The Right and Wrong Ways of Shopping Online

Today, we shall be discussing an aspect of life in Estonia that every enterprising resident has encountered, and everyone else has at the very least bitched about: buying stuff in the US. (I'll be talking about electronics, because that's what I have experience with.)

There's a number of reasons why certain things cost a lot more in Estonia. One of them is market segmentation: the manufacturer will sell for volume in one market and for margins in another. The US consumes a huge number of goods, and there's also more competition. On this side of the Atlantic, people don't buy quite as much vacuous crap; plus there are obligations such as warranties (the EU mandates a minimum warranty of something like a year on all goods, whereas in the US you'd be lucky to get 30 days without having to pay for an "extended warranty"), taxation differences, etc. All this means that manufacturers tend to set higher prices for their goods. In fact, there's a rough rule of thumb that a product will have the same numeric price tag - in USD over there, in Euro over here.

More importantly, manufacturers are really annoyed when people circumvent these limitations. This is why US warranties are often not honoured abroad, even if the manufacturer has an official repair centre in the country and sells the exact same device locally, warranty and all. (There are differences between policy and practice - I've talked to people whose US-sourced cameras were routinely serviced at nominal or no cost by the Canon affiliate in Tartu, and I've also talked to people whose laptops with "worldwide warranties" were denied repairs because the person who brought them in was not an American on a business trip.) This is also part of the reason why Amazon.com has the line "Currently, item can be shipped only within the U.S." in the description of all of their electronic components. The other part of that reason is that Amazon has subsidiaries in Europe, and would prefer you shopped there, and paid higher margins to Amazon as well as Apple.

For Estonia specifically, there is the added problem of us being a very small market. It's mostly not worthwhile for manufacturers to set up a presence here, they just sell the franchise to a local company. The reason an iMac costs $200 more in Tallinn than in Helsinki is because the Apple stores here are actually all iDream or iDeal - local companies that buy small volumes of stock at less than Apple's best wholesale prices, then add their own costs and as much profit margin as they can get away with on top of that.

Fortunately, you can get around all of this. There are companies in Estonia that will buy an item for you in the US, ship it here, take care of all the paperwork, etc. But these schemes involve a lot of extra steps that make the goods expensive, often more expensive than an equivalent that you can get right here, so they are mostly used by people who are looking for a highly specialized niche product that simply is not available in Estonia by any other means - people for whom getting exactly what they want is more important than the cost. (I've never seen a company like this advertise its services for more than a few months at a time, so there's a good likelyhood that such companies just go out of business, or offer the opportunity as a sideline to their main revenue generator.)

These days, there are also ways to buy things from the US directly. B&H is the biggest one I've seen - a store in New York City that started out dedicated to professional photo & video equipment, but now does most of their business online. They will actually ship anything in their (quite expansive) stock anywhere in the world, including Estonia - and if you choose a slightly more expensive shipping method, they will even have their partners deal with customs on your behalf.

Both of the options above, however, involve paying customs duties. It still makes sense on some purchases - the B&H site was pointed out to me by someone who wanted to buy a Canon 50D semi-professional camera, 13 700 EEK delivered to Estonia versus 16 800 EEK at a local supplier. But the true bargain hunter will want to bypass the Tolli- ja Maksuamet entirely.

Here we come to the bit that made me write this entire article. Because in buying electronics from the US, there is a Right Way and a Wrong Way.

The Right Way is to find an acquaintance who happens to be going to the US for whatever reason, and ask them to bring back the gadget for you. I brought a MacBook Pro back for a friend this summer - even with Washington DC's sales tax and whatever SEB charged me to use my credit card abroad, the final cost out of my bank account was 14 000 EEK and change; even half a year later, the same model in Estonia costs over 18 000. The first time I went to the US - years ago - I was bringing back not just the MP3 player and digital camera I got for myself, but a suitcase full of special equipment for my employer's technical support center, and a snowboard. (The snowboard was for a colleague who was returning to Estonia a week later, but couldn't bring it himself because he was already carrying a full desktop tower PC and a huge, professional CRT monitor.)

The Wrong Way, if you're buying anything expensive, is to get it from eBay and have it shipped to you privately.

Postal packages have a declared value for their contents. If the value is below 150 Euro, the Estonian customs authorities won't even look at it - this means that you can buy books, CDs and DVDs from Amazon.com without any trouble. (Actually, even purchases from Amazon's main site will be shipped from the German warehouse half the time if the delivery address is within the EU, but that doesn't happen every time and you shouldn't count on it.)

If the declared value of the package is more than 150 Euro, it will be subject to import duties, equal to the local VAT. 20% right now, but it was 18% years ago, when I was receiving a shipment from India containing spare parts for two thousand inflatable dildos. (It's a long story.) There's also an administration fee attached - the threshold used to be a lot less than 150 Euro, so I've been in a situation where the fee was more than the tax itself. You can find the full set of customs rules for postal packages here, or a partial bad translation into English here.

Finally, here's the Really Wrong Way: you can buy an expensive piece of goods in the States (or on eBay), and try to outsmart the Customs Board. You can have the goods delivered to a friend in the US, who will resend them to you directly, marking them as a gift and declaring a very minor value. Murphy's Law dictates that the package will be lost in transit (more likely than not, stolen by a postal worker en route - a friend in Canada has taken to labeling all his packages "educational materials" on the assumption that the same Canadian posties who appropriate expensive-looking boxes are fundamentally uninterested in education), at which point the international postal system will either shrug, or refund the sender the $1 declared value of the package and tell him to have a nice day.

