Peter Jaworski comments here.

http://www.thevolunteer.ca/2011/03/canada-is-free-the-u-s-is-mostly-free/

When the Heritage Institute measures economic freedom, the US comes out lower many other states, including Switzerland, Denmark, and Canada. Now if you make a distinction between the regulatory state and the social insurance state, and just make comparisons with regard to how heavily governments interfere in the economy, the US looks even worse. Go here and compare Denmark to the US on business freedom, trade freedom, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom. Notice Denmark tends to win, usually by a wide margin?

This is just on economic freedom. How might the US compare on other kinds of freedom? My hypothesis: often not too favorably.

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  • Jason Brennan

    Mike,

    Did you mean your comment to be aimed at Fernando or me?

  • http://www.thevolunteer.ca P.M. Jaworski

    Thanks for the mention, Jason.

    I trust the Fraser Institute’s Economic Freedom of the World annual report much more than Heritage’s, by the way. According to the latest findings there (September, 2010), Canada is seventh with 7.95, while the U.S. is sixth with 7.96. http://www.freetheworld.com/news.html

    Wikipedia has a list of freedom indexes here: http://en.wikipedia.org/wiki/List_of_freedom_indices They have a nifty chart near the bottom.

    The results? The countries that count as free across the board are: Canada, New Zealand and Switzerland. Sweden, Netherlands, Norway, Luxembourg, Ireland, Germany, Finland, Denmark, Belgium, and Australia get three out of four.

  • Dan Kervick

    Well, if lots of libertarians and progressives can come together in admiration for the Scandinavian social model, I would say there is good reason for optimism about the possibilities of a new coalition.

    I had one question about DeSoto’s preface to the report. It seems to me that he misrepresents the problem that was created by mortgage-backed financial derivatives, so as to force that problem under his favorite rubric of inadequate property rights protections and confusion about ownership.

    To be sure, there have been problems created by the buying and selling of mortgages themselves, to the extent that there are mortgages whose ownership is now in doubt. But my understanding is that that is a separate problem from the securitization of pools of mortgages, and the selling of derivative securities backed by these mortgages. I don’t think the big problem with the derivatives has much to do with confusion over who owns the securities or even who owns the underlying mortgages. The problem is that the overly complex causal chains lying between the derived value of the securities and the fundamental asset and liability values upon which they rest leads to a tremendous loss of information and corresponding accumulation of risk, as well as an unacceptable diffusion of accountability for the taking of risk.

    I believe that we have all learned something form this financial crisis about how people respond psychologically to risk, and how that informs the pricing and marketing of assets. It’s not rational or pretty. We have also seen more problems about the dangers inherent in diffused ownership, and the role of the “I’ll be gone; you’ll be gone” phenomenon. When people are allowed to make transactions with other people’s money, but have little accountability for their errors and imprudent decisions, tremendous mischief can result. This is especially true when the sums of money are so large that the transacting agent can make a fortune adequate for an entire lifetime within the space of a few months.

  • Nathan P.

    To Mike Huben: Claiming that corporations value economic liberty is flogging a dead horse. The incentives faced by business people mean that they rationally value protectionism, not free markets.

    This post wasn’t really addressed to liberals, anyways. It was addressed to libertarians. We’re the ones who find it scandalous to say that the USA should look more like Sweden.

    I personally am not convinced, but I am willing to consider the possibility!

  • Jason Brennan

    Nathan.

    Thanks, but I actually do intend this to be something left-liberals should strongly consider. Many of them–though not all–are surprised by these kinds of rankings.

  • Nathan P.

    Oh, well, I suppose so. So they don’t think of Sweden as a bastion of economic liberty in the first place? I guess because ‘economic liberty’ is more prone to getting Mr. Huben’s reaction than anything else…

    Sorry to have been so presumptuous.

  • http://profile.typepad.com/andrewlevine Andrewlevine

    I think most American liberals DO think of Sweden as a bastion of economic liberty. Recall that the phrase “economic liberty” means different things to different people.

    I agree with the premise of the post, that countries like Sweden and Denmark enjoy the most economic liberty in the world, partly for the reasons Jason has pointed out. But look at what their tax-to-GDP ratios are, and see how the Heritage challenges the traditional libertarian view of “economic liberty”:
    http://www.oecd.org/dataoecd/48/27/41498733.pdf

    There are some to whom any definition of “more economic liberty” necessarily includes, among other things, “lower taxes”. This is the definition that Huben was responding to, but it clearly is not one that applies to Denmark or Sweden (where taxes are about half of GDP, compared to 28% in the US).

  • http://www.law.upenn.edu/cf/faculty/mlister/ Matt

    I don’t doubt that Switzerland has many virtues. But whatever it’s level of freedom on some scales, its truly hideous immigration laws are a huge negative aspect, and certainly limit freedom for many. (Not just for would-be immigrants, either, but also for people who would like to associate with them.) That these immigration laws are closely connected with some truly vile racism also makes me suspect that, if you’re not in a pretty select group, it’s not such a wonderful place to live, and that many people would feel less free there than the official law would lead you to believe.

  • http://www.tmmblog.co.uk Cahal

    I’ve never really placed much value on economic freedom as a statistic; seems it is mostly a veil for free market ideology.

    I don’t think average people care about it too much either, outside of tax rates.

