The following article was published in the July 2012 Discovery Newsletter.
- Economic freedom: a heated debate
For more than 20 years, Flint Hills Resources’ Pine Bend Refinery has provided realistic training opportunities for rookie firefighters from area fire departments.
Government policymakers, by contrast, seem to have had much less effective training when it comes to dealing realistically with economic firestorms.
Ever since the economic meltdown that began in 2008, governments have spent trillions of borrowed and newly created money trying to avoid economic disaster.
And yet, recent reports from the European Union, Asia and the United States have confirmed ongoing problems with high unemployment, sluggish growth and – in most cases – swelling deficits. An estimated 80 percent of the world economy is now slowing.
Consequently, the debate over how to solve these problems is heating up again. Many are calling for further government intervention, especially the imposition of higher taxes and the spending of even more borrowed (or created) money.
A better way
Charles Koch, chairman and CEO of Koch Industries, sees a better solution for many of these problems: greater economic freedom.
“Long-term, widespread prosperity,” Koch says, “is only possible in free societies. This is why the fight for economic freedom is so important.”
Economic freedom means people are free to make their own economic choices under a beneficial rule of law. Their property is protected and they can lead their lives without undue government interference. They can start a business, sell their property or work for whomever they please with a minimum of government interference.
Working families and the most vulnerable – including the poor, aged and disabled – are far better off in nations with a high degree of economic freedom.
It’s no coincidence that citizens of South Korea have much higher incomes, literacy rates and life expectancies than those living in North Korea. They also enjoy a much cleaner environment.
Challenges
Even with so many demonstrated benefits, the principles of economic freedom are under attack.
Out-of-control government spending, destructive regulations that stifle innovation and job creation, and cronies who count on the government to keep them profitable, are all undermining economic freedom and the ability of entreprenuers to create value for customers and society.
Too many critics ignore how economic freedom generates economic growth, which means much more than just the creation of new jobs.
As Harvard economist Benjamin Friedman put it: “Economic growth almost always fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy.”
Downwardly mobile
Economic Freedom of the World is an annual, non-partisan study published by the Fraser Institute. It compares 141 countries using 10 key measures, such as the freedom to invest, degree of corruption and level of government spending.
The U.S. used to be near the very top of the rankings, but fell from third place in 2000 to number 10 in 2009, and is likely to fall even farther.
With an overall score of just 76.3 (out of 100), the U.S. is no longer considered economically “free.” Rather, it has fallen into the “mostly free” category.
“Restoring the U.S. economy to the status of a ‘free’ economy,” says this year’s report, “will require significant policy changes to reduce the size of government, overhaul the tax system, and transform costly entitlement programs.
“By boosting growth in the private sector, such freedom-enhancing policies are the best hope for bringing down high unemployment rates and reducing public debt to manageable levels.”
As they have for nearly 50 years, Koch’s shareholders support policymakers of any political party who support these kind of market-based policies and initiatives.
