10.27
Bredonborough.
A grey day.
A builder’s meeting with Mr. Big Cheese to progress the work at home & World HQ.
E-flurrying, and from a pal…
NY Times: New Europe’s Boomtown By JOHN TIERNEY
Published: September 5, 2006
Tallinn, Estonia
Philippe Benoit du Rey is not one of those gloomy Frenchmen who frets about the threat to Gallic civilization from McDonald’s and Microsoft. He thinks international competition is good for his countrymen. He’s confident France will flourish in a global economy — eventually.
But for now, he has left the Loire Valley for Tallinn, the capital of Estonia and the economic model for New Europe. It’s a boomtown with a beautifully preserved medieval quarter along with new skyscrapers, gleaming malls and sprawling housing developments: Prague meets Houston, except that Houston’s economy is cool by comparison.
Economists call Estonia the Baltic Tiger, the sequel to the Celtic Tiger as Europe’s success story, and its policies are more radical than Ireland’s. On this year’s State of World Liberty Index, a ranking of countries by their economic and political freedom, Estonia is in first place, just ahead of Ireland and seven places ahead of the U.S. (North Korea comes in last at 159th.)
It transformed itself from an isolated, impoverished part of the Soviet Union thanks to a former prime minister, Mart Laar, a history teacher who took office not long after Estonia was liberated. He was 32 years old and had read just one book on economics: “Free to Choose,” by Milton Friedman, which he liked especially because he knew Friedman was despised by the Soviets.
Laar was politically naïve enough to put the theories into practice. Instead of worrying about winning trade wars, he unilaterally disarmed by abolishing almost all tariffs. He welcomed foreign investors and privatized most government functions (with the help of a privatization czar who had formerly been the manager of the Swedish pop group Abba). He drastically cut taxes on businesses and individuals, instituting a simple flat income tax of 26 percent.
These reforms were barely approved by the legislature amid warnings of disaster: huge budget deficits, legions of factory workers and farmers who would lose out to foreign competition. But today the chief concerns are what to do with the budget surplus and how to deal with a labor shortage…
He is not a free-market purist — he likes the health care and social services provided by countries like France. But to pay for their safety nets, he figures they need to cut regulations and taxes so they can have robust economies like Estonia’s, which grew about 10 percent last year.
The growth over the past decade has produced so much unanticipated revenue that the tax rate is being gradually reduced to 20 percent. Laar’s political rivals still complain that his flat tax unfairly helps the rich, but as he notes, the level of income inequality in Estonia actually declined during the past decade.
“People think a progressive tax system is fairer,” Laar says. “But in the real world rich people find a way to avoid high taxes. With a flat tax, they stop worrying about sheltering their income or working in the gray economy. There is less corruption because it’s easier to pay the tax.”
Since Laar started the revolution, the flat tax has been adopted by its Baltic neighbors and a half-dozen other countries, including Russia, Ukraine and Romania. Such radical reform is still taboo in Western European countries like France, but they can’t seal their borders against this threat. If they don’t go to Estonia for a lesson in economics, their enterprising citizens will make the trip on their own.
23.37 DGM HQ.
To London at lunchtime, to have two moles removed from my right leg. The doctor considers them benign, but needed a nurse’s help. As one was not available the Minx volunteered her services, took great interest in watching the scalpel in action & helped tie the stitches. My own eyes were closed.
This was followed by a fabbo tea visit with actor pal Tim & his Mother Ann, and then down to DGM.
The current arising continues to arise.
"The foundation of learning is play."
