Why I believe what I believe
June 29, 2011
Over time, I figured this out:
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I hadn’t seen it put so directly before, and so I’m sharing it with you, dear readers.
Incidentally, a reminder: Canada is currently economically freer than the United States.
Categories: I am Canadian!, Political philosophy, USA! USA! USA!
I wonder which way the causation runs. Societies may be less free because they are poorer, rather than poorer because they are less free. For example, a poorer society might not be able to pay government employees as much, requiring those employees to become corrupt to make a decent wage. Corrupt officials want more regulation and licencing because it gives them more opportunities for shakedowns.
Another interesting thing about the graph is that most of the countries in the top right are European countries or members of the white Commonwealth (Japan, Taiwan and Chile are the only big exceptions). Most of Europe and the white Commonwealth have been developed countries for a long time, so comparing their income per head with those of, say, China, is a bit deceptive. The differences are due to the vagaries of history, not economic freedom. If you took away the European countries and the white Commonwealth from this graph, there really doesn’t seem to be much of a relationship between economic freedom and income per capita.
Another thing that is deceptive about this graph is that it leaves off a lot of countries. For example, free and rich, but relatively small Hong Kong and Singapore are present. Small, rich but less free United Arab Emirates is not. Russia and Libya are both resource based economies with similar incomes per capita, but Russia has a much freer economy than Libya. Russia is present, but Libya is not. Georgia is freer than Slovakia (and Norway, which would be off the chart in terms of income) but poorer than China. Georgia does not appear on the chart. Note that my measure of freedom comes from the Heritage Foundation’s Index of Economic Freedom. Using the Fraser Institute’s measurement, Georgia ranks even higher (coming ahead of Germany, Japan and South Korea). Fraser ranks the UAE more free than Heritage. If you prefer the Fraser Institute’s measurements, replace the UAE with Kuwait in my example above.