Imagine you and I dropped everything and went on a trip right now – a tour of economic freedom throughout the world. Where do you think we’d begin? The United States? Europe? No, we’d leave the Western world behind and start our journey in East Asia.
Surprised? You shouldn’t be. Hong Kong and Singapore have been the leaders in economic freedom for all twelve years that The Heritage Foundation and The Wall Street Journal have been publishing the annual Index of Economic Freedom. Though the recently-released 2006 version found that although the two Asian nations still top the list, it also shows that the world as a whole is economically freer than it was a year ago. And since economic freedom is directly related to prosperity, that’s good news for many.
What is economic freedom? The Index defines it as “the absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself.” For those who haven’t studied economics, this means that “people are free to work, produce, consume, and invest in the ways they feel are most productive.”
Every year, the Index grades each nation on the basis of 50 independent economic variables related to categories such as trade policy, fiscal burden of government, government intervention in the economy, wages and prices, property rights, and regulation. It then ranks nations based on the final outcomes.
And even though the grades are based on economic indicators, it didn’t surprise me that many of the nations with the worst economic freedom scores were also those with little political freedom. For instance, the three nations with the worst Index scores (North Korea, Iran, and Burma) also made PARADE magazine’s 2006 list of nation's with “The World’s Worst Dictators.” After all, the brutality and excessive control that makes these dictators infamous also tends to stifle their nation’s economies.
Nations with dictators and economic unhealthiness are usually not much fun for carefree tourism either, which is why I suggested an economic freedom trip, and not an excursion through economic misery. So let’s rejoin the tour.
We’ve just missed Chinese New Year, but that doesn’t mean the fun is over in Asia. In Hong Kong, we can marvel over the lack of trade barriers, over the mixture of Western and Asian elements, and over how such a strong capitalist system sits mere miles from –- and is now once again a part of -– the largest Communist nation in the world.
In Singapore, we’ll observe one of the world’s best commercial law systems. We can also learn about feng shui and have our outdated stereotypes of opium dens and caning of foreigners put to rest.
Next, we head to our first English-speaking destination: Ireland. Despite a history of revolution, the nation is now soaring economically, thanks to one of the world’s most pro-business environments. Ireland’s corporate tax rate is less than half of the EU average, so it’s no wonder that the nation receives one-third of America’s EU investments. The rolling green hills and delightful tunes and accents make me want to invest some tourism dollars here too. (You can keep the Guiness though.)
The tiny European nation of Luxembourg is next, boasting one of the world’s highest GDP income levels. It has a fair regulatory structure, a skilled workforce, and a well-developed infrastructure. It also has several castles and wineries for us to explore.
While we’re in Europe, let’s head to the United Kingdom for some British humor. Margaret Thatcher’s influence still pays dividends for the nation’s economy, which is now the fourth largest in the world. A strong rule of law also doesn’t hurt. While we’re enjoying the economic blessings, let’s take in some Shakespeare, enjoy high tea at Harrod’s, and pay homage to the poor wives of Henry VIII at the Tower of London.
In case you’re a bit homesick at this point for the U.S., you shouldn’t hold your breath. The United States is in a three-way tie for 9th place in the Index of Economic Freedom, and we’re only halfway there. We still need to make stops in Iceland, Estonia, and Denmark before we visit the ninth-place finishers (U.S., Australia, and New Zealand).
How can the United States be so far behind? One devastating decision last June by the U.S. Supreme Court didn’t help; the Kelo v. City of New London ruling on eminent domain was a huge black mark for our property rights score. Massive government spending and protectionist trade tendencies also haven’t helped our ranking.
However, since the United States was in twelfth place last year, we can be thankful for at least some overall improvement. It’s pretty embarrassing that the so-called “Leader of the Free World” wasn’t even listed in last year’s economic freedom Top Ten. Let’s hope our score continues to improve, as Townhall readers and conservatives in Congress fight for smaller government, lower taxes, and less government spending.
The day The Heritage Foundation released the 2006 Index of Economic Freedom, my husband’s beloved grandfather Roger “Happy” Hetzner passed into eternity. Happy loved to travel, set an incredible example of financial stewardship, and was a faithful supporter of The Heritage Foundation. He would have loved to take this tour of economic freedom with us, and thus I dedicate this column to him. Bon Voyage, Hap.