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January 22, 2019
Government Innovation

Follow the Data Podcast: Insights from the Digital Republic: A Conversation with the President of Estonia

Governments across the world are struggling to keep pace with new technologies and ever-evolving digital platforms. In the worst cases, bureaucracy is inefficient, arcane, and disconnected. In other cases, governments recognize the demand for modernization, and are stepping up to meet the need.

Estonia is a leader in the field of digital government. In a conversation between Bloomberg Philanthropies Government Innovation lead James Anderson and President of the Republic of Estonia Kersti Kaljulaid, the president describes her country’s dedication to providing streamlined services, protecting citizen’s privacy, and taking proactive steps to get people the information they need.

This episode features a conversation that took place in October 2018, at CityLab Detroit.

A partnership between Bloomberg Philanthropies, the Aspen Institute, and The Atlantic, CityLab is the preeminent meeting of city leaders and the top minds in urbanism and city planning, economics, education, art, architecture, public sector innovation, community development, and business — convened with the goal of creating scalable solutions to major challenges faced by cities everywhere.

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We hope you enjoy this episode. Follow us on Twitter @BloombergDotOrg for information about our next episode. Until then, keep following the data!

FULL TRANSCRIPT

KATHERINE OLIVER: Welcome to Follow the Data, I’m your host, Katherine Oliver.

Every year, Bloomberg Philanthropies invites some of the world’s most interesting people to talk to us at our global ideas conference, City Lab – mayors, artists, academics, policy experts, presidents – the men and women who are shaping the world we live in.

The Republic of Estonia has been hailed as the first “Digital Republic,” a nation whose government is virtual, borderless, networked and secure. A child living in the United Kingdom can study in virtual classrooms taught in the Estonian language. A young woman living in Kenya can learn the Estonian tax code and work in accounting without ever setting foot in the country. This small, post-Soviet nation’s effort to turn digital government into a competitive edge has helped Estonia close the economic gap between it and its closest, richest neighbor Finland by twenty-five years. And, as you’ll hear in a minute, Estonia has some valuable lessons for much larger nations, including the United States.

Estonia’s President Kersti Kaljulaid has defined her time in office by advocating a vision of government that is increasingly inclusive and responsive to people’s needs – work that has made her a leader in the global digital revolution. The President sat down with my colleague James Anderson, who leads Bloomberg Philanthropies’ Government Innovation program, at City Lab Detroit this past fall, where they talked about the shift from analog to digital government and the promise that holds for us all. City Lab is hosted in partnership with the Aspen Institute and The Atlantic.

Listen to their conversation now.

JAMES ANDERSON:  All right, good morning everyone.  Good morning, President Kaljulaid.  Welcome to City Lab.

PRESIDENT KALJULAID:  Good morning.

ANDERSON:  For the benefit of everyone in our audience, the President was elected in 2016.  She’s the first woman to hold this role. Estonia is a nation of about 1.3 million people.  It shares on its east a border with Russia.  It’s part of the Baltic States.  It’s an advanced economy. Some of the highlights.  They offer free college education to all of their residents. They have the longest paid maternity break of any country in the OECD.  In so many ways I think they’re leading the charge.  The country has also been a global leader in public sector innovation particularly around digital government, which is what we’re going to talk about today. Estonia was the first country to digitize many public services, the first to do online voting at scale. Every citizen is given a digital number at birth, which they can use to do everything from filing taxes to voting.  It’s been called the most ambitious project in technological statecraft today so it’s a great pleasure to have you with us Madam President.

To begin, your country has made a huge push since independence to promote entrepreneurship and attract investment.  Can you talk about the ingredients you put into place to turn that vision into a reality?

PRESIDENT KALJULAID: Indeed, thank you for that question because it explains how Estonia has become the only digital nation which actually has a state support behind it.  Estonia has always been looking for innovation in public sector.  And the reason was we were occupied for 50 years by Soviet Union, and then when we regained our independence then we wanted to leapfrog, and everybody was telling us in the developed world, IMFs, world banks, just do like everybody else and you will catch up.  And we thought, “That’s wrong.”

So we innovated in our currency reform, coming out of the rubles zone.  We innovated in our tech system.  We innovated in our genetic law, and finally we innovated also in the digital matters because we always had this drive that we want to catch up with our closest, richest neighbor Finland.  And we now see that we were behind 50 years, now we are only 25 years behind Finland.  If you look, we Estonians are living as well as Fins in 1994.  This is a huge achievement.

