Economic Freedom

“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”
-Milton Friedman

The Heritage Foundation has put out its annual Index of Economic Freedom for 2014 and the big takeaway is that the United States has fallen out of the top ten for the first time in the twenty year history of the index. That this barely qualified as news should not surprise, given the media’s preoccupation with such transcendent issues as highway cones on the George Washington bridge, but it is nevertheless a critical data point that deserves our attention.

For the twentieth consecutive year, Hong Kong reigns atop the list. While it has room to improve in political freedom, Hong Kong remains the most economically free territory in the world, a place where you can start a business in one day. From protection of property rights and contract to strong business, labor and monetary freedom, Hong Kong shines a bright light on the wonderful productivity, wealth and dynamism that free market conditions spur. Singapore follows at number two and Australia is number three, giving the Asian economic zone the top three freest economies in the world. Rounding out the top ten are (in order) Switzerland, New Zealand, Canada, Chile, Mauritius, Ireland and Denmark. At number twelve, the United States is sandwiched between Estonia and Bahrain, and one can’t help wonder how a former Soviet satellite and a gulf oil emirate managed to flank the world’s preeminent champion of economic freedom. Such is life amid a snails-paced non-recovery going on its sixth year. The progressive managers of our decline are surely celebrating (quietly) our exit from the top ten, as their aim is not to enhance freedom but equality. If anyone in the administration ever read any Milton Friedman (very doubtful), it clearly did not register.

Why is the left suspicious of economic freedom? Why does the concept of laissez-faire chill them to the bone? Why do they exhibit the analytic sophistication of kindergarteners when it comes to evaluating free enterprise? Why do they reject the moral case for the market?

Progressives are either very ignorant of the facts on poverty or willfully dishonest in their interpretation of the data. For the simple reality is that free enterprise and entrepreneurial capitalism are exponentially more valuable in the fight against global poverty than government aid or action. In the past forty years, developing nations that introduced or expanded economic freedom have seen the crisis of the poor evolve from one of famine to one of net worth. Fewer humans starve today than at any time in history. Ultimately progressives shrug at economic freedom because they don’t understand it. They bemoan the plight of the poor and the downtrodden as victims of some ruthless zero-sum economic Hunger Games because they lack the imagination to discern how the upwardly mobile got to where they are. In assuming that success in America is achieved through grift, connections and inheritance as part of a rigged conspiracy, progressives take an awfully cynical view of human nature and the world. The reality is that success in America is achieved through hard work, risk and perseverance; same as it ever was. But if the organic dynamism of capitalism appears too chaotic and confusing, it is understandable that the alternative would be a vision of state collectivism, instead of one that elevates the individual over the state.

When economic freedom is enhanced, power is necessarily stripped from the state and dispersed to the consumer through markets. The left is never happy with this outcome, as diffuse power and spontaneous order make no sense to their simple minds. For the left, society is a chaotic mess that must be managed by experts lest it descend into Hobbesian anarchy, and the idea that what looks like chaos is actually order seems ludicrous. They only focus on what is seen but are loathe to consider the unseen. They refuse to acknowledge the merits of economic freedom while harboring a perverse desire to attribute prosperity to government rather than the market: “You didn’t build that.” This points to the fundamental progressive aim: control. Since control over people is impossible when individuals are able to pursue their own commercial ends, economic freedom has always been anathema to the leftist mindset. The focus on equality over freedom that the left favors today is bound as ever by the laws of economics and destined to further codify Friedman’s maxim as a sacred truth.

The U.S. will return to the top ten in the Index of Economic Freedom, but not until public policy reflects an appreciation for liberty and the free market. That means shrinking the size of government, reducing federal spending substantially, and overhauling or eliminating a bevy of federal agencies and programs. The left doesn’t feel an urgent need to restore our economic freedom ranking because they affirmatively believe that policies enacted by less free economies, such as increases in welfare, taxes and labor organization, lie on the path to social justice. They couldn’t be more wrong about that. As certain as the sun sets in the west, economic freedom is the road to wealth and prosperity. It is categorically not the road to equality, but if everyone is better off with economic freedom, who cares if some people are more better off than others?

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