Link to the video here!
When Estonia regained its independence from the Soviet Union in 1991 and restored liberal democracy, the small Baltic country’s leaders knew that they wanted to catch up with the rest of the developed world, and more. Embracing an optimistic, can-do attitude, Estonians pursued cutting edge technology in both the public and private spheres. The country developed a unique conception of “digital democracy,” in which every citizen could access public services online. But while Estonia has gotten plenty of press attention for its digital futurism, the country’s success is about more than just the tech. There’s an Estonian attitude that underpins all of its incredible innovations and allows its people to bridge seemingly irreconcilable tensions at the core of liberal democracy, whether that’s fiscal responsibility and social solidarity, tradition and progress, or the public and private sectors.
It couldn’t be more bizarre, more science fiction. I, a guy from Missouri, was logging into an online portal to fill out an application — not for a job or a school — but to become a digital resident of Estonia, a small north-eastern European nation sandwiched between Russia and the Baltic Sea.
You’re probably wondering what it means to be an e-resident of a country, and, frankly, so was I.
It turns out you don’t get to live in Estonia or vote in its elections, which, by the way, are held online. Maybe that’s a bit underwhelming.
But e-residency is just the tip of the iceberg when it comes to Estonia’s groundbreaking and fascinating efforts to establish the world’s first digital democracy.
And, though my hometown of Kansas City boasts a population twice the size of Estonia’s, and while some may say:
[Everything's up to date in Kansas City]...
truth is, everything’s really up to date in Estonia, and I’d like to tell you about it.
So how, of all places, did Estonia build one of the most modern democracies in the world?
And why does this tiny country’s story matter to you?
CHAPTER I: NOSTALGIC OPTIMISM
When you think of the Russian revolution, you probably think of the emergence of communism.
But communism wasn’t the only product of the revolution, as peripheral nations broke away in the midst of revolutionary chaos and turned not toward communism but democracy.
One such escaped prisoner was Estonia, where nationalist sentiments had been simmering for decades.
Now in control of their own destinies, the Estonian people established a parliamentary democracy with a liberal constitution that guaranteed widespread suffrage and equality before the law. As with any young democracy, the country experienced hiccups and instability, but its primary challenges were hardly internal.
In 1940, as Europe descended into yet another world war, the Soviet Union eyed the Baltic states for yet another grab at power. By the end of the war, all three Baltic countries were under Soviet occupation.
But many refused to give up on Estonia’s nascent liberal democracy. Uniquely among the so-called Soviet Socialist Republics, Estonia established a government in exile that would endure until independence was finally regained.
Though its activities were limited, it was a powerful symbol both of resolute hope for a brighter future and a fierce adherence to the country’s democratic past.
As the Soviet Union began to self-destruct in the late 1980s, the Baltic nations began four years of largely non-violent dissent, culminating in a singing human chain that stretched across the three nations, earning the movement’s unique name: the Singing Revolution.
In 1991, Estonian independence may have been something new, but this was not so much a new Estonia as it was an unbroken continuation of the republic proclaimed in 1918.
By maintaining a nostalgia for the past and optimism for the future—this unique Estonian attitude found a way to bridge the gap between the frequently opposed goals of venerating a nation’s founding while adapting to the present.
CHAPTER II: PUBLIC PRIVACY
But that unique Estonian attitude wouldn’t just prove an effective guiding light through occupation but also through its extremely successful post-Soviet transition.
Because while things like Estonia’s geography and the constitution of its Soviet economy played a role in this, they don’t tell the whole story.
In 1991, Lennart Meri, Estonia’s first President since independence, asked a crucial question, one that has defined Estonian political and economic development for the past thirty years. “What,” he asked, “is our Nokia?”, a reference to neighboring Finland’s telecoms giant.
In the challenge of rebuilding Estonia, it quickly became a priority not just to jettison old Soviet technology, but to build something new, something cutting edge at home.
In order to do that, though, Estonian leaders knew that they needed to break from the Soviet way of undertaking projects—five year plans and strict production quotas, the kinds of the things that made the USSR such an economic success.
Now, you might think that means a turn towards neoliberal austerity—and you’d be half right. Yes, Estonia instituted a flat tax, embraced free trade, and privatized state-owned enterprises. But it’s not all a story of blind faith in the invisible hand.
Estonian leaders had an interesting idea. Estonia wouldn’t just have a thriving private sector, it would have a smart and efficient public sector too.
Centralization was abandoned in favor of an attempt to cultivate entrepreneurial innovation from the bottom-up within the state bureaucracy, as state agencies were encouraged to develop new and low-cost technological solutions to their own challenges.
Soon, government employees were deeply engaged with the private information technologies sector, as they sought to contract assistance for their digital improvements. These natural networks slowly became increasingly institutionalized, resulting in two major programs core to Estonia’s digital democracy: a data exchange platform for frictionless administrative coordination and a digital identification system for all citizens.
Without strangling innovation and without sacrificing the public interest, Estonia fostered a healthy state and thriving business community.
Once more—through collaboration, cooperation, and an unceasing obligation to the public good—the Estonian attitude found a way to achieve the impossible, reconciling the seemingly inveterate enemies of the public and private sectors to establish a world-class digital democracy.
CHAPTER III: CONSERVATIVE WELFARE
Okay, okay - Estonia has a very advanced “digital democracy.” But what does that even mean?
It means that if you’re an Estonian citizen, you can access all government services online, 24/7. Need to file any forms? Just plug your ID into your computer and log into the government portal.
Want to pay a ticket or fine? Log in. One minute.
