Economic Freedom

The poor need to be given these access to markets, and need to create their own possibilities, because they will. It's not that people don't have the capacity... it's that the access is not democratized.
- Marcela Escobari

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  • Michael Miller on the Freedoms and Foundations to Succeed

    What Rwandans need, what all Africans need, what all people in the developing and the developed world need, are the foundations to allow them to live out their freedoms and live out their responsibilities, to fail and to succeed. And if you give people that foundation, then they’re going to create success, they’re going to create wealth that no state could ever create.

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  • Michael Miller on the Hypocrisy of Foreign Aid and Trade Barriers

    You’ve got Europe and the United States giving hundreds of millions of dollars in aid. But you also have Europe and the United States protecting markets to not allow these developing countries to get access to their markets, say in agriculture.

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  • Andreas Widmer on Networks and the Poor

    Being poor has nothing to do with one or two dollars per day. Being poor has something to do with being excluded from networks of productivity and exchange, that means cell phones, internet, banks, financial systems, educational systems, trading systems to be allowed to trade, to have free trade, to have products from here that are produced here, to actually be allowed into other countries. If we’re not allowing that to happen, you can’t have entrepreneurs here grow their companies properly.

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  • Andreas Widmer on the Global Oligarchy

    What is happening in the world, in the world market is not capitalism. What is happening is not a free market. What is happening is not competitiveness. It’s actually more aligned with the principle of an oligarchy.

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  • President Paul Kagame on the Freedom to Compete in an Open Market

    Competition is good for everybody…. Competition helps bring out everybody’s potential … and be able to move forward. And it doesn’t matter what level of society; even the poor people have that energy, deserve that freedom where they can be able to compete with the rest and do the best they can, and be able to move forward on that.

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  • Carl Schramm on Africa vs. Asia

    The United Nations has been focused on Africa. There’s been virtually no movement [out of poverty] with two exceptions in Africa. Africa is as poor or poorer than it was 30 years ago. All of the movement from poverty into the lower-middle class and into the middle class, and in many cases people come out of destitute poverty and jump way up into the higher parts of the middle class, has all happened in China and India, in both cases because they have adopted capitalist perspectives and capitalist operations in their economies.

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  • Carl Schramm on Economic Hypocrisy

    I’ve studied economic development for a long time and one of the ironies of history is that in the United States, we have an unfettered free market economy. The minute we set foot abroad to help other people, we establish a central plan for whatever country we’re going to and this plan has a complete view of what infrastructure has to be in place before this development happens, before that development happens, and before the next development happens…We operate with one economy in the United States but we export centrally planned, Soviet-style economies.

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  • Ebow Graham on Aid vs. the Market

    The donors, we are tired of them. All those years, the aid, it has come, come, come. We are still poor… Give us the market; we will come.

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  • Herman Chinery-Hesse on Aid vs. Investment

    [Bono] instead of giving [aid], should put it into small business loans, that kind of thing, and tightly managed by professionals, not in an airy-fairy, we-love-Africa way. That doesn’t help us. The people here are not stupid. They’re just disconnected from global trade, that’s all.

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  • Doug Seebeck on Bangladesh and Trade Tariffs

    The greatest way to end poverty in Bangladesh is through job creation and trade…. Bangladesh exports garments to the U.S. They pay $580 million in tariffs on $3 billion of that trade… Now the United Kingdom, which has this favored trade status, they pay the same amount, about a half a billion, on $60 billion dollars of trade. You see, you get that? Now, if we could remove those tariffs and encourage more trade, if we could get trade going, it would be ten times the value of the aid that we give now basically.

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  • Doug Seebeck on Loving My Neighbor

    How do I best love my neighbor? In this rapidly integrating world, how do I best love my neighbor so that everybody has the ability to have what I have? It doesn’t mean by giving it away. It means by allowing them to succeed.

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  • Rev. Robert A. Sirico on the Benefit of Business

    The argument has been made that global capitalism, or the expansion of free markets, by its nature hurts the poor, and I think that is a seriously untutored idea. The way in which people rise out of poverty is not through state-to-state aid, not at the generosity or behest of bureaucrats, no matter how well intended, no matter how good personally these people may be. But it’s through the opportunities that people have in their families, in their localities, to exchange value, to be involved in business. Business is the normative way in which people rise out of poverty, not state-to-state aid, not the largess of politicians and bureaucrats.

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  • George Ayittey on Freedoms

    Intellectual freedom, political freedom, and economic freedom. [The Free Africa Foundation] believe[s] that those three types of freedom are all interrelated. You can’t just push one and forget about the others…. Africa is poor because she is not free.

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  • John Armstrong on the Power of Freedom and Enterprise

    It has been those who are entrepreneurs who have the freedom, especially in the western context, to dream, to produce, to create jobs, to make money, to turn it around and fund the projects and fund the institutions that will reproduce the— not just the physical financial capital, but the intellectual and spiritual capital that transforms people, societies and churches.

