Friday, January 21, 2011

Actually, Canada Ranks Even Higher

Yglesias:

I was struck to learn recently that a Heritage Foundation / WSJ op-ed page survey decided Denmark has more “economic freedom” than the United States of America. Well, it also has taxes as a much higher share of GDP, much less inequality, stronger labor unions, and it’s dramatically “greener” in terms of per capita (or per unit of GDP) carbon emissions. It seems to me that all things considered, progressives would gladly make the swap. And apparently conservatives would, too.

1 comment:

Downes said...

The survey actually includes a number of repressive measures under the rubric of 'freedom'. The formula doesn't merely measure tax rates, for example, it specifically pinpoints the highest tax rates. Countries with lower (or better yet, none) minimum wages rate higher. Countries with no regulation of the financial sector are ranked as 'freer' (despite the fact than unregulated financial sectors result in repressive corporate practices). The index also prefers lower government spending and (ergo) a minimum of social programs. Etc. - I could go on.

Even so, Canada, Australia and New Zealand rank very high because, despite having high minimum wages, government spending (including health care spending), and taxes on high earners, these countries have very little corruption, less red tape and hinderances to business. Hong Kong and Singapore, by contrast, have very low government spending and few restrictions on the financial sector - the former is what we would expect from cities with no military or other federal responsibilities.

A real ranking of freedom would leave Canada, New Zealand and Australia near the top, and drop Singapore and Hong Kong down the list. Because when you have little government regulation, you have a lot of corruption (as the stats here show) and the need for a lot more police and more repressive legal system - things that don't show up on the charts, because the WSJ doesn't really care.