Then you can do the thing that is not just Wrong, but annoying, the thing that a friend of mine has been whining about all day: buy an expensive piece of electronics via a third-party vendor on eBay, have the vendor declare the package as a gift, then explode in righteous indignation when the Customs Board says, "no, this is actually something you bought, so yes, you'll have to pay the equivalent of Estonia's VAT on it". If, as my friend, you've also selected a private delivery service such as FedEx and UPS and didn't want to pay them to deal with Customs on your behalf, you'll also experience all the joy of getting a bureaucratic institution governed by bysanthine local and international regulations to pay attention to you as an individual - exactly the sort of entity that a Customs authority has absolutely no interest in accomodating.

What annoys me isn't the attempt to get around the Customs rules. The Estonian version of the regulations has a paragraph that specifically addresses eBay purchases with a dubious declared value: A non-commercial package is a goods package that is sent by a private party from a third (non-EEC) country to an EEC resident on an ad hoc basis, contains only goods intended for the personal use of the recipient and his family (such as gifts), whose type and quantity do not indicate a commercial purpose, and which the sender is sending to the recipient for free. (My translation, their emphasis.) Thus, an iMac that the recipient's American cousin received, unboxed, played around with, placed back in the box and sent to Estonia along with pictures of the cousin's new baby and a bag of home-baked chocolate chip cookies is something the authorities should not be taxing. An iMac sent by someone for whose effort you paid, is not a gift or a delivery of your own property - it is a purchase, and as any purchase in Estonia, it is subject to local VAT. (For bonus morality, see this site, which talks about state sales tax on Internet purchases in the US in terms of whether the recipient is benefitting from the services provided by the state and paid for by the taxes.)

I am annoyed by people who claim some sort of ideological high ground for downloading movies & music from the Internet - "information must be free", "copyright is unfair" etc.: just admit that you're doing it because you can, it's convenient and there's an infinetisimal chance of ever getting caught. In the same way, I am annoyed by people who claim the Customs Board is being unfair to them by not accepting their argument that an eBay transaction somehow constitutes a delivery of personal-use property, not a purchase of goods from a commercial seller. It's disingenuous, and it makes you look like a twat.

I don't care, just vote against the incumbent.

It's less than a week until the election. I've already voted online; ended up choosing Mihhail Lotman on the IRL list, for no better reason than the fact that my parents were students of his father, the famous semiotician. Lotman is a university person, and while certifiable intelligence in no way precludes one from making really bad decisions, it's as good a differentiator as I'm going to get in this municipal election. IRL's list also includes Ene Ergma, not that there is any chance she'll actually stick around to serve on the city council. The candidate list regulations for Estonian elections are disappointing.

I haven't had that much cause to be unhappy with the existing Tartu city government, but they've done nothing to impress me, either. Reform's problem these days is an utter lack of vision. They've always gotten by quite well on being the quietly competent party, but that will not be enough to overcome the bad will accumulated by the government in a crisis. IRL doesn't have anything particularly interesting to say either (they promise to fix the appalling public bus system in Tartu, but I don't think they can), but they're inoffensive to me, and just nose ahead on the respect gained from the candidates' willingness to hang out near Kaarsild at 8am on a weekday, handing out coffee.

The Social Democrats are desperate enough to resort to spamming, on the one hand, and extremely dubious political statements on the other. Having gotten kicked out of the coalition for not playing nice, they are still under the delusion that they matter, and have now suddenly remembered that they are supposed to be a left-wing party. So they came out in support of the latest Keskerakond bright idea: making mortgage loans non-actionable. The idea being that a loan is secured only by the real estate; if the owner is underwater, he can just walk away from it. (Nevermind that Estonia already has a personal bankruptcy law, which can be applied to people who are genuinely in trouble.) It's pandering to an irresponsible, infantile mass. I'd long since stopped expecting anything better of Savisaar, but SDE should be ashamed.

Of course, the election is mostly about Tallinn, and the vast majority of the campaigning is focused on it. Knowing he's lost the reasonable vote, and completely devoid of any actual ideas on how to improve things, Savisaar's defaulted back to "Ansip sucks dicks" and "vote for me, I'll give you potatoes". The opinion polls seem to suggest that there is a chance of a coalition keeping the centrists out of power in Tallinn this time around. That would be nice.

Who else is left? Rahvaliit? Very funny. The Greens? They're a bunch of utter morons, opposing anything they can if it brings them some semblance of street cred among the hippies.

Somebody in my blog feed suggested we reintroduce a property test for voting rights, and while that's undemocratic, I can't help but go "hmm". Freeloaders who refuse to take responsibility for their choices, and then expect the state to bail them out, are not the sort of people who should be allowed to have a say in the way a country is run. Most of the serious social stimulants in this country are already in the form of income tax breaks. If you've been actually receiving cash from the state for more than 2 years (to account for maternity and temporary unemployment insurance), you have a conflict of interest, and are not allowed to affect the political process. Ah, I can only dream...

Something called Uus Laine in Paldiski actually paid Tallinn's nightgame host to do a free-to-play session in the port city on election day, noon to 6pm. The only condition is that all cars need to be carrying flags with the party's logo. I don't think there was much interest.

