Economic freedom is about, yes, the freedom to buy and sell stuff, but it’s also about
the freedom to interact with people, to converse with people, to travel where we want, to say
the things we want to say. These things [that] involve interaction with others are truly
at the core of economic freedom.
There’s a tremendous body of evidence that suggests that economic freedom is associated
with many of the things we think of when we think of a healthy society. We can look at
the Economic Freedom of North America Index. States with more economic freedom have higher
growth rates of the economy, they have lower unemployment rates, they have less debt per
GDP than states that are less free.
All of these things we associate with economic health are also associated with economic freedom,
but we see the same phenomenon when we compare countries of the world. The most economically
free countries have GDPs per capita that are about 10 times the size of less economically
free countries.
One might argue that what we’re seeing is the big country effect. That is, big countries
will tend to be economically free, and they’ll also tend to have high GDP per capita. But
if we restrict our vision to just the poorest 20 percent of countries, the poor countries
that have the most economic freedom have GDP per capita that are 50 percent greater than
the poor countries that have less economic freedom.
One counterargument is that GDP per capita only measures average income. It’s possible
that you could have a country with a small number of elite, rich people and a large number
of destitute people. But if we examine inequality measures, what we find is that the countries
that are more economically free also have more equitable income distributions. That
is, economic freedom is not only associated with higher income levels on average, but
it’s also associated with a more equitable income distribution.
Skeptics might argue that economic freedom achieves greater income because of exploitation,
exploitation of people and exploitation of the environment. Let’s look at the data
and see if this is the case. On average, women in economically free countries have more gender
equality than women in economically less-free countries. Also, child-labor rates tend to
be lower in economically free countries and higher in economically unfree countries.
One might argue that child-labor rates are lower in economically free countries because
economically free countries are richer and therefore can import products from poor countries
that do not have child-labor laws. In effect, the rich countries encourage the poor countries
to exploit their children so the rich countries don’t have to exploit theirs.
But if we look at the poorest countries, we see the same phenomenon. Even amongst the
poorest countries, those with more economic freedom have lower child-labor rates than
those with less economic freedom.
Economic freedom also accompanies reduced exploitation of the environment. For example,
deforestation is worst amongst the least economically free countries. Meanwhile the most economically
free countries actually experience reforestation: Their forests are growing.
Economic freedom is about the freedom to act. The more freedom we have to act, the more
able we are to do the things we want to do: to create wealth, to protect the environment,
to help people be equal across genders, to help children no longer have to work in factories.
It’s about being free to make your own choices and to live with the consequences of those
choices, provided that you do not violate anyone else’s freedom. The more economic
freedom we have, the more able we are to make the world a better place.