Wealthy and free
For 15 years, the Wall Street Journal and the Heritage Foundation have been measuring countries’ commitment to a free economy under the rule of law in the Index of Economic Freedom.
The 2009 Index, published this week, provides strong evidence that the countries that maintain the freest economies do the best job of promoting prosperity for all citizens.
The positive correlation between economic freedom and national income is confirmed yet again by this year’s data. The freest countries enjoy per capita incomes over 10 times higher than those in countries ranked as “repressed.” This year, for the first time, the Index also correlates economic freedom with important societal values like poverty reduction, human development, political freedom and environmental protection. The linkages are robust, with economically freer countries performing significantly better on every indicator of well-being.
1. Hong Kong
5. New Zealand
6. United States
10. United Kingdom
Six of the top seven countries were established by Brits. Ireland loves and protects many originally British legal protections, such as trial by jury.
In the last year, Australia has edged out Ireland, and New Zealand has edged out the US, which has slipped in the ratings.
The Wall Street Journal and Heritage Foundation persist in calling free economies "free-market capitalism". Here is the reason we don't -
Capitalism is an inadequate and counter-productive name for a free economy. It is inadquate because it suggests that an economy is only about capital when it is about so much more. A free economy is about people like you freely and openly creating, inventing, producing, marketing, buying, selling, trading and investing within a framework of fair laws and voluntary cooperation. It is about dreams and hard work and team work and imagination.
And as Walter E Williams wrote, it is relatively new in human history. Prior to it, "the way people amassed great wealth was by looting, plundering and enslaving their fellow man".
Capital is part of a free economy, but only part. Why give poor, befuddled Marx a helping hand by using his terminology? Adam Smith described the free economy without ever using the word capitalism.
Troubled as the free economy can be, it is far better than the government-controlled economies I saw behind the Iron Curtain. There I found, in Churchill's words, that "the inherent vice of Socialism is the equal distribution of misery". And by misery, I really mean misery.
Adam Smith identified the things that would hurt us and our economy - among them monopolies, tariffs, high taxes and lack of ethics. He told us what a free economy needed. Vitally, a free economy needs accurate information. No one, including people in business, can make a good decision without accurate information.
Recently, accurate information, such as the real worth of subprime mortgages, has been completely missing. Odd, that.
How well we live can also be measured by our intangible wealth.