Here's a parting thought. It might be a downer, but go and vote. If you have no good motivation to vote for any particular party (much less a candidate), then just vote against whoever was in power last time. As usual: if you don't vote, you don't get to bitch.

Grassroots Credit

Walking into town on Sunday to pick up my car after a night of severe intoxication, I strolled past Tartu's office of Parex Bank. No, I didn't know we had one either; but apparently we do, and what's more, it's still operating - and what's even funnier, they are advertising 9.5% return on deposits in Estonian kroons.

Now, obviously, very few people would be foolhardy enough to place their savings in Parex these days, but it is the vanguard of an interesting phenomenon. Russian economic blogger Artyom Eyskov of Superinvestor.ru mentions today that a bank in Russia is offering a savings deposit plan at 20% per annum. Furthermore, Artyom took the time to check out that plan's terms, and it appears legit - which motivated him to do a little investigating and come to the conclusion that the bank in question is gathering up cash wherever it can find it, in order to pull off an investment so lucrative that even significant interest payouts are worth the bother. (The bank's offer is not an investment plan, but a deposit, so it is guaranteed by the Russian government.)

And then there is Vabakapital.ee: a company that seeks investment, promising payouts of between 16% and 28% - even at the bottom end, that's a very big reward. They're not a venture capital or an investment fund, but rather an intermediary - providing the connections between people with cash to spare, and entrepreneurs in need of loans. They advertise to both sides and, presumably, charge both sides a fee.

Of course there are some caveats, the most obvious one being that the company does not actually assume any risk. It's not a financial institution; if the deal goes sour, Vabakapital is not liable. However, it is a very good idea, and a highly curious phenomenon.

The problem of the credit crunch is not a lack of capital, but a lack of faith, as exercised by institutional creditors. The nature of business in a time of industry and globalization is that business deals are conducted against lines of credit; if you need raw materials, you're not actually going to hand over a bag of cash to a guy in China once a freighter docks at Muuga. Instead you're going to give your supplier a letter from your bank, saying that the bank is confident you're good for it. Hell, more often than not, if you and the supplier have an established relationship, he's just going to trust you. Sure, there are legal papers saying you have to pay, but that's not the same as cash on delivery.

So business runs on credit, and yes, banks are a large part of it (many companies use short-term bank loans to smooth out cash flow, and most have borrowed from the bank to grow the business anyway). Now, the banks put a lot of their money into really stupid deals that naturally fell through. I'm not going to go into detail on that, suffice it to say that banks are left with not just huge losses, but no real idea of how much they lost - the assets they got for the deals are worth something, and nobody has a clue how much exactly (but not a lot). So banks are afraid they have too little, and won't give out loans.

Without loans, businesses can't produce and deliver. The demand is actually still there - at least until all the workers get laid off - but without lubricant, the machine grinds to a halt.

And here's the important bit: just because a business can't function, doesn't mean it's not a good business.

So in the global economic crisis, somebody with some spare cash can actually make a very good investment - buy a functional, profitable, well-structured business that has simply been tripped up by the act of globalization shutting down for a year. The machinery is still there, the people, the business contacts, and most importantly - the paying customers. Just needs a bit of liquidity to get it moving again.

And if the banks won't help, then there is an opportunity for individuals and groups. The crisis has lowered barriers to entry and made a lot of business owners desperate; and let's face it, if you're looking to get a return on your money today, you really have no good reason to trust investment bankers and other professionals. They've shown themselves to be utterly worthless as a class of humanity. But if you're dealing directly with the owner of a business, and are giving him a loan backed by his real assets - or better yet, buying a stake in the company - you're in a position to exercise your own best judgement. The very fact that you still have money to invest means your judgement is a hell of a lot more sound than that of hedge fund managers.

There are companies elsewhere doing this already, sort of, but the Vabakapital thing seems like a lot more simple, and likely to work. Mind you, it could still be either a massive scam or an epic failure, and I haven't given them any of my own money yet.

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Ah! you say. But who has spare cash to lend these days? Well, there's a good probability that a lot of people do, they just don't feel comfortable doing it. There's a crisis on; we might all lose our jobs; let's not spend, and definitely let's not be frivolous with our savings. The upshot is that everyone keeps their money in the bank, where it's safe, guaranteed by the state. Funnily enough, there is already some evidence of the banks - at least here in Estonia - seeking to make use out of all those deposits and pushing consumer credit again. At high rates, certainly, but still.

Crisis Resolution

(Btw, this is post 401 on AnTyx. In three years...)

I hate to say "I told you so", but I've mentioned on multiple occasions that in all the time since the restoration of independence, no Estonian government has ever served a full term, from one election to the next. The current cabinet may have come together around a PM with a massive vote of confidence, but that didn't exactly last - and now the coalition is creaking at the seams, again.

The bone of contention is tax reform. The ruling party has accumulated a lot of goodwill with their tax reduction policy: over several years, personal income tax would drop from 26% to 18%. At the same time, the tax-free minimum would keep growing (this is the base earnings amount per month that does not incur any income tax at all). The upshot is that everybody in Estonia would get more money in their pockets in January than they did in December, without begging their employer for a raise. The electorate has really appreciated it, and the Reform Party has been a member of every coalition in memory.

Of course, we're now in the middle of an economic crisis. The upshot for the government is that they are not getting as much tax as they planned to, and the budget falls short. Which it absolutely cannot do: by law, the government is not allowed to have a budget deficit. The shortfall in the 2008 tax revenue has prompted budget cuts in various branches of government, some layoffs, and a lot of shit-slinging between ministries controlled by different coalition parties.

