedom, just like Estonia.
But I assume you'll find arguments to back up your claim that in fact they are doing bad and are degenerate socialist hellholes?

brett ütles ...
Autor on selle kommentaari eemaldanud.
brett ütles ...

So the Socialist's defense in and for Estonia is to look North?

I would not call the USA with it's socialized programs "hellholes". I would just call them poorly designed and products of a diluted democracy. A democracy that borrows 40% of every dollar spent: by spending more on education per pupil than any other country, by spending more on healthcare per person than any other country...all with a very progressive income tax. It's not necessarily a hellhole, just a Nation in decline, do to an electorate motivated both by greed and class envy and a representation that is not leading but following and encouraging such bias.

It would sure be a shame if Estonia does not learn from 'world" history.

Does anyone here think wealth is finite? In other words, because one makes more the other must make less?

Marko ütles ...

Estonia, as a republic was founded on the basis of solidarity. Our constitution is based on the principle of equality and individual liberty and a protection from the State if these have been compromised. As you claim, that its a persons own fault that they are poor, I would challenge that by claiming that poverty can also be inflicted to some and it is the duty for the State to put the wrongs right again. If not, why the hell do we need this country in the first place, lets all live like cavemen ot rednecks?!?!

Marko ütles ...

Brett, Estonia does not look North in that sense. Estonia is North. We've always done things this way, . it was only the Soviet invasion and following occupation that cocked things up in Estonia. We are just struggling to find our feet again. But all the signs behind the scenes show thst wr ate heading towards where we left earlier.In 20 years time Estonia will be welfare state again, Iits just inbuilt to the people living at these shores.

brett ütles ...
Autor on selle kommentaari eemaldanud.
brett ütles ...

Marko, where did I claim "it's a persons own fault that they are poor"?

I believe that the fear of failure incentives the opposite of failure. Poverty can be the product of many things. I the USA, I have witnessed what I call institutionalized poverty. We could also call this generational poverty. Mother to son, Father to daughter, Mother to daughter, Mother to daughter, generation after generation....all a product of the welfare state. Gov't housing, food stamps (SNAP), Medicaid, Unemployment, Welfare in general...what's missing? Education and freedom, leading to hope and opportunity.

brett ütles ...

Marko, don't you want to see Estonia evolve into a prosperous Nation?

The role of the government should be to protect the rights and freedom of the individual. I am not advocating for a weak government, I am advocating for a government that is not willing to sacrifice future possibilities for short term political appeasement.

Temesta ütles ...

"So the Socialist's defense in and for Estonia is to look North?"

No my defense is to provide an example showing that these policies that you call ´socialist´ are not incompatible with a strong economy.

Liivimaa parim ratsutaja ütles ...

Yawn.

brett ütles ...

Would you want a strong or stronger economy if you had a choice? How are we to pretend Estonia has had hundreds of years of freedom and economic growth?

Education, Individual Freedoms allowed the USA to grow into the economic power that it is today. I don't think we can say spreading the wealth allowed any country to do this. Turning your back on freer markets and fairer markets (flatter taxes) based on a belief that the government can create wealth faster than the freer market is simply a lack of economic understanding. It is a political argument not an economic argument.

Temesta ütles ...

You are attacking a straw man. I (or someone else here) never claimed that government can create wealth faster than the market. For me it`s not about the government owning the means of production but about redistributing wealth to a certain degree. I hope you understand the difference. You´ll claim that this slows growth and causes countries to end up with a smaller GDP per capita. This effect exists, but is minimal, and the costs do not weigh up to the benefits. How many countries have a flat tax among the twenty or thirty countries with the highest gdp per capita? How many of them have minimal governments?

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

And please don´t claim that you ideas are somehow non-political, neutral.

brett ütles ...

My ideas are based on the idea that we should examine history, promote fairness, utilize logic, and understand incentives to gain a better grasp on how we should attempt to guide future economic policy. I could care less about political arguments, these are only to promote one special interest over the other.

To think that the government spending upwards to 50% of GDP is a good idea. To think that this will promote, generate, and multiply wealth is shortsighted.

To think that greed is only and attribute of the rich is also shortsighted, just come to the USA and examine the abuses of the welfare and entitlement systems.

As far as straw men? Wasn't I the one who was accused of believing "it's a persons own fault that they are poor" and that I "don't believe in education".

