The Poor Get Richer: Index of Economic Freedom 2007

Posted: Jan 17, 2007 9:38 AM

This is one of my favorite times of the year-- the release of the Index of Economic Freedom! All right, so you have to be pretty nerdy to dig this, but it's fascinating. Stick with me:

Here's bad news for those who oppose global free trade: Not only did the world-wide trend toward greater economic liberty hold steady over the past year, but the incomes of poor individuals across the globe are rising as result. The world isn't only growing richer. The gap between the per-capita income of have-not populations and that of the developed world is narrowing...

The average freedom score this year for the 157 countries ranked is the second highest since we began measuring economic freedom 13 years ago. It is down a fraction from last year, but each region of the globe enjoys greater economic freedom than it did a decade ago. Hong Kong, Singapore and Australia are the three freest economies in the world this year, in that order. The U.S. ranks No. 4. Among the 20 freest economies in the world, Europe holds 12 places.

The full rankings are here.

The survey measures, among other things, property rights protections, tax rates, government intervention in trade, and regulation. There are only seven countries designated as free, and they're all largely English-speaking. Michael Barone calls it a victory for the Anglosphere:

Hong Kong, Singapore, Australia, the United States, New Zealand, the United Kingdom, and Ireland. The next nine countries, with scores between 75 and 80, are mostly smaller European countries: Luxembourg, Switzerland, Canada, Chile, Estonia, Denmark, the Netherlands, Iceland, and Finland. Canada, of course, is primarily English-speaking, and my impression is that knowledge and use of English is widespread in Denmark, the Netherlands, and Iceland.

Why are English-speaking countries at the head of this list? Because they–we–are the inheritors of England's traditions of representative government, rule of law, and economic freedom.

Luckily, despite the anti-free-traders' best efforts, that tradition does not have to be confined to English-speaking countries. For instance, eastern European and middle European countries are outstripping old European countries that refuse to change with the times.

Andy Roth links an editorial on the "Baltic Boom:"

2006 was the year when the Baltic engine fired on all cylinders, with economic expansion reaching double-digits in two countries (Estonia and Latvia) and increasing wealth at an impressive rate. Estonia passed Poland in terms of GDP per capita, and appears set to move up the ladder steadily and determinedly.

Estonia was No. 1 in the Index one or two years ago and has since fallen a bit, but remains in the top 15. And, how Ireland became the Celtic Tiger.

Here's the Executive Summary. Click around and explore. It's good stuff.

And, while I'm at it, one of my favorite essays on the subject: Seven Moral Arguments for Free Trade.