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  • Kim Tan on the Deprivation of Freedom

    In terms of nutrition, they’re deprived. In terms of their housing, they’re deprived. In terms of education, they’re deprived. In terms of opportunities, they’re deprived. See, one of the things that the poor don’t have is they don’t have choice. They don’t have freedom.

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  • Eric Kacou on Competition and Individuality in the Development Process

    What competition does is to create a platform where each individual can unleash its own potential. And this is critical because this really puts the individual at the center of the economic development process, and it really helps this individual drive the development process the way that would be fulfilling for that individual. And this is the type of development that I believe is critical if we are going to create prosperity across the world.

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  • Samuel Gregg on Open Markets and Economic Growth

    If you want to understand why some countries are rich and others are poor, how some countries rise out of poverty and why others are stuck where they are, you need to understand networks of productivity. You need to understand that if you look at examples like the Asian tigers, Singapore, Malaysian, Thailand, Korea, mainland China, Taiwan, what do these countries all have in common? They’ve gone from poverty to relatively high levels of standards of living, precisely because they’ve opened themselves up to trade, opened themselves up to markets, and have also incorporated market-like institutions within their own cities; things like property rights, things like rule of law. All these things lead to wealth creation, but you must have the connectiveness to open markets. Otherwise, wealth growth is going to be very slow.

    More from Samuel Gregg
  • Samuel Gregg on the Value in Finding a Comparative Advantage

    The Asian tigers, Taiwan, Singapore, Malaysia, Thailand, Hong Kong, they’re a wonderful example of how markets open up countries to find the comparative advantage. When a country finds its comparative advantage, like many of these countries did, they are able to produce a good faster, more efficiently, and at cheaper prices. That makes them competitive in the global economy. It also provides jobs for people in these countries, who otherwise would not be able to have those types of jobs.

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Economic Freedom Defined

There are many dimensions to economic freedom and much debate about its definition and measurement. Here, we'll define economic freedom as the ability to engage freely in productive economic activities such as trade and wage labor, to form businesses and practice commercial activity without unreasonable regulation or restriction, to own private property securely and without threat of arbitrary confiscation, and to save, invest, or make purchases as one sees fit. In any society, in any country, economic freedom is a crucial prerequisite for economic development.

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Table of Contents

  • Economic Freedom Defined
  • Economic Freedom Initiative
  • Economic Freedom and Development
  • Economic Freedom versus Crony Capitalism
  • Economic Freedom and Political Liberty
  • The Moral Dimension of Economic Freedom
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Economic Freedom Initiative

via Economic Freedom:

 

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Economic Freedom and Development

Economies that enjoy high levels of freedom tend to be highly productive. There are two main indices of economic freedom, the Economic Freedom of the World (Fraser Institute) and the Index of Economic Freedom (Heritage Foundation/Wall Street Journal). While there are differences between the two and limitations to each, both focus attention on a similar set of concerns, including free trade, property rights, levels of taxation, and business regulation. Most importantly, both find similar positive correlations between economic freedom and economic growth.

For example, high rankings correlate strongly with higher average income per person, higher income of the poorest 10%, higher life expectancy, higher literacy, lower infant mortality, higher access to water sources and less corruption. The people living in the top one-fifth of countries enjoy an average income of $23,450 and a growth rate in the 1990s of 2.56 percent per year; in contrast, the bottom one-fifth in the rankings had an average income of just $2,556 and a -0.85 percent growth rate in the 1990s. The poorest 10 percent of the population have an average income of just $728 in the lowest ranked countries compared with over $7,000 in the highest ranked countries. The life expectancy of people living in the highest ranked nations is 20 years longer than for people in the lowest ranked countries.

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Economic Freedom versus Crony Capitalism

Economic freedom is closely related to the rule of law. Economic freedom implies equal opportunity for all to participate in commercial affairs, to initiate financial transactions, and to create business enterprises. Although it may be seen to be synonymous with capitalism, it should not be confused with a “crony capitalism” by which large and powerful firms with political connections benefit at the expense of marginalized individuals and small operations.

Economic freedom thus requires equal protection under the law and is opposed to favoritism. The property rights of the poor are protected as vigorously as those of the wealthy and well-connected. It is not synonymous with laissez-faire capitalism, because economic freedom is compatible with reasonable governmental regulations designed to promote the common good by, for example, addressing poverty, preventing human rights abuses, and protecting the environment.

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Economic Freedom and Political Liberty

Although the relationship is not always perfectly correlated, history and contemporary experience suggest that freedom in one sphere tends to be linked to freedom in others. Where there is a high level of economic freedom, for example, there is usually strong protection of political and religious liberties as well. Governments that are responsive to their constituents are more likely to ensure conditions that enable all citizens to tap into the prosperity of the economy. 

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The Moral Dimension of Economic Freedom

Arguments for economic freedom extend beyond the material benefits that might result, with some emphasizing that defending the freedom to participate actively and fully in the economy also respects human dignity, leads to a more robust recognition of responsibility, and fosters a sense of achievement and self-worth. These reasons may contribute to the fact that economic freedom studies find that higher economic freedom correlates strongly with higher self-reported happiness.

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