Tottering on the Brink Jayati Ghosh

What is it with women and high heeled shoes? Such shoes are known to be uncomfortable, unhealthy and even dangerous for those wearing them. Not only do they force the wearer’s feet and body into unnatural positions, they are hard to stand or walk around in for any extended time, and prolonged use can lead to damage of internal reproductive organs. Despite what appear to be these rather obvious drawbacks, they still dominate in high-fashion female footwear – to the point where the higher the heels, the more expensive and fashionable the shoes are likely to be. They remain popular and may even have become more so among women across the world, who want to be thought sexy and abreast of the latest trends.

In fact, they seem to be excessively popular in the most unlikely surroundings. On the streets of the charming Old City in Tallinn, Estonia (which is a UNESCO World Heritage site as the largest still-preserved Hanseatic urban centre), walking can be a complicated activity at the best of times, despite the delightful views and appealing historic architecture. This is because most of the streets are still paved with cobblestones dating in some places to as long ago as the 13th century, in other places more ”recent” – that is, as late as the 17th century. The stones are naturally uneven and irregular but still highly polished due to constant use.

In spring and summer these cobblestoned streets are at least clear, if often wet – but for around five months of the year, snow and ice make them particularly treacherous for navigation. So even with the most sensible made-for-walking sort of shoes, pedestrians have to be careful to avoid slipping or turning ankles on the uneven surfaces. But even on these difficult streets, it is a common sight to see gorgeous young Estonian women walking implausibly briskly along in footwear of the most extravagant heel length imaginable.

So there are women wearing all sorts of different clothing, from miniskirts to casual jeans to elaborate evening wear, but with very high stiletto heels. These very scary high heels in turn come on all sorts of shoes: not just dressy shoes for the night out, but sandals and even apparently casual shoes that look like sneakers or sport shoes in front but have crazy high heels at the back. For those who enjoy sitting at roadside cafes and watching the world go by, this can even make it hard to raise the eyes above the knees: so varied, fascinating and downright incredible are the shoes worn especially by younger women.

It is observed by some locals that this tendency reflects the subtle but still pervasive patriarchy that characterises gender relations in Estonia. Corporate clothing retailers, for example, have very different marketing strategies and choice of garments for women in Estonia than for their counterparts in neighbouring Finland and Sweden: in Estonia the focus is much more on selling sexy, revealing clothing that demands in turn that the women have to be fitter. Some young women note the social pressure to achieve perfect bodies and look attractive at all times, which is possibly more marked here than in most other European countries.

This is more than just a cultural or even sociological phenomenon. In fact, the extravagantly high shoes so beloved of young women in Estonia could serve as metaphor for the Estonian economy, and by extension, the broader European economy: in the throes of self-inflicted pain in the hope of preserving a certain self-image and attracting others, and relying on possibly the wrong indicators of success to achieve self-esteem.

Most mainstream analysts would immediately challenge such an assessment. Estonia was one of the more developed regions of the former Soviet Union, the home of the electronic engineering and early ”knowledge-based” industries. That tradition has continued to some extent in the post-Soviet era: for instance, Estonia is the home of ”Skype”, which was developed in Tallinn, and is currently promoting not just software development but biomedical innovation as means of riding the ladder of economic success within a broad macroeconomic policy that puts the entire responsibility for growth on private activity.

There are limitations of such a strategy. For example, Rainer Kattel and other researchers at the Tallinn University of Technology have argued that these policies have been a double-edged sword: on the one hand enabling fast and furious industrial restructuring while, on the other hand, locking Estonia and similar East European economies into economic activities with low value added and low productivity growth and thus undermining future sustainable growth.

The painful industrial restructuring that has occurred may be one of the reasons why Estonia is cited as one of the economic ”success stories” of the European periphery. The other is in terms of the macroeconomic policies that have ”delivered” in terms of cutting government fiscal deficits. Estonia is a Baltic country that went through the hoops of very deflationary macroeconomic policies for several years for the privilege of joining the eurozone, a goal that was achieved early this year. Deficits were cut by sharply reducing public spending even as corporate tax rates have been at zero for almost a decade.

The ratio of Estonian public debt to GDP was always very low, even as low as 3.7 per cent of GDP in 2007. Because of severe fiscal austerity, even during the crisis it did not increase much, and is still less than 8 per cent of GDP. The tight control on spending has kept fiscal deficits very low and budgets almost in balance. This is seen as a huge success by the government and is widely touted even in the rest of Europe as the example of how following stringent austerity policies can work for a small open European economy.

In fact, all this apparent success has been achieved at the cost of significant (and potentially increasing) material pain for the bulk of the population. The budget cuts affected public services, further increased unemployment and hit poorer sections hardest. GDP fell by 15 per cent in 2009 and is still well below the levels witnessed before the financial crisis. In fact, current estimates suggest that the economy is unlikely to reach the 2007 level of GDP before 2014 – in other words, a seven year period.

So employment indicators are bad and worsening. Unemployment is currently hovering around 15 per cent of the labour force, and the rate is closer to 20 per cent for youth. New jobs created tend to be more fragile, insecure and low paying. There has been a steady and continuous erosion of real wages.

This happened first through labour market ”flexibility” measures that allowed employers simply to announce that certain jobs were now ”90 per cent” or even ”80 per cent” of the previous work, even though the work done did not actually change and sometimes even increased. It is happening now through the mechanism of inflation (currently just above 5 per cent annual rate), which is undermining the living standards of workers in a slow but effective manner, even as nominal wages are stagnant or falling. This has contributed to an increase in household debt, as households borrow to try and sustain their living standards, forcing a private imbalance instead of a public one.

This ”internal devaluation” has contributed to the falling product wage, which is the only means of making the economy more competitive with fixed exchange rates and now within the eurozone. As in the currently troubled peripheral economies of Europe like Greece, Ireland and Portugal, it was expected that exports would make up for the shortfall in domestic demand, but this has simply not happened.

In fact, exports fell in 2009, and in 2010 have only managed to get back to their 2008 level because of increased demand coming from industries in Sweden and Finland that use the output of Estonian electricity generation and electronic engineering industries. These are not particularly large employment generators, so employment in export industries has not gone up even though exports have recently shown an upward trend.

The high unemployment and erosion of living standards of the population that still has paid jobs are not immediately visible in the centre of Tallinn. Here, the unequal pattern of recent growth has meant that the city centre (including the historic old town) remains a scene of bustling activity. Economic degradation is more evident in smaller towns and is also disproportionately concentrated among the Russian minority, whose members tend to be much poorer on average than native Estonians.

It is also not that this economic strategy has reached the end of its possible road. Indeed, with other peripheral economies facing so many problems, it is quite possible (and maybe even likely) that Estonia’s fiscal indicators will render it once again an attractive destination for European finance capital. This could then create yet another property cum finance bubble in the private sector, which would generate rapid GDP growth (but not necessarily too much employment) for a few years before the bubble then bursts.

This is a strategy that is based on the belief that increases in inequality will be accepted for quite some more time among a population that has been rendered more passive and quiescent by its history and current socio-political proclivities. So, just like the young women in high heels stepping in determined if precarious fashion along Tallinn’s cobblestoned streets, the Estonian economy too may proceed in a way that chooses self-inflicted pain to be rewarded by external approbation.

(This article was originally published in the Frontline Volume 28 Issue 12, June 04-17, 2011. )