Thursday, January 06, 2005

Alas, Poor Murka: No Longer Free

That's a little bit exaggerated. In reality, the United States dropped from the top ten countries in this year's Index of Economic Freedom. This index is the creation of the conservative Heritage Foundation which defines "economic freedom" as follows:

Economic freedom is the measure of the roadblocks governments put in place that prevent their citizens from achieving success. Not surprisingly, countries with the greatest economic freedom enjoy strong economic growth. Unfree countries, conversely, do not.

And what, exactly, might these roadblocks be? The index measures them by using fifty empirical variables from these ten groups:

Trade policy,
Fiscal burden of government,
Government intervention in the economy,
Monetary policy,
Capital flows and foreign investment,
Banking and finance,
Wages and prices,
Property rights,
Informal market activity.

Most of these classes cover the activities of the government as expected. The Heritage Foundation definition of economic freedom appears to be a country in which the government has no say in how business behaves, in which the property rights of capital owners are strongly enforced and in which wages are allowed to be low and prices high. Environmental regulation would be seen as a bad thing, and so would any laws guaranteeing safety and health at the workplace.

No wonder, then, that Hong Kong and Singapore are the top two countries in freedom.
Even Chile beats the United States in this definition of "economic freedom". For this is only one of many ways one might define economic freedom, and despite the aura of legitimacy given to the Freedom Index by its fifty variables, it would be perfectly feasible to construct completely different indexes by using a different set of fifty variables.

It's worth returning momentarily to the Heritage Foundation's definition of economic freedom:

Economic freedom is the measure of the roadblocks governments put in place that prevent their citizens from achieving success.

Such a clever piece of framing! The wingnuts are the masters of framing, I must admit. Note how the use of "roadblocks" gives the government activity a very negative label: no-one wants to be stopped by roadblocks or interrogated by police officers. And note how these roadblocks are the fault of government, something put in place purely to harass the poor citizens. There is no explanation of the reasons for laws that try to reduce pollution or maintain a minimum wage level. They are just put there as roadblocks. And finally, note how "their citizens" gives the impression that all citizens would be the beneficiaries if only the government stopped obstructing everything so much. Even those citizens whose wages will be low in the state of economic freedom, or those who are paying high prices for this freedom. In reality, there are winners and losers in this game, and the way the Heritage Foundation defines economic freedom would make most of us into losers.