As seen in recent protests against globalization, the idea that free markets naturally lead to poverty, sickness, and environmental degradation still has a significant hold on the minds of many. A necessary corrective is the latest edition of James Gwartney and Robert Lawson’s Economic Freedom in the World, which rates and ranks 123 of the world’s nations based on the extent to which their economies are burdened with public spending, taxation, and regulation. It turns out that the United States is only number three--both Hong Kong and Singapore have more economic freedom than we do.
However, what is most interesting about Economic Freedom in the World is that Gwartney and Lawson go on to demonstrate how indices of economic freedom track with the sorts of things that we like to see in a country--wealth, health, literacy, environmental concern, etc. Contrary to the claims of the modern Left, there is more of each of these in countries with high level of economic freedom. Moreover, while economic freedom seems to have little impact on poverty--the poorest 10% of the population tends to garner roughly the same percentage of national income whether the country be socialist or free-market--there is no denying that the poor are better off in absolute terms in countries with a high degree of economic freedom. In the nations with the most rigidly controlled economies, average income of the poorest 10% runs just over $700 US. However, in the most market-oriented countries the figure is more like $7000 US.
The conclusion? If you want to fight poverty, illiteracy, disease, environmental degradation, etc., stop lobbying for higher taxes and more regulations and let the market work!
For more information on Economic Freedom in the World, visit Robert Lawson’s home page: https://capital2.capital.edu/faculty/rlawson/pubs/