Today, freedom throughout the world is under threat and we are witnessing more and more economies adopting policies that stifle freedom based on the fallacious notion that free markets have failed and the state knows best. The new book, Towards a Worldwide Index of Human Freedom,should serve to focus the attention of people throughout the world, and South Africans in particular, on the importance of freedom – both economic and personal. Economic and personal freedoms are mutually reinforcing and indivisible; there is simply no wriggle room – it is impossible to have one without the other.
On 8 January, the National Executive Committee (NEC) released a statement on the occasion of the 101st anniversary of the African National Congress (ANC). On the same day, the Free Market Foundation (FMF) released the results of a new index, incorporated in Towards a Worldwide Index of Human Freedom, co-published by the Canadian based Fraser Institute and the German based Liberales Institut. The new empirical analysis is well timed.
Since the mid-1990s, the Fraser Institute has published the Economic Freedom of the World index. This index has equipped us with strong, long-term evidence that free-market-orientated economic policy leads to an overall better economic performance as measured by a host of variables such as income per capita, economic growth rates, etc. The index has also demonstrated improved non-economic outcomes such as life expectancy, health, literacy, etc.
Yet, despite a plethora of evidence that economically free societies are better off by virtually every measure of wellbeing than societies that are directed and controlled by a central authority, there continues to be significant opposition to ideas of political and economic freedom. Indeed, in the South African context much of the thinking still suffers from a planning paradigm and a persistent insistence that development is, in a fundamental sense, up to the government rather than individuals.According to the NEC’s January 8 statement, “Within this mixed economy, we re-affirm the active and interventionist role of the state in ensuring economic development. It must be a state that has the capacity to intervene in the economy to lead development.”
Despite the overwhelming evidence, opponents of freedom have argued that economic freedom can flourish in places where civil liberties have been significantly stifled. However, Nobel Prize winning economist Milton Friedman famously said capitalism is a necessary condition for freedom but it is not a sufficient condition. It is not true that wherever you have capitalism you have freedom. One just has to look at the policies of Chile’s Pinochet. Although we would consider his policies to be economically free, his dictatorship embraced almost all of the bad qualities of centrally planned states. The so-called “evidence” that opponents of freedom use to back up their argument that in order to foster economic development, the role of the state needs to be increased, do not stand up to rigorous empirical analysis. In fact, the statistical evidence demonstrates that economically free dictatorships are the exception rather than the rule.
Freedom lovers required a more comprehensive measure that also included human freedom in the analysis. According to Fred McMahon, editor of the new book, Towards a Worldwide Index of Human Freedom, “Our intention is to measure the degree to which people are free to enjoy classic civil liberties – freedom of speech, religion, individual economic choice, and association and assembly – in each country surveyed. We also look at indicators of crime and violence, freedom of movement, legal discrimination against homosexuals, and women’s freedoms”.
This publication adds considerable weight to the virtues of increased freedom by including a new dimension that examines the characteristics of freedom more generally and how “freedom” can best be measured and compared between different nations. According to the index, New Zealand leads the world in human freedom, followed by the Netherlands, and Hong Kong. South Africa is ranked 69th out of the 123 countries included in the index, coming third in Sub-Saharan Africa behind Ghana 55th and Namibia 62nd.The lowest-ranked countries in the index are Zimbabwe, Myanmar, Pakistan, Sri Lanka, and Syria.
The distinction between personal and economic freedoms can be demonstrated by using African examples. Uganda has a better economic freedom score of 7.3 out of a possible 10 than South Africa, which has a rating of 6.75. However, Uganda has a lower personal freedom score (4.90) compared to that of South Africa (7.30). As a result, Uganda has a lower overall Freedom Index score (6.00) than South Africa (6.94). This would suggest that it is better to do business in Uganda but to live in South Africa. However, if we shift our attention to New Zealand, we see that it scores 8.22 for economic freedom and 9.20 for human freedom, which results in an overall score of 8.73 on the Freedom Index. Thus, in absolute terms, New Zealand is a better place both for doing business and as a place to live.
This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.