My last column focused on why the United States is no longer among the top 10 nations listed in the annual Index of Economic Freedom. But it’s important to put this in a larger context and explain why it matters.
The freest societies in history have always been the most prosperous. The more freedom that people have to engage in entrepreneurial and other economic activities, the more products, processes, innovation, jobs, wealth and opportunity will be created. And that greater prosperity means a better living standard for all the people.
History has shown that only in times of economic turmoil have the forces opposed to individual liberty been able to fully seize power. No revolution has overthrown a government in times of widely shared prosperity.
In the United States, the 10 states noted for the greatest amount of freedom, opportunity and encouragement of business activity are also the fastest-growing and most prosperous. On the other hand, the states with the greatest burden of taxes, regulations and restriction on businesses are the 10 slowest-growing states.
The link between freedom and prosperity also holds true on the world stage. For 20 years now, The Heritage Foundation has produced the Index in cooperation with the editors of The Wall Street Journal. Each year the Index ranks more than 175 nations in terms of their level of economic freedom, characterizing them as “free,” “mostly free,” “moderately free,” “mostly unfree” and “repressed.”
During this entire period, Hong Kong has always been ranked number one in the Index, thanks to its small government, low taxes and light regulations. As former Attorney General Edwin Meese, now the Ronald Reagan Distinguished Fellow at The Heritage Foundation, put it in a 1999 Heritage lecture, “Economic freedom and economic prosperity rise and fall together.”
He cited the remarkable history of Hong Kong is a brilliant illustration of the value of political and economic freedom:
“A century and a half ago Britain’s Lord Palmerston dismissed Hong Kong as ‘a barren rock with hardly a house upon it.’ One can only wonder what Lord Palmerston might think if he could visit Hong Kong today.
“He would walk among skyscrapers that hold the offices of 9,000 multi-national companies. His eyes would behold the fifth-largest banking center on earth, and the eighth-largest stock market. He would stroll among citizens who earn the sixth-highest per capita income in the world.