Economic Freedom Rankings - Heritage / Wall Street Journal

[vanguard96]

2017 rankings from Heritage Foundation in conjunction with the Wall Street Journal

http://www.heritage.org/index/ranking

Once again Hong Kong leads the list with Singapore, New Zealand, Switzerland, and Australia the top 5 and the ones considered "Free"

Estonia, Canada, UAE, Ireland, and Chile round out the top 10 at the head of the Mostly Free Category

UK (12), USA (17) S Korea (23), Germany (26) rank in the same category along with most of Northern Europe and a few surprises like Botswana.

The moderately free category includes Japan (40), Spain (69), Mexico (70), Portugal (77), Italy (79), Indonesia (84) as well as a good deal of East Asian and Middle Eastern countries.

African, Asian and Latin American countries take up a lot of the Mostly Unfree category with Russia (114), Nigeria (115), Brazil (140), India (143), Argentina (156)

The repressed category includes the usual suspects North Korea (180), Venezuela (179), Cuba (178) DR Congo (177), Angola (165), Haiti (159)

It has a few cool features like the heatmap for various subcategories such as property rights, government integrity, labor freedom, business freedom, etc.

Some liberals may blanche at the agency reporting it (as a conservative free market think tank) but the data goes back to 1995 and it is very interactive and informative and some underlying assumptions can be undermined by this such as the direction certain countries are heading in with regard to say labor freedom, government integrity, and other factors that people even those who openly disdain 'free markets' can get behind from a human rights perspective.

Example you can see that the US got surpassed by Canada in 2009 - likely due to US regulations following the economic crash. Or Canada's labor freedom dropping out of the top category in just the past two years.

The maps can show the change over time too - for instance Russia's business and labor freedom over time is interesting to track.

They have a new category for this year - judicial effectiveness. I am curious to how it correlates to 'rule of law' rankings in other indices.

This category judges:
Judicial independence
Quality of the judicial process
Likelihood of obtaining favorable judicial decisions

Definitely there would be some correlation even with those that do not focus on economic freedom.

https://en.wikipedia.org/wiki/List_of_freedom_indices
Cross reference here shows only New Zealand and Switzerland are in the top categories for Freedom of the World, Economic Freedom, and Press Freedom. 10 European countries satisfy two categories - Freedom of the World and Press Freedom. Australia for Freedom of the World and Economic.

Hong Kong and Singapore in the top category here show as partly free in the Freedom House index. The Fraser Institute notes that in the lower democracy & media scores for Hong Kong. And Singapore with personal freedom scores poorly in religious freedom, movement and same-sex relationship freedom moving their overall score down to 40th overall.

Bahrain, Qatar and UAE are the only countries scoring mostly free in economic freedom that do not exhibit at least a partially free rating on the Freedom House scale. We all know about that as the Arab countries have encouraged business investment and financial markets in their area to attract money as they realize just having oil is not enough but refuse to relinquish autocratic controls on individual / human rights such as women's and LGBTQ, religion, assembly, and press.

[Matty]

Wouldn't most of Africa be towards the top considering how dysfunctional and non-intrusive the governments tend to be there?

[vanguard96]

Wouldn't most of Africa be towards the top considering how dysfunctional and non-intrusive the governments tend to be there?

No. Not by any stretch.

Rule by strongman usually means bribes, no freedom to start a company even if you had the money if you weren't connected to the ruling party or ethnic group. Angola & Zimbabwe have repressive socialist dictators Dos Santos and Mugabe.

I suggest you look at the categories deeper.

From Foundation of Economic Education article by a South African writer Stacy Ndlovu titled
Why Africa Should Worry Less About Income Inequality :
"Moreover, to market skeptics, it starts to seem plausible that these benefits are unattainable because capitalism itself works against the poor. After all, extreme poverty, chronic unemployment, and misery persist all across Africa, including in countries with relatively free economies, like Botswana. Worse still, even in conflict-ridden South Sudan, foreign companies have reportedly made millions from dealing with South Sudanese generals while the general population suffers from man-made famine."

From the same article saying economic freedom is more important than income inequality:
"How many of them have tried to open a business, only to find out it takes more than 100 days to deal with the bureaucracy, including paying a bribe? How many of them have tried to be entrepreneurial, only to be forced out of business because NGOs, like Oxfam, provided certain products for free, effectively forcing them out of business?"

