“Asia is home to the world's freest _ and most repressed _ economies, but Europe ranked highest as a region in terms of economic freedom, an annual report released Tuesday by the Heritage Foundation and Wall Street Journal said.”
So began an Associated Press news report of the Heritage Foundation report just released.
Naturally I was intrigued, particularly since the conclusions in the AP report ran counter to what I have studied and observed this past half-century. I wondered, as Ross Perot may have mused, whether there was a Devil in the details, so I went to the Heritage Report.
There I found, in a strict reading of the Heritage Report, that Asia is indeed home to the world’s freest – and most repressed – economies. The two freest in the world are the city/states of Hong Kong and Singapore, but then you have to drop down all the way to 17th to pick up the next free Asian economy, Japan, and China comes in at 126th.
Europe being ranked highest as a region in terms of economic freedom also requires very strict reading of the Heritage Report. According to the AP, their rationale for ranking Europe first as a region was that: “European countries accounted for half of the top 20 economies considered free or mostly free, with Ireland at No. 3, Switzerland at No. 9 and Britain at No. 10.”
Rounding out the top 20 freest European economies: Denmark at No. 11, Estonia at No. 12, Netherlands at No. 13, Iceland at No. 14, Luxembourg at No. 15, Finland at No. 16, and Belgium at No. 20.
All told, these ten freest European countries make up 32 percent of the total European Union (EU) Gross Domestic Product (GDP), although the UK GDP is larger than the total of the other nine ranked with it in the top 20. The percentage of EU GDP that belong to EU countries ranked in the top ten freest is only 20 percent.
One obvious conclusion from looking at the numbers so far is that 68 percent of the EU GDP is produced by members not ranked in the top 20 freest: Germany at No. 23, Spain at No. 31, France at No. 48, and Italy at No. 64. In fact, these four lower ranked EU members produce 57 percent of the EU GDP, or almost double the total of the “freer” EU countries.
Apparently it suits the political point-of-view of the AP to not mention anything about the position of North Americans in terms of freest economies. Again, using a strict reading of the Heritage Report, the AP is correct in stating that only two of the top twenty freest economies are in North America: the United States at No. 5, and Canada at No. 7 (the AP erroneously listed Canada at No. 6). However, the combined US and Canadian GDP is 30 percent of the gross world product, virtually identical to the European Union GDP.
According to the Heritage Report: “America could do better in its scores for fiscal freedom and government size, which are 7 and 8 points below average, respectively. Total government spending equals more than a third of GDP. Corporate and personal taxes are moderately high and are getting relatively higher as other advanced economies reform with lower tax rates.”
In other words, American economic freedom suffers because of high government spending and taxation.
To put it another way, American economic freedom suffers because of high government spending and taxation.
It bears repeating that American economic freedom suffers because of high government spending and taxation.
In conclusion, America could have the world’s freest economy if not for high government spending and taxation.
Another way to compare is to look at how much of the world’s population live in the freest economies. Obviously a Frenchman living in the 48th freest economy can’t claim to enjoy the economic freedoms of an Irishman at No. 3, even though both are European.
While a total of 111 million Europeans (23 percent of the EU population) live in the top twenty freest nations economically (and 77 percent don’t), 334 million North Americans (100 percent of Americans and Canadians, and triple the number of Europeans) live in the top twenty – make that the top ten - freest.
In fact, 89 percent of the residents of the nations having the top five freest economies are Americans.
From these facts, obvious conclusions can be drawn about which region of world has the freest economies, unless you’re an AP editor.
The surest path towards having the freest economy becomes obvious from the Heritage Report – have an English heritage.
Look at the top ten of the entire list:
1. Hong Kong
5. United States
6. New Zealand
10. United Kingdom