Red tape and bureaucratic nonsense are staples of American government, whether in small towns, major metropolises, or the federal level. According to the U.S. Chamber of Commerce, federal red tape alone costs the public 11.6 billion hours annually. That amounts to nearly 35 hours per citizen yearly, translating to a staggering $117 billion or 0.6% of GDP, drained not by inefficiency but by outdated systems. In contrast, the Estonia Digital Government Model offers a powerful example of how to eliminate bureaucracy and deliver efficient, AI-powered public services.
Bureaucratic headaches in the U.S. have become as predictable as death and taxes. But what if there was a better way to solve this constant impediment to proper growth and progress that’s already working? I recently had the privilege of sitting down with Prime Minister Kristen Michal of Estonia, where we explored how his country has built one of the most advanced digital governments on the planet, which is nearly 100% digitized, citizen-first, and powered by AI.
Estonia’s model isn’t just a curiosity. It’s a potential playbook for how the United States could reimagine governance, slash inefficiencies, and unlock productivity at scale.
Estonia Becomes Fully Digital, Eliminating “Bureaucrazy”
Estonia’s Prime Minister Kristen Michals has ushered in a new era by creating a citizen-centric government, working to eliminate nearly all bureaucracy towards a goal of 100% digitalization of its government services. This push began in 2015-2016 with a project called Zero Bureaucracy. The group behind this were ministers and entrepreneurs who identified the obstacles of working with the Estonian government. Despite a stall in the early 2020s, the project has delivered. According to Prime Minister Michals, “Almost 100% of our services are online, and we already have more than 130 examples of usage of AI in public services. They are predictive, personalized, and proactive. Let’s say, for example, if a kid is born, after that, you will have everything online already, no physical forms and so on… And with everything else, it’s the same.”
Imagine never being handed a clipboard again when you enter the doctor’s office. They have all your info in their database, so you never have to repeat yourself. You only need to complete an online form when you have a significant change in insurance or medical condition.
Benefits to Business Owners
This model of filing and processing every form and application online and digitally is a windfall for business owners and entrepreneurs. The Prime Minister added that all business owners “take less time on bureaucracy and more time on their own enterprise, because we have this kind of real-time economic solution…(completely implemented by ’27), which will spare about $132 million for Estonian businesses on just filling the forms” and time savings.
This type of AI and digital implementation in the United States would make every business immediately more efficient. Contractors applying for permits, awaiting feedback, and scheduling follow-up will see lessened waits and lag time in completing projects. Entrepreneurs would see real savings when applying for business licenses, filing corporate taxes, managing payroll, and handling unemployment claims entirely digitally and in real time.
Estonia’s thriving AI ecosystem is already driving this transformation across global enterprises. Kaspar Korjus, CEO of Pactum AI, a leading Estonian AI company whose clients include Walmart, Maersk, and other Fortune 500 firms, explains: “Pactum AI Agents are transforming the operating models of global enterprises by inviting Agents to work alongside procurement professionals. While you read this article, your agents negotiated with your suppliers and generated hard savings for you across your supplier base. Agents have time to give a chance to every supplier, no matter how strategic or transactional one is. In many ways, we see that we will transcend the limits of humans, and thus we learn to become better humans ourselves.”
Education and Future-proofing the Population
Estonia has focused on adopting a curriculum to keep up with rapid AI advancements while fostering critical thinking and creativity. Kristina Kallas, Minister of Education and Research for Estonia said, “Estonia’s economic competitiveness depends on how well we can prepare young people for the age of artificial intelligence.” This type of long-term thinking and governmental dedication is the type of action that sets up Estonia for decades of success. In the United States, we are sometimes shackled to election cycles and the short-sightedness of politicians who care first and foremost about being re-elected.
I asked the Prime Minister how these successes could be modeled in the United States, and how this could be exported or shared internationally with other countries?
“By 2027, one-third of our teachers and students will be learning and using AI tools. If you use AI tools smarter than anybody else, you will probably be a winner…Usually, success stories can be exported. If we are successful in the things we do, … we’ll have one-third of our students and teachers using AI tools. And if we succeed in doing that, our example will probably be used worldwide.”
But AI still must be introduced and taught as a tool, not anymore. It is not the end-all be-all to knowledge, replacing education. The ability to think, reason, and problem solve is still a core competency in Estonia’s educational system.
“Let’s say, AI provides all the answers, keeping a critical mind in today’s world … is very tough. But it comes from the school curriculum that you should always question facts and use the facts, not just read the headlines and the answers given…This kind of AI lead we’re giving to our educators, students and so on, and also using this in businesses and with research and development, will help a lot.”