  • http://profile.typepad.com/panglottblogspotcom Panglott.blogspot.com

    I think this is the post that convinced me that “liberaltarian” might actually be workable in some sense.
    http://www.willwilkinson.net/flybottle/2009/02/23/the-possibility-of-big-and-free/

    But I think that liberals and libertarians have a lot of trust issues on this, due to the old fusionist alliance on the right. Economic freedom and social welfare may be two great tastes that taste great together, but I think lots of liberals suspect that libertarians will just call them socialists anyway and refuse half of the bargain.
    http://yglesias.thinkprogress.org/2011/03/what-about-singapore/

  • John

    We make these comparisons and i wonder if they are legitimate. What would Sweden or Denmark look like if they were the size of the USA? What if they had the same level of cultural/ethnic diversity?

    I suspect that one’s level of trust in strangers is positively correlated with commonality — shared culture type things.

    This does make me wonder if polities that force a more egalitarian income might not plant some seeds for wider spread trust of one another, ceteris paribus, in the area of economic rules.

  • http://profile.typepad.com/theotherchuckd TheOtherChuckD

    Though it may sound flippant, the only measure of freedom many of the noisiest right-libertarians can bring themselves to get exercised about is the top marginal tax rate.

    It doesn’t matter how easy it is to start a business in Sweden or how fluid labor markets are in Denmark as long as taxes are high.

  • John V

    TheotherChuckD,

    Yes, that was flippant. You’re taking one argument that is the priority for SOME people (I haven’t seen the libertarians here making a big stink about this here, BTW)and addressing that rather what is being talked about.

    My view, as a strong libertarian, is that Denmark is a wonderful model for economic freedom is terms of “rules”. The Danes have excellent policies to allow markets to function properly and naturally…far more than many like to admit because people like to dwell on their redistribution policies and taxes. Now, do the Danes need such high taxes and generous redistribution to maintain their level of prosperity? I don’t know. But I don’t think so because what really drives the wealth in Denmark is the “rules” which are very, very good.

    My position is best put this way:

    Given the two extreme choices of high taxes and redistribution and relative freedom of capital and labor (good rules) VS. almost no taxes and a heavily dirigiste state of heavy top-down economic control, I’d choose the former because the society will be far better off a much better place to live. Why? Because Freedom of Capital and Labor with as few restraints on choice and movement is more important to strong economic growth.

  • http://homebrewindustrialrevolution.wordpress.com Kevin Carson

    The Freeman: Ideas on Liberty just published an article by me on this question:
    http://www.thefreemanonline.org/featured/what-economic-freedom-indexes-leave-out/

  • http://stickmanscorral.blogspot.com stickman

    Andrew Levine (above) more or less nails it:

    Recall that the phrase “economic liberty” means different things to different people.

    As a foreigner that has now lived in the Nordics for close on two years, this is the crucial distinction that I keep trying to point out to dogmatic, US-style libertarians.[*]

    From my experiences, Scandinavians place a premium on equality and fairness alongside prosperity. They appreciate the benefits offered by social security (and, by and large, trust their politicians to make sensible decisions). As one example, the State education loan funds in these nations put an excellent tertiary education in reach of virtually every student. This ensures that they preserve a critical mass of human capital that helps maintain the countries’ international competitiveness, say nothing of rewarding student meritocracy regardless of the social standing of their parents.

    Now, I certainly don’t agree with everything that I have experienced here (e.g. the ridiculous state monopoly on selling wine and spirits), and would be cautious for suggesting how replicable their system is given the small size and homogeneity of their economies. However, I will say that their mixed-economy structure works for them, if nothing else, for the simple reason that everyone buys into it.[**]

    Freedom in terms of “outcomes” is one thing, but it is the premises themselves that form the crucial distinction here.

    [*] Actually, there have been a number of interesting articles on this precise matter… See, for instance, here and here.

    [**] An example that was particularly striking to me: You can freely view the full salary and tax contributions of each and every Norwegian citizen (your neighbour, priest, date for next Friday night… even members of the Royal family) on public websites (e.g. here). You can only imagine the cries of “privacy invasion!” if you tried to implement that kind of system in other parts of the world and yet it is consistent with the Nordic view of how a transparent and fair society should be run.

  • John V

    Stickman,

    Now seriously try to imagine the Swedish model in education (or in general) and its results in a diverse country of 300 million people with high immigration and tell if it works just as well.

    I’ll never cease to be amazed at how people can look at a totally different circumstance like Sweden and ignore all that is different and think we can do the same here.

    One need only look at slightly larger and more diverse countries like France and see that the same intent doesn’t yield the same results….never mind taking that even further with an example like the US.

    Looking at Sweden is like looking at Vermont or Wisconsin…or any other small example compared to the whole.

  • http://stickmanscorral.blogspot.com stickman

    John V,

    Please note my previous comment:

    [I] would be cautious for suggesting how replicable their system is given the small size and homogeneity of their economies.

    You are seeking confrontation where there is none.

    My primary point – and that of many others – is that Scandinavian countries define “freedom” in ways distinct to many Americans (although there are obviously a number of common themes). If you disagree with this, then I would be happy to debate.

    Are the the US and the Nordic countries close substitutes? Clearly, no. Might the US learn something from the way these countries approach “freedom” or integrate state activities into the broader economy? I dare say, yes.

    (An example from own field of specialisation: Consider how Scandinavian countries have exposed national energy utilities to ultra competitive market forces at the same time as they support public finances and broader social programmes.)

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  • hikerguy

    how fantastic is it that a libertarian web site shares ideas without anyone yelling at each other… just imagine a congress like this

  • Jack

    The US is highly oppressed. Freedom? That’s been long gone in the USA.

  • yuki

    I personally think the more active a country is in stuff like wars and ect. the more problems it would have within its country.

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