When Strangers Judge Paradise

The Heritage Foundation released its annual Index of Economic Freedom last week; Hong Kong and Singapore, as usual, take the top slots. Writing in the International Herald Tribune, Philip Bowring finds this "baffling" and argues that Singapore's freedoms look significantly freer from the outside:

It is clear is that the rankings of Hong Kong and Singapore are based to a significant degree on ignorance of their domestic economies. In its 10-point assessment, the Heritage Foundation puts a high premium on freedoms for foreigners to trade and invest and enjoy low taxes, and remarkably little on the freedoms of the local inhabitants….

In Singapore, it is the government itself that stands in the way of the unfettered private enterprise that the Heritage Foundation's criteria are supposed to favor. The major real estate, banking, transport, manufacturing and utility companies listed on the stock market are all government-controlled entities. They may be efficient, but is this an economy free of government intervention? The index also claims that "the market sets almost all wages." But actually "wages are based on annual recommendations made by the tripartite National Wages Council."

Whole thing here.

Comments

[Ayn_Randian]

I was always suspect of the claim that a country that beats the hell out of you for gum on the sidewalk could somehow prize and epitomize economic freedom. I have always thought that something was off with those evaluations.

[KipEsquire]

How's the saying go? "Nice place to do business with, but I wouldn't want to live there..."

See also, "China."

[madpad]

Kip...you took the words right out of my mouth.

[Doc]

Judging from my time in HKG a few weeks ago, "Economic Freedom" means freedom from pesky pollution controls and making the legal work week 6 days long (9 hours/day).

Yeah, no wonder Big Business *loves* China and SE Asia.

[Eric the .5b]

We can go into the usual debates about private "monopolies and oligopolies" in the case of Hong Kong, but one point is clear - it's extremely suspect to talk about "economic freedom" in a country and gloss over the actual economic rights of its citizens.

[Warren]

Browning scores a touch. Market manipulation, whatever the mechanism is an intrusion on economic freedom. The appearance of valuing outside investors over the native population also strains credibility. I'm not as impressed with the 'Country X rated higher than Country Y can't be right' analysis. Such surprises are a key feature of the index, inviting deeper evaluation.

I am of the mind that economic freedom is only half the story. An Index of Social Freedom is in order. I think it would be equally instructive.

[Eric the .5b]

Warren - that would be a noisy debate. 🙂

[happyjuggler0]

For Germany and Sweden to be considered tied for 19th/20th int he economic freedom rankings, there has to be a huge amount of countries with pathetic economic liberties. Looking at the list, I see there are.

Anyone who complains about how harsh things are economically in Hong Kong or Singapore should check out the CIA's World Factbook. http://www.cia.gov/cia/publications/factbook/ Granted, you don't necessarily want to take the CIA's word for it, but I also don't hear about anyone complaining their numbers are biased either.

The countries that have the most economic freedom according to the Heritage Foundation are basically the same ones that have high per capita GDP's. Granted, per capita GDP is not the same as per capita income, but they are highly correlated. Countries like Botswana and Chile started out at a much lower base than the other countries near the top in economic freedom, and thus their per capita GDP numbers aren't as high yet. I believe that Botswana had the world's highest annual GDP growth rate for about 30 years from something like 1960 to 1990.

Hong Kong and Singapore used to be dirt poor third world "countries", but their emphasis on wealth creation over redistrubition paid some huge dividends, and their approach to how to create that wealth was very different. The important thing it seems is to actually try to create wealth (national wealth is a synonym for national economy), and not to redistribute exisiting wealth.

It should also be noted for anyone who misses it, the Heritage list is not about freedom in total, just economic freedom.

[thoreau]

Another thing worth considering about social freedom is that somebody would make money make money if it were legal to sell subversive newspapers, banned books, sex toys, decadent Western movies, violent video games, and pictures of women without headscarves. Impinging on social freedom also means curtailing certain enterprises.

[Eric the .5b]

Social and economic freedom aren't completely extricable, no.