[The Self]

Your post strikes me as being apologetic  in the extreme of right-wing libertarianism, while deliberately neglecting the possibility of a transformative left-libertarianism. We need less Cato and more Center For A Stateless Society.

[Kingpoleon]

Your post strikes me as being apologetic  in the extreme of right-wing libertarianism, while deliberately neglecting the possibility of a transformative left-libertarianism. We need less Cato and more Center For A Stateless Society.

Don't confuse left-libertarianism with borderline crypto-anarchism.

[136or142]

Some liberals may blanche at the agency reporting it (as a conservative free market think tank) but the data goes back to 1995 and it is very interactive and informative and some underlying assumptions can be undermined by this such as the direction certain countries are heading in with regard to say labor freedom, government integrity, and other factors that people even those who openly disdain 'free markets' can get behind from a human rights perspective.

Example you can see that the US got surpassed by Canada in 2009 - likely due to US regulations following the economic crash. Or Canada's labor freedom dropping out of the top category in just the past two years.

I see no evidence though that these ratings correlate in any way to predicting which nations will have stronger future GDP.  Given the measures, I have no doubt that these rankings correlate very strongly with which nations will have growing wealth inequality.

Anytime an organization uses a loaded term like 'freedom' except in that terms' original meaning/context that should tell you that the organization's work is for propaganda purposes and not for governance purposes.

[The Self]

Your post strikes me as being apologetic  in the extreme of right-wing libertarianism, while deliberately neglecting the possibility of a transformative left-libertarianism. We need less Cato and more Center For A Stateless Society.

Don't confuse left-libertarianism with borderline crypto-anarchism.

Perhaps you (and others) ought to do more to facilitate left-libertarianism, then.

[vanguard96]

Your post strikes me as being apologetic  in the extreme of right-wing libertarianism, while deliberately neglecting the possibility of a transformative left-libertarianism. We need less Cato and more Center For A Stateless Society.

I don't think rejecting capitalism & private property has been very constructive. So left libertarianism has certain authoritarian aspects to it which I don't agree with largely. Some extremely voluntary exchange types have a point in a small mutually agreed society but seem to not acknowledge how the world is on a whole including what happens when inequality results 

[vanguard96]

Some liberals may blanche at the agency reporting it (as a conservative free market think tank) but the data goes back to 1995 and it is very interactive and informative and some underlying assumptions can be undermined by this such as the direction certain countries are heading in with regard to say labor freedom, government integrity, and other factors that people even those who openly disdain 'free markets' can get behind from a human rights perspective.

Example you can see that the US got surpassed by Canada in 2009 - likely due to US regulations following the economic crash. Or Canada's labor freedom dropping out of the top category in just the past two years.

I see no evidence though that these ratings correlate in any way to predicting which nations will have stronger future GDP.  Given the measures, I have no doubt that these rankings correlate very strongly with which nations will have growing wealth inequality.

Anytime an organization uses a loaded term like 'freedom' except in that terms' original meaning/context that should tell you that the organization's work is for propaganda purposes and not for governance purposes.

GDP is a rather inaccurate barometer.

I prefer the Fraser Institute's Human Freedom Index which combines Personal Freedom with Economic Freedom. The one I mentioned was from 2017. Frankly, without ability to have freedom to change jobs, freedom to start a company, etc then one is in a position of depending on the whims of the locality and how its civil rights conditions are. For all the complaints of bias though if you actually look at the rankings you can see that economic freedom can be achieved while maintaining civil liberties and there is a correlation between the two as the Fraser one shows.

[Murica!]

Your post strikes me as being apologetic  in the extreme of right-wing libertarianism, while deliberately neglecting the possibility of a transformative left-libertarianism. We need less Cato and more Center For A Stateless Society.

Don't confuse left-libertarianism with borderline crypto-anarchism.

Stop

[136or142]

Some liberals may blanche at the agency reporting it (as a conservative free market think tank) but the data goes back to 1995 and it is very interactive and informative and some underlying assumptions can be undermined by this such as the direction certain countries are heading in with regard to say labor freedom, government integrity, and other factors that people even those who openly disdain 'free markets' can get behind from a human rights perspective.

