Economic Freedom vs. Social Progress

According to the 2017 Index of Economic Freedom,  conducted annually by the Heritage Foundation, a leading U.S. conservative think tank, the following countries rank the highest in “economic freedom”, which includes factors such as rule of law, property rights, ease of starting and running a business, and regulatory and tax burden:

  1. Hong Kong
  2. Singapore
  3. New Zealand
  4. Switzerland
  5. Australia
  6. Estonia
  7. Canada
  8. United Arab Emirates
  9. Ireland
  10. Chile

The United States ranks 17th, after Lithuania and the Netherlands and ahead of Denmark and Sweden (though not by much).

It is worth noting that nearly all of the nations that are deemed friendliest to business and investment nonetheless maintain such socially progressive policies as universal healthcare, free or affordable secondary education, a strong social safety net, and other forms of public welfare.

Granted, they all go about these things in different ways — Switzerland, Hong Kong, and Singapore take a more free market approach than the other high ranking nations — yet they still pull them off without sufficiently constraining entrepreneurship or commerce.

To be sure, I am critical of some aspects of the Index’s methodology and criteria, such as its assumption that any sort of regulation or constraint of the excesses of business are inherently bad for economic freedom. (Barring any checks or balances, the dominance of private-sector elites and big corporations can be just as much a damper on the private enterprise of the common individual.) Also note the high ranking of states like Singapore and the U.A.E., which are not the most open and democratic societies despite their otherwise free economies.

But the point remains that even by the standards of a staunchly right-wing think institution, countries with generous social policies succeed in balancing their commitments to public welfare with facilitating the individual pursuit of economic success. Surely a country with as many resources and as much creativity as the U.S. could pull this crucial balance off better than Chile, Estonia, or Canada.

What are your thoughts?

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