Pointing out that the private sector creates wealth while the public sector takes wealth or hampers it's creation is no straw man argument, its what I believe. I have a hard time believing Thatcher or Obama would share views regarding how wealth is created. I also wouldn't say that believing that wealth is not finite is a straw man argument. It's just support for my views.

Finally, does anyone think that what Obama and the Socialists, Progressives, Liberals, Democrats (whatever label) are doing in terms of using the "progressive" tax code to raise revenue is a good idea. He just raised taxes on a tiny fraction of the American voters. In the USA 98% of the public/voters are insulated from the negligent fiscal policy implemented by the Left and Right. This is class warfare. The Occupy and 98%ers are promoting it and the wealthy or rich or successful or evil ones are to pay, blame, and punish.

What is fair or logical about any of this? And why would anyone in Estonia want to create such an imbalance or environment for such class envy and punishment? All while ignoring how wealth is generated and how incentives motivate behavior.

Temesta ütles ...

I always like it when people refer to concrete data to prove or make their point, instead of endlessly repeating their dogmata. That keeps us connected to reality.
If I should believe you then Sweden or Denmark as they are now (wealthy, high taxes, big welfare state), could never have existed.

brett ütles ...

Let's examine what your own Wikipedia link (concrete date) warned: "GDP per capita is often considered an indicator of a country's standard of living;[1] although this can be problematic because GDP per capita is not a measure of personal income. See Standard of living and GDP."

Temesta ütles ...

Data can always be questioned, but if this is the best you can come up with...

But of course, if personal income, especially for the top layer, is your main concern, then it is logical that countries with a low income tax score better, by definition.

Marko ütles ...

Problems Estonia is facing are quite simple. If you earn 400 euros, your rent is 200 and heating another 200 then in order to eat, you have to borrow. I'm not bringing even children in to this equation. The signals that ptivate sector sends ouy in Estonia are that work does not pay, which is in strong conflict with our culture and heritage. Thats why I think that it is appropriate for the state to step in and put end to this exploitation. It's not that business has very tiny profit margins, quite the opposite is true. Current government is Latin-Americazing Estonia, and people are not happy. If they will not sort it out, you will have conditions ripe for revolution. Simple as.

Marko ütles ...

In a nutshell. If government wants to keep here those foreign and domestic investors who take piss out of the working man, then my message to the government would be - you subsidize it, bring in working tax credits fot low earner and squeeze the difference out of those leaches. If you are not gonna do it, I'll vote in a government that will. And that does not make me a socialist, just being fair, eye for an eye - and even the most backward right wing conservative shoulf understand this language.

Temesta ütles ...

Marko, I understand that this problem has become bigger since 2008, with wages decreasing or growing slower than inflation.
But how was the situation for example in 2000, when incomes where much lower?

brett ütles ...

Denmark and Sweden have been championed, let's compare these to the US and Canada.

http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS/countries/EE-US-CA-SE-DK?display=graph

The above link is a graph laying out the central government tax revenue as a percentage of GDP going back to 2003. Using the most recent data provided, the US=10.4%, Canada=11.9%, Sweden=21.3%, and Denmark 33.8% Estonia falls in the middle at 16.1%.

http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

The above link provides annual GDP growth by year by country. I used this data to calculate an average annual GDP growth over the past 19 years 1993-2011 (16 for Estonia, 1996 was their first year of data). The US=2.56%, Canada=2.74%, Sweden=2.60%, and Denmark 1.59%. Estonia falls in the middle at 5.04%. Denmark falls below the EU average of 1.87%.

I think it is hard pressed to claim that Denmark is a strong economy or at least strong enough to think that Estonia should emulate. Sweden on the other hand, point taken. Yet, if we compare the last 51 years Sweden's average growth rate is 2.64% and the US's is 3.12%. From an historical perspective it is fair to equate that the USA economy has been stronger, despite the growth in social welfare programs and entitlement spending over this period. Or could we argue that over the past 51 years the USA has suffered from an increase in the size of the federal government as a percentage of the GDP?

Marko ütles ...

It quite triky to assess. I suppose a lot more houses would have had log burners in them, as during the boom years many opted for electric underfloor heating. Energy prices have more than doubled. Global commodity prices for basic food have also risen drastically. Therw was still a lot of "old fat" around, grandads old farm here, nans old beach front summerhouse there - as I can see, most of it has now been exhausted, just yo cover the basic living standard.

Also it's all very subjective, isn't it? Apparently costs related to childcare have also gone through the roof. And on the backdrop of all this wages have been stagnating, thus the high emigration rates which also equates to the lost tax revenue gor municipalities outside Tallinn.

