
America's Dwindling Economic Freedom - f_salmon
http://online.wsj.com/news/articles/SB10001424052702303848104579308811265028066
======
bazzargh
Huge pinch of salt and 'citation needed' on this. The Heritage Foundation is a
self-described conservative think tank, and just seems to be relabelling 'low
tax' as economic freedom here.

The purported benefits: "Countries achieving higher levels of economic freedom
consistently and measurably outperform others in economic growth, long-term
prosperity..." really? From 2000-2008, Ireland held 3rd or 4th spot in the
list[1], and is now 11th. Worked out great for them, what with the recession,
the bailout, and the 2nd highest level of household debt in the world[2].

To those who would reply 'but that's outside forces, economics is
complicated,', well, exactly. Reducing it to a list like this is wishful
thinking.

[1]
[https://en.wikipedia.org/wiki/Index_of_Economic_Freedom](https://en.wikipedia.org/wiki/Index_of_Economic_Freedom)
[2]
[https://en.wikipedia.org/wiki/2008%E2%80%932013_Irish_financ...](https://en.wikipedia.org/wiki/2008%E2%80%932013_Irish_financial_crisis)

~~~
brc
I think the point there is not that fact that Ireland had a major economic
crisis, but what the response to that crisis was. My memory on this is
imperfect, but I recall all the banks getting nationalised and the losses
being pinned on the taxpayer. That would demonstrate a loss of economic
freedom in the way the index seems to weight it (lower public debt and lower
taxes = higher economic freedom). So I don't see a particular problem there.

If Ireland had followed more of the Iceland model post-crisis (dissolve the
entities, prosecute the execs, reneg on debt) then I think the results for
Ireland would probably be different.

~~~
bazzargh
The problem isn't that the rating for Ireland went down when the economic
indicators did, it's that HF claim the rating is a predictor of economic
performance, without a shred of evidence.

~~~
brc
The way I see it, if Ireland hadn't pinned the taxpayer with the losses, their
economic freedom would be higher, and their economic growth would probably be
better. Certainly Iceland has fared better than Ireland in terms of economic
growth since the 2008 crash - though Iceland appears further down the list of
Economic Freedom. If Ireland _had_ acted differently, it would likely have had
better growth, and would be higher in the list as in the past. I think this
case is fine in terms of the methodology.

~~~
bazzargh
You're not seeing the wood for the trees. Ireland is just one example _among
many_ where it is a poor predictor of growth. I could pick out China, India,
Brazil (and complain about the weighting given to small countries), or just
point at...all of the data:

[http://www.leftbusinessobserver.com/Freedom1996.gif](http://www.leftbusinessobserver.com/Freedom1996.gif)

It's comically bad. Random things like penis size correlate better with
economic growth
[http://static1.businessinsider.com/image/5008876deab8ea62620...](http://static1.businessinsider.com/image/5008876deab8ea626200000f/gdp-
male-organ-penis.png)

(that's from a real paper from the Helsinki Center of Economic Research, btw,
though it's obviously tongue in cheek)

Even its correlation with GDP is pretty shaky:
[http://www.heritage.org/index/book/images/in-2014-chapter-1-...](http://www.heritage.org/index/book/images/in-2014-chapter-1-chart-2.jpg)

This is nothing but a list to write press releases around. There is no science
to it, and we shouldn't take it any more seriously than articles about the
mathematical formula for the perfect sandwich.

------
elipsey
I'm annoyed. I came here to point out who the heritage foundation is, but
bazzargh has it covered:
[https://news.ycombinator.com/item?id=7062656](https://news.ycombinator.com/item?id=7062656)

TFA complains about "marginal income rates of %43" as though this were the
general case. For what it's worth, %43 is the highest capital gains rate, the
highest income rate is %39, which is for incomes of over 1.8MM:
[http://en.wikipedia.org/wiki/Income_tax_in_the_United_States](http://en.wikipedia.org/wiki/Income_tax_in_the_United_States)

With that out of the way, the highest marginal tax rate was around %90 during
the boom of the 50's and 60's, and is lower now than during Regan
administration for example: [http://www.ntu.org/tax-basics/history-of-federal-
individual-...](http://www.ntu.org/tax-basics/history-of-federal-
individual-1.html)

If one is a member of the very highest tax bracket, then one might be tempted
to measure freedom by the myopic comparison of income tax rates. It would be
unsurprising if the Heritage Foundation were concerned about the very highest
tax rate in great disproportion to it's nominal consequence.

There are other economic freedoms: freedom from excessive gov't granted
monopolies (patent/copyright), freedom from protectionism, tariffs, limited
work visas, etc. Even rich guys driven to distraction by high tax rates ought
to be able to find something say about these sorts of things in an article
about economic freedom, but no specific structural reforms are proposed. News
flash: partisan think tank doesn't like taxes, president.

For the rest of rest of us, real freedom also means not being imprisoned for
interacting with other consenting adults in ways that are illegal, and not
being denied due process in various ways such as: torte reform, civil asset
forfeiture, being spied on by agencies who are immune from judicial review,
etc. Could we take a break from wringing our hands about the welfare of the
ultra-rich, and work some of that stuff too?

~~~
yummyfajitas
_For the rest of rest of us, real freedom also means not being imprisoned for
interacting with other consenting adults in ways that are illegal..._

You mean interactions like paying a consenting adult $7.24/hour to clean your
bedroom? Selling a consenting knowledgeable adult a substance which has not
passed FDA review? Paying a person without a medallion to drive you to a
different location?

As far as I know, you don't escape from patent/copyright or work visa issues
by travelling to other nations. Incidentally, those things are included in the
Heritage rankings, and collectively get more weight than tax/govt spend.

[http://www.heritage.org/index/about](http://www.heritage.org/index/about)

~~~
elipsey
>> You mean interactions like paying a consenting adult $7.24/hour to clean
your bedroom? Selling a consenting knowledgeable adult a substance which has
not passed FDA review? Paying a person without a medallion to drive you to a
different location?