Now the government is preparing the 2009 budget, which it has to submit to the parliament for approval by the end of September. While the Bank of Estonia says we're past the worst of it and the economy will start to bounce back next year, it still won't be a return to happy days, and the government needs to figure out a way to cut spending, or increase revenue, or (preferably) both.

And so the coalition's second-biggest party, the right-wing IRL, is pushing the PM to freeze the tax cuts. Leaving the income tax rates at this year's levels is supposed to bring in an extra 2,5 billion kroons over the original calculations.

At first the Prime Minister was against the idea - naturally; but now it seems as if he is coming around. Ansip has tried to strong-arm the coalition before, and it has never worked out well for him. He kept Mart Laar out of the Foreign Minister's chair because Laar had more popular approval than the PM - and bore the blame of the April riots, leaving Laar in the wings and blameless. He tried to push through some suspect legislation to the benefit of a particular company - and the rest of the coalition promptly supported a rival's unpopular bill to restrict the sales of alcohol. This is a representative democracy at work: with a true multiparty system, even the big dog can't afford to get too arrogant.

So now Ansip is talking about maybe stopping further tax cuts. But is it a good move?

Estonia's economic miracle is largely attributed to two things: a balanced budget, and the lack of any corporate taxes. The former is now under threat. The latter has been a subject of much discussion for the last couple of years, not least because the other EU states are a bit miffed: it's a strong disbalance in the common market, giving Estonia a competitive advantage that the other member states will struggle to match. The government has had to fight hard against EU officials to retain the no-corporate-tax rule. An odd case of the government actually making a proper effort to not get more money.

The income tax cuts, on the other hand, are far less critical to the overall economic health of the country. Estonia needs foreign capital. Personal income tax cuts are of no consequence to the investors, and on the other hand, they are not that much help to the population at large. Businesspeople with stock portfolios and significant financial interests will certainly get a significant bonus if their tax falls by another percentage point - but to the majority of the voters, January's raise comes down to a couple of hundreds of kroons, maybe. It's certainly a very nice thing to have, but it's not critical. If the extra revenue from freezing further tax cuts will balance the budget, save the social services from further layoffs, and keep the economy healthy, then it is entirely reasonable for the state to ask its people to make that sacrifice.

And if it does work, what a boon for Ansip! His once-high approval ratings have been tumbling ever since his failed attempt to be a politician. It is now high time for the Reform Party whips to stop the madness and return to their true purpose in the Republic of Estonia: that of the quietly competent economy buffs, secure in their coalition spot because they are the ones who know how to keep the money rolling in. Freezing the tax cuts is a small price to pay to relieve the crisis; if the government pulls it off, and Reform takes the credit, it will go a long way to undoing the damage done by three years of Ansip's misguided shenanigans.

With pressure from IRL and the rest of the coalition, it now seems almost inevitable that Ansip will take the plunge and drop the tax cuts. The only question is whether it will be enough.

Shenanigans Protracted

Had to spend two and a half hours in a doctor's office for my semi-annual labour law checkup. (A backdoor way of getting Estonians in to see the doc at least occasionally, I suppose.) Came across the Center Party leaflet inside the morning's Postimees, and gave it a pass. Apparently though today is a slow news day, so the Postimees website is bitching about it. (They have no qualms about taking Savisaar's money for distribution; and in fact, I imagine they used the deal to prepare indignant commentary once the paper edition makes the rounds.)

Savisaar's big idea this time is to a)recognize Russia as a modern, positive-thinking state so they give us the oil transit back, and b)restrict food prices, pegging the cost of groceries to the national average salary and/or creating municipal grocery stores with below-market prices.

The latter is a page directly out of Vladimir Putin's book, so blatant it's startling. Without the sort of control that the Russian government has over its businesses, and without the pile of oil cash that the Russian government is sitting upon - and even then - artificially restricting food prices will only lead to a shortage in official channels and an overpriced black market - because the producers will not sell at below cost. Besides which, this is an authoritarian move far beyond anything even Ansip has ever concocted. In a free state with a free market, it is inexcusable. For a country that prides itself on successfully disentangling itself from the monster of Soviet plan economy and undertakes to teach others, it is a suggestion whose mere utterance is shameful.

On the other hand, the paper edition did include a curious little op-ed from Keit Pentus of the Reform party (I keep wondering if she's related to Sten Pentus, the racing driver - I'm sure one of the readers knows?). She proposes to cap the income subject to social tax.

If you don't know how the Estonian tax system works, here's the point. The salary number you get in your employment contract is subject to income tax; the cash you get in hand is that number minus 21% (and dropping), and a couple of other minor deductions like the mandatory, regulated, but private pension fund. Additionally, the employer pays 33% of the contract amount in social tax. So the cost to the employer is actually a third higher than the negotiated salary. The employee gets about 57% of what the employer spends. In the spirit of E-stonian E-fficiency, here is a handy online calculator for employment costs.

For income tax, there is a deductible minimum: the first 2250 EEK you earn each month is not subject to income tax. (If your spouse does not work and you file a joint tax return as a household, his untaxable minimum can also be counted against your income.) What Miss Pentus proposes for social tax is the obverse: a deductible maximum. The employer would only pay social tax up to a maximum; let's say a contract number of 30,000 EEK. In that case the cost to the employer is 40,000 EEK, and the employee receives 23,000 EEK after all deductions. The employer pays 9900 EEK in social tax and 5600 EEK in income tax. (This is Estonia, you don't have to do your own taxes unless you're doing something uncommon.)

