Rating Global Economic Freedom

Phillip J. Wood is an associate professor of political studies at
Queen’s University.

The purpose of this Fraser Institute–sponsored collection is to
further the analysis of the concept of economic freedom. Most chapters
attempt to provide empirical measures of economic freedom in general or
in specific areas, such as capital markets, labor markets, and taxation.

Despite the hyperbole in the jacket notes (“a decisive step forward
...”), there is not much to be learned here. At the conceptual level,
almost all the contributors are committed to a 19th-century conception
of economic freedom which is based on (i) the individual’s right to
allocate resources as he or she sees fit (assuming that unregulated
markets are most conducive to the economic well-being of all, regardless
of differences in resource ownership); and (ii) an insistence that the
greatest impediment to economic freedom is democracy, whose correlates
(state intervention, unions, and an organized civil society generally)
interfere with the efficient operation of the market.

From this crude perspective, the preferred society is unorganized and
atomistic, while the preferred state is a minimal state that enforces
only negative rights—social order, the rule of law, enforceable
contracts, and defence against aggression. Positive rights—to health
care, housing, or a minimum income—are denounced as only
quantitatively different from slavery.

The operationalization and measurement of such an abstract and narrow
concept produce predictable results. Some of the highest levels of
economic freedom are to be found in countries in which the political and
civil rights essential to it do not exist: Guatemala, where labor
discipline is enforced by death squads; and Singapore, which is,
according to the London Weekly Telegraph’s correspondent, “an
oppressive little city state” where the state intrudes into “every
aspect of its citizens’ lives.”

Although it does not always find itself numerically at the top of the
heap, everybody’s favorite seems to be Hong Kong. Not to worry about
the numbers, though: if they don’t turn out as everyone likes (as is
the case in one chapter, whose brave authors incorporate some measures
of political freedom), “those ... which are patently at odds with our
common sense can be discarded.” After all, “rather than striving for
objectivity, the notion of economic freedom should be thought of like
the scores of a diving competition: judged by expert opinion.” The
Fraser Institute, it seems, is a bit like Guatemala—a nice place to
invest, but you wouldn’t want to work there.