Would you believe me if I told you that a guy born and raised in Missouri could become a digital resident of a small north-eastern European country on the Baltic Sea? It sounds almost like something out of science fiction. It’s not even obvious what that actually means. But it’s true, about as cool as you would probably imagine, and it’s an idea that sheds real light on what smart government policy can do to bring a country into the 21st century.
Being an e-Resident of Estonia means that you get remote access to the Estonian economy from anywhere in the world. It doesn’t mean you get to vote or receive access to Estonian welfare services, or even that you get to live there. However, access to the Estonian market also means access to the European Union’s market —twenty-six economies which, when combined, constitute the world’s third largest.
Starting a business in the United States is hard and complicated and full of all kinds of expenses. Trust me, Spectacles has taught me that lesson at least. As an e-Resident or citizen of Estonia, however, it’s incredibly simple and inexpensive. Opening a business in the country costs €120, and everything can be done online through Estonian government web portals which feature detailed and useful explanations of everything one needs to know. This is why Estonia has the most startups per capita in the EU and is ranked the most entrepreneurial country in Europe by the World Economic Forum.
Becoming an e-Resident of Estonia is similarly straightforward. All you need to do is head to the government website—which actually feels modern and professional, especially compared to US government pages—and fill out the application. It takes about 30 minutes to an hour. All you really need is a headshot, a picture of your passport, links to your social media, and some answers to various questions about your motivation and interest.
When you’re finished, you pay a €120 fee and wait around 30 days to find out the result of your application.
E-Residency is a fascinating program, but it’s merely one example of how streamlined, modern, and innovative Estonia’s bureaucracy is. The features and mechanics which underpin e-Residency extend far beyond it.
All the way back in 2005, this small country became the first in the world to hold nationwide elections online. Today, citizens can vote online from anywhere using their unique ID-card or mobile ID. Beyond voting, all government services and forms can be accessed online, 24/7, through one website, eesti.ee (give it a visit to see how extensive it is). Whether you want to access your insurance information, receive a pension, pay a ticket, file a request with the government, or do anything else, it’s all in one place. The only three exceptions to this rule are marriage, divorce, and the transaction of real estate, which each require the submission of physical paperwork to an office.
When it comes time to pay taxes, this too is done online through the same portal, and it takes all of five minutes. Estonia has a flat tax of about 20% on all income which is automatically withheld by your employer. All a taxpayer needs to do is approve the documents which are automatically, digitally pre-prepared. This, combined with an extremely simple corporate flat tax results in a very low rate of fraud. What’s more, the level of digitization allows for a high level of automation, which saves the state a great deal of money.
When you combine all these characteristics, especially the generally low tax rate, you might expect that Estonia would not have a very well developed welfare state or social policy, but that’s hardly the case. 94% of Estonians have access to free healthcare, and education is free all the way through college. In fact, the country is the 3rd best-educated in the world, behind Korea and Japan. Even with all that, Estonia maintains the most balanced budget with the lowest rate of debt of all developed democracies: 14% of GDP, compared to the next lowest countries’ 30% and 43%, or the United States’ 161%.
Another point of concern might be privacy or security, given that so much of citizens’ private information is accessible online in order to interact with government services. If any country was going to be subject to cyberattacks, it would surely be the one which conducts voting online, borders Russia, and contains a sizeable Russian ethnic minority. But in Estonia, no such problem has ever been encountered. Alongside the digitization of its government and society, Estonia has developed one of the most advanced cybersecurity industries in the world, even leading to the invention of novel blockchain technology used to secure votes and citizen data online.
What’s more, every Estonian citizen can see when and which government officials have viewed their information and what has been viewed. Citizens can and have filed highly successful suits against improper access. The transparency generated by digital citizenship generates two-way accountability and greatly enhances rule of law. Taxes and other penalties are hard to avoid, and invasions of citizen privacy are nearly impossible to conceal. If that still sounds concerning, consider the fact that most governments have access to an extraordinary amount of information on their citizens. Estonia simply makes that modern reality transparent and thus accountable.
All this can be found in a north-eastern European country of only 1.3 million people: about half the size of the metro population of my hometown of Kansas City. This small nation is an outstanding model of the potential of a modern state. Government services are automated, streamlined, highly accessible, and technologically progressive.
In America, a long-standing and widely-believed narrative asserts that bureaucracy is necessarily bloated and backward. Estonia proves that notion dead wrong. 21st century technology provides governments with the opportunity to enrich the lives of citizens and enhance accountability. By contrast, we have elected officials demanding that Facebook “end finsta,” among many other examples of just how clueless our aged politicians are about contemporary technology. What’s worse, Americans are subject to an enormous amount of private and public surveillance with very little judicial recourse.
American bureaucracy is bloated and backward, no doubt about it. But that is a product of American government and governance, not an intrinsic characteristic of bureaucracy. Neither is bumbling inefficiency, as some claim, an inherent feature of democracy: an unconscious capitulation to authoritarian talking points. Why the administration of the wealthiest nation in the history of the world resembles the Flintstones, while the Jetsons may be found living in a small Baltic nation, is a complicated question which we will explore more in future articles. But the symptoms are obvious.
When Hamilton and Madison penned the Federalist Papers—essays explaining and defending America’s constitution—they were more than clear. The virtue of American freedom and government, they wrote, would be political and social vigor, ingenuity, and stability. Where many believe the change that comes with innovation is a generator of instability, these men recognized that creative and vigorous leadership was the key to navigating a ship through ever-changing waters. In politics as in life, it is the ship which floats without direction that is dashed on the rocks.
New ways of thinking are hardly the sole purview of “progressives.” Instead, a competent state is a necessary precondition for any thriving society, whether one proclaims the virtues of the free market or the intervening hand of government. Estonia provides a crucial real-world example of how a healthy, effective, and purposeful bureaucracy can cultivate a freer society.
Well-maintained bureaucracy with strong and clear accountability to the public, when grounded in principles of equal opportunity, can actually enhance market accessibility and generate the extremely high level of entrepreneurship found in Estonia. The country not only defies our traditional understandings of bureaucracy but also of its relation to the free market, notching high ratings for economic freedom, ease of doing business, and tax competitiveness right alongside a generous welfare state.
Government is meant to be active and innovative, and this kind of government is best-suited to the achievement of so-called progressive and conservative ideas alike. A stagnant, incompetent government which does very little is good almost exclusively for people with the established resources to continue reaping the benefits of the status quo.
Would you describe American government as active or lazy? Intelligent or stupid? Creative or thoughtless? I would guess most readers answer with the latter three options: lazy, stupid, and thoughtless. I don’t point this out to suggest there’s reason to be hopeless or panicked about our state. Instead, I point it out alongside the story of Estonia to suggest that there is a better way which lies within our reach.
America, however, is a rather arrogant nation. Just ask around. We aren’t well-liked. We have a cultish notion that we are the greatest nation in the world in all ways. Measured pride and patriotism are important. They can shield us from uncertainties about ourselves which, if taken too far, would not do us service but only cripple us with self-doubt. Pride in the potential of the American system and democracy is one such healthy example. Being arrogant about our total virtue, however, does not shield us from harm but from help. It insulates us from wisdom and the possibility to learn from others. There is value in looking at countries like Estonia, as small and insignificant as they may seem. But it takes a great deal of humility to recognize where we have been outdone by a nation 1/300th of our size.Subscribe to Spectacles