Most people assume the United States is the most economically libertarian country. Not so.
Even though the US has the highest number (in both absolute and percentage terms) of self-identified libertarians, and even libertarian ideas get more play in mainstream US politics, the US is not the most libertarian country overall. It does not have the strongest commitment to economic or to civil liberties. Many of the countries that Americans and others are inclined to describe as “social democracies” or “socialist” actually are more libertarian than the United States.
Libertarian rhetoric is more prominent in the US than elsewhere. But talking libertarian talk is not walking the libertarian walk. We need to see what the governments of different countries actually do.
The Wall Street Journal and Heritage Foundation produce an annual Index of Economic Freedom. They rate countries for their respect for property rights, freedom from corruption, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, financial freedom, fiscal freedom, and government spending. Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Chile, Mauritius, and Ireland have higher overall scores than the United States.
… Australia, New Zealand, the United Kingdom, Canada, and Switzerland have higher levels of economic freedom. Many of the Scandinavian countries—which Americans often call “socialist”—beat the US on many central aspects of economic freedom.
I go on to argue that we should regard Denmark in particular as economically freer than the United States. Yes, Denmark has high tax rates, but on almost every measure of economic freedom, it trounces the US.
Denmark ranks much higher than the United States on property rights, freedom from corruption, business freedom, monetary freedom, trade freedom, investment freedom, and financial freedom. Luxembourg, the Netherland, the United Kingdom, and many other countries beat the US on these measures as well. Thus, many other European countries might reasonably be considered more economically libertarian than the US.
Denmark also rates 99.1 in business freedom, 90.0 in investment freedom, and 90.0 in financial freedom. In comparison, the US scores 91.1, 70.0, and 70.0 respectively on these measures.)
Denmark and Switzerland have remarkably effective welfare states, but that doesn’t make them social democracies by the standard American Left’s idea of social democracy. Rather, think of them as free market countries with strong, well-functioning social insurance programs. They may be examplars of the most statist version of bleeding heart libertarianism.
Hard libertarians would regard Denmark as unjust because it taxes some to provide for others. Neoclassical and classical liberals in contrast may look favorably upon Denmark or Switzerland.
When I was writing the book, the Fraser Institute still ranked the US 10th overall in economic freedom. However, it now ranks the US 18th overall, lower than Denmark.
As I have argued in previous posts here, there’s a difference between the administrative state–which tries to control, regulate, and manage the economy (and everything else), and the social insurance state, which taxes citizens and provides publicly-funded social insurance. Hard libertarians oppose both the administrative state and the social insurance state, because they believe both violate people’s rights. Classical liberals and neoclassical liberals dislike the administrative state for a variety of reasons. But they are more open to the social insurance state. The social insurance state, by itself, if run properly, still allows citizens an expansive range of economic freedom.
On that note, John Tomasi recently did a few lectures in Sweden on Free Market Fairness. Even if we put his lecture at Timbro aside, he found that Swedes were remarkably open to his ideas in a way that American academics were not. Tomasi wonders: Are American academics pushing hard to make the US what Sweden was between 1970 and 1990, but the Swedes know this is a mistake? Tomasi writes:
Been thinking: The growth of our understanding of the moral requirements of social justice has lagged behind the growth in our understanding of the economic problems facing socialism and social democracy alike. Countries that have honestly absorbed the institutional lesson (Sweden) seem especially open/eager to consider the moral one (Sweden, or at least most every Swede I talked with last week). Market democracy, nordic style…
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