Eric Siegmund notes that the US is slipping in the rankings of world economic freedom. The US is currently #12 in the annual rankings of economic freedom compiled by the Heritage Foundation and The Wall Street Journal. The entire list can be found here.
It’s interesting to see how many European counties such as Ireland and the United Kingdom actually outperform the US in terms of economic freedom. Ireland in particular has been one of the biggest success stories in the EU, with a per-capita GDP that’s 122% of the EU average. In some ways, EU membership is a major economic boon for member countries — in order to join the EU, member states must make a commitment to fiscal discipline and free trade. However, the EU as a whole is not remotely competitive with the EU, and core EU states like France and Germany are only considered mostly free in the rankings.
Economic freedom is only one aspect of freedom and societal health, but it’s important that the United States continue to expand rather than contract economic freedom for its citizens. There is a direct link between economic freedom and wealth — free economies tend not to be poor and even poor economies can get better by promoting freedom — which is why the former Soviet republic of Estonia has a vibrant economy and competes handily with other EU nations while other former Soviet republics like Belarus and Georgia lag behind in both economic and political freedom.
A more holistic report on both economic and political freedoms would likely change the rankings dramatically — neither Singapore nor Hong Kong have the level of political freedom that the US has. However, when considering actions that would enact new barriers to trade or raise levels of taxation, it is important to remember that correlation between economic freedom and quality of life.
“There is a direct link between economic freedom and wealth.”
No argument. Unbridled free enterprise has produced insane fortunes for the likes of Andrew Carnegie, John D. Rockefeller and Ken Lay. Where the link is not so direct is between economic freedom and adequate wealth distribution. If this were not the case, every civilized nation of the world would not have turned its back on the economic policies embraced during the Industrial Revolution. Civilization necessitates the transition to a more equitable system, but it appears we’re on track for a serious rollback now. In America, we’ve already rolled back most of the Great Society and New Deal advances and Republicans are now setting their sights at rolling back the early gains of the Progressive Era, including Teddy Roosevelt’s anti-trust laws and Woodrow Wilson’s estate tax. Given that America has cut the top tax rate by nearly 70% and is generally moving full-throttle back to the McKinley-era, that’s an ominous sign for what the rest of the world is doing to remain 11 positions ahead of us in the realm of “economic freedom”.
Then again, looking at the list raises some serious questions about their methodology. It’s kind of curious to see Sweden right behind the United States at #13. Sweden is considered Old Europe’s most socialist country and has tax rates somewhere between 50 and 70% depending on the year. Just how are they measuring economic freedom for Sweden to rank 13th? Or for the UK to come in ahead of the US for that matter?
Unfortunately, political freedom in Western society is being eroded as economic freedom is revered and expanded, creating a perfect storm for working people that allows the political power brokers in government and the economic power brokers in corporations to virtually assure them of a declining standard of living. Ireland is a perfect example of this as it embraces failed Milton Friedman-esque economic dogma as the same time as it resembles police states like Singapore a little more every day. Beyond the well-documented tobacco prohibitions, Ireland is also pursuing oppressive laws on every conceivable health-and-wellness issue, slapping on restrictions on everything from eating high-fat foods to chewing gum in public.
It appears that China is the political and economic model of the globe’s future, with governments brokering financial freedom to expand and centrallize wealth while simultaneously reigning in the lifestyles of the other half just fighting to get by.
Wealth distribution isn’t relevant. So long as the standard of living is high, who cares if a few people get super rich? In fact, economically that should happen in a healthy society. Unless one wants to go the Harrison Bergeron route, there will always be inequalities in any economic system because not all people are equal.
That’s why in Sweden the concentration of wealth at the far end is so much higher than in the United States. The Ericsson family has far more control over Sweden’s economy than Bill Gates does because Bill Gates has to compete with Steve Jobs, Larry Ellison, et al.
Quality of life at all levels is tied to economic freedom. I would much rather be a poor American (which according to the government I nearly am) than a poor person in France or Germany, or even Sweden.
So long as the standard of living is high, who cares if a few people get super rich?
It’s not the super-rich that are the problem; it’s the super-poor.
I would much rather be a poor American
And I’d rather be able to get paid enough so that when the rent, health insurance, and grocery bills come in, I don’t have to decide which 2 of the three I’m going to pay this month.
And while we’re dreaming, I guess I’d like an iPod Mini.