But if the employee then gets a raise to, say, 40,000 EEK a month, the employer keeps paying social tax up to the maximum. Only the 9900 EEK top band gets tacked onto the contract amount. The cost to the employer is 50,000 EEK. The employee gets 31,000 EEK after all deductions. The employer pays 9900 EEK in social tax and 7700 EEK in income tax. No matter how much the employee's salary is; the employer will never pay more than 33% of 30,000 EEK in social tax.

I'm not absolutely convinced that this scheme will work, but it sounds like it could. It limits the employer's costs in creating highly skilled, highly paid jobs in Estonia, which is what we want to do. It works on the same principle that has served Estonia extremely well in the past: limit the amount of money you're making from each source, and use that to get more sources. This is why McDonalds is worth more than De Beers.

Similar tax cap schemes exist in neighbouring countries. As much as it pains me to admit that the Latvians have done something right, maybe we should give this idea a try?

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Bonus story: Bank of Estonia says the worst is behind us, and we can now start our long slog up to prosperity.

Making a Difference

A friend found with some surprise that he had some money coming to him: a microloan that he made to someone in Equador had been repaid.

I shrugged, had a look at the website, and ended up making a loan to a blacksmith from Peru. I've read some things about the Grameen Bank and similar projects, and they've always made a lot of sense to me. I've been wrangling with Paypal today anyway to buy a case for the Mininote from eBay, so the website was a convenient way to contribute.

It's $25; the sort of money I might spent in a mediocre night out. For that sum, I get to feel good about myself: I'm making a difference, doing something unequivocally Good, and doing it in the most practical way possible.

This isn't charity, which I vaguely dislike (although I did send money to tsunami victims - because it was conveniently arranged by the Internet banking website). It's providing a loan for entrepreneurs, money they will use to buy materials and tools to improve their ability to do business and provide for themselves - and they'll pay it back after a fixed period. This is not feeding a Third World addiction - it is the bleedingly obvious upside of globalization.

This country has gone from a postsoviet wreck to a Nordic tiger in two decades, ultimately thanks to foreign capital that allowed us to earn good money for hard work. It is the moral obligation of everyone in Estonia, and everyone who has ever received help from others, to support projects like microloans.

Go to kiva.org, give someone a loan of twenty-five bucks, then come back here and sound off in the comments, so I can tell you how much you rule.

Estonian Healthcare - Redux & Personal

I've written before about Estonian healthcare - how it's considered crap, though probably undeservedly. Of course, it is difficult to pass judgement on a system that you've only ever used for trivial matters. I've had major surgery when I was very young, but that was still in the Soviet times and I remember nothing of it. Otherwise I never had cause to avail myself of Estonia's hospitals for anything more serious than an adenoid removal, which took half a day and resulted in as much ice cream as I could eat; not a complete waste, then. A couple of years ago I got into a fairly impressive car accident, was ambulanced to Tallinn and checked over at the ER; I was sent home the same evening with some stitches and a concussion. That was luck. But in 2008, I've been deliberate.

I'm a big guy. Always have been. I'd resigned myself to being fat for the rest of my life; and then I decided I was going to do something about it. The key factor was the appearance of bariatric surgeons in Estonia; but the turning point was late last fall, after I'd been swimming regularly, three times a week, for about half a year. I was feeling a lot better and gaining muscle mass, but not really losing much weight. My last bit of self-deception - that I could get into shape through diet and exercise - fell away: there is no way I will ever have the sort of self-discipline for the sort of massive weight loss I need. There are people in the world who've done it, and I have the greatest respect for them, but that's not me. Growing up fat meant a lot of confidence issues; Antyx readers will recognize that confidence is not something I have a problem with. The way I did was to stop hating myself. Self-discipline on the order required to go from the clinical definition of morbidly obese to more or less normal would have to stem from a burning hate for my own body; and that is not a choice I am prepared to make. Even if it kills me.

Fortunately, I now have the opportunity to cheat; to achieve the result while bypassing the part that makes it so difficult for me. Not that the cheat itself is particularly simple, but it's something I can do. There are surgeons in Estonia who do the operations that result - reliably - in radical weight loss; I am still young and have most of my health; and I can afford the surgery. I'm paying a little over two thousand Euro for it, which isn't a lot. Thanks to the Estonian healthcare system.

My first move was at the end of 2007, when I saw my GP (or rather one of the GPs sharing a pool of patients) for a severe sore throat. I got a week's bedrest and a referral to an endocrynologist - a specialist on metabolism. Since this was not an urgent matter, I got put in the back of the queue; a little over a month till my visit.

When the time came, it was all remarkably efficient. I paid 50 EEK (3 Euro and change) for the initial visit. The doctor ran a bunch of tests, some that afternoon, the rest on the next morning. A week later I got the results, with commentary, and some research on the state of bariatric surgery in Estonia. The doc confirmed the diagnosis I'd known already: hyperinsulinemia, the most remarkable thing about which is that it is not diabetes. What it does do is cause an appetite disproportional to consumption. By this time I'd recognized that I eat more than most people; but I do it without really thinking about it. It's the difference between hunger and appetite, and it's something that ought to be fixed well by an operation that constricts the volume of the stomach. The endocrynologist gave the go-ahead.