[Warren]

thoreau,
Absolutely. There's a good deal of overlap. But I still think the way a country deals with pot, porn, and pagans, tells you quite a bit about it. I suspect such a social index would also correlate with a measured standard of living. Singapore would score very poorly. I think Hong Kong would do well. I'm trying to think of countries that would score high social freedom and low economic, the Philippines maybe

[dead_elvis]

Economic freedom and personal freedom are one and the same. Any other way of analyzing is falling into a false dichotomy.

As the article points out, the situation in Singapore/Hong Kong is "Free for me, but not for thee." Some quote about the inadequacies of statistics and surveys would be appropriate here.

[Rhywun]

It seems obvious that the Heritage list is meant as an investment tool for outsiders (presumably Americans?). Ah, I see they mention it right in their methodology.

[Warren]

Economic freedom and personal freedom are one and the same. Any other way of analyzing is falling into a false dichotomy.

How you figure? A country could have strong property rights, a relatively free market, but still require women to where burqas, forbid alcohol, mandatory mass, etc. True, your economic freedom is diminished if you aren?t allowed to open a bar or stuff bills into a dancing girl's undies, but could never the less, still be high.

[Stevo Darkly]

Warren, I think they are inextricable because, if you forbid buying and selling alcohol, for example, that's a restriction on trade and property rights. Restrictions on women mean restrictions on their property rights, ability to work in the marketplace, a man's ability to hire women, etc. Mandatory Mass restricts what you can do with your time on Sunday, which can affect the way you run your 24/7 convenience store, etc. You get hemmed in, in a lot of little ways.

You could still get rich, but your ability to achieve would still be a lot less than it might have been if you were freer to use your time, resources and ability to associate as you'd prefer.

[thoreau]

I see the philosophical linkages between social and economic freedom. And as I said above, I also see the practical linkages.

But there are still some obvious practical distinctions. Compare, say, the Netherlands with Singapore. Despite the similarities (especially if a third option enters the picture, say, China or Russia) there is no denying the contrasts.

[Stretch]

On a base, philosophical level, dead elvis is right on. I think it was Hayek who said there can be no social freedom without economic freedom. Economic regulations are simply restricitions on the way an individual can use their own time and energy to provide for themselves. Redistribution is simply taking a portion of one person's life and giving to another. It doesn't get much more personal than that.

That said, as a practical matter the distinction is important and useful.

[Eric the .5b]

Shouldn't we be having a 200-post frenzy on the whole "can't anonymously annoy people on the internet" law? 🙂

[Eric the .5b]

Though, apparently, the bill is being misconstrued: Details from BoingBoing - scroll down to the latest updates.

[Akira MacKenzie]

Mr. Bowring was "baffled" by these results? The Heritage Foundation is a right wing think tank, for cripes sake. Ever since the tale of that spoild American brat getting caned for graffiti, I've heard more than a few of my conservative acquiantences hold it up as a utopia; corporal punishment for miscreants, capital punishment for drug users, censorship, and a government willing to use whatever force it needs to perserve "order."

Face it, folks. To many American conservatives, Singapore is a land of milk and honey. The only thing that would make it a Bill Bennett wet-dream is if the population were made up of evangelical Christians, instead of "heathens."

[Akira MacKenzie]

Edit: Ever since the tale of that spoiled American brat getting caned for graffiti hit media back in the 90s...

[Anonymous]

*pokes Eric with a stick*

[dead_elvis]

How you figure?

I'll admit, I'm pretty sure I used the term 'false dichotomy' incorrectly. Perhaps I should have said, an analysis based on seperating the two freedoms is flawed because it is based on a flawed premise.

I think most people think of personal/economic freedom as seperable based on the notion that someone does not identify with their profession. But if the way I make my living is tied with who I am as a person, you can't restrict one without restricting the other. I am a musician; if someone tells me what I can and can't do regarding playing my instrument (as my union is very keen to do), it's an affront to my personal liberty, not just an economic restriction.

Of course, somebody out there is saying that being a musician is different than most professions. Personally, I think most people underestimate the extent to which they personally identify with their profession, because most people want very badly to think of themselves as more than or better than just their job.

