Businessman: State should only encourage people to work, save and invest

Rain Lõhmus.
Rain Lõhmus. Source: Siim Lõvi/ERR

The state's role should be to stimulate people to want to work, save and invest — not invest so much in infrastructure, such as renovating the national library for nearly €100 million, said businessman and banker Rain Lõhmus.

Speaking at the economic discussion "How to stop tax hikes" on Thursday, Lõhmus said that the public sector is accustomed to borrowing and growing faster than the economy can support.

He cited as an example that while average wage growth has been very high — doubling — then the government's increase in revenues in the same timespan has been yet another 18 percent faster than that.

"Figuratively speaking, instead of this money reaching people, the government is taking even more of it," Lõhmus said, adding that this isn't the worst when comparing European countries, but that the EU has been a loser for the past 30 years.

Lõhmus likewise highlighted that regulations kill the economy and generate pointless hours of work that ultimately are of no benefit to anyone.

"I myself am a very simple and old-fashioned proponent of supply side economics in that sense," the businessman said. "I honestly believe that the state's role is to stimulate people to work first of all, save second, and invest third, and just to be safe and secure. And to enforce agreements. That's it. I don't think we need to build that much infrastructure; this can get out of hand. For example, is it really necessary to [re]build the national library for €100 million?"

Regarding cuts, Lõhmus said that he knows how this is done in LHV, for example: if there are clear goals and you state them, everyone has a hundred and one reasons why they can't do it, but at the end of the day, they need to be done.

One of Estonia's peculiarities is the concentration of things, the businessman and banker said. When the government and the president argued last month over Office of the President spending, people were split into two camps, and the question arose whether we can't celebrate Independence Day after all due to a lack of funds.

He noted that in Switzerland, for example, every city and local government celebrates Independence Day in their own way.

"Even the tiniest of villages are filled with bonfires and flags, and people play the bagpipes," Lõhmus described. "It isn't the case that a small group gathers in one place and it's broadcast."

He added that Estonia stands out in terms of massive centralization as well as the construction of monuments and large projects as well.


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Editor: Aili Vahtla

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