I then contacted the surgeon, from a Tallinn private practice. It took a while to set up a visit, and when I did travel to the capital, it turned out that he was in surgery; apparently he actually works as a gastric surgeon on the staff of Tallinn's regional hospital as well. Fair enough, really; but what I did find out was that the metabolism workup was not sufficient. I'd also need to be cleared by a gastroenterologist. Fortunately, I could do that in Tartu.

This time I didn't feel like waiting a month, so I cheated. I paid the university hospital for an unreferred visit to a specialist doc. My 300 EEK (20 Euro) got me a time within two business days of putting in the request on the hospital's website. Since I did actually have national health insurance, that was all I paid; the ultrasound, gastroscopy and doctor's consult were all free. The GE was one of those old doctors that somehow instill tremendous trust. (I've never been afraid of docs, not even of needles when I was very little; an old relative that died before my birth had been something important in Estonian medicine, so all through my childhood various doctors had been very pleased to meet an heir to that family. Comes with having an uncommon last name.) She gave me the OK, and mentioned what she knew about the bariatrics in Tallinn; some 70 surgeries had been performed successfully there.

Most of those were of the really hardcore kind. There are three types of surgery available, and the most radical one is an actual bypass, where the patient's guts are rerouted. (Curiously enough, since it's purely surgical and does not involve any medical gadgets, it gets paid for in full by the national health insurance.) The least invasive type is the gastric balloon, which they insert through a tube down your throat - but it stays there for no more than 6 months, and I needed a longer-lasting effect than that. So I'm getting a lap band - a sort of belt that gets tied around the top part of the stomach. The upshot is that very little food can actually fit in there, so I can't overeat - and apparently most of the nerve endings are at the top of the stomach, so I constantly feel really full. It's not a magic pill, but it's been around for decades, and it seems to really work.

The great thing about the lap band surgery is that they're not cutting any internal organs - just adding a new bit. Sounds safer than removing an appendix.

Today, after my extended three-day birthday celebrations involving cake and a last Chateubriand stake from the Crepp meatery, I weigh 149.8kg. My surgery is on Wednesday. I'm about to put my gut where my blogging finger is.

The AnTyx Fix: Education

Wrote about education a few weeks ago, and of course somebody asked me what we're supposed to do about it. Which is a very good point; it's my job as a blogger to suggest the proper way to do things which I think are broken.

There was a news blurb in the papers yesterday: apparently there is something called an IT Council, and they recommended that the national school-graduation exams include mathematics as a mandatory test. This would produce a lot more youths with aptitude in mathematics, solve Estonia's labour shortage, and generally save the dolphins.

Well, that's a silly idea. It would be valid in India or China, but it's inappropriate for what we are trying to do here. Making maths mandatory is going to produce a large number of people with just enough math knowledge to pass the test, and they will be expected to go into IT, and we will have a workforce of semi-competent code monkeys that are far more expensive than semi-competent code monkeys in Bangalore, and nobody will have any use for them.

Estonia needs to be a knowledge economy. Our marketable skill is competence, and the ability to design and implement the optimal solutions to a problem. Solutions which are remarkably useful, and I mean remarkably - so good that you can't help but remark on it. To sustain this, we need to give our people the opportunity to become really good at what they do, and we can't do that by forcing all of them to learn Java.

Now, I've seen something recently which made me think about these things. It was a list of things you have to do when you're poor. It had really sad and hard-hitting lines like "Being poor is making lunch for your kid when a cockroach skitters over the bread, and you looking over to see if your kid saw". It made me think of my own family, back in the early 90s, when often enough my dad would simply not get his salary; he'd do the work, but there would be no money to give him. We were properly poor back then. But these days - I'm not rich, but I've fooled some people. I'm comfortably middle-class, with enough disposable income for a moderate selection of toys. So's the rest of my family. So are my friends, including the ones I grew up with.

And it occured to me that the biggest external contributing factor - other than the fact that I'm just naturally good at something that I've managed to earn money doing - was education. More importantly, the fact that I could go to the best university in the country and pay no tuition at all. I worked through most of my uni days, and my parents helped out, and I took out student loans some of the time (secured by the state - the interest is actually less than inflation now), but I couldn't have done it if I had to pay tuition as well. And yes, I have a BA in English, which is about the most practically useless degree one can have (second only to semiotics and philosophy), but it's still helped to find a good job. It has also given me an excuse to move away from my parents, and get the confidence of being able to take care of myself.

So how do we scale that experience? Keeping in mind that our ultimate goal is to create a steady stream of intelligent, well-trained and highly competent specialists? I don't have a guaranteed solution, but I have an idea on where to start.

1) Money. Estonia's free-market ideology means that the government does not own the companies that provide a government-regulated service. The national universities (like hospitals) are commercial enterprises; and every year, the government calculates how many specialists in a certain field it will be able to use 3 to 5 years down the line. Based on that, it signs a contract with a university, paying it to train the specialists. The university has a certain, significant but limited, number of tuition-free spots, which are assigned to applicants based on academic achievement. Usually, those who didn't make it will have a chance to get a paid spot - a thousand Euro per semester or so. Same curriculum.

