The Importance of Economic Freedom in 6 Graphs

The Fraser Institute recently released its Economic Freedom of the World: 2013 Annual Report, which reveals the continual decline of the U.S. (#2 in 2000, now #17). Some may object to the term “economic freedom,” seeing it only as a pretty-sounding Trojan Horse for the evil bourgeois system of capitalism.

Guess what: it is.

But rhetoric is important (as economist Deirdre McCloskey has explained) and “economic freedom” is, in my view, a more accurate description. And far from living up to its caricature (i.e. a system of power and greed that exploits the poor), economic freedom–as shown by the graphs below–does more to raise the living standards of all involved, rich and poor alike, than any other economic system yet discovered. Descriptions are at the bottom of the graphs.

Per Capita Income and Economic Freedom
Per Capita Income and Economic Freedom Quartile

 

Growth in Developing Nations Per Capita and Economic Freedom Quartile
Growth in Developing Nations Per Capita and Economic Freedom Quartile

 

Political Rights and Economic Freedom Quartile (Low Scores = High Rights)
Political Rights and Economic Freedom Quartile (Low Scores = High Level of Rights)
Civil Rights and Economic Freedom Quartile (Low Score = High Level of Rights)
Civil Rights and Economic Freedom Quartile (Low Score = High Level of Rights)

 

 

Life Expectancy at Birth and Economic Freedom Quartile
Life Expectancy at Birth and Economic Freedom Quartile

 

Income of Poorest 10% and Economic Freedom Quartile
Income of Poorest 10% and Economic Freedom Quartile

If you are more worried about income equality rather than actually raising the poor out of poverty, it might be worth noting that the share of the poorest 10% virtually remains the same across countries that are economically rigid and free. The difference is, as shown above, the poor in freer countries have substantially higher incomes.

Perhaps libertarian economic views are more in line with bleeding-heart types than previously thought.