When I said the article proposes no particular structural reforms, and ought
to take on protectionism, &c. I meant that these are exactly the sort of
issues I would like to have seen addressed.

It seems like we have in common more than you think :)

------
jasonkester
Hmm. You know those dozen or so countries even further down the list than the
US do sorta seem like nice places to live. Germany, Sweden, Japan and so
forth. Maybe there are just a lot of countries in the world, and not everybody
can be in the top 10 for everything every year.

The reasons the author lists for why my freedom is suddenly so limited don't
seem like they would really impact me all that much. So there's more health
care regulation. And now I'm supposed to be panicking?

Perhaps not.

~~~
mpweiher
"...nice places to live...why my freedom is suddenly so limited don't seem
like they would really impact me all that much"

 _Economic_ freedom, that is the freedom of companies to do as they please, is
often in conflict with _individual_ freedom. For example, I find myself with
much greater freedom as an employee or as a consumer in Germany than in the
US, because the inherent imbalance in power between the two parties is leveled
by regulations curtailing the corporations' freedom.

~~~
brc
Economic Freedom is the freedom for you as an individual to follow your own
path. It has nothing to do with individuals vs corporations. Regulations do
not make you free.

How free are you to start up a company in any given field? To earn income
doing a task of your choosing? To spend your income on items of your own
choosing?

That is the essence of economic freedom.

In the details it shows that the USA is still very high in certain areas -
like personal freedom in labor mobility - but is getting marked down for
continued and excessive debt.

I think the list is somewhat imperfect (Hong Kong is no longer a country,
despite it's commendable history of low taxation and personal freedoms, now
lost to being a chinese micro-state).

The discussions around healthcare seem to muddy the waters - although it is a
hot topic I don't think it really counts for much as most of the countries
above the USA have much more regulated or state owned health care.

~~~
Jare
> Regulations do not make you free

Regulations prevent more powerful others from removing my own freedom as they
want.

~~~
brc
See my other reply, but the only 'more powerful other' that has the ability to
remove your economic freedom is a government. A large corporation cannot
remove your ability to change jobs, spend your income how you like or start up
a new business unless they do it through the government.

Microsoft or Apple can't prevent me from starting up a new company or buying
some other product unless they get the government to regulate my other choices
out of existence - which means they can only harm me by decreasing my economic
freedom. The exact opposite to what people seem to be trying to say here.

------
DGrutt
You can see a big difference when you look at Africa. Countries like Botswana
and Mauritius really have seen great gains in economic growth through economic
freedom, yet we think the whole continent is struggling. Compare that with
Cuba, North Korea, and Zimbambwe at the bottom. For a while Botswana was
outpacing Hong Kong, Singapore, Taiwan and South Korea in economic growth
rate.

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spindritf
Here's the actual index
[http://www.heritage.org/index/](http://www.heritage.org/index/)

It's a pretty well made website. You can export filtered data in csv, there
are profiles for each country, etc.

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thecolorblue
I think its two difficult to put the US and UK (as examples) on the same scale
as other countries. Miller suggests that tougher regulation has caused the US
to loose points. I would argue the US needs more regulation, compared to
smaller countries, for stability.

~~~
cmdkeen
I think the point being made is the blunt nature of the regulation - "entire
industries" are being regulated. More regulation doesn't necessarily mean
better regulation.

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pessimizer
tldr; Arbitrary number made up by conservative think tank not known for
intellectual rigor is declared to have risen, press released.

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ChristianMarks
Unscientific rubbish. Discourse about economic justice is "value laden" but
talk of economic freedom is based on "economics without values."

------
xradionut
Norway, which is the "happiest" country is ranked number 32 on this list.

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vmsmith
That's kind of a silly list. Look at the 11 countries above the U.S. in
'economic freedom'..

First, there's Hong Kong, Singapore, Switzerland, Mauritius --
Mauritius...?!?!? -- Ireland, Denmark, and Estonia.

Really? You're really going to compare those postage stam...sorry, countries,
and their so-called economic freedom to the U.S.? Really?

Australia, Canada, Chile, and New Zealand...OK, I can perhaps buy that.
Particularly Australia and Canada.

Now look at the countries below the U.S. Included are:

Taiwan, Germany, South Korea, Israel...all doing quite nicely on the
capitalist front.

Not to mention Norway, Sweden, Finland, and several other countries with
arguably higher standards of living and qualities of life than the U.S.

A silly list purporting to demonstrate an even sillier implication.

~~~
jedrek
A friend just moved back to the us from Denmark and can't shut up about how
much better it is for business in the US.

~~~
gaius
Jante Law. "Who are you to start your own company? Do you think you're better
than an employee?"

------
nirnira
Seems like bullshit. Australia has ludicrous regulations on competition,
including a massive minimum wage, with all sorts of knock-on distortionary
problems, yet it makes the top five.

