UPDATED: Economic Indices Ignore ‘Century of the State’

Economy, Free Markets, Individual Rights, Liberty, The State, The West

Australia, New Zealand, Ireland, Canada and Chile have leapfrogged over the United States on the Fraser Institute’s index of economic freedom.

“In this year’s index, Hong Kong retains the highest rating for economic freedom, 9.05 out of 10. The other top 10 nations are: Singapore (8.70), New Zealand (8.27), Switzerland (8.08), Chile (8.03), United
States (7.96), Canada (7.95), Australia (7.90), Mauritius (7.82), and the United Kingdom (7.81).”

Forty-two data points are used to construct a summary index and to measure the degree of economic freedom in five broad areas:
1 Size of Government: Expenditures, Taxes, and Enterprises;
2 Legal Structure and Security of Property Rights;
3 Access to Sound Money;
4 Freedom to Trade Internationally;
5 Regulation of Credit, Labor, and Business.

With some variation, The Heritage/WSJ’s economically freest countries are these:

1- Hong Kong
2- Singapore
3- Australia
4- New Zealand
5- Ireland
6- Switzerland
7- Canada
8- United States
9- Denmark
10- Chile

Lest you forget, these indices provide important but woefully incomplete data. Long ago, Pierre Lemieux, a libertarian Canadian economist (a friend too) explained:

“If ‘economic freedom’ is inseparable from the rest of human liberty in a social context (using one’s property to express dissenting opinions, travel, have sex, grow marijuana, store one’s firearms, raise funds from “public” investors, etc.), the freedom indexes are off the mark.

“This explains why some countries ruled by hard tyrannies (as opposed to the soft, Tocquevillian brand we know in the West), where nobody in his right mind would want live except to make a buck as a privileged foreigner or a member the local nomenklatura, make it to the top of the list. Who would want to live in Hong Kong (ranked 1st of 151 countries in the HF/WSJ index), that is, under one of the worst tyrannies on earth, and so much so for its very efficiency? Who would want to be a peasant under other Asian tyrannies like Singapore (ranked 2nd)?”

“The selective definition of economic freedom also explains why the indexes show growing economic freedom while everybody who lives in the real world must know that the 20th century, rightly described by Mussolini as ‘the century of the state,’ is continuing in the 21st with a vengeance. During the 12 years of the HF/WSJ index, economic freedom is supposed to have increased. For example, over that period, both the U.S. (now ranked 9th) and Canada (ranked 12th) have improved their scores by 11%, while in both countries (and others) the Surveillance State was growing uncontrollably, including on financial markets. In the U.S., so many business executives are going to jail that perhaps repression will have to be outsourced to China.”

“Thus, the ‘economic freedom’ that is being measured is a rather special animal: it is the freedom to do what is narrowly defined as freedom in the statistics underlying the index. In practice, the freedom indexes encompass some general conditions for economic freedom (like a stable currency, or narrowly defined ‘property rights’), specific government restrictions or controls (on foreign investment, for example), and consequences of state intervention (the informal economy or corruption). And, of course, the weights assigned to the components of the indexes are arbitrary.”

“I am not saying that such indexes are totally useless. They do regroup variables that are correlated with GDP per capita and its growth, but keep in mind that GDP is a very unreliable construct that reveals basically nothing about the general welfare, and is based on arbitrary value judgments (this is pretty standard welfare economics: see my upcoming article in The Independent Review). The indexes may correlate with the difficulties the businessman will have with local bureaucracies. They may even indicate opportunities for investors to make money in limited contexts, assuming the information has not already been incorporated in prices. The HF/WSJ publication even contains some useful country summaries and international statistics.”

“But the freedom indexes have little to do with ‘economic freedom’ as we use the term in politics, economics and philosophy.”

UPDATE (Oct. 17): Interestingly, John Stossel has addressed Myron’s question:

“This evening on Eric Bolling’s show, Follow the Money, when I argued that economic freedom brings prosperity, lefty lawyer Ron Kuby said I was ‘full of it’ because the freest countries are not at the top of a list of the world’s richest countries:

1- Monaco
2- Liechtenstein
3- Norway
4- Luxembourg
5- Channel Islands
6- Qatar
7- Bermuda

But this is deceptive nonsense, like so much of what lefty lawyers say. It’s no surprise that small oil-rich nations, tax havens, and countries with old wealth have the highest per capita income. But the freest counties are all near the top of the list. Here’s Heritage’s list of the least economically free countries:

172- Democratic Republic of Congo
173- Libya
174- Venezuela
175- Burma
176- Eritrea
177- Cuba
178- Zimbabwe
179- North Korea

Do you want to live in any of those counties? I sure don’t.”

