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President of the Republic at the Latitude59 conference

President of the Republic at the Latitude59 conference © Maido Parv (Latitude59)

25.05.2017

Dear guests of Latitude59!

I am proud to greet you in Tallinn.

As president of Estonia I represent the world's only digital society which actually has a State – the Estonian digital society of 1,3 million people, our whole population.

We have gone through a societal disruption to make sure our citizens and businesses have a totally digital environment to deal with both the State and also with their private partners. Important notice – at no point during this process has Estonia created any cutting-edge technology. Tech-wise, all we use is pretty well tried and tested by other actors, mostly private, in the world. It makes it cheaper, and more reliable. Part of it is even open data, namely our e-voting system, so all and sundry can try to hack it if they can – but they have not managed, in 7 years' time.

The disruptive innovation from Estonians is thus not technology itself, the innovation lies elsewhere – in the process of bringing businesses and government together to help all people, young and old, to benefit from digital services options available.

There is no enforcement to go digital. But as it is simple, cheap and available, everybody has done so by now. As it has to be simple, cheap and work every time, it cannot be too innovative, untried and tested. It is not. But it includes every one and works every time. It demonstrates that for a society as a whole high rates of technological penetration even when the technology itself is no cutting-edge, may pay off better than having something truly innovative in the hands of a few select people. You all have experienced this – the lives of millions have been transformed by cheap cars or washing machines, not by deployments to the moon. It is important to keep that in mind when digitalising societies.

How it happened in Estonia was probably accidental. Most big breakthroughs are. The e-Estonia, which you know at least by its e-residents facility, is something which happened when government realised, around the turn of the century, that the private sector was notably better digitalised in their processes than government. But, instead of setting out to simply digitalise the government processes, Estonians for actually unknown reason decided to propose a system which would change how society thinks and works.

We put a person, physical or legal, into the center of our digital society and provided this person with digital identity, making all interactions with all other persons, effortless. It saves us all 2% of our GDP today, I cannot count the amount of saved neurons which are still intact because we never have to que at any Office, or CO2 emissions saved because we never have to go anywhere in person. Ourselves, represented by our ID signature complete with time stamp, can be within five minutes in 10 places, if needed. It has made Estonia much bigger than its physical size. But as important is to stress that this is also socially responsible change what we have had – saving on administrative burden helps small businesses and simple people more than big entities used to managing the bureaucracy. All this 2% is heavily skewed towards benefitting SMEs and citizens!

I am sure that rather sooner or later we see all governments in developed countries climbing onto the digital platform. Digital ID-s are rather widespread already. Governments are adjusting laws to enable digital states. European Union is starting to make digital sphere part of the European freedoms.

This is happening with 100% certainty simply because public sectors cannot afford to be the only ones going on in analogue. People are more and more digital in their relations among themselves and private businesses. Governments will lose the attention of their people if they cannot keep up!

If you are impatient to try out a digital society, explore the Estonian e-residency option. But, when you come, please keep also in mind that this is not a no-tax option. It is the most transparent way of doing business in the world. Our tax board needs to know all you do here, and their co-operation with other tax boards makes the others know as well. Transparency in conducting international business is a valid G20 objective claim, so here we are totally in the sync with established developed world thinking. Again, we simply come from the viewpoint of a simple entrepreneur – being compliant does not need to take time and resources away from doing your business!

As a digital society, we also understand better the lack of geography from everyday equations of people entering job market today and tomorrow. Work is changing – it is less related to a concrete enterprise, concrete office, and consequently, concrete country.

Industrial area jobs are vanishing faster and faster and I hear weird voices saying we need to therefore pay everybody a sustenance fee and get money for that from taxing robots. It sounds pretty absurd. I doubt that we would have reaped the full benefits to our societies from industrial revolution if we had decided to tax tractors and pay a sustenance fee to everyone who lost their job in agriculture. Of course, that transition was socially painful and costly for majority of people, but that was because of lack of education, medical treatment and other social services we offer to people nowadays. It is not so scary for lower middle class and poor, facing this time around the deterioration of industrial employment.

Instead of curbing people's ability to adapt by talking sustenance fees we should focus on the ability of modern technology to rise the earning capacity of the society as a whole. We must not take technological development simply as something limited to the better industrial processes and therefore to job losses. It is not, it is comprehensive change, it reaches out to every single person.

In fact, remarkable amount of jobs created by technology development are surprisingly neutral to the occupations or educations in their nature. One might call them egalitarian opportunities even. They are not reserved to wise, well-educated and tech-savvy. Yes, those do best by creating tech infrastructure, but some of the quickest growing companies sell actually strikingly simple services or services we did not think existed at all.

Think chatting to each other, in long version Facebook, in shorthand, Twitter. Or Uber and AirBnb – allowing people to turn their spare resource into service to others. These are big examples, but SME versions exist, too. A bookkeeper can work for 10 companies from any end of the world. Their market is not global, I admit, as you need to know the laws, but it is bigger than their physical range is where they go to work by car, bus or train. In handicraft, a time-old available career option for people who do not wish to obtain degrees, previously it was limited in its earning capacity by the ability to drive around local markets, or later, in the 20th century, by the ability to sign distribution contracts with, say, souvenirs stands. Today, I know in Estonia a guy who is South African, he lives in a little county of couple of thousand of people, he produces world class bows and his market is somewhere among the global billions of people, none of them living closer than probably 200 km from him.

These examples show how technology enhances earning capacity and lower provision costs in traditional tasks. In addition, tech use and more free time for bigger number of people stemming from efficiency gains creates permanently new jobs we do not know of yet. Travelling youtuber as a new job we know already, but the next one we do not.

To sum up, job creation will continue beyond industrial age as it did beyond agricultural period, the transition should be more tolerable to vulnerable classes of poor and uneducated due to existing social systems and the democratic nature of this transition, which creates opportunities for all social classes.

This brings me to something I like to call the Alice in Wonderland issue, another societal disruption I want to talk about. You remember, when the cat vanished, the grin just lingered on? If we talk about the disruption to current jobs and indeed, working habits of people, we need to test whether our governance models are sustainable through these disruptions? Or will our tax base, let's take a simple example, social tax base, simply vanish together with industrial jobs? If we do not believe that the grin stays on without the cat, we need to assume that social security model built on industrial model of work cannot survive if the industrial model itself is gone.

People become more independent in their work, thus making them freer. This is to be welcomed by political actors, supported by rethinking social benefits, education, pensions. But this is the job of me and my colleagues. What matters to you is – technology makes everyone free to decide their own destiny, to become more independent professionals for whom both enterprises and governments will compete. This is to be celebrated, and I know you will be doing so during this conference!