Tõnis Saarts: On the causes of lackluster cost-cutting
After sending the same kinds of messages and receiving positive feedback in the form of votes at elections for decades, parties and politicians find sharp about-turns almost impossible, Tõnis Saarts finds in Vikerraadio's daily commentary.
Even though some politicians have talked about "brutal austerity" and the public sector is now expected to dial back to the tune of a billion euros over four years, cutting costs seems to be especially painful and slow this time around. Yet, the public sector has been put on a diet and public spending decisively slashed in the past.
What is different this time? Why are we falling short compared to the tough 1990s and the days of the global financial crisis of the noughties?
Leaving aside technical details and sector specifics, there are three main reasons for this. They are lack of external stimuli, Estonians having gotten used to a Western welfare society and the almost unbreakable effect of path dependency for political parties. Let us take a closer look.
While austerity aficionados sigh nostalgically and reminisce about how the Mart Laar administration reduced social benefits and other public expenses to a minimum in the 1990s, or Andrus Ansip's "crocodiles committee" during the 2000s' financial crisis, we need to keep in mind that those were very different times.
International pressure left Estonia few other choices. Had Laar failed to take drastic austerity measures, Estonia would not have been able to secure economic loans necessary for reforms and economic reawakening, while the Ansip administration would have had to wave goodbye to Estonia adopting the euro in the late noughties.
These painful measures were sold to the public by promises of the light soon appearing at the end of the tunnel if we all cut back today. The motivation of becoming a Western state with a stable economy was alluring enough for society to weather the cost-cutting in both cases.
There is no external pressure on Estonia today. The possibility of EU and international organizations' officials appearing in Estonia to curb overly enthusiastic borrowing and Estonia's so-called Greecification remains far in the future for Estonia, which still sports one of the smallest public debts in Europe.
What is more, and baffling as it might sound, politicians have failed to offer a positive future narrative to explain why these efforts are needed. Yes, we are sacrificing well-being to keep Russian tanks from appearing and perpetrating new Buchas here, but psychologists know that only threatening worst-case scenarios is hardly a good motivator, without offering a silver lining in the form of a vision of a better and prosperous future Estonia. Politicians have hardly made great efforts to pain the latter picture.
During the great financial crisis of the 2000s, many Estonians were baffled to see people in Western Europe, and especially Southern Europe, take to the street whenever their government decided on even the slightest pensions or other social benefits cuts, took away public sector workers' guarantees etc.
Estonia has also become considerably wealthier since then. We have fully adopted the Western comfort zone syndrome where giving up recent benefits and public services only happens through great pain and protest. We should keep in mind that politicians who are afraid to cut costs are performing a social contract of a society that is nowhere near ready for "brutal austerity."
Experts have been saying for years how even laying off hundreds of public servants wouldn't have the desired effect, which is why there is no way around slashing pensions, education and healthcare. Readers who have been adamant about the need for cuts should now ask themselves whether they would be willing to accept considerably smaller pensions, a cost-sharing hike in healthcare and paid higher education. If yes, this needs to be signaled to politicians. However, if the answer is no, it would perhaps be best to take the opportunity to say nothing next time austerity comes up as a topic of conversation.
Finally, there is the effect of path dependency. After sending the same kinds of messages and receiving positive feedback in the form of votes at elections for decades, parties and politicians find sharp about-turns almost impossible.
The Reform Party cannot give up the principle of offering, next to market liberalism, certain social groups, mainly pensioners and families with children, a level of well-being, which it has sported since the days of Andrus Ansip. Isamaa has painted itself into a corner with promises of [low] land tax, property taxes and free higher education, while there is no way for the Social Democrats to give up their ideological tenet of the least fortunate being spared cuts.
Because there is no external pressure and stimuli, the powers that be simply dare not risk the political fallout from "brutal austerity," fearing also to make sharp about-turns in their ideological programs, meaning that austerity policy will rather remain a case of a few dozen million here and there instead of bold decisions for years to come. It is a situation that only a shock to the system or a serious crisis can change, while I hate to even think about what those could be today.
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Editor: Marcus Turovski