ANDERSON:  A huge achievement. You have said, I found this quote in one of your speeches, “The first naturally digital generation will be almost middle aged by 2025, yet most digital states they are still to be born.”  Talk to us about where this came from.  Why the digital state, what was its impetus?

PRESIDENT KALJULAID:  Our people wanted to get public services everywhere, and we simply could not offer them everywhere.  Estonia is as big as Netherlands, but with 1.3 million people.  So, it didn’t make any sense for public sector offices to be in every village.  Since private sector was already starting to use Internet, for example online banking was already born when we created our digital identity.

Frankly speaking, we did not realize that we would be ahead of everybody else still 20 years later, but we thought that we may have five years where nobody else is yet trying this – to digitize our public services. And why it was important that we do it first.  We were poor at that point and we wanted private companies to help us and to be part of it because they do not have a sandbox, a test base elsewhere.  We created the possibility for digital developers to work in our country in the format they couldn’t find anywhere else at that point in time.

ANDERSON:  What year was that?

PRESIDENT KALJULAID:  That was 1999 when Estonia digital identity was born, but by that point we already had one public service online and that was our tax board because you say always in America that nobody wants to see the tax man.  We gave people this opportunity because in Soviet Union you didn’t have salary and you didn’t pay taxes.  We had to teach the whole nation to pay taxes and it seemed so unfair that you have to go somewhere to queue to get rid of your own money.  So instead of that we offered people an opportunity to pay their taxes in five minutes.  It is much better and it feels much better I can tell you.

Then the banks and the digital sector and the government got together and decided that we will give everybody a single digital passport online which will be then open for all service creation, public and private sector. This is I think the most important element there.  We didn’t think we are doing something unique, but in fact we were.  We created a single digital backbone where identification is based on something which is like passport online, as secure as passport. It’s online.  It’s not a nickname or something and you don’t have tens or twenties.  You have one.  It is well protected and state guarantees that it is protected if the services are well exceeded by this Xroad we call it or Crossroads.

ANDERSON:  It’s interesting because in the states of course we’re so contested over data privacy issues and the role of big technology companies in our lives.  And in some ways, Estonia’s moved to go first and create that universal platform that everyone operates upon – in hindsight looks incredibly visionary.  Can you talk about the advantages that’s given you in terms of data privacy in terms of trust in public institutions and also perhaps in terms of creating collaboration between the private sector.

PRESIDENT KALJULAID:  If I hear now Facebook and others being criticized for having offered people an opportunity to be identified to each other to be able to transact online, for example, and that they couldn’t guarantee the security then I always feel like what are you doing?  This is the government’s obligation to provide identification.  Also online like in analog world, we cannot leave our people and businesses alone, yet many governments did this to their people and then they blame the companies who have tried to offer something, but the companies cannot guarantee this level of universal safety, what states can guarantee.

I mean technology of course always can fail, but look at it this way – I mean paper is definitely not safer than is digital.  If you think about where your paperwork is, it’s in government office.  You don’t know who read it last time.  You don’t know.  But in our digital system, the promise by the state that I will keep your data safe is implemented because I know if somebody reads my digital medical record, I can check who it was and if it was not the doctor who is dealing with me I can complain and that would be criminal offense.  So there is a legal space in addition to technical security, which is protecting this architecture.  And here comes the most important cyber hygiene element. This way people know if I’m using my digital passport I am safe whereas if I’m on Facebook, or Amazon, or Google I am less safe.

ANDERSON: You talk a lot about digital hygiene, which to me speaks to this idea that you’re really creating a digital culture within your society and I wonder if the culture was started before the reality came into clear existence, was that something that you seeded as intentionally as these early investments?

PRESIDENT KALJULAID:  Well in 1999 there are basically two services people used, one was this electronic tax board and the other was online banking and both ran on this platform.  Gradually the services were added.  Gradually people got more and more used to having this safe opportunity and gradually they got more and more lost, why globally as soon as you exit because Estonia is a tiny country.  As soon as you go outside you do not have this kind of safety.

