10 most economically free countries

[Stoner]

Very interesting article.

Ranked by the Heritage Foundation and the Wall Street Journal.

The Heritage Foundation and the Wall Street Journal recently released their 13th annual Index of Economic Freedom, which identifies the variables that comprise economic freedom and analyzes the interaction of freedom with wealth. The Index measures 157 countries across 10 specific factors of economic freedom.

10. Canada

Canada’s economy is 78.7% free. A strong rule of law ensures property rights, a low level of corruption, and transparent application of the country’s admittedly thorough commercial code. However, as in many European democracies, government spending is high because Canada maintains elaborate social programs and a welfare state.

9. Switzerland

Switzerland’s economy is 79.1% free. Commercial operations are protected by the regulatory environment and aided by a flexible labor market. The national financial sector leads the world and is both protective of privacy and open to foreign institutions. But as in many other European social democracies, personal income taxes are high.

8. Luxembourg

Luxembourg’s economy is 79.3% free. The average tariff rate is low (though non-tariff barriers include EU subsidies), and business regulation is efficient. The financial sector is regarded as a global financial hub that maintains depositor secrecy. However, total government spending is more than two-fifths of GDP.

7. Ireland

Ireland’s economy is 81.3% free. Entrepreneurship is made easy by the light regulatory hand of government. Inflation is low, but Ireland’s monetary score suffers somewhat from distortionary EU agricultural subsidies. Property rights are well protected by an efficient, independent judiciary.

6. United Kingdom

The United Kingdom’s economy is 81.6% free. The average tariff rate is low, although the government does implement distortionary European Union agricultural tariffs. Support for private enterprise is a world model, and the financial sector is modern and a historic world hub. The judiciary should be the envy of the world.

5. New Zealand

New Zealand’s economy is 81.6% free. A globally competitive financial system based on market principles attracts many foreign banks, helped by low inflation and low tariff rates. A strong rule of law protects property rights, and New Zealand is the world’s second most corruption-free country.

4. United States

The economy of the United States is 82% free. The average tariff rate is low, although there are several non-tariff barriers. Financial markets are open to foreign competition and are the world’s most dynamic and modern. Corruption is low and the labor market is highly flexible.

3. Australia

Australia’s economy is 82.7% free. Its low inflation and low tariff rates buttress a globally competitive financial system. A strong rule of law protects property rights and tolerates virtually no corruption. Businesses enjoy considerable flexibility in licensing, regulation and employment practices.

2. Singapore

Singapore’s economy is 85.7% free. Virtually all commercial operations are performed with transparency and speed, and private enterprise has boomed. Inflation is low, and foreign investment is welcomed and given equal treatment. There are no tariffs. Singapore’s legal system is highly protective of private property.

1. Hong Kong

Hong Kong’s economy is 89.3% free. Income and corporate tax rates are extremely low. Business regulation is simple, and the labor market is highly flexible. Inflation is low, although the government distorts the prices of several staples. Investment in Hong Kong is wide open.


http://www.humanevents.com/article.php?id=19669

[Alonzo]

And what's the end result? Economic freedom is good when it benefits the citizens of that nation, bad when it doesn't. I've never considered economic freedom in and of itself a benefit.

[firefox]

Why not? That doesn't make sense to me. If you have a truly free market, both sides will benefit, assuming they have full knowledge of what's going on, and no one is being fraudulent. One scenario where I think you may be pointing to is where various states ratify "Free Trade Agreements" that are in name only. Instead, these often create or perpetuate subsidies or other unfair advantages to producers in one region while locking others out of the market, even if they could do the job better. The result would be a situation like in many places in the developing world where the "dominant" state's producers benefit at the expense of those in poor countries. Is this sort of what you were hinting at?

[Alonzo]

If you have a truly free market, both sides will benefit, assuming they have full knowledge of what's going on, and no one is being fraudulent.

Which society is like that? Also, even if it's legal and above board, the goal of corporations is to make money. Whether or not that benefits the society as a whole is irrelevent.

Look at the poverty rates in places like sweden, netherlands etc. and compare them with nations such as the u.k. and the u.s.