Temesta ütles ...

I doubt that central government tax revenue is a good measure, because of differences in local and regional taxes.

Nice that Sweden did better than Denmark. According to the heritage institute Sweden has less economic freedom (so is less capitalist) than Denmark, so this does not necessarily mean a lower growth rate. In 1993 Denmark had a higher per capita gdp (PPP) than Sweden, but Sweden jumped over Denmark in 2006. And Denmark despite the slower growth rate is still among the countries with the higher per capita GDP.

http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/weorept.aspx?pr.x=31&pr.y=15&sy=1993&ey=2011&scsm=1&ssd=1&sort=country&ds=.&br=1&c=128%2C144&s=NGDP_RPCH%2CPPPPC&grp=0&a=

Looking at your data, Estonia does not fall in the middle, but has the highest growth rate. This is normal, Estonia started from a much lower GDP per capita and went through a period of fast catch up growth.

Yes, over 51 years the Swedish growth rate is a bit less than the one of the United States. But should they abandon their welfare state because of this?

Temesta ütles ...

Marko, I am very happy with our ahi. We can heat our flat with logs during the whole winter for only 100euro. But I totally agree that there has been a lot of pressure on low income families during the last couple of years.

brett ütles ...

The difference in average growth rate of 3.12% US and 2.64% Sweden over 51 years does in fact lead to a significant impact on today's GDP. These rates compounded over 51 years is not what I would label a "bit" of a difference. From Sweden's perspective the US has grown 18% faster than Sweden since 1961. With Denmark's 51 year growth rate of 2.40%, they have grown 30% slower than the US.

Yes Estonia's growth rate is a little skewed and well ahead of the average(that was a typo). Which is expected considering that they re-entered the global markets years behind more historically sovereign states. This is both a set back and an opportunity.

Lets look at where Estonia should/could be in 51 years. Do they want to average 3.12% growth or accept what some on this blog would call a strong economy with 20-30% lower growth rates?

Also, is Estonia to emulate a welfare state without ever growing into a "rich" country? What I am hearing is that Estonia should be more like Denmark and Sweden, both of which have enjoyed years and years of freer markets than Estonia.

Temesta ütles ...

The point is that Sweden (and Denmark also) has a strong economy and moreover, most of it´s citizens share in it´s wealth, compared with high inequality in the US. If I understood correctly you claimed earlier that this is not possible.
You seem to have a fetish for reaching the highest GDP per capita, whatever the cost. I would settle for a bit lower per capita GDP but a more equal distribution of incomes. Shoot me.

brett ütles ...

I am about growing the economy GDP in order to grow the middle class. Not taxing the rich to give to the lower class. One version creates wealth, while one hampers it's growth.

Temesta ütles ...

Good for you.

Temesta ütles ...

Like the countries I mentioned don´t have a middle class. It´s only black or white in your universe.

Temesta ütles ...

By the way, according to the CIA in the US ´Since 1975, practically all the gains in household income have gone to the top 20% of households (https://www.cia.gov/library/publications/the-world-factbook/geos/us.html).´
They really succeed in increasing the prosperity of the middle class it seems.

http://rwer.wordpress.com/2011/10/23/top-0-1-top-1-bottom-90/#more-6330

Marko ütles ...

I will be a loony bin and try to predict future here. My sistet works fot Tartu University and half her wages go on childcare alone, in 20 years time there is not going to be any middle class in Estonia if we continue at current course.

And why do you compare US to Estonia? US is strong because its military is strong. And from where does the military get thrir equipment from? Prisoners make it. And who are in prison in Amrrica? Most British intellectuals agree that the US still employs a level of slavery and fund through that their military muscle to gain more influence, ie money on global markets. Estonia couldn't ever compete with that, nor should it.

We'll find our own way, thank you very much. And wealth distribution is something that needs to be looked at straight away.

In 1930s, when the first Republic was 20 years old and the Great Depression was reaking havoc across the globe, your average working class couple could start from zero and have theit own fully furnished house within 7-10 years. All paid for. So what's wrong now, or more importantly - why are things different now?

brett ütles ...

I am not comparing the US to Estonia. More accurately I am comparing the US to Sweden and Denmark and then asking which would Estonia rather have?

Which economy drives innovation? Which economy promotes wealth creation? Which promote wealth confiscation and re-distribution?