Example you can see that the US got surpassed by Canada in 2009 - likely due to US regulations following the economic crash. Or Canada's labor freedom dropping out of the top category in just the past two years.

I see no evidence though that these ratings correlate in any way to predicting which nations will have stronger future GDP.  Given the measures, I have no doubt that these rankings correlate very strongly with which nations will have growing wealth inequality.

Anytime an organization uses a loaded term like 'freedom' except in that terms' original meaning/context that should tell you that the organization's work is for propaganda purposes and not for governance purposes.

GDP is a rather inaccurate barometer.

I prefer the Fraser Institute's Human Freedom Index which combines Personal Freedom with Economic Freedom. The one I mentioned was from 2017. Frankly, without ability to have freedom to change jobs, freedom to start a company, etc then one is in a position of depending on the whims of the locality and how its civil rights conditions are. For all the complaints of bias though if you actually look at the rankings you can see that economic freedom can be achieved while maintaining civil liberties and there is a correlation between the two as the Fraser one shows.

If that was all there was to it, that would be fine, but looking at the Heritage Foundation website it includes 'property rights' which generally means 'no regulations on developers', 'tax burden' which generally means 'low taxes on the rich'  and 'labor freedom' which means 'no unions.'

I think it's pretty clear that what these rankings really favor are countries that have policies that lead to increasing economic inequality.  Again, I haven't and I don't know if anybody has done a comparison of nations that receive high rankings from the Heritage Foundation or the Fraser Institute, but I would certainly expect a very high correlation not with increasing median wealth in those countries but with increasing income and economic inequality.

Of course, if your values are that the rich deserve to be rich and that the poor deserve to be poor, then you are perfectly welcome to take these rankings from the Fraser Institute and the Heritage Foundation seriously, but I think we should all understand what these rankings are most likely really measuring.

[buritobr]

Heritage ranking is a bad ranking. The richest countries are the top countries in the countries because the ranking doesn't measure how free are the economies. They measure how developed are the economies.

[vanguard96]

Heritage ranking is a bad ranking. The richest countries are the top countries in the countries because the ranking doesn't measure how free are the economies. They measure how developed are the economies.

Not entirely true. For instance Chile is not richer than France for instance. But it is easier (though reportedly worsening under Socialist rule the last couple years) in many respects there for business & personal consumers - look at their methodology first.

Over a long enough period you can see how Venezuela has foundered its natural resource situation and the measures over time are interesting.

They measure based on other global rankings from OECD, World Bank, GDP data, etc - widely shared data.

Example property rights --

You must be logged in to read this quote.

At the end of the day its all in the FAQ on their site and many countries in the top 10 have a considerable social welfare apparatus such as NZ, Canada, and Australia. Swiss power is at the canton level but they are open for business as they say. The US on the other hand seems to be falling particularly on the Fraser Institute's combined rankings.

To me the achievement of improving abject poverty numbers by over 50% since 1980 thanks considerably  to increased economic freedom in the developing world has been amazing. 

That is of course lost in the inequality talk.

[136or142]

Heritage ranking is a bad ranking. The richest countries are the top countries in the countries because the ranking doesn't measure how free are the economies. They measure how developed are the economies.

Not entirely true. For instance Chile is not richer than France for instance. But it is easier (though reportedly worsening under Socialist rule the last couple years) in many respects there for business & personal consumers - look at their methodology first.

Over a long enough period you can see how Venezuela has foundered its natural resource situation and the measures over time are interesting.

They measure based on other global rankings from OECD, World Bank, GDP data, etc - widely shared data.

Example property rights --

You must be logged in to read this quote.

At the end of the day its all in the FAQ on their site and many countries in the top 10 have a considerable social welfare apparatus such as NZ, Canada, and Australia. Swiss power is at the canton level but they are open for business as they say. The US on the other hand seems to be falling particularly on the Fraser Institute's combined rankings.

To me the achievement of improving abject poverty numbers by over 50% since 1980 thanks considerably  to increased economic freedom in the developing world has been amazing.  

That is of course lost in the inequality talk.

Leaving aside that I dispute the term 'economic freedom' the obvious mistake you're making is in claiming "if some 'economic freedom' is good, then more must be better."