[Leopardpm]

No one on either side of a trade has 'perfect knowledge' and thus the whole reason for the trade in the first place! If both sides had equal knowledge, then both would value the item in question the same and not be willing to trade it. There is nothing wrong with one side having different knowledge than the other, trade is one method that knowledge gets transferred through the pricing system.

[firefox]

Exactly right, leopard.

Alonzo: First, corporations are government created legal entities, as I've said 50 thousand times already. Eliminate the state protection and they have to play on the same field as everyone else. Trust me, I'm in business of setting up similar legal entities (http://www.mpassetprotection.com/) myself, albeit for individuals, and for different reasons. The thing that separates voluntary business from involuntary government activity is that the firm must please the customers, lest it go bankrupt. On the other hand, government benefits by screwing over a large proportion of its constituents, many of whom may not even want to be participating in the system if given the option.

[Alonzo]

Eliminate the state protection and they have to play on the same field as everyone else.

And they'll be the strongest and will have no restrictions on their ability to abuse their power. That's the way this country used to be, and it didn't benefit the vast majority of people.

[firefox]

Actually, that's not true. In order to boss people around that much, you have to use force. To do that, such firms got in bed with government. On a similar note, I found a good article written just after the collapse of the USSR about how to devolve control of the economy to the people.

URL: http://www.mises.org/story/2415

Summary:


Conclusion

The dimensions of the proffered Rothbard Plan for desocialization should now be clear:

1.

Enormous and drastic reductions in taxes, government employment, and government spending.
2.

Complete privatization of government assets: where possible to return them to the original expropriated owners or their heirs; failing that, granting shares to productive workers and peasants who had worked on these assets.
3.

Honoring complete and secure property rights for all owners of private property. Since full property rights imply the complete freedom to make exchanges and transfer property, there must be no government interference in such exchanges.
4.

Depriving the government of the power to create new money, best done by a fundamental reform that at one and the same time liquidates the central bank and uses its gold to redeem its notes and deposits at a newly defined unit of gold weight of existing currencies.

All this could and should be done in one day, although the monetary reform could be done in steps taking a few days.

The article is a little long, but I read it in about 15 minutes, and it is quite thought provoking, IMHO.

[wonder cow]

Humm. I would have thought Switzerland would have been higher on the list?

[Alonzo]

Actually, that's not true. In order to boss people around that much, you have to use force. To do that, such firms got in bed with government. On a similar note, I found a good article written just after the collapse of the USSR about how to devolve control of the economy to the people.

If it's not true, then you may want to show me how the business policies of the 19th and early 20th century benefitted the people more than the current policies. Those companies had massive power because the government did nothing. Those companies can use force regardless of whether the government aids them, as they are such large forces in the economy and job market. If they want to fire striking workers they would be fully able to do so if the government didn't interfere, and the workers would have little recourse to challenge the employment policies.

A good example of this recently is a supermarket called "stop and shop". They wanted to remove most of the workers benefits (health care, drastically reduce retirement benefits and things like that), while increase the pay from 8 to 13 an hour. This applied to all workers, not just new ones. People who had been there 15 or 20 years and had families now would have had to pay for many things out of pocket. The pay increase was simply a way to cut costs, since it freed the company from paying the benefits. If they had been unable to strike then such changes would have taken place. The store could have easily replaced the workers with new ones, that wasn't an issue.

Also, if your example is to do generally what the soviet union did (I don't have today to read the article, and won't likely have time today) then that's a pretty bad example considering all the problems it faces. And since it seems to be based on theory, not examples of actual results achieved by such practices, I have little interest.

I don't care about economic freedom, about moral arguments on taxation and government regulation. I'm concerned about the end result for the general population. That's it.

[firefox]

If it's not true, then you may want to show me how the business policies of the 19th and early 20th century benefited the people more than the current policies. Those companies had massive power because the government did nothing.

Check this out: http://www.mises.org/story/2317


The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not — it is neomercantilism.

In some cases, of course, the entrepreneurs commonly labeled "robber barons" did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad,[1] and he and his business partners profited from this monopoly scheme. Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction. Thanks to historians who fail to (or refuse to) make this crucial distinction, many Americans have an inaccurate view of American capitalism...


Those companies can use force regardless of whether the government aids them, as they are such large forces in the economy and job market. If they want to fire striking workers they would be fully able to do so if the government didn't interfere, and the workers would have little recourse to challenge the employment policies.