UPDATE IV: A National Reviewnik Thinks He’s "Contrarian"

Debt, Inflation, Journalism, Media, Neoconservatism, Paleoconservatism, Pseudo-intellectualism, Republicans

He’s trillions of dollars and a decade too late, but Kevin D. Williamson of National Review can assure himself he’s “contrarian” for advocating an about face in the Federal Reserve Bank’s fiddling.

Williamson may be reading Austrian economics. By that I mean the reality based thinking of Ludwig von Mises (taught at the Mises Institute); preached by Ron Paul (whom the neoconery mocked during the Bush years), practiced by financier Peter Schiff, written about by Tom Woods in Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse; as well as by Vox Day, and in this writer’s columns and blogs over the past decade.

Being of the establishment, however, Williamson can just put his hands over his ears and tell himself over and over again “I’m contrarian,” and this will be so.

“So here’s a contrarian take,” Williamson assures himself: “The Fed should stop trying to drive down interest rates. It should instead work to raise them. Why? Our economy needs savings and investment. …”

As I said, trillions of dollars and a decades too later … (“PUNDITS, HEAL THYSELVES!”)

Your host, writing in “Those Invisible Jobs,” did not anoint herself a “contrarian” for advocating that Fed supremo Ben Bernanke raise interest rates.” Not then, and not in 2000 (“The Central Bank’s Game is the Same, Whoever’s the Name”), and on all those occasions in-between.

Why? Because in the Austrian community, represented by some very prominent people, this is common wisdom.

Bloody annoying…

UPDATE I: I’ll be honest: it’s hard to know from Mr. Williamson’s wishy-washy articles exactly where he stands on matters of political philosophy (or if he is a neoconservative or not). However, this post’s point was pretty clear. It expressed annoyance that someone can call himself contrarian for proposing less quantitative easing. Granted, it’s a prickly post, but Mr. Williamson can understand, surely, why writers like myself get a tad testy? We’ve been marginalized for being right on foreign policy and fiscal matters our entire careers, such as they are. Then, when the rest catch up with us, a decade down the line, they pretend that truth began with them.

If I’ve learned anything about the American Mind it is this: Truth doesn’t exist until someone in the establishment pronounces it, usually a decade or so after it has been in circulation. I guess, better late than never, but why not acknowledge those who went before?

I saw Mr. Williamson go up against one or the other left-liberals on TV, and I remember thinking: much better than Rich. Still, I do not believe there is a sufficient amount of information to conclude that “better than Rich” is a meaningful statement.

Mr. Williamson is young (and presentable). He has plenty of time to correct any mistaken impressions I might have formed, not least of which is his sharing that horrible habit common among the Republican establishment of never admitting to being Johnny-come-latelies on Iraq, Bush, economy, QE, etc.

UPDATE II: Mr. Glisson, first, why don’t you provide hyperlinks and particular quotes in substantiation of your position that Mr. Williamson is never a neoconservative? Second, why misconstrue the point of this writer’s post, encapsulated again in the last two sentences of “UPDATE I”? Moreover, from a parenthetic statement about the neoconservatives’ attitude toward Ron Paul, Mr. Williamson concluded that I had called him a neoconservative. You do the same, for some reason.

Again, Mr. Williamson is better than Rich; way better. I am still unsure as to what kind of badge of honor this really is; or if Mr. Williamson is or is not a neoconservative. Isn’t that a condition of employment at National Review? John Derbyshire is NRO’s only paleoconservative (sort of). I’d love to see John thrust into the spotlight, but they keep him in the basement, so to speak.

UPDATE III (Oct. 17): We thank Kevin D. Williamson for responding to the intrigue he has generated on Barely A Blog. He remains a man of mystery, and that is not half bad. In the age of too much information (and letting it all hang loose), mystery is a good thing. We agree that Mr. Williamson ain’t Rich. Has Rich employed a non-neoconservative in the hope of generating some oscillation in the static National Review? Or because the readership has little patience with that old guard? Who knows? We also understand that a man has to make a living. To do so, he must often walk an ideological tightrope.