Obviously we end up with more specialists than the state ordered. The state is limited by its budget, and relies on the commercial spots and all-private universities to make up the shortfall. The problem is that the all-private universities are generally crap (I think Tallinn's EBS business school might be the only exception). More money for more free spots would allow a concentration of students to the better institutions. We'd be fine with a University of Tartu and a University of Tallinn, and their colleges in Pärnu, Narva, Haapsalu... I have no faith in places like Mainor or Euroülikool.

More opportunities for free tuition will attract more students to the universities that can provide good education. Education from a good university is a useful thing even if the student ends up with a job that has nothing to do with his degree - as a lot of people do.

2) Exams. Currently, there is a single set of exams for high school graduation, and the results of these are used by the universities to generate an average passing grade. The results of all applicants are averaged out, and those who have a grade higher than the threshold, get the free spot.

The problem with this is that the exams cater to the lowest common denominator. Not all the kids who leave high school will go to university. Not all universities are the same in the level of education they offer, and thus the level of student knowledge they require.

The universities need to re-introduce their own entrance exams. This will allow the good colleges to accept good students; or rather, because they will be the ones with an abundance of free-tuition spots, it will motivate more students to study hard and bone up on the subject matter. It should also intrinsically limit the number of kids applying for a major with a low entrance barrier that they have no long-term interest in - just to get that student status.

3) Support. Estonia's tertiary education system has been criticized for mostly being inferior to universities abroad, but that is the wrong approach. Obviously it is not possible for a country of 1.3 million to build up a talent pool as comprehensive, diverse and advanced as a country with thirty or fourty times the population. Fortunately, we don't have to! The fact that it is so easy for our kids to go and study in Oxbridge or the Sorbonne is an advantage, a very significant resource bestowed on us by EU membership, and one that we would be fools to ignore. By the very nature of the Estonian people, they will not stay away forever; even those with an education and a career in the confederacy or further off will still return sooner or later, because of the fundamental Estonian sense of home. EU's best universities should be exploited by Estonia in the same way that EU funds are used to renovate our infrastructure.

Of course any application for EU funds is accompanied by a mandatory self-financing component. The same point applies. The Estonian government needs to dedicate resources - financial, administrative and political - to supporting those of its youths who choose to go abroad and study at the best colleges in Europe, or indeed the world. In the same way that the state secures student loans at a low interest rate, pays for tuition, and ensures discounts on vital goods and services (I'm still convinced that there is a state tender for the 1.90 EEK packets of ramen in the shops near Tartu's dorm cluster), there needs to be an extensive government program of supporting kids that study abroad. Something similar exists in a basic state - you can get your student loans written off if you work for a government agency after graduation - but it needs to be greatly expanded.

So, what do you think? Does any of this make sense?

Current Affairs

Well, it looks like the government's found a loophole to keep the zero corporate tax regime in Estonia and still be in accordance with EU directives - if only just. At the same time they've passed a bill raising excise on fuel, alcohol and tobacco, among other things. All in all, while the income tax will keep falling to 18% (and somehow I'm getting the feeling that's as low as it will go), and additional tax breaks for families with young children are introduced to bolster population growth, a lot of the extra money will be eaten up by the cascading price increases. The point is to cool down the economy - stop discretionary spending, reduce consumer & long-term debt, and prevent the bogeyman that is a "hard landing". I've yet to see a good explanation of this nasty phenomenon, but apparently it'll cause everyone to lose their homes.

Edward Lucas says that we're doing better than most Eastern European countries, because we have a budget proficit (this is a legislative issue, the government is not allowed to spend more than it gets). If you're in the mood for a cheeky chuckle, enjoy master Lucas's elaboration, of high importance to readers of The Economist: quoting "Juliet Sampson of HSBC, a bank."

Now that the economy's sorted, or at least there's a plan of action, we can go on to the next big issue: traffic deaths. Over a hundred people have bitten it on the roads in the first half of 2007 (and somewhat surprisingly for those who know me well, I wasn't among them). This is a major problem now, and a very public one. The reasons are mostly to do with the gung-ho attitude of drivers being inappropriate for the twisting, occasionally dilapidated, all too often slippery highways of this heavily-forested country. The government is getting drastic: besides the standard talk of increasing fines and introducing a point system, they've gone ahead and purchased a bunch of speed cameras. In this first phase they've only got enough hardware to cover about 80km of road, apparently, but if the gatsos are effective, there will be more.

I'm not sure how I should feel about it. As a car enthusiast, I am bound to finding speed cameras repulsive. On the other hand the highway traffic really is getting quite bad. There's a time and place to drive fast, and the behaviour of many drivers on the Tartu-Tallinn road* is quite simply imprudent. Having survived several highway mishaps, I now prefer to stay within reasonable proximity to the speed limit. If gatsos really are an effective deterrent, and if they'll not just be used as revenue generators, I can't in all honesty complain.

There are, however, sillier ideas going around. Reader letters in Postimees have suggested mounting a speed limiter on the cars of rookie drivers and repeat offenders, physically preventing the car from breaking the speed limit - this ties in to the EU idea of banning cars capable of going faster than 160km/h. The problem is that this is presents a safety concern: in some situations, you need power to pull off a maneuver safely, and an arbitrary engine limiter could very well put you in harm's way.

In Tallinn**, they're thinking of reducing the speed limit to 40km/h. Now, a basic principle of legislature is to not pass laws that cannot possibly be enforced. The traffic speed in Tallinn today is more organic than prescribed; very few drivers follow the 50km/h limit unflinchingly. If all the cars around you are travelling at 70km/h, you'd better do it too. Reducing the limit would achieve no more than criminalize the population, which would do nothing for safety, but would generate resentment. Bad idea.