No kidding. It is entirely within the rights of a company owner to decide who works for him, and under what conditions. Here are a couple of things to think about here:

1. Who owns the business? Those who founded and/or manage it, or those who work for it in exchange for payment? Clue: it's usually not the latter, with the exception of some forms of co-op organization.

2. Workers can be fired, but there is no reason why they can't boycott the establishment and/or start their OWN competing business in that or another sector of the market. After all, if the management was bad enough to fire everyone, it's probably good riddance to them!

3. The owner of a business has an economic incentive NOT to fire, but to retain labor as often as possible, given the investment he or she must put into training, etc. It is always better to work with the same employees than to face high turnover. At the same time, it is important to hire the highest quality people to begin with, even if they cost a bit more.

4. 'Zo, didn't you say that you are a professor somewhere? Have you ever owned or managed your own business before? It's not as easy as it may look, and there's no such thing as guaranteed benefits and employment after a decade. This bad case of "campus bubble" may be a large factor or explaining why so many in academia favor socialism rather than solutions that can and do work in the real world every day.


Also, if your example is to do generally what the soviet union did (I don't have today to read the article, and won't likely have time today) then that's a pretty bad example considering all the problems it faces. And since it seems to be based on theory, not examples of actual results achieved by such practices, I have little interest.


They did not follow this proposed model, which is why they are stuck with Valadimir Putin of the old KGB and a cartel of government-connected robber-barons. On the other hand, some satellites states like Estonia did a better job, and have thus been much more productive.


I don't care about economic freedom, about moral arguments on taxation and government regulation. I'm concerned about the end result for the general population. That's it.


Apparently. How's this for proof: Why is it that the most productive states on that list have the most open economies? Also, since you don't care about economic freedom, would you mind mowing my lawn tomorrow? No? Well too damn bad, 'Zo I'm making you my indentured servant, and if you don't like it, I'll throw you in a cell. Doesn't that sound like fun? :-D

[Alonzo]

Nowhere in your arguments do you produce results of your policy. Just moral or ideological arguments which aren't appealing at all to me.

No kidding. It is entirely within the rights of a company owner to decide who works for him, and under what conditions. Here are a couple of things to think about here:

1. Who owns the business? Those who founded and/or manage it, or those who work for it in exchange for payment? Clue: it's usually not the latter, with the exception of some forms of co-op organization.

2. Workers can be fired, but there is no reason why they can't boycott the establishment and/or start their OWN competing business in that or another sector of the market. After all, if the management was bad enough to fire everyone, it's probably good riddance to them!

3. The owner of a business has an economic incentive NOT to fire, but to retain labor as often as possible, given the investment he or she must put into training, etc. It is always better to work with the same employees than to face high turnover. At the same time, it is important to hire the highest quality people to begin with, even if they cost a bit more.


All of this means nothing to the workers. Protecting the well being of the many are more important than protecting the supposed rights of a few to do whatever they want.

'Zo, didn't you say that you are a professor somewhere?

I never said that.

Also, since you don't care about economic freedom, would you mind mowing my lawn tomorrow? No? Well too damn bad, 'Zo I'm making you my indentured servant, and if you don't like it, I'll throw you in a cell. Doesn't that sound like fun? :-D


So, you want to explain how that deals with nothing more than economic freedom? Do you understand the term? Last I heard slavery was a little more than simply economics.

How's this for proof: Why is it that the most productive states on that list have the most open economies?

Here's a ranking of child poverty in 21 industrialized north american and european nations:

1. Netherlands
2. Sweden
3. Denmark
4. Finland
5. Spain
6. Switzerland
7. Norway
8. Italy
9. Republic of Ireland
10. Belgium
11. Germany
12. Canada
13. Greece
14. Poland
15. Czech Republic
16. France
17. Portugal
18. Austria
19. Hungary
20. United States
21. United Kingdom


http://news.bbc.co.uk/2/hi/uk_news/6359363.stm

Netherlands, sweden, denmark and finland probably won't be topping the open economy lists any time soon.

Poverty and other statistics that relate to overall wellbeing don't have a strong correlation with open markets, past a point anyway.