Estonia's market structure and wealth are still forming and growing at nearly double that of the US and Sweden (never mind Denmark) over the past 19 and 16 years respectively.

It just seems odd to compare Denmark and Sweden to Estonia. Estonia has a few glaring internal structural challenges that are not seen the US, Denmark, or Sweden. The main one from my perspective being the lack of integration of the Russian population into the motivated class. How do you create a welfare system in Estonia if you 1st don't have wealth to distribute and 2nd don't have an underclass willing to do what it takes to move upward. The welfare system will simply set a portions of Estonian residents back 20 years.

I am more focused to looking at history and how incentives have promoted and created wealth creation. Rather than saying, which system (Denmark, US, Sweden, Canada) is better, I think the question is "Which system will work the best in Estonia?"

Thats for them to decide and hopefully my daughter to benefit from not be saddled with.

Temesta ütles ...

"Which economy drives innovation? Which economy promotes wealth creation? Which promote wealth confiscation and re-distribution?"

Again, it's only black or white for you, right? Yes, without taking inequality into account the US is richer, but Sweden is also a wealthy country. I advice you to visit it and see for yourself if there's no wealth and no rich people in Sweden, you would be surprised. They even have billionaires! Despite 75 years of 'wealth confiscation' Swedes don't stop producing. But of course that is not in accordance with your dogmata and prejudices.

Temesta ütles ...

Some reading material:

http://www.voxeu.org/article/nordic-innovation-cuddly-capitalism-really-less-innovative

Mele ütles ...

I keep on wondering, for years already, what's this obsession with country's wealth, GDP and personal income that so many people seem to share, in totally unquestioned way? In this debate its brett, in Estonia its Reform Party and its followers, in global media its all mainstream right-wing media... Is there any proof that high GDP has made people of some country really happy? Or -- whats the point of life anyway...

I think the signs have been out quite long already for most to understand, that the right way to go for all countries, is not desperate growth -- it should more be like how to tie economy and everything around it up with less pain while we need to pack together anyway -- more popularly its called sustainability.

And equally important purpose should be wealth equality. Yes, I do agree that in Estonia things are pretty bleak income-wise, there are few rich and most in the middle are just hanging on there, we really would benefit from average higher incomes -- but even here this and the growth of GDP is far not the most critical worry. Growing inequality does far more damage to the whole society, including the 'rich'.

brett ütles ...

Temesta, thanks for the insight. I particularly enjoyed

"For instance, all Nordic countries have introduced dual income taxation, according to which capital incomes are taxed at a flat rate. This helps in motivating entrepreneurs, despite quite progressive taxes on earned income. Sweden has recently encouraged wealth accumulation by abolishing wealth and inheritance taxes altogether."

Now my questions would be: 1) If capital income should be taxed at a flat or flatter rate to create an incentive to invest, why shouldn't earned income be taxed similarly. 2) Doesn't the highly progressive model of taxation on earned income punish hard work and sacrifice that would be needed to boost productivity? 3) Why doesn't the USA follow Sweden's lead and abolish their inheritance taxes? How do these US taxes jive with the "cut-throat capitalism" description given by the 3 Finnish Economists.

"It is quite understandable that US companies dominate patent filings in the US. For an international comparison, the so-called triadic patents – i.e. patents filed for the same invention in the US, EU and Japan – are a more suitable measure."

The TRIAD patent data point is interesting, but let's assume you are a company in the US. If you are seeking a domestic market your US patent is sufficient. But most Nordic countries can not survive with a solely domestic mindset. They must appeal to and seek out the global marketplace to remain viable. Just as companies in the US can't survive by operating in just one state. The patent analysis from my view is simply flawed.

Mele, I think the use of GDP is rather simple to grasp. I have yet to find an economic system that can provide an increasing standard of living over the long term, without a growing GDP over the long term. I do not suggest we should view GDP between nations as the end all, but I do suggest we examine the trends of GDP growth and what incentives are in place to promote or hamper growth.

"Is there any proof that high GDP has made people of some country really happy? Or -- whats the point of life anyway..."

Conversely, is there any proof a low GDP makes people happy. Also, what country is better suited to provide for the poor or defend those in harms way, one with a small GDP or one with a large GDP?

But I often tell friends and family the coolest part of Estonia is the respect for nature and the simple life found at the core. The saunas and the family gardens, often managed and cultivated together as a collective. To the benefit of the family as a whole. Regardless of the economic structure I doubt this will change. We will still be eating the potatoes, carrots, mushrooms, pumpkin, cucumber, tomatoes, garlic, and various berry jams and juices harvested in 2012 well into 2013. This to me is happiness, it is freedom. But it is not the product of a government system, it is the product of a family system.