We were learning quite quickly that if I’m in the system with my digital I.D., then nobody is starting to send me advertisements about I mean taking the same trip again as you know everybody who has booked tickets through Booking.com. And so you inherently learn the cyber hygiene, but you need to teach people cyber hygiene.  We have people going around in our schools telling children that if it is not okay in analog world, if it’s offensive in analog world, you cannot do it in digital and we actually have a legal space which says exactly the same.

So if somebody’s looking, let’s say in in my in traffic registry for, I don’t know my ex-boyfriend’s new girlfriend’s data, it is criminal offense.  You go to court.  You’re punished because you did it.  And we had a couple of cases actually which were highly mediatized and people learned really quickly that no, I don’t do it.  I don’t do it in digital any more than I do it on paper.  Cyber hygiene needs to be taught globally and everywhere because technology will not keep us safe.  It’s always the brain which keeps us safe.

ANDERSON:  Sticking on this point of the transition from analog to digital, another great thing that I read in one of your talks, “We must go for inclusiveness not high-end and we must go for reliability not complexity.”  You later said, “Going digital, this was also an opportunity of radically rethinking and simplification because simply making an existing paper process digital is not such a good idea.”  And I think that gets to an issue that so many of the people here in the room have.

The transition to digital services also requires that we do process redesign, and they impact the way that people work and their routines. I can’t imagine that transition was a completely seamless and easy one, but how has it shifted the way that people work and the administrative routines and so forth?

PRESIDENT KALJULAID:  First of all, Estonian public sector is simple anyway.  Like we have a single income tax rate for all income.  I mean rent, capital gains, salary.  It is quite simple to administer anyway. And then on top of it we had this advantage.  You would call it disadvantage, but if you look at now it seems like advantage because there is was not enough computer power to get through very difficult public sector processes.  And then there is one very important thing that we created our system this way that it’s like a sun.

There is this nucleus, this xroad, where the identification happens and an endless number of rays surrounding it.  If you do a train instead, the people always enter the first wagon and then have to walk to have the proper service, you’re lost. There is a lot of work which has to go into the service design, but finally technology will not do it by itself. It will still be your public sector culture which will be reflected also in your digital state culture.  The only thing which happens is that it gets more efficient and effective.  If you have a big bureaucracy, it gets even more efficient and effective in bothering people.  You have to take this into account.  It will not happen by itself.  It is still your job to streamline the process.

ANDERSON:  Was there a big focus on revisiting using human centered design and other tools?

PRESIDENT KALJULAID:  There still is because more and more of the services went online.  Nowadays you cannot get married online and you cannot buy property and everything else you can do online.  This means that we constantly have to struggle with interfaces, that they are simple, that they are uniform, that they are easy to understand, but people do not get lost in the digital, because if you get lost in the analog world, then you just walk up to that counter. There are no such counters in Estonia.  I mean there is in principle, but nobody would bother to go there.

People save four or five working days every year by simply using the digital process, but I mean they get impatient.  As soon as people realize that our public sector is falling behind in services design compared to private sector, they demand — Estonian people expect public sector to excel in online service provision and this way the system is now citizen driven.  For example, if people notice that companies prompt them to buy something, do something, they immediately ask that. I mean, “My driver’s license is running out.  You know it, prompt me.”  Our system now prompts people.  Now it gets even further.  People say, “You know I have the right to a certain service,” a social service for example, “you know I have this right. You know my bank account because I’m paying your taxes.  Why do I still have to apply online?  You have all the information.  Just pay.”

See, it becomes citizen driven this way gradually.  And you asked me also before are we more somehow open to new technologies, yes we are and exactly this way.  People expect public sector to offer the technologies which are there, out there in private sector. If you think of self-driving vehicles, of course Estonians want their cities to offer self-driving vehicles because simply private sector can make these things.

ANDERSON:  One of the things that we were chatting about backstage was in addition to the efficiency gains that this has led to, you’ve really also taken note of the equalizing effect for women, for homemakers, for people in rural communities.  Can you talk about that?

PRESIDENT KALJULAID:  Yes, and this I think is important to notice that this applies both in public and private sector because I mean mostly  its women, at least in our country I’m sorry to say, who apply for Social Services, who will put children to kindergarten and to school.  If you do all this online at midnight basically or early in the morning, it saves a lot of time.

