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e-Stonian PM Gets Friedman Prize

by Christopher Chantrill
April 21, 2006 at 6:50 am

HE’S NO relation of Bert Lahr, the Cowardly Lion, and he’s certainly not lacking in courage.

He is Mart Laar, the former Prime Minister of Estonia, who set in motion the economic reforms that has doubled the GDP of Estonia in ten years. And now he is the third recipient of the Milton Friedman Prize for Advancing Liberty awarded by the Cato Institute.

Accordint to Marian Tupy

Mart Laar replaced the "dead hand" of the government with Adam Smith's "invisible hand." His government eliminated import tariffs (a decision that was partly reversed by Estonia's membership of the European Union) and established a flat income tax. Corporate taxes on reinvested profits fell to zero and a currency board was established to combat inflation. The government also undertook extensive privatization of state companies.

But here is what Laar himself says about his reforms, as told on the Cato Institute’s website.

"I had read only one book on economics — Milton Friedman's Free to Choose," he said. "I was so ignorant at the time that I thought that what Friedman wrote about the benefits of privatization, the flat tax and the abolition of all customs rights, was the result of economic reforms that had been put into practice in the West. It seemed common sense to me and, as I thought it had already been done everywhere, I simply introduced it in Estonia, despite warnings from Estonian economists that it could not be done. They said it was as impossible as walking on water. We did it: we just walked on the water because we did not know that it was impossible."

Oy! It’s lucky that Milton Friedman has solid ideas that actually work. Suppose Laar had read some lefty tome instead! Then e-Stonia would be in a mess, like Old Europe.

And bravo to Mart Laar for turning his nation into a Baltic tiger.

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Christopher Chantrill blogs at americanmanifestobook.blogspot.com.  His Road to the Middle Class is forthcoming.

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Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

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E. G. West, Education and the State

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Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
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F.S.C. Northrop, The Logic of the Sciences and the Humanities

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presented by Christopher Chantrill

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