The Americas Take a Dive in Freedom Ranking

By: Rebeca Morla - @RebecaMorla - Sep 14, 2015, 7:16 pm
Hong Kong remains as the  most economically free country on the planet, according to the 2015 Economic Freedom of the World Report. (All Worlds Towns)
Hong Kong remains as the most economically free country on the planet, according to the 2015 Economic Freedom of the World Report. (All Worlds Towns)

EspañolCanada’s Fraser Institute released its 2015 Economic Freedom of the World Report (EWF) on Monday, September 14, with good news for the world but bad news for the Americas.

The 247-page report utilizes data from 157 countries, and measures the degree of economic freedom in five areas: size of government; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor, and business. The index is based on data from 2013, the most recent year for which all numbers are available.

“Economic freedom is present when individuals are permitted to choose for themselves and engage in voluntary transactions as long as they do not harm the person or property of others,” the study reads.

“The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property.”

The top three winners for this year, just as in 2014, are Hong Kong, Singapore, and New Zealand. Switzerland, the United Arab Emirates, Mauritius, Jordan, Ireland, Canada, and the United Kingdom and Chile (tied for 10th position), respectively complete the list of the top 10 freest economies of the world.

The United States, which occupied 12th position last year, fell down to 16th. On this change, authors James Gwartney, Robert Lawson, and Joshua Hall wrote:

“Nowhere has the reversal of the rising trend in the economic freedom been more evident than in the United States … unless policies undermining economic freedom are reversed, the future annual growth of the US economy will be only about half its historic average of 3%.”

Although the United States has seen percentage reductions in the EWF’s five areas of study, the most “alarming” decline has been to the legal system and protection of property rights.

The average chain-linked economic freedom rating has increased from 5.31 in 1980, to 6.86 in 2013. (Fraser Institute)
The world average chain-linked economic freedom rating has increased from 5.31 in 1980 to 6.86 in 2013. (Fraser Institute)

According to the report, factors behind this plunge include “the increased use of eminent domain to transfer property to powerful political interests, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the auto-bailout case.”

Latin America on the Wrong Track

Although Chile remains an example of economic freedom and development in Latin America, most countries in the region exhibit an unfavorable performance on this year’s EWF index.

Peru has had a significant fall, from 20th in 2014 to 41st in 2015. In the same vein, Costa Rica has descended from 23rd to 25th.

Furthermore, Brazil fell 15 spots to an unenviable 118th; whereas neighbour countries Colombia and Ecuador also descended from 104th to 106th and 131st to 135th, respectively.

Among the lowest-rated countries of the world, Cristina Kirchner’s Argentina takes the 152nd spot, and Nicolás Maduro’s Venezuela remains stuck at the end of the list.

The other nations that complete the bottom 10 are: Angola (148), the Central African Republic (149), Zimbabwe (150), Algeria (151), Syria (153), Chad (154), Libya (155), and the Republic of Congo (156).

On the other hand, a few Latin American nations have had better luck in the ranking. Between 2014 and 2015, Guatemala rose 15 spots to occupy the 33rd place. Moreover, Panama managed to rise 17 spots, and is now ranked 49th.

More Economic Freedom, More Happiness

The last chapter of the report, written by Hans Pitlik, Dulce M. Redín, and Martin Rode, is titled “Economic Freedom, Individual Perceptions of Life Control, and Life Satisfaction.” It explains that living in a country with high overall economic freedom is a relevant determinant of feeling in control of one’s own life.

Thus, the authors state that economic freedom has a strong impact on individual happiness, because it gives people the feeling of being more in control of their own lives, and grants them the opportunity to choose between the different options offered in the market.

The report further concludes that people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives than those living in nations with less economic freedom.

It shows that the average income of the poorest 10 percent of people in the most economically free nations is about 50 percent greater than the overall average income in the least free nations. In terms of life expectancy, the bottom quartile has an average of 63.1 years compared to 80.1 years in the top quartile.

