Renovating Freedom House

Which country enjoys more economic freedom: a dictatorship that imposes a 20 percent income tax on its subjects, or a democracy with a 70 percent tax? The heavily taxed democracy, the best known annual survey of economic freedom might say. Freedom House, which issues a widely respected annual study of political freedom and civil liberties around the world, has since 1982 also reported on economic freedom. But many scholars say its economic survey is incomplete and is based on the faulty assumption that majority rule, a crucial factor of political freedom, is part of economic freedom, as well—that it's all right to vote away individuals' economic liberty. (The Freedom House ranking puts Sweden, for example, ahead of South Korea and Taiwan in granting citizens economic freedom.)

A group of individualist scholars recently met in Vancouver to examine the Freedom House rating and try to develop alternatives. Milton and Rose Friedman of the Hoover Institution, Charles Murray of the Manhattan Institute, Robert Poole of the Reason Foundation, and others discussed how to define and rate economic freedom. Their goal: to eventually come up with a more accurate rating system for Freedom House to use.

Unanimity was rare. Many participants argued for a narrow focus on a few simple measures—tax rates or the size of government. Others advocated a broader, more integrated philosophy of property rights and free markets to undergird the ratings. Much work remains to be done before a suitable rating system is complete. But all agreed that scholars around the world should dedicate as much attention to economic freedom as to political freedom—and that the first step is to know the difference between the two.