Finally, I will leave this thread back at it's origin. Words from Prime Minister Thatcher

"...and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them."




Mele ütles ...

"Conversely, is there any proof a low GDP makes people happy."

-- That's not too strong of a counter-argument here. I most certainly did not propose that there is a relation between low GDP and happiness -- instead I suggested that may-be such a relation (between GDP and the really important things in the lives of people) does NOT exist at all or at least it is very strongly overrated lately.

When we enter the realm of things that ARE proved, then life in countries with low inequality rate has proved to provide happier citizens by many different measures.

The standard mistake of people leaning towards right/neoliberal values seems to be that "success" (usually defined in an extremely limited way by the number of bucks on some account, etc) is something that an individual can achieve by himself and his wisdom and work, not on the expense of society at all. Well, the simplified experiment to start seeing the nonsenseness of that claim is: go to some desert with no society/community and try accumulating wealth there. No infrastructure built by tax money, no way to take advantage of people as work force, etc... good luck!

Marko ütles ...
Autor on selle kommentaari eemaldanud.
brett ütles ...

Maybe Prime Minister Thatcher can better explain her position...

http://m.youtube.com/#/watch?v=okHGCz6xxiw&desktop_uri=%2Fwatch%3Fv%3DokHGCz6xxiw

brett ütles ...
Autor on selle kommentaari eemaldanud.
Marko ütles ...

Brett, Thatcher turned Britain from Northern European State in to a Northern American State. We can see where your sympathies lie, but most Estonians would take her approach with a pinch of salt.

For many, following Thatchers lead would mean going backwards. We had similar economic model in place during the late Dark Ages. These were times of great economic growth (see Estonian architecture from Hansa period), but also the times of great conflicts (peasant revolts, reformation, European wars etc.).

I think that the penny dropped for the Estonians somewhere late 17 early 18 century. Education for the poor became the fashion of the day and has remained so until now. We have a lot data from that National Awakening period, you can check it out from your local (publicly owned!) library. The common theme, however, or the main incentive was to decrease poverty among the peasants and to gap economic inequality.

So, you recommend us to ignore 200 years of development and history and plunge back to the Dark Ages?

brett ütles ...

Marko,

It's about trying to learn from history (old and new) and trying not to repeat mistakes that have already been made. On this thread I have pointed to mistakes made in the US and reforms made in the Nordic Countries.

Yet, I am not willing to declare wealth as a finite commodity, that must be equalized to reach fairness.

Just as I am not willing to examine Estonia's options under a regional microscope both geographically and historically. Estonia is in a very unique chronological position as it charts it's economic course. Jumping ahead and pretending it is already a wealthy nation is by no means a way of maintaining that so called position of obtaining that status in the first place.

If you want to spread the wealth around in Estonia, you will run out of money in very short order.

And as far as libraries go? Nearly very federally mandated/government run grade school in the US has a library, but that doesn't mean students are wiser, more educated, and better prepared for the rest of the 21st century. Heck the US spends more than any other country on education per pupil, but we test nowhere near the top. It's not money that is lacking. It's not resources, it's the system that needs reformed. Maybe the US should look toward the Nordic Countries and learn something.

Marko ütles ...

Brett, when independence was reestablished, world for us seemed a very different place than it does today. There was a silent gentelmens agreement between the classes in Estonia. People genuinely accepted lower wages on one hand as a circumstantial fact of life but more importantly as a tool to help the business to find it's feet and prosper. And it worked! Obviously that was many moons ago and things have changed greatly. Those early corporations established seem to follow a certain "scheme". They made it competitive through cheap labour, they invest profits to Middle-East, Africa or Latin-America, they sell on the business to Scandinavian investors, land the profits of the sale in off-shore bank accounts and the Scandinavians keep operating these businesses as simple cash cows.

Now, theres nothing wrong with it per se, as Estonia is a global economy, but country itself was originally not seen or meant as such, as it was a very different world back then. It just so happens that many people feel that the initial trust and street-cred we had with these people has greatly undermind. People feel as if they were taken advantage of.

So, as the original social agreement does not stand no more, a different one needs to be constructed. I'd leave the business side as it is, the hell with it, but would bring in more politicians with social conscience - to make sure that business would get the message - with great benefits and privileges comes great responsibility.