The West's Star Pupil Feels the Crunch

NY Times: For nearly two decades, Estonia embraced capitalism with such gusto that it seemed to be channeling the laissez-faire philosophy of Milton Friedman. From its policies meant to attract foreign investors to its flat tax and freewheeling business culture, it stood out as the former Soviet republic most adept at turning post-Communist chaos into a thriving market economy.

Now Estonians, and some of their Baltic neighbors, are slogging through their first serious economic downturn since liberation from the Soviet grip in the early 1990s.

Whatever happens, government officials say there will be no betrayal of Friedman’s philosophy. “We will stay a laissez-faire economy,” said Juhan Parts, Estonia’s minister of the economy. At the same, though, Estonia will see more state direction in the economy than they are used to, not as a matter of ideology, but as a matter of circumstance.