Posted on Saturday, November 2, 2024
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by Outside Contributor
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1 Comments
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The ability to choose your job, start a business, own property or decide how to spend your paycheck may seem natural to most Americans. Yet for billions around the world, the most basic economic freedoms remain out of reach. The latest Economic Freedom of the World index, just released by the Fraser Institute, reminds us why freedom matters for everyone, whether you’re a factory worker in Michigan, a tech entrepreneur in Austin, or a farmer in Niger.
Economic freedom isn’t just some wonky concept debated in academic halls. It’s about whether a government protects property rights or seizes assets at will; whether regulations are sensible or suffocating; whether you can trade freely or face a maze of obstructions; whether your money holds its value or your purchasing power gets eroded by government mismanagement; and whether you can count on courts to enforce contracts fairly.
The 2024 index, using the latest available data from 2022, measures precisely these factors across 165 countries, as it has done since 1996. The results are striking.
The freest economies enjoy an average GDP per capita about 7.6 times greater than that of the 25% least economically free places. They have cleaner environments, better health care outcomes, and longer life expectancies – by a lot. Even the poorest citizens of free countries fare better than the middle classes in economically repressive nations.
Who are these lucky countries? “Hong Kong (1st), Singapore (2nd), Switzerland (3rd), New Zealand (4th), the United States (5th), Denmark and Ireland (tied for 6th), Canada (8th), and Australia and Luxembourg (tied for 9th).” It shouldn’t be lost on my readers that Denmark, which Sen. Bernie Sanders (D-Vt.) often uses as an example of a socialist democratic regime, has far more in common with the United States than with a truly socialist country.
Speaking of socialist-like countries, the 10 least free are Yemen, Libya, Iran, Argentina, Myanmar, Algeria, Syrian Arab Republic, Sudan, Zimbabwe and Venezuela.
This isn’t just about numbers. When Venezuela dismantled economic freedoms and became a socialist country through nationalizations, price controls, currency controls, and business and trade restrictions, it also went from being one of South America’s richest countries to one that millions of citizens fled due to its poverty. Meanwhile, Botswana embraced economic freedom and transformed from one of Africa’s poorest nations into a middle-income success story.
That’s why economic freedom isn’t chiefly about profits; it’s about prosperity for ordinary people. The report reminds us why we shouldn’t wish economic oppression on our worst enemies. For example, inhabitants of the 25% least economically free countries experience infant mortality rates nine times greater than those who live in the freest 25%. Extreme poverty is 30 times likelier. Child labor is routine, as is illiteracy, especially among girls.
The consequences reach far beyond stock markets or GDP figures. Sadly, this year’s report reveals the continuation of a troubling trend. After decades of expanding economic freedom that lifted over 1 billion people out of poverty, we’re now witnessing a global retreat. Global economic freedom is in decline for the third consecutive year.
Even traditionally free economies like the United States are slipping, with increased government spending, heavier regulatory burdens and higher trade restrictions. In addition, COVID-19 lockdowns and other pandemic-era government tyrannies are showing their ugly faces in the data.
The stakes are exceptionally high. We face global challenges with the rise of right-wing authoritarian regimes hostile to immigration and other aspects of economic freedom. Even in the United States, economic freedom isn’t on the ballot in an especially clear way. Both Vice President Kamala Harris and former President Donald Trump are eager to deploy and expand the government into many economic areas of our lives. We Americans must therefore choose a candidate along different margins.
Nevertheless, we can insist that more future candidates embrace economic freedom as a core value. History shows that economically free societies are more resilient and adaptable. They respond to challenges through decentralized problem-solving rather than central planning, unleashing the creative potential of millions rather than relying on the blindered purview of a few regulators.
To regain America’s leadership position, we must also address the areas where we’re falling behind. This means trimming back our out-of-control regulatory system, reforming a tax code that punishes work, investment and innovation, and resisting the temptation to solve every problem with more government intervention.
Let’s remember that economic freedom isn’t about abstract ideology – it’s about real people enduring the consequences of real choices made by government officials about their lives. The index doesn’t just measure economic statistics; it measures human potential, and that’s something worth protecting.
Veronique de Rugy is the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University.
Reprinted with Permission from CFIF.org – By Veronique de Rugy
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
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