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Matt Laar at PUSH 2005

Mart Laar‘s a funny guy. He introduces Estonia to us as “one of the countries where Santa Claus lives”, and gives the nation’s history by listing, in rapid order, the nations that have invaded and conquered Estonia: “Germans, Swedes, Poles, Swedes again, Russians, Swedes, Germans, then Russians for a long time.”

He walks us through Estonia’s guerilla resistance to Soviet dominance with passion and humor (which only seems right, when you realize that he was a history teacher before becoming Prime Minister), up to nonviolent resistance against the Soviets with a human chain across the Baltics, as people held hands and demanded freedom for the Baltics.

Estonia gained independence… and immediately inherited the wind. In 1992 – when Laar first took office – there was 1000% inflation, and a 30% annual fall in employment… unsurprising because 92% of Estonia’s economy had been based on trade with Russia.

As he tells the story, Laar had no idea what he was doing, economically – “I was a blank paper” – and was therefore open to trying techniques that just shouldn’t work. So he picked up conservative economist Milton Friedman’s “Free to Choose” and followed the advice in the book. This meant a focus on monetary reforms (eliminating the black market), opening markets (he eliminated all trade barriers) and flat taxes.

Whether or not Friedman’s prescription would work for every nation, it seemed to work very well for Estonia. The nation is growing at 6-7% a year, and 40% of the nation’s exports are high tech (including fun technology like Skype and Kazaa.) The Heritage Foundation lists the country as one of the most economically “free”, and it’s sometimes referred to as “the jewel of the Baltics”. Internet adoption is a very impressive 70%, and Laar shows us evidence of 100% paper-free eGovernment.

He gives a compelling talk. It’s a wonderful reminder that the distinctions of left and right we make in US politics don’t always translate across international borders. I tend to think of political revolutionaries as coming from the left. But here’s a revolutionary with Ronald Reagan (who he acknowledges was crazy, but admired nevertheless) and Milton Friedman as patron saints. It’s a good challenge for folks like me who tend to assume that the progressives are the folks on the right track…