The only things I can think of that would seriously improve traffic safety are road construction - freeways especially, as it's rather difficult to kill yourself in city driving (although there are bright sparks who've managed) - and saturation of the traffic flow with police presense. To the best of my comprehension, raids on the Tallinn-Tartu road during peak hours, when you'll see five or six squad cars over the length of your trip, have been effective. There's no need to enforce the letter of the law rigorously and punish people harshly for every minor infraction, but the mere presense of traffic police in the flow at all times should do wonders. Estonians are sufficiently civilized that they won't break the law while the police is watching. ;)

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* The road I'm most familiar with, and the major artery in the country. They're doing things to it - diverting heavy trucks during peak hours, extending the autobahn-style separated sections, etc. Curiously enough, while dangerous, it is not responsible for most of the fatalities - people kill themselves a lot more on country roads. There's a known phenomenon with twisting mountain passes, that it's statistically a lot better to not put up any barriers at the edge of the road - drivers who are scared shitless will drive more prudently and get through safely. The appalling traffic of this freeway probably acts as a similar inhibitor.

** I'm too tired to think of a way to convincingly blame this on Edgar Savisaar, so use your imaginations.

The AnTyx Fix: Schools

Let's be constructive, shall we? In the very admirable and very Estonian spirit of not listening to people saying it can't be done, here's one ostensibly excellent solution to a very difficult problem.

The disenfranchisement of Estonia's Russian-speakers in the new generation is usually attributed to two things: hostile foreign media, and russian schools as an impediment to integration. The former comes down to the fact that Russians en masse will not speak Estonian and do not speak English, in fact they're having a hard enough time learning their own language; the upshot being that the underclass lemmings stay in front of the television showing channels piped over from Russia, and forego any sort of critical analysis of the propaganda therein.*

The latter compounds this problem by making sure that young Russian-speakers have very little opportunity to escape the vicious circle. Friendships and afterschool activities are maintained within this virtual ghetto, under the watchful eyes of a faculty mostly carried over from the Soviet days. Like the rest of the Russian-speaking population, the teachers are likely to be immigrants, but their training includes both indoctrination and the imperative to indoctrinate the kids.

Russian-language schools are actually an example of the astounding tolerance towards the community by Estonians; in very few European countries will you find massive, municipally funded education networks in languages other than the state tongue. The fact that russian schools exist is, however, mostly a consequence of a lack of ideas - Estonians aren't particularly happy about them, and Estlanders increasingly prefer to put their kids in estonian schools. The russian education is being phased out slowly, as the demographic balance shifts and the Russian-speaking population shrinks faster than the national average; however, every single school closed provokes a wave of indignation and accusations of malice.

The reason the educational system was not transferred entirely into Estonian right after independence is one of logistics. At the time, it would've been politically possible, I think. But there simply weren't enough teachers to go around, and after a while the integration policy - a mix of assimilation tactics and "ignore the ruskies, maybe they'll go away" - made the question one to dodge.

Whenever it was brought up - both at the time I was in school myself** and later - it was always the same thing: start from the top, switch the higher years to Estonian and work your way down. I'm not entirely sure what the logic behind this is. My best guess is that because the last three years are not mandatory - children can leave school after Year 9, even though they are guaranteed an education for free up to Year 12 - the assumption was that any kids who make it into the final stage will be both reasonably bright and reasonably motivated. So the cut-off point was set to Year 9; above that, some of the classes are now taught in Estonian - particularly things like Estonian literature and history - and more are to come. Even that project is stalling because of a lack of teachers able to speak the language properly.

The vision of a Russian teacher reading the material to Russian students in Estonian is, admittedly, extremely funny.

However, the approach itself is fundamentally wrong. Kids who don't speak Estonian as a first language will resent it, of course - it's more difficult for them; the result will be that on the one hand, the students will resort even more to rote memorization instead of actually comprehending the material, and on the other, their attitude towards the impossibly complicated tongue will not improve. A bit of extended vocabulary is hardly the same thing as linguistic proficiency.

The trick is to start at the other end: phase out Russian-speaking first years. As anyone who's either taught or learned a language will attest, it is incomparably easier to pick up the skill at an early age. Seven-year-olds who are suddenly forced to spend their day talking in Estonian will have no problems growing bilingual (and there's no reason why the scheme can't be extended to kindergartens; most of my Estonian now is a pale remnant of the proficiency I had when I went to kindergarten with two dozen Estonian kids). Furthermore, it is far easier on the teachers. I am not going to claim that elementary school teachers' jobs are simpler - but the material itself is, especially in the context of a new language.

Set a cut-off date: from the year 2008, no more russian first grades. The existing ones will be allowed to run out - their teachers can then either retrain or retire (which most of them should be about ready to do, after fighting uphill for the best part of two decades), and within twelve years the problem will have been solved.

Education specialists in the audience - you know who you are - is there any objective, pedagogical reason why this wouldn't work? I can't think of any.

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*This is not to say that Estonian media don't engage in blatant and grossly inappropriate propaganda; however Estonians by their nature are too sceptical to buy into the crap wholesale.

**Yes, I went to a Russian-speaking school. Supposedly a fairly good one, too. Though its principal has been in the news last year for being unable to speak any Estonian whatsoever, despite it being a job prerequisite and him being able to produce the necessary certificates.