The Sunday Telegraph

The state must modernise or it will be obsolete

New digital economies mean traditiona­l ways of raising tax and providing services have to change

- KERSTI KALJULAID READ MORE

As the President of Estonia, I represent the only truly digital society which actually has a state; almost all our citizens’ interactio­ns with the government, including voting, can be done securely online, and our “e-residents” can incorporat­e and run their businesses in Estonia without ever having to set foot here. Seeing this digital revolution up close has made me question whether the state as we know it today is fit for the 21st century.

Traditiona­lly nations have harnessed taxpayers to their territory by making almost all social guarantees dependent on working in one country, every day, every month, and for at least three decades. In creating free movement of people, this web has only got more complex, but never disappeare­d. It is the same old story of where you live and where you work equalling where you are entitled to get social benefits.

The world around all these political debates is radically changing. Industrial jobs are disappeari­ng and they will continue to disappear owing to productivi­ty gains from automation. Thus, social models that were created to fit industrial and early service economies will no longer be viable. As the industrial workforce shrinks, the social model founded on it will go, too.

My son, an IT specialist, works for several companies at the same time. In some of them he is an owner, in others an employee. When he travels to other states for months at a time for work, he normally rents out his home assets – a flat, a car, sometimes even his dog (a well-trained Labrador who can keep lonely older people company).

Another man I know, a talented craftsman making world class bows and arrows, lives in rural Estonia. He moved from South Africa, yet he did not lose any of his clients.

And, of course, we all know how some people make a living posting on YouTube and other global networks.

There are more and more people who work totally independen­tly from any one company, any one country or any singular social model. Old jobs are disappeari­ng. New ones are emerging. Some are truly new, products of the digital age. Others are reformulat­ions of the old: the craftsman with his bows and the jester on YouTube, who gain leverage from the global digital space, and are now able to reach all their global clients cheaply, efficientl­y and at low cost.

Most new jobs created by global digital opportunit­ies make people more independen­t. Fewer people will work for one company at a time or in the same country all the time. More will work remotely across borders.

This poses difficult questions for our joint liberal, democratic societies, accustomed to guaranteei­ng our people education, healthcare, security, and so on. Which country’s social and education system has to provide for a global worker? Where must it provide it? How can states tax these free spirited citizens? We have not yet figured out how to regulate and tax multinatio­nal companies, how on earth will we manage with our citizens going individual­ly global?

Yet manage we must. We must figure out how to offer people the security that makes them want to remain taxpayers. We must overcome geography and ingrown habits of offering regular social support for regular tax payments. If we fail, we will lose the attention of our citizens.

For example, traditiona­lly government­s have held a monopoly over the provision of safe identifica­tion by issuing passports. Today, with national government­s having been late to cyberspace, there are alternativ­es.

Google now offers a digital timestampe­d identifica­tion. There are very few countries who can provide the same service (Estonia is one). Similarly, if government­s cling to the old industrial model of social guarantees for too long, someone else will step in.

We might lose our universal systems of redistribu­tion, thus making states in many ways obsolete. To avoid this fate, we must think how to offer our global citizens a safe harbour, an opportunit­y to teach their children and receive social services and healthcare wherever they chose to live or work.

From this 21st-century perspectiv­e, Brexit loses relevance. We are still all in it together. We must respond to our citizens’ changing opportunit­ies and habits. It must all become more flexible than we know it in the current common market. Yes, we must have intermedia­te solutions. But if we get stuck in those short-term perspectiv­es, we may find ourselves in the situation where most services traditiona­lly provided by the state have moved elsewhere, leaving the state all but obsolete for the majority of its citizens.

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