Want to access your medical records? Log in. Two minutes.
Want to pay your income taxes? Log in. Five minutes.
Want to cast your vote? Log in. Ten minutes.
The point is simple: in Estonia, interacting with the government is easier and more modernized than just about anywhere else.
But obviously life isn’t just spent in front of a screen, and the government doesn’t just exist to process documents, so what does Estonian society look like more broadly?
Well, five minute taxes are made possible by an exceedingly simple 20% flat tax rate, for corporations and individuals alike. As a result, compliance with the tax code—which in America costs an estimated $300B each year—in Estonia is almost effortless.
But these flat taxes—typically heralds of fiscal conservatism—belie a considerable welfare state.
The Estonian government foots the bill for about 75% of healthcare costs. Parental leave is generous. Most education is free, what isn’t is cheap, and the primary education system turns out the best-scoring students in the world.
Even after all that, Estonia maintains one of the tightest fiscal ships in the developed world: public debt is only 14% of GDP, compared to the next lowest countries’ 30% and 43%, or the United States’ 161%.
Once again, the unique Estonian attitude finds a way to bring together seemingly inherently opposed goals — in this case, fiscal and social responsibility.
Wait, wait, wait. I’m not finished, because Estonia isn’t some perfect utopia.
Some critiques aren’t very compelling — like those aimed at privacy concerns. Yes, everything is online, including elections, but the integrity of Estonia’s digital infrastructure has never been severely compromised — this in a NATO member country bordering Russia and home to a sizable Russian minority.
Perhaps you worry about government officials snooping on, say, your medical records. But this shouldn’t be a concern either.
The Estonian system allows citizens to see a record of who has accessed any of their information and when,
leading to a number of successful suits against law enforcement officials for breaches of privacy.
Think of it this way — the government already knows plenty about you, and what it doesn’t know wouldn’t be that hard to get. Wouldn’t it be better to face that reality and build robust systems of accountability, like Estonia has?
But other critiques are compelling.
Digital democracy is under-developed relative to its enormous potential. There’s a lot of room to grow better government engagement with the public. And perhaps some features are a little frivolous, more important for the global PR of a small country bordering Russia than anything else.
And yes, Estonia has been subject to similar challenges faced by most of the Western world—namely, far-right populism, among other things.
It’s not a perfect country, of course. But, despite its small size, it is an important country.
CHAPTER IV: ESTONIAN ATTITUDE
It’s an important country because there are some truly unique things about the Estonian attitude which, if emulated, could lead to incredible improvements in the quality and longevity of democracy around the world.
This isn’t just about embracing technology and digitizing taxes. We should do those things, but this is much deeper than that.
Our last video, featuring an interview with the legendary Francis Fukuyama, was about why liberal democracy may be the end of history. But even as it is exceptionally impressive, liberal democracy still faces tough challenges.
Should we look back to our foundings as sources of guidance and intention, or should we keep our eyes on the future, always striving for change? Through its post-Soviet transition—the Estonian attitude found a way through the middle.
Should we work to institutionalize and bureaucratize everything in society to deter the dangerously ambitious, or should we laud the disruptors and prize innovation and creative destruction? Through its digital transformation—the Estonian attitude found a way through the middle.
Moreover, should we enhance the power of the government, the corporation, or the citizen? Through its responsible statesmanship — the Estonian attitude found a way through the middle.
About many of the most central challenges democracy faces in the world today, the Estonian attitude has much to teach us.
“Estonia’s Digital Transformation: Mission Mystique and the Hiding Hand,” in Great Policy Successes, by Rainer Kattel and Ines Mergel
“Pathfinder: e-Estonia as the β-version,” by Wolfgang Dreschler in Journal of European Democracy and Open Government
00:50 — “Kansas City Metro Population,” via censusreporter.org
00:50 — Estonia Population, via World Bank
01:35 — Estonia: A Modern History, by Neil Taylor
02:25 — “Professor Uluots, the Estonian Government in Exile and the Continuity of the Republic of Estonia in International Law,” by Lauri Mälksoo in the Nordic Journal of International Law
02:42 — Estonia: A Modern History, by Neil Taylor
03:44 — “Estonia’s Success,” by R.A. Panagiotou in Communist and Post-Communist Studies
03:54 — “Estonia’s Digital Transformation: Mission Mystique and the Hiding Hand,” in Great Policy Successes, by Rainer Kattel and Ines Mergel (for all of Chapter II, except where otherwise indicated)
06:31 — “E-governance,” at e-estonia.com
07:20 — “Estonia has the Most Competitive Tax System in the OECD,” via Tax Foundation
07:30 — “The Tax Compliance Costs of IRS Regulations,” via Tax Foundation
07:45 — “The Future of Healthcare in Estonia,” via the Foresight Center
07:57 — PISA Scores, via OECD
08:03 — General government debt, via OECD
08:40 — “Estonia: Freedom on the Net,” via FreedomHouse
09:31 — “Pathfinder: e-Estonia as the β-version,” by Wolfgang Dreschler in Journal of European Democracy and Open Government
President Ronald Reagan's Trip to Union of Soviet Socialist Republics (USSR), Walking in Red Square with Mikhail Gorbachev, Talking to Soviet Citizens, Moscow, Courtesy of Reagan Presidential Library
President Reagan's Remarks Welcoming British Prime Minister Thatcher on November 16, 1988, Courtesy of Reagan Presidential Library
President Reagan's Air Force One Arrival-Departure in Arizona and California on August 10, 1982, Courtesy of Reagan Presidential Library