June 6 2009
Today started out beautifully with the best breakfast I’ve had here so far. Along with the usual meat, bread, and cheese, there was also granola, yogurt, and fruit!!! It was very satisfactory (finally!).
After breakfast we had a day of interesting lectures and ideas. First, one of the professors of the University of Tartu, Viktor Trasberg, spoke to us about the economic developments in the Baltic region. But first let me start off by saying that this guy was wearing a dollar sign belt buckle…threw me off a little bit in the beginning but he ended up sounding quite knowledgeable. He gave a little bit of history of how it all started, and how’s it grown into what it is today. The Baltic region could be described as the countries surrounding the Baltic Sea. These countries include Estonia, Latvia, Lithuania, Denmark, Sweden, Finland, Russia, Poland, Germany, and sometimes Norway. These countries have always traded with each other, and now many of them are a part of the EU. Anyway, the most interesting part of this discussion to me was how many of the existing institutions in Estonia from the Soviet Union (education, healthcare, roads, ports, etc.) actually seemed to contribute to liberalized institutions, which in turn helped get them into the EU. Estonia is a great case study of a country that went from communism to capitalism, extremely rapidly (pretty much overnight). They’re an interesting case because it happened quite smoothly and quickly, and they’ve turned into a very stable and fairly successful country. Their economy was one of the fastest growing economies in the world. However, apparently this was because of once-in-a-lifetime conditions that existed after the fall of the Soviet Union. They had cheap resources, a favorable global environment, a loan based economy, and the EU was purposefully enlarging. All of these things helped Estonia merge into Western Europe and become a capitalist nation. This rapid growth has caused problems though. For instance, too much was invested in certain sectors (such as real estate), the resources went to less productive sectors, and because there was so much domestic dependence, there is a huge decrease in international competitiveness.
The next lecture we had really complimented this. It was given by one of the most distinguished social scientists in Estonia, Marju Lauristin. She talked about the social challenges that Estonia has had to face since regaining independence. Because Estonians were so used to having everything taken care of by the USSR, and the government being completely run by the USSR, they had to start everything over from scratch. All they had were some ideas of how the Finnish and the Soviets ran their governments pretty much. They had to create an entirely new budget for example. They had to figure out how to tax people, how to set up social services, and most importantly, how to pay for all of it. The Soviets had a huge amount of resources but Estonia is such a small country that they simply cannot take care of the people like they were before. Pensions were decreased, and healthcare was set at 13% of taxes which apparently only covers about 60-65% of the costs. You have to remember that these people were used to having healthcare at no cost, and pensions were set at 70-80% of the previous salary during the Soviet occupation. But it seems to me that Estonians are extremely hard workers and they’re willing to do whatever they need to in order to keep this an independent and free country.
What really strikes me is how responsive this government is. Of course they are currently in a depression because of the economic situation across the world, with the 3rd highest ranking for unemployment in the EU. They are however, already developing ideas and so many strategies to overcome their problems. It seems like they notice so quickly when something has gone wrong, and then everybody works together to fix it. It simply amazes me how quickly things get done! All of these successes and problems and solutions have come about in the last 19 years, and yet they’re already fixing so many problems that have hardly begun. For example, their population is decreasing and since they’re already a very small country, this is a problem. So the government is fixing it, just like that. They’ve set up a new policy that lets one parent take 1.5 years of leave with full pay (up to a certain amount but it sounds like most people get full pay). So already they’ve increased the birth rate by 25% or something. The response time here is just amazing. I suppose it’s probably because it’s so small. You see a problem more quickly that way and it doesn’t take as long for a solution to take effect. I mean, of course this country has a lot of kinks to work out still, especially through this economic crisis but for how new they are, I am just so impressed by the way things are run. I think the young people are really the key to the future success of this country. They’re so open to change and new ideas, and it seems they’re also more accepting of minorities and ready to leave the past behind. Really there are a lot of similarities to the US in terms of social and economic problems. It’s just really fascinating to see it on a smaller scale, and to see that there are possible solutions to these problems.