Fred McMahon of the Fraser Institute points out that “economic freedom breeds prosperity, and the most economically free countries offer the highest quality of life while the lowest-ranked countries are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens.”

Rebeca Morla Rebeca Morla

Based in Guayaquil, Ecuador, Rebeca Morla works as an editorial assistant with the PanAm Post. She is a political scientist and an Executive Board member of EsLibertad. Follow @RebecaMorla.

Only Libertarians Can Face Down Colombia’s Taxi-Union Cartels

By: Daniel Raisbeck - @DanielRaisbeck - Sep 14, 2015, 3:56 pm

EspañolThe latest development in the dismal anti-Uber saga in Colombia's capital involves video footage of several taxi drivers dangerously cornering a car they believe is using the UberX app. They then proceed to bully the passenger and accuse her of using an "illegal" service. The young woman breaks into tears as the taxi drivers forcibly and illegally attempt to remove her from the vehicle. Many residents of Bogotá, who have become accustomed to the unsavory behavior of local taxi unions, are probably not surprised by these despicable acts: the thuggish, threatening tone; the harassment of a frightened young girl; and the unoriginal expletives directed at the Uber driver's mother. What is surprising, however, is the presence of a police officer at the scene, in sight of the camera throughout the video. He remains motionless for the entire 2 minutes and 51 seconds of intense bullying and insults. He even stands idly by as the young woman pleads for his help. The inefficiency and utter lack of authority of the Bogotá police force becomes evident when the taxi-union thugs order the officer to call a "transit-police agent to fine" the car's driver. The taxi drivers know full well who's in charge. They tell the woman, without hesitation, "[your driver] is an illegal (pirata), and we are putting an end to this, OK?" At one point the woman asks them if they think it's alright to resort to violence in this manner. "If we have to end illegality with violence, we'll do it," one of the taxi drivers coolly replies. The law of the jungle is what prevails in Bogotá, as Thucydides described: "The strong do what they can, and the weak suffer what they must." But not all hope is lost. During my campaign for mayor, I have defended ride-sharing apps, like Uber, Lyft, Curb, and other competitors, at every opportunity. While other candidates remain silent on the issue, I continue to stand up for these companies, which allow consumers to choose whatever means of transportation they want and should be allowed to operate legally. [adrotate group="8"] But it is clear that this issue is not just about who provides the best and most useful service. These apps allow the people of Bogotá to circumvent powerful and violent taxi cartels, who would not be as powerful if not for the special privileges that politicians have granted them. If taxi drivers have any reason at all to take justice into their own hands — which is completely unacceptable —  it is inability of heavyweight politicos to keep the promises they made in order to win their votes. It's worth remembering, for example, that during last year's presidential campaign, President Juan Manuel Santos, Rafael Pardo, and Germán Vargas Lleras promised over 1,000 taxi drivers that they would "remove from the market the apps that promote unlawful behavior." But as the successful British entrepreneur Paul Graham said: "Uber is so obviously a good thing that you can measure how corrupt cities are by how hard they try to suppress it." Ultimately, Uber and other similar apps represent digital innovation and the empowerment of citizens at the expense of union mafias and special-interest groups. A libertarian administration in Bogotá would welcome and foster fair competition between them, because free markets benefit consumers, and our policies focus on the consumer. As for the taxis, they would be allowed to operate without paying the absurd taxes that are currently in place. We would begin by eliminating the license quotas that artificially inflate the price of a taxi license, and those who have already paid will receive tax breaks until they are fully compensated. However, a license to operate a taxi in Bogotá will not mean carte blanche to provide low-quality service, scare innocent people, or boss the police around. We would roll out a ratings system similar to Uber, allowing users to rate taxi drivers. Those who do not maintain high-quality standards will lose their right to operate a taxi. Regarding the police, we will follow the example of former Mayor Antanas Mockus and send officers to be trained in universities, where they will learn how to peacefully solve problems. This video is proof that a return to a true civic culture is essential for the safety of Bogotá residents. Translated by Adam Dubove and Guillermo Jimenez.

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