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Thursday, January 15, 2009

Heritage Foundation releases 2009 Economic Freedom Index, Canada at number 7

The Heritage Foundation and Wall Street Journal have released their 2009 Index of Economic Freedom. The Index ranks 183 countries from around the world on the freedom they permit their citizens to open a business, have secure private property, buy and sell, trade with each other and the world, and so on. Here is how the Index explains economic freedom:

The highest form of economic freedom provides an absolute right of property ownership, fully realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself. In other words, individuals are free to work, produce, consume, and invest in any way they please, and that freedom is both protected by the state and unconstrained by the state.

Here is the top 10 for 2009, along with their score (out of a possible 100):

1) Hong Kong (90)

2) Singapore (87.1)

3) Australia (82.6)

4) Ireland (82.2)

5) New Zealand (82)

6) United States (80.7)

7) Canada (80.5)

8) Denmark (80)

9) Switzerland (79.4)

10) United Kingdom (79)

Here is a detailed chart of the top 10 (click to expand):

I wonder how many of these indexes will need to be released before the myth of Canada the socialist country versus America the free market country is exploded. We're awfully close to the U.S. on this index, and beat the U.S. on my preferred index, the Fraser Institute's Economic Freedom of the World report.

The North American press release for the index is below the fold.

North America is the world leader in economic freedom, boasting two of the 10 freest countries in the 2009 "Index of Economic Freedom," published annually by The Wall Street Journal and The Heritage Foundation. The United States enjoyed the highest ranking within the region and finished sixth in the world, followed immediately by Canada. One reason the region does so well is the North America Free Trade Agreement. "NAFTA has been a positive force enhancing economic freedom," the Index authors wrote, "connecting more than 400 million people in an economic area with about one-third of the world's total GDP." Mexico still has a way to go to catch up with its northern neighbors, and could begin doing so by improving its investment freedom and freedom from corruption, the authors noted. In a first for the Index, Canada, Mexico and the United States are split off from the rest of the Americas and graded as a separate region. To compile the Index, the authors measured 183 countries across 10 specific factors of economic freedom: The higher the score, the lower the level of government interference. All countries were graded on a scale of zero to 100. The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. Ratings in each category were averaged to produce the overall Index score. This year's Index aims to be the most precise measure of economic freedom ever published. The authors fine-tuned their methodology. For example, they fine-tuned the "labor" component, analyzing six labor freedom factors instead of the four studied in previous Indexes. Worldwide, the average rating for economic freedom held essentially steady this year. However, "there is a real possibility that the economic freedom scores in this edition might represent the historical high point for economic freedom in the world," the authors warned. As governments attempt to stave off a global recession, their meddling could threaten economic freedom and long-term economic prosperity. Of the 183 countries ranked (the most ever), only seven were classified as "free" (a score of 80 or higher). Another 23 were rated as "mostly free" (70-79.9). The bulk of countries--120 economies--were rated either "moderately free" (60-60.9) or "mostly unfree" (50-50.9). The remaining 29 countries were rated "repressed" economies, with total freedom scores below 50. This is the 15th consecutive year The Heritage Foundation and The Wall Street Journal have published the Index. The 2009 edition was edited by Kim Holmes, Heritage's vice president for foreign affairs, and Ambassador Terry Miller, head of Heritage's Center for International trade and Economics.

Posted by P.M. Jaworski on January 15, 2009 in Economic freedom | Permalink

Comments

It's good to see that Canada is still able to keep up with the US.

Posted by: Zebulon Pike | 2009-01-15 10:44:34 AM

"I wonder how many of these indexes will need to be released before the myth of Canada the socialist country versus America the free market country is exploded."

Jaws,

Culturally, I think it's a bit more than a myth. In Canada, as Gerry Nicholls pointed out to me once, most of the avowed socialists are also nationalists. If you deny one of their sacred cows (public health care/gun control/multiculturalism/etc), then you're anti-Canada. It's pretty much exactly the same as the "love it or leave it" attitude you find in some Americans.

In the U.S., socialists have to hide in caves, call themselves "progressives", and can't ever seriously pretend that their ideology is written into the fabric of their country (unlike the Canadian socialists.)

This difference may not, in fact, make Canada more of a socialist hellhole than the United States, but it does contribute to that impression. In Canada, people actually respect people like Jack Layton, instead of shunting them off to an obscure college campus somewhere.

Best,

Terrence

Posted by: Terrence Watson | 2009-01-15 2:05:14 PM

I agree about the *attitude* of Canadians vs. the attitude of Americans. But I'm more interested in the impact that attitude has on actual policy, than in what the object of the attitude is.

When it comes to economics, Canada and the U.S. are borderline indistinguishable. True, tax policy is mostly better in the U.S. But, really, our economic freedoms are a hair's breadth apart.

On civil liberties issues, as well, Canadian policy seems comparable to U.S. policy. True, Americans have easier access to guns (an issue I consider vital and part of civil liberty). True, Americans protect freedom of speech and opinion (much) better than Canadians do. But we have much less militarism and fewer Canadians get imprisoned, per capita, than Americans do. We also don't have a vicious and liberty-destroying war on drugs on anything like the scale we see in the U.S.

You're right about the respect we accord to socialist crazies like Layton. But, again, it isn't the attitudes that worry me. I'm more interested in the policies. And, with respect to policy, Canada and the U.S. are, all things considered, about the same when it comes to individual liberty. There isn't enough of it in either country, but it's probably false and contrary to the facts to claim that the U.S. is more free than Canada.

Posted by: P.M. Jaworski | 2009-01-15 2:15:34 PM

What I find strange about Australia's rankings... is that anecdotally (as we have some employees who work in Australia and have moved to Canada and the US) that everything I've heard is that taxes in Australia are higher for comparative incomes... and the cost of living in Australia is higher on all counts.

So I wonder how taxation factors into these readings.

Posted by: Mike Brock | 2009-01-15 3:20:07 PM

From the research: "Canada trails the world average only in size and expense of government. Like many European democracies, Canada has elaborate social and welfare state programs that raise government spending."

I guess we'll call this "room for improvement."

Posted by: Matthew Johnston | 2009-01-15 9:14:36 PM

You want to see the Jack Laytons of Canada shuffled off to some obscure campus? That may be the problem. There are far too many of them on our campuses and influencing our country's future leaders. Education is sadly lacking in far too many of our classrooms.

Posted by: DML | 2009-01-15 10:52:42 PM

It seems like a race to the bottom.

If the Federal Government hadn't squandered our cultural inheritance, America would knock these rankings out of the park every time.

Having lived in New York then Toronto then New York, I see this city becoming slowly Ontarionized, from the cheaper building materials to the TD Bank that now sits on my corner!

Life in Ontario was, for me, just a flash forward to a New York of increasingly inane regulations, a power balance in favor of large corporations, and an sapping of the vital yet intangible vitality that liberty brings to a state.

What I really liked was the Fraser Institute rankings of states and provinces several years ago. The more success we have dismantling our Federal overlords, the more relevant a state-by-state ranking will become.

http://www.mikevine.com/





Posted by: Mike Vine | 2009-01-16 1:21:15 AM

It's kind of interesting that the #1 place is Hong Kong which has been part of COMMUNIST China for 12 years!

Posted by: Tim Trudeau | 2009-01-19 6:03:56 PM

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