Nevertheless, those who went before—and remain permanently frozen out of mainstream—deserve mention. It gets terribly cold out here. Mr. Glisson seems to think I’m some kind of intellectual missionary, spreading the good word, pleased to turn the other cheek just so long as the new guard can adopt the gospel, even if they falsely pretend to be pioneers.

Rubbish. Nonsense on stilts. I’m all about justice. Intellectual justice included.

UPDATE IV (3/5/2016):

“NRO Writer’s ‘UnFollow’ Leads To Musing About The Manners-Morals Connection.”

UPDATED: A Vote For Chile’s President

America, Barack Obama, Bush, Free Markets, Government, Media, Technology, Trade

The following is from “A Vote For Chile’s President,” my latest WND column:

“President Barack Obama took to the podium well before President Sebastian Piñera did. Chile’s president bided his time patiently with the group of rescue workers in hard hats, until all 33 miners had surfaced from deep within the San José copper-gold mine, in northern Chile, where they had been entombed for 69 days.

If not for the translator’s running commentary, I would not have guessed that the man with a beaming smile—so different from Obama’s gleam of dentition and Bush’s demented grin—last in-line to meet and greet the miners who ascended from hell, was no other than Chile’s president. Sebastian Piñera wife, first lady Cecilia Morel, was equally low-key, fading into the background and ceding to the heroes of the unfolding drama.

The images transmitted from Camp Esperanz showed no swat teams, personal body guards, or retinues of handlers and props—the sort of ‘presidential comitatus’ that accompanies the head of the American hyperpower everywhere.

At ‘Camp Hope,’ the pensive group of rescuers and their president looked like a band of brothers. The media scrum did nothing to shatter what was almost a religious atmosphere. All present—mining men, the rescued and the rescuers, and their families—seemed oblivious to the din from the outside world. Nobody appeared star-struck; few were playing to the cameras. All present had eyes for one another alone. Expressions of joy were all the more poignant because so dignified. There was no slobbering, no Geraldo-Rivera hyperbole.” …

The compete column, now on WND.COM, is “A Vote For Chile’s President.”

Next week I hope to introduce you to the work of a dear friend, Professor Dennis O’Keeffe, who has just written a gem of a book about Edmund Burke. My conversation with Dennis will be the first of a two-part interview. You’ll enjoy it.

And do read my libertarian manifesto, Broad Sides: One Woman’s Clash With A Corrupt Society.

The Second Edition features bonus material and reviews. Get your copy (or copies) now!

UPDATE (Oct. 16): Star Parker in “What Chile can teach America about freedom”:

But back just a little less than 40 years ago, Chile was a typical, poor South American nation, with intrusive government and sluggish growth.
How was it transformed?
Read a short essay called “How the Power of Ideas Can Transform a Country,” by one of the leaders that made it happen – Jose Pinera.
He relates how, in the mid-1950s, the Catholic University of Chile signed a cooperation agreement with the Department of Economics of the University of Chicago, then home to the world’s top free-market economists, including the legendary Milton Friedman.
Milton Friedman’s classic “Capitalism and Freedom” explains how individual liberty can only thrive when accompanied by economic liberty
Thus began the education of a generation of young Chileans in the wisdom of economic freedom.
Beginning in the late 1970s, these young leaders, with newly minted Ph.D.s, helped implement new economic reforms in Chile protecting private property and promoting free trade.
A graph showing annual economic growth in Chile over the last hundred years looks like a hockey stick. From the early part of the twentieth century until 1980, the line is flat, averaging less than 1 percent growth per year. But beginning 1980, growth takes off in a vertical surge, averaging over 4 percent per year.

QE2: That Ship Has Sailed

Debt, Economy, Federal Reserve Bank, Inflation, The State

I’m not talking about “The Queen Elizabeth 2” cruise ship, but of “‘Quantitative Easing,’ which is state-speak for the government’s monkeying with the money supply.” That ship has indeed sailed a long time ago. At the end of September, we reported here on a $1 trillion Fed infusion of paper into our hot-air balloon of an economy.

How many pinpricks away from runaway hyperinflation are we?

Now you know why a stock market rally does not a recovery predict. In fact, stocks will be buoyed after a funny-money injection. “But as usual,” concedes Larry Kudlow, ignored are “the plunging dollar and soaring commodity prices, which will lead to an inflation tax on consumers and businesses, something that is not good for profits or economic growth.”