Another Spectrum

Personal ramblings and rants of a somewhat twisted mind

America the Land Of The Free: Fact or Myth (part 2)

7 Comments

In my previous post in this series I looked at press freedom. In this post I’ll have a quick look at economic freedom.

Economic freedom

According to Wikipedia:

Economic freedom or economic liberty or right to economic liberty is the ability of members of a society to undertake economic direction and actions. This is a term used in economic and policy debates as well as a politicoeconomic philosophy. One approach to economic freedom comes from classical liberal and libertarian traditions emphasizing free markets, free trade and private property under free enterprise. Another approach to economic freedom extends the welfare economics study of individual choice, with greater economic freedom coming from a “larger” (in some technical sense) set of possible choices. Other conceptions of economic freedom include freedom from want and the freedom to engage in collective bargaining.

The Heritage Foundation and Wall Street Journal produce an annual survey of of economic freedom based on ten criteria: Business freedom; Trade freedom; Monetary freedom; Government size; Fiscal freedom; Property rights; Investment freedom; Financial freedom; Freedom from corruption; Labour freedom.

How did the five countries (USA, France, Japan, South Africa and New Zealand) perform? The rankings (out of 100) are: The land of the free, USA 12th (76.2), France 73rd (62.5), Japan 20th (73.3), South Africa 72nd (62.6), and New Zealand 3rd (82.1). The two Highest ranking countries were Hong Kong and Singapore, while the lowest ranked countries, as might be expected were North Korea and Cuba.

Of the 5 countries in my comparison, only New Zealand was classified as Free. The USA and Japan were classified as Mostly Free, while France and South Africa were classified as Moderately Free.

Comparing NZ and the US, America performed better at Labour Freedom (98.5 : 91.4) , Government Spending (51.8 : 43.0), and Trade Freedom (87.0 : 86.8), while New Zealand performed better at Property Rights (95.0 : 80.0), Freedom From Corruption (91.0 : 73.0), Business Freedom (95.5 : 88.8), Monetary Freedom (87.6 : 76.6), Fiscal Freedom (70.4 : 66.2), Investment Freedom (80.0 : 70.0), and Financial Freedom (80.0 : 70.0).

The Fraser Institute also creates an index of Economic Freedoms. They measure five broad areas: Size of Government: Expenditures, Taxes, and EnterprisesLegal Structure and Security of Property RightsAccess to Sound MoneyFreedom to Trade Internationally; and Regulation of Credit, Labor, and Business.

The most recent Fraser Institute report ranks USA 12th (7.81), France 58th (7.21), Japan 23rd (7.60), South Africa 93rd (6.73), and New Zealand 3rd (8.25). As with The Heritage Foundation index, Hong Kong and Singapore came out on top, but neither Cuba nor North Korea were included in the report. The Fraser Institute list the Republic of Congo, and Venezuela as the lowest ranking countries.

A comparison between NZ and the US shows America performed better at Size of Government (5.3 : 5.6), and Labour market regulations (9.0 : 8.7), while New Zealand performed better at Legal System and Property Rights (8.8 : 7.7), Sound Money (9.7 : 9.3), Freedom to Trade Internationally (8.5 : 7.7), Credit market regulations (9.9 : 8.5), and Business regulations (7.4 : 6.7).

It’s somewhat of a surprise that when it comes to economic freedom, a country with a mixed economy outperforms a country purportedly based on capitalism and private enterprise.

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Author: Barry

A post war baby boomer from Aotearoa New Zealand who has lived with migraines for as long as I can remember and was diagnosed as being autistic aged sixty. I blog because in real life I'm somewhat backwards about coming forward with my opinions.

7 thoughts on “America the Land Of The Free: Fact or Myth (part 2)

  1. Something must be wrong with the data, the survey methodology, or other factors. Because everyone knows that America is #1. We’re America. And as I said in my post today, it’s all about American Exceptionalism.

    • Of course Doobster, I manipulated the figures just to make the US look bad 🙂

      Actually it’s interesting to note that much of the raw data comes from either American or right of centre institutions. If anything that would tend to have a favourable bias towards more capitalistic societies instead of to more mixed economy societies such as NZ.

      • See, I told you someone is manipulating the data. That just proves it. Some Kiwi must have breached security and shorted the computer.

        • Breaching security will eventually be found out. No, Kiwis are smarter than that. We’ve found a way to ensure that the raw data is skewed in our favour as it’s being collected. That’s common knowledge here. However how we skew the data is a national secret which I’m not allowed to reveal to outsiders 🙂

        • No wonder the call you guys (and Australia), “Down Under.”

  2. This gets into difficult territory. For example, is a country more free because the right to organize unions is protected or because it isn’t protected and the right of a company not to recognize the union is therefor unfettered? I know what I think, and I know I’d want to know how they’re measuring before I take the data seriously.

    • The data takes both into account. There are separate scores for the rights of workers and how effective those rights are, and another score for business to be able to operate without undue restraint.

      Freedom to do business and freedom from exploitation of workers aren’t necessarily mutually exclusive. Some countries do well on both counts, others do well in only one. The lowest ranking countries do poorly at both.

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