If you have heavy home life burden, it is an equalizer for you.  Also, many companies now don’t expect people to show up for work and because you can identify yourself very easily people are used to kind of work procedures which are online.  And then I know one Estonian bank for example, it never says this job is there.  It says we have a job and it gets done wherever people find themselves. And another example, we have a man who makes bows and arrows.  He lives in Southern Estonia.  He’s a global seller.  His closest clients are probably 1000 kilometers away yet he can make perfect living.  Or take handicapped people. Let’s imagine we have an autistic person who likes to knit red socks.

Previously, this person could not sustain himself or herself through this habit. Now they can because you don’t have to sell face-to-face.  You do not have to sign with souvenir shops, and among 7 or 8 billion people globally there are enough people who are interested in red socks.  In your own village, probably there aren’t enough.  You see it is an equalizer.  A girl in Africa can learn Estonian tax code and do bookkeeping in Estonia without ever coming to Europe.  This is what digital gives us.  It’s not killing jobs.  It’s creating jobs and it is making access to jobs radically easier, but for this I think our governments have the obligation to make sure that their people have at least this little thing, self-identifier.  How we get it global?  It’s possible but first everybody has to have them at home.

ANDERSON:  The President was saying that shortly after independence the policymakers decided that if we take the advice of IMF and everyone else to do what all the countries that have come before us have done, we’re going to always be in the position of catching up with the other countries.  And there was a very intentional focus on leapfrog technology and leapfrog public policy.  So I ask you today as the President of the first digital state, what is the next leapfrog that you’re focused on and where should we be looking for your next big moves?

PRESIDENT KALJULAID:  Actually the leapfrog we are now in the middle of is preventive medicine, and this started also at the turn of the century where Estonia created an Estonian genome law and we allowed people to have their genes tested for specific markers, state pays for it. And this data as well is kept safe, but in a, well, non-personalized format.  It can be used for scientific purposes and even for business purposes.  Globally, Iceland and Estonia have this kind of loss.  And we thought it would be necessary because we realized again that we can start the Estonian Genome Foundation with private money if we create this legal space.

Later on states will ruin the market and everybody will have to pay from their public purse for this.  And we thought there will be sooner the medicines which will only work with certain genetic patents.  Well, this has not yet happened, but we have hundreds of markers which inform people about their hereditary risks and this way people can stay healthy, which leads us to better preventive medicine.  Estonian healthcare system is ranked the most efficient globally.  Part of it is this pattern.  Part of it are the elements, but this is becoming I think the next big thing is preventive medicine and digital healthcare.  We need to educate our Web doctors and you know why?

I think also here, like in Estonia, when people get the cough or they have a pain somewhere, first thing they do is Google.  And nowadays they find a lot of silly, esoteric stuff on the Google.  Therefore, we cannot change the behavior of people’s various demands so we need to create properly educated web doctors, narrow AI, which will learn from cases it has gone through, which will learn from the information that they can get from Genome Foundation for example, and hence start informing people properly

Also in digital, it is the narrow AI.  As I said, people want the state now to be proactive. They don’t want to apply for services.  They want that the state offers these services all by itself. And they want the services globally.  We now understand we need to put our school online.   There has to be a computer game which will be called Estonian Primary School, Estonian Secondary School because then Estonian kids who live global in Europe because we have the free job market.  So we have to make sure the children can if they want study in Estonian language.  Also it would make regular school better because nowadays it’s less and less the function of a child’s age, what they know.  So teachers can supervise learning based on this computer program, but not teach a class because 9-year-olds for example in Estonia have very different command of English language.  Mostly they can speak, but their textbooks expect them not to be able to even read and make simple sentences.  They don’t know which the rude words are and they cannot write, but not what is in the textbook.  Same in math.  So the school system will have to radically change so that kids could be ready to be better people, and then this is the most important thing.  Computers are taking away from us the burden of really well tedious, boring tasks and then we can concentrate on being compassionate human beings.  I think this is the most important thing we need to teach our people now.

ANDERSON:  This is the most important thing and a terrific note to end on.  Please join me in thanking the President for being with us today.

OLIVER: We hope you enjoyed this episode of Follow the Data.

Many thanks to President Kaljulaid for joining us.

If you haven’t already, be sure to subscribe to Follow the Data podcast. This episode was produced by Electra Colevas and Christian Nwachukwu Jr., music by Mark Piro, special thanks to Tim Herro.

As our founder Mike Bloomberg says, if you can’t measure it, you can’t manage it. So until next time, keep following the data.

I’m Katherine Oliver, thanks for listening.

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