Jevgeni Kabanov, President at Bolt is bullish on the nation’s ability to create strong mutually beneficial partnerships between the government and private business to further education. Kabanov said that “Estonia continues to lead by example by showing how public-private partnerships can facilitate the adoption of new technologies. This has been highlighted most recently by TI-Hüpe (AI-Leap), an educational program which will provide Estonian school students and teachers with free access to AI learning applications.”
Employment and Jobs
One of the most significant worries globally with AI is how it will affect the labor market. Frightening statistics state that AI will replace 9.1% of jobs worldwide, but on the other side of that coin, 83% of employers state that a worker who has skills using AI will be retained.
Estonia’s approach to this coming global change has been to invest in its population via upskilling. In 2023, the government earmarked over $10 million (9 million Euros) to advance knowledge and skills in the production, engineering, technology, and IT sectors.
“The only way is to work smarter, not in quantity, but in quality. And AI is helping in that… Estonia’s economy was in decline for two years. Right now, it’s starting to grow, and growth is also predicted for the next years,” the prime minister added.
The ability to leverage AI and use it to help work smarter and more efficiently is the direction Estonia is directing its workforce. “Future jobs won’t be taken by artificial intelligence, but by people who know how to use it better,” said Linnar Viik, AI Leap initiator, Estonian technology expert, entrepreneur, and one of the key architects behind Estonia’s digital society. This is a success and a message the United States should look to mirror and apply nationwide, get the workforce to understand the plethora of opportunities AI can provide them as they build a career and life.
“I see AI as a way to increase productivity per person. That is probably the only way for Estonia to go up in the global value chain and pass some countries on the way,” is the Prime Minister’s take on this subject.
Potential Drawbacks and Obstacles
Potential pitfalls when digitizing any part of a business or government include threats from foreign bad actors, data breaches, and a lack of computational power. Only 42% of Estonians believe the EU effectively protects their digital rights. Add to that the fact that only 76.9% of homes in Estonia have very high-capacity network (VHCN) coverage, which is below the overall EU average of nearly 79% and you can see that despite all of the impressive work that has been done, there is still more to do in terms of trust and infrastructure.
The government’s plan is not to go alone but to develop a strong public-private partnership.
Prime Minister Kristen Michal said, “For us, we know that we as a state, have a good partner in the private sector, which is helping us and also giving critical feedback; what is needed, what can be done better, and so on.” He went on to add, “We have every day to be wary of Russian and different players attacking… one would imagine that during the Ukraine aggression from Russia’s side, that the attacks against European countries and also on Estonia would go down. But no, they have gone up.”
The Estonian government demands and requires all public officials and employees to use only authorized devices on secure networks. This diligence can also be exported to the United States. All levels of government should mandate that all communications occur only on secured devices, networks, and via secure and approved applications.
Despite its digital leadership, Estonia is not without economic hurdles. Estonia’s GDP only grew by only 1.2% in Q4 of 2024. This was driven by 3.5% inflation, falling exports, and wage pressure. They are forecasted to recover, but it will be a slow process. The government must make difficult financial decisions around increased military spending due to the Russian attack on Ukraine, plus public debt and the need to reform their tax code, designed in the early 1990s, which led to income inequality. The economy overall has a high dependence on foreign trade, which can cause uncertainty due to regional tensions.
Global Partnerships on Your Terms
In the US, a group of tech companies called the Magnificent Seven dominates the industry. In Estonia, they collaborate with technology giants such as OpenAI and Anthropic, and others. Estonia has dedicated itself to balancing innovation while maintaining national sovereignty and data security. When asked the Prime Minister how they do this, his answer was simple and profound.
“To make it very simple, it means that we work with global AI leaders, but that’s as much as possible on our own terms…That means that data stays protected, and local as much as possible. We built custom tools for Estonia; the AI is also responsible and transparent by design. As much as possible, everything is in that world. So, sovereign (AI) does not mean isolation, but it means working on your own terms. And as you can probably imagine, as we know the technology, we also know the threats.”
Not being tied to any tech company or group of companies can also be mirrored. Relying too much on one leaves you vulnerable and at their mercy. The government must set the terms, and always keep options and avenues open to negotiate or leave when they feel it is needed for the safety and benefit of the nation. To quote Honorable Alar Karis, the President of Estonia, “We won’t use artificial intelligence the most, but we’ll use it the smartest.”
Estonia proves that government can be fast, efficient, and citizen-first with vision, leadership, and the proper digital infrastructure. The Estonia Digital Government Model is not just a success story—it’s a roadmap. The U.S. doesn’t lack the talent or technology, but it lacks the will to act. It’s time to move from red tape to real-time, before we fall too far behind.