Wednesday, January 23, 2008

You Know It's Bad When Something Makes Rants About Global Warming Not Existing Seem Thoughtful (JM)

A Freer World is a Better World

Why do I automatically cringe when I see a headline like this? I mean I like freedom, it's a good thing. Yet, somehow I have a feeling I am going to get as much "freedom" from this article as I get "reason" from reading Reason.*

By John Stossel

This week's newspapers are full of predictions of an impending recession, and maybe they're right. But the great untold story is the good news: the worldwide boom in economic growth.

This is really good to know, because growth is an excellent measure of the economic health of the country. Distribution is totally irrelevant, growth, that’s where it’s at. I hear it all trickles down anyway.

"I think one of the best kept secrets is that the world is in the midst of an economic boom, and it is largely driven by increases in economic freedom," says economics professor James Gwartney, director of the Stavros Center for the Advancement of Free Enterprise and Economic Education at Florida State University. "The world has become more free, and, at the same time, growth is soaring to new highs. During 1995 to 2005, the growth rate of per capita GDP in 99 countries for which data are available has increased to 2.2 percent, nearly twice the rate of recent decades. Since 2000, the annual growth rate of per capita GDP has been even more rapid, 3.2 percent."

WHAT?! James Gwartney, of the “Stavros Center for the Advancement of Free Enterprise and Economic Education at FSU” thinks the economic freedom leads to growth?! The devil you say! Pizza Hut just informed me that pizza leads to deliciosity. Seriously, I mean we all know that 99.9 percent of econ departments are unabashed champions for Saint Free Market of Assisi, but I mean come on, isn’t this a little on the nose? Also the evidence, more growth has occurred over a ten year period. Yep, causal link=established. Well done, James Gwartney, let’s all go home and open up our markets and watch as out bank accounts skyrocket. What’s that? You have more… excellent.

As the world gets freer, says Gwartney, it gets richer.

He should know. For years, Gwartney and Robert Lawson of Capital University have compiled an index showing the solid relationship between economic freedom and economic growth. The latest index, covering 2005, was recently published by the Economic Freedom Network, which comprises more than 70 policy institutes worldwide, from Albania to Zambia.

Hmmmmmm… this is so compelling actual data is unnecessary. I will just go on the word of John Stossel, former 20-20 investigator who doesn’t believe in global warming, but does believe in the magical panacea of the free market.

The story the index tells couldn't be clearer: Economic freedom produces high living standards.

It seems I have heard this somewhere before.

This insight shouldn't come as news, but unfortunately it will because prejudice against the profit motive and property rights leads many to believe that government coercion is better than free markets at making life better.

What is economic freedom exactly? As the report puts it, "individuals have economic freedom when they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others."

The researchers ranked countries according to five criteria: size of government, security of property, access to sound money, freedom to trade internationally and level of regulation.

The top five freest countries in 2005 were Hong Kong, Singapore, New Zealand, Switzerland and the United States. That's a slight slip for the United States, which in 2004 came in third. We've never placed higher than second (in 2000).

God damn the United States, only number two?! Seriously guys, stop regulating markets. If we’ve learned anything from Enron, WorldCom, the subprime crisis, the impeding foreign debt implosion, it’s one thing: the market will solve.

The next five are the United Kingdom, Canada, Estonia, Ireland and Australia. The bottom five are Republic of the Congo, Angola, Democratic Republic of the Congo, Myanmar and Zimbabwe.

It's hard to miss the point: The freest countries are far more pleasant places in which to live. Countries with little or no economic freedom make life hellish for all but the politicians or dictators in charge (and even for some of them).

This is LITERALLY the funniest argument I have ever read. Everyone ready now: John Stossel believes life is bad in the Republic of the Congo, Angola, Democratic Republic of the Congo, Myanmar and Zimbabwe because they don’t have enough free trade! This is amazing, let’s leave alone the fact that two of these countries are so wartorn with violence that there is a “Republic and Democratic Republic”. Let’s forget that John himself pointed out that most of these places are dictatorial regimes. Let’s forget that this is a totally insane study with absolutely no statistical controls whatsoever that can largely be categorized as: bad shitty countries are in trouble and wealthy, industrialized countries are doing well. Let’s ALSO forget the fact that for the most part countries with more progressive, regulated markets in Europe are doing pretty well economically. Let’s finally forget the fact that even if there were economic growth in these countries it would be distributed in such a way that, well Angola will still look like Angola, but some warlord will have palace that makes Disney World and the French Riviera look like housing projects. Let’s free up those markets and have international trade, then the people of Myanmar can enjoy a quality of life and freedom similar to the people of Singapore.

I hate you so much John Stossel. I also hate you James Gwartney.

The good news, says Gwartney, is that economic freedom is increasing. "The average rating of the 99 countries for which data are available continuously since 1980 has increased from 5.5 in 1985 to 6.6 in 2005," he says. "The primary factors underlying this increase are lower top marginal tax rates, more stable monetary policy, lower tariffs and less regulation of international trade and some relaxation of restrictions on the movement of capital."

Good news, rich people will by paying less taxes. This will be good for everyone. Remember, there is no poverty in America… and if there is, it’s because of taxes.

Gwartney's data also show the relationship between economic freedom and income. As countries get freer, per capita GDP rises. The least-free nations have a per-capita GDP of about $3,300. The next group up the freedom ladder has a per capita GDP of about $6,100; the next, $10,773. The freest group of nations comes in at more than $26,000.

Angola v. the United States: the only differences are lower top marginal tax rates and lower tariffs.

Gwartney's data show that it's better to be poor in a more-free country than in a less-free country. In the freest countries, the poorest 10 percent earn on average more than $7,300 a year versus $905 in the least free countries. And, of course, in a free society, people often move out of the poorest groups.

Whoops, John Stossel finally realizes part of the problem with his argument. But only part of it. I mean serious, yeah it sucks more to be poor in the Democratic Republic of the Congo, but definitely not because economic freedoms. Also I would question his definition of “often” when it comes to social mobility, but the degree of social mobility we have has nothing in the world to do with economic freedom, but years of market regulation. From consistently desegregating business and business networks, to providing social safety nets, giving free education to all, basically providing opportunities for individuals the market would never solve for, this is how we have social mobility. Not less regulations on international trade.

Finally, the study also finds a strong correlation between economic freedom and environmental quality.

I am trying to acquire this study, I find this very very difficult to believe, unless they are counting the fact that some of these countries simply don’t have modern sewage systems, you know because of tariffs.

It is beyond dispute. Economic freedom leads to good things, while government coercion leads to poverty and oppression.

Complete beyond it, irrefutable. Here’s you Nobel Prize, MacArthur Genius Grant and The Mayor McCheese McDonaldland Citizen of the Year Award.

It's stunning that some people still find the free market controversial.

It’s stunning that people publish your articles.

*Reason, if you don't know, is a totally inane, wrongheaded, libertarian magazine. I am sure that we will be discussing them in the near future. For those of you not already aware, the authors of this blog hate libertarianism and believe that those that espouse it are usually too dumb to realize its oversimplicity or too selfish to care.


Brian said...

"Hong Kong" was the freest country in 2005?

Jonathan said...

Yep, it was. It's all in how you define "free". I am the "hottest" guy on earth, way hotter than Brad Pitt or Zac Efron or whoever it is the kids like these days. BTW I definite as "scraggly Jew who never combs his hair".