Who was the greater revolutionary -- Fidel Castro or Mart Laar? It's no contest. Mr. Castro took a poor country and preserved its poverty. And it took him almost 50 years. Mr. Laar took a poor country and turned it around -- "a complete overthrow," in the Shorter Oxford English Dictionary's definition of revolution, "of the established order." It took him four years.
"We gave the power to the people," Mr. Laar said. "We trusted the people. We set them free." As you would expect of a revolutionary who killed, tortured and imprisoned no one, his image adorns no T-shirts in fashionable boutiques and his name is almost unknown.
Mart Laar was twice prime minister of Estonia (1992-1994, 1999-2002). When the Soviet Union imploded, Estonia imploded with it. Run as a Soviet republic for decades, the country had no economic function independent of Moscow. Ninety-seven per cent of its trade had been with Moscow, conducted through state-owned enterprises. "Estonia was a ruin," Mr. Laar said. "Our economy was in shambles.
"Shops were entirely empty. People stood in line for hours and hours to buy food."
In the country's first two years of independence, industrial production fell 30 per cent, real wages by 50 per cent. Fuel prices rose 10,000 per cent and inflation hit 1,000 per cent a year. Unemployment registered 30 per cent. Worst of all, Mr. Laar said: "Fifty years of Communist domination had damaged the soul of the people -- people had become completely dependent on the government."
Mr. Laar was a young historian with an academic interest in 18th century European nationalism. He was ignorant of economics. (He was 32 when he took power; Fidel Castro, 33.) The only Western economics book he had read before taking office was Milton and Rose Friedman's Free to Choose, a free-markets manifesto published in 1980 and deemed by Moscow as too subversive for Soviet bloc readers; it became the first Western book translated into Estonian in the post-Soviet era.
Mr. Laar read it a few months before he became prime minister -- partly, he said, for its title because "free" and "choose" were powerful words for anyone who had lived under Soviet subjugation.
Estonia's economists thought him mad -- that he wanted "to walk on water." Yet Mr. Laar found himself drawn to the American economists whom the Soviet Union had feared. Once in office, he proceeded to run on water. He ended price controls and slashed bureaucratic regulations. He abandoned welfare programs and sold off state-owned businesses. And he began to implement reforms in the two areas the Friedmans held most important of all: tariffs and taxes. Acting unilaterally, Estonia repealed all tariffs. "We opened our country to competition," Mr. Laar said. "We made ourselves one big free-trade zone." At the same time, the government ended subsidies, support programs and subsidized loans, leaving the privatized businesses a simple choice: Get efficient or get lost. Many got efficient.
And on the matter of tax reform. "We introduced radical tax reform to energize our people," Mr. Laar said. Like the Friedmans , he actually believed that people who worked harder shouldn't be soundly punished for it. He introduced Europe's first flat-rate, proportional income tax. The inaugural rate for both individuals and corporations: 26 per cent (now 20 per cent). He ended taxes on re-invested corporate profits.
In succeeding years, Estonia has turned itself into the fastest-growing economy in Europe. (In the past six years, it has achieved these real, inflation-adjusted rates of growth: 7.9 per cent in 2000, 6.5 in 2001, 7.2 in 2002, 6.7 in 2003, 7.8 in 2004, 9.6 in 2005.) It has attracted more foreign investment, per capita, than any other European country. Living standards have risen dramatically. Per capita GDP (expressed as purchasing power) rose last year to $16,700 (U.S.); Cuba's equivalent GDP is $3,500, roughly 20 per cent less than when Mr. Laar became Estonia's prime minister. Estonia now expects to reach the European average of $32,000 within 15 years. Exports and imports have doubled. Its principal trading partners are now Sweden, Finland and Germany.
Worker productivity is rising at a rate of more than 6 per cent a year. Poverty levels are a fraction of what they were.
In its 2006 Index of Economic Freedom, the Washington-based Heritage Foundation listed Estonia among the Top 10 "most free" economies in the world. (Hong Kong, Singapore and Ireland were No. 1, No. 2 and No. 3; Estonia was No. 7; the U.S. was No. 9; Canada was No. 12.) Europe has recognized the country as the most technologically advanced economy in the European Union. (Eighty-five per cent of Estonians filed their simple, no-loophole income tax returns by e-mail this year -- after spending an average of 10 minutes preparing them.) In May, the Cato Institute, a Washington-based libertarian think tank, honoured Mart Laar for his role in the Estonian revolution by awarding him its $500,000 Milton Friedman Prize for Advancing Liberty.
In his acceptance speech in Chicago, Mr. Laar said that he was sorry to see -- "walking the streets of New York" -- that Marxist ideology remains so strong in the West. "I see T-shirts with the pictures of the biggest murderers of the 20th century," he said. "I don't understand."