[JD]

making the legal work week 6 days long (9 hours/day)

You make it sound like that's being a virtual slave. A lot of Americans work that much and some work much more (think about sole proprietors of small businesses, for example) and 50+ years ago it was even more common than it is today. Heck, talk to young investment bankers...they'd be gleeful at the idea of a workweek that was only 54 hours.

[Kwix]

dead elvis,
No, you are correct about the economic/personal restriction tie-in. While they may be a bit more "personal" to you as a musician instead of say a 9-5 software developer it still applies. What if I am a game designer who is working on some fantastically real "gore effects" for a fighting game. Suddenly, the government of Walla-Walla decides that not only is blood bad for kids to see, but for adults too! Bam, out of a livelyhood I go, or at least one I was happy with.

Personally, I would love to work on growing new strains of recreational marijuana but current government restrictions on both personal use and commercial use are impeding that line of business for me. So, I guess I will just panhandle on the corner till the coppers say I have to move.

[Doc]

>Heck, talk to young investment bankers...they'd be gleeful at the idea of a workweek that was only 54 hours.

Believe me, I work those kind of hours too. But the compensation for that young investment banker is a *lot* better than that poor schlub working on the bamboo scafolding of a building 50 stories up.

And since when were Hong Kong and Singapore "poor countries"? Certainly they've become the tigers they are now in the couple decades. But these were city states created whole cloth by the Brit's.

[Eric the .5b]

*pokes Eric with a stick*

Hey!

I'll get you - with the power of discovery!

[madpad]

A country could have strong property rights, a relatively free market, but still require women to where burqas, forbid alcohol, mandatory mass, etc.

Warren,

Certainly someplace like this could exist...somewhere in a science fiction novel...or in reality for about 8 seconds. But let's say for a second that it did exist.

Any such place would have defacto market restrictions on a social level. Any place that restricts behavior to the degree your example does would fail (by folks understanding) to have a "free market".

I admire your attempt to posit, but I'm sorry. I'm not buying it. I think you need to consider the ramifications and details of your idea.

At the very least, it's obvious a large number of products and services would probably be illegal. Doesn't sound relatively free to me.

And any place that socially restrictive would no doubt be subject to capricious whims of the 'enforcers' of this magical land. Thus making market stability a flaky bit of business.

[Anonymous]

"I'll get you - with the power of discovery!"

Tell it to Dave W.!

Nyah.

[fyodor]

Assuming one owns one's own body, then restrictions on what can be done with it or put into it are clearly property rights violations.

That said, it's true that things like taxes and wage controls cover a wider swath of the economy than restrictions on specific activities, and they're easier to measure to boot.

[Eric the .5b]

Nyah.

Fie upon you, annoying anonymous person!

*sulks*

[happyjuggler0]

It is true that liberty is liberty, regardless of how you want to subclassify it. That said, it is in my opinion silly to say that many things that are normally thought of as restricitons on civil or social liberties have the same deleterious impact on the economy as things normally thought of restrictions on economic liberties.

Examples of restrictions on economic liberties: capital gains tax; non-commons government spending; new EPA restrictions that destroy 90% of the value of your property without any compensation; government restrictions on who you are allowed to hire or fire or when or why; restrictions on your ability to bargain your way into your first job (i.e. minimum wage).

Examples of restricitions on civil or social liberties: refusal of government to allow you to use six certain inexcusable words on tv or radio; government interference in the marriage "market"; warrantless searches (i.e. no probable cause) of your person, home, or phone conversations; French ban on headscarves; government regulations on types of allowed acts in the bedroom between consenting adults (e.g. oral sex); restrictions on adult voting based on color, gender, religion etc.;

Clearly the first group has much more impact on the economy than the second.

This is not to say that there aren't many restrictions where it becomes much harder to differentiate between civil liberties and economic liberties: various drug prohibitions; illegal adult prostitution; ban on pornography; bans on bumper stickers/t-shirts that say "shit happens"; Iranian subsidization of (news)paper, resulting in the ability to withdraw such subsidy for any publication it chooses to; ban on violent content in movies/video games; etc.

[fyodor]

This is not to say that there aren't many restrictions where it becomes much harder to differentiate between civil liberties and economic liberties

Well now, THAR's the rub!! Or put another way, some restrictions have greater impact on wealth creation than others. But that's different than drawing an artificial line between "economic" and "social" liberty or lack thereof.