The decline in abject poverty is, of course, mainly due to India and China opening up their economies and reducing the power of their bureaucracies and both would probably do well to open up even further, however, there comes a point where 'economic freedom' increases income inequality and leads to economic growth going to the 1% - or more likely 10% or so of the 1%.

This point, as I mentioned above, is when nations start to adopt pro 'economic freedom' policies that are anti union, anti consumer regulations, anti environment and that allow bankers to wildly speculate.

[vanguard96]

Heritage ranking is a bad ranking. The richest countries are the top countries in the countries because the ranking doesn't measure how free are the economies. They measure how developed are the economies.

Not entirely true. For instance Chile is not richer than France for instance. But it is easier (though reportedly worsening under Socialist rule the last couple years) in many respects there for business & personal consumers - look at their methodology first.

Over a long enough period you can see how Venezuela has foundered its natural resource situation and the measures over time are interesting.

They measure based on other global rankings from OECD, World Bank, GDP data, etc - widely shared data.

Example property rights --

You must be logged in to read this quote.

At the end of the day its all in the FAQ on their site and many countries in the top 10 have a considerable social welfare apparatus such as NZ, Canada, and Australia. Swiss power is at the canton level but they are open for business as they say. The US on the other hand seems to be falling particularly on the Fraser Institute's combined rankings.

To me the achievement of improving abject poverty numbers by over 50% since 1980 thanks considerably  to increased economic freedom in the developing world has been amazing.  

That is of course lost in the inequality talk.

Leaving aside that I dispute the term 'economic freedom' the obvious mistake you're making is in claiming "if some 'economic freedom' is good, then more must be better."

The decline in abject poverty is, of course, mainly due to India and China opening up their economies and reducing the power of their bureaucracies and both would probably do well to open up even further, however, there comes a point where 'economic freedom' increases income inequality and leads to economic growth going to the 1% - or more likely 10% or so of the 1%.

This point, as I mentioned above, is when nations start to adopt pro 'economic freedom' policies that are anti union, anti consumer regulations, anti environment and that allow bankers to wildly speculate.

Per these rankings less than half of the countries on the list are 'free' or 'mostly free'.

It's not simply about unions which as you know are only a small part of the economy even at the peak of industry in the mid 20th century they only represented about 20% of the population.

Many of the regulations in place are anti-consumer, pro-specific industry protections garnered through lobbying and connections - like certain industry tariffs for say steel or sugar or whatever that may protect the steel mills and sugar beet farmers but leads to higher prices for those who use the products such as auto makers and bakers. In the end the bakers and auto makers have a few options 1) raise prices 2) cut other costs 3) hire fewer workers.

So you can't just apply a broad brush as you seem to think - I am talking about places like Brazil, Greece, India, Russia and so forth where you can't easily have a business or have your financial assets protected from seizure - even the poorest people was affected in India by their recent demonetization of the two most commonly circulated bills in a heavy cash economy.

Also, as you can see Canada, Australia, Ireland, and New Zealand all have considerable welfare states, so this is saying economic freedom is not at odds with having a social safety net.

Finally, the argument of economic inequality - is I think a failed argument put forth by liberal and progressive economic idealists who view the world in fixed Marxian oppressor / oppressed dichotomy - talk of banning billionaires or having a very high redistribution above a certain level even though those in the lowest quartile of income are able to move out of this area over the course of their lives. If you do it too stringently it will lead to more off-shore hidden accounts, more currency flight, and fewer entrepreneurs deciding to do business in your country or region.

The inequality obsessives rarely look at things like average age of certain racial / ethnic groups, hours worked, degrees pursued, etc and thus even with the same starting point you will inevitably not reach the same outcomes. Likewise much of the data takes snapshots in time - not of the same people but just whoever is in a certain income quartile during that year even if they may have earned a lot or not so much in a particular year - a contractor or farmer would be a good example of this.

Certainly corruption remains a factor - however very often there is the idea that if 'we just get the right people in charge then everything will be fine'. Inevitably it is not and the rules put in place are influenced by those with connections  here and in many places - the larger corporations (Google, Boeing), large associations (example National Auto Dealers / National Realtors Association) large unions (AFL/CIO) and this gives those organizations a leg up on the rest of us consumers / small business / general public.