[thoreau]

happyjuggler-

I largely agree that there are very significant practical differences between economic liberties and other civil liberties. I pointed out that there is overlap because (and I know Eric will hate it when I say this) many H&R posters seem to value economic liberty more highly. Or at least they see it as a higher political priority (political and personal priorities are not always the same, obviously).

My point is that if a regulation destroys a job, it destroys a job, and somebody now has to find a new one. Somebody's life has just been seriously fucked with.

Also, some of the industries targeted by the social conservatives (and also some "for the children" liberals) rake in billions of dollars every year. Particularly entertainment. So the potential economic stakes of social policy can be significant.

Finally, there are some significant issues that can't be put in just one of the two categories, because the social and economic aspects are both tremendous: Drug prohibition is a social experiment that fuels a massive underground economy, which in turn yields dire social consequences. Immigration policy has huge social and economic ramifications, no matter what your stance might be on it.

My point? Keep in mind that social policies can have big economic consequences. That's all.

[Two Ham Theory]

When I think of a lot of economic freedom and not much political freedom, the first word that comes to my mind is "Pinochet." Discuss

[Eric II]

An Index of Social Freedom is in order. I think it would be equally instructive.

If such an index was to be based on what a person can get away with in practice rather than what's technically allowed by law, I think it would find that the socially freest places in the world are third-world countries where the local authorities don't care about enforcing most of the petty laws and regulations on the books - and in the off chance that they do care, can usually be dealt with through a small bribe.

[Herrick and His Balls]

Eric II, good call. Somalia would probably rank up pretty high on that social freedom list considering that there kind of is no government to restrict what you do. Although the whole lack of any police and court system is a bit too free for my tastes.

[Eric II]

Somalia's obviously an extreme case. But there are a number of places where the police will go in earnest after murderers, rapists, carjackers, etc. (and which sometimes have lower violent crime rates than the US), but don't care too much about enforcing things like speed limits, drinking ages, and land use regulations, and which keep any "war on drugs" they have going low-key, particularly with regards to users rather than dealers.

Though unfortunately, these places also often rank low with regards to economic freedom, and also with regards to other factors needed to deliver prosperity, such as the quality of their infrastructures and educational institutions. And paradoxically, one of the factors that keeps a lid on the amount of nanny state tyranny seen in such countries - the corruptibility of local authorities - also does a number on their ability to produce sustained economic growth.

[happyjuggler0]

When I think of a lot of economic freedom and not much political freedom, the first word that comes to my mind is "Pinochet." Discuss

When I think of dictatorships, brutal or otherwise,the first thing that comes to my mind is economically destructive.

The fact that a dictator who chose to murder significant numbers of his political opponents also happened to choose a viable economice system is something of a miracle.

The few dictatorships that have decent economic systems usually seem to become more politically free as the people become more prosperous.

The many countries that have lousy economic systems seem to have a hard time holding democracies together, assuming they ever got that far.

[joe]

How free were people in Pinochet's Chile to form unions, hold meetings, and protest their conditions?

[Dave W.]

Anonymous seems to have some wrong ideas about the way I think.

Here is what Dave W. actually thinks:

"[Somebody else:] And Dave W., no amount of treaty rules are going to ensure the existence of a fair and open marketplace in third world countries. The more rules, the less likely that anything will be accomplished.

[Me:] I disagree. here is a practical way to change things with regulation:

red tags go on all merch from countries that treat labor worst

yellow tags for merch from countries that treat labor somewhat good

Green tags for countries that do at least okay vis-a-vis labor.

Then let the market decide. I guarantee you that third world countries will respond by doing whatever it takes to maximize sales in a world where consumers have this basic, low threshold level of info.

Comment by: Dave W. at July 21, 2005 02:17 PM"

New gloss:

when I see people like half bee and the others recognizing that social problem is an important part of freedom. Acknowledging that it matters how the rank-and-file workers get treated, I have to think back to the old thread from July with my colored flags idea.

This scheme was conceived as a minimally-intrusive way to help Americans identify and support economuc freedoms in other nations, while preserving ultimate private choice for each and every customer. A lot of people disagreed with this scheme when I proposed it back in July 2005. I was surprised by the negative reaction at the time.

However, you guys are doing really similar stuf on this thread -- trying to figure out what freedom really means, in all of its economic, social, theoretical, practical, abstract and concrete glory. You guys are then trying to take your conception of freedom into your private business dealings as free consumers. Of course, even on this thread, there are ppl who admit that they don't feel they have any responsibility in any oppression that may exist in faraway places (eg, nice to economically exploit China, but bad to live there). Importantly, these Hank Rearden Juniors are fully respected under my scheme. (See, the part about the red tags). Maybe time to reconsider some of what ol' Dave W. actually has to say here.

[Eric the .5b]

Dave, who decides the flags and what criteria? Is this going to be a system where the only countries to get Green flags will be those with heavy social services and heavy unionization in government?

[Eric the .5b]

Also, as a general question, how precisely will buying, say, fewer goods from China benefit prisoners engaging in slave-labor there? Will they get more days off? Will they be released?

Will they be more likely to just be shot?

[Dave W.]

Dave, who decides the flags and what criteria? Is this going to be a system where the only countries to get Green flags will be those with heavy social services and heavy unionization in government?

I would hope not. That is why I brought my plan here instead of some left wing board. Because Reason (unlike the Heritage Foundation) can be expected to have a balanced perspective on freedom and understand that maximum freedom needs to balanace economic and personal freedoms, hard and soft freedoms, rich-people-freedoms and poor-people-freedoms.

I don't have a full answer for you, but when I hear some fundamentalist nut say that the *only* freedom that matters is freedom of rich people to be free of taxes and regulation, then I know that that individual is out of whack. Similarly, if I hear some bleeding heart say that the only freedom that matters is guaranteed access to the good stuff in life, regardless of one's willingness to work, then I know that individual is out of whack. Another little game I observe in the comments here (but not by the Reason authors) is the shiney penny game, where if you give a slave a shiney penny, he is not a slave anymore, regardless of larger context. That is out of whack, too.

Freedom means both free markets and free minds. Defining, balancing and trade-offing between both types can and should be matter for endless discussion in any rich nation with a decent amount of leisure time on its hands. My labelling system would provide a democratic vehicle for such discussion, without impinging on anybody's right to buy whatever they want.

the fact that I don't have a set of concrete standards pre-determined for my flags is a feature of my scheme, not a detriment. Just because I invented my scheme doesn't mean that I have any better morals or ethics or judgement than anybody else in the difficult, broad and important debate about what freedom means. My contribution is finding a way to get people thinking and talking without trampling all over their rights as consumers. Genius, really.

[Dave W.]

Will they be more likely to just be shot?

If the decentralized, free consumer market of the US awards higher profit margins to green flag countries, then China will do whatever the green flag countries do. It will copy them, errrr, slavishly.

On the other hand, if the market favors red flag products, then China would probably liberalize its laws on shooting employees for minor infractions and shootings would increase.

So, the answer is that it could go either way. Nothing wrong with customers specifying what they want to see. Its their money!

[Eric the .5b]

te fact that I don't have a set of concrete standards pre-determined for my flags is a feature of my scheme, not a detriment.

Dave, you don't have a scheme. You don't even answer the question of who's putting the flags on products.

The government? Then it doesn't matter one iota what all the market-loving libertarians in the world think, the government will set its own criteria for its own reasons that will probably have little to do with economic freedom and everything to do with trade negotiations.

Private groups? Who's going to voluntarily put "Yeah, the people who made this do so at gunpoint" stickers on products they sell?

If the decentralized, free consumer market of the US awards higher profit margins to green flag countries, then China will do whatever the green flag countries do. It will copy them, errrr, slavishly.

You make several unjustified assumptions, here.

[Dave W.]

Dave, you don't have a scheme. You don't even answer the question of who's putting the flags on products.

Doesn't matter to me. City of Compton, County of Cork, state of Vermont, nation of US, Treaty Group Of Wealthy NetConsumer Nations. I am sure each level of gov't has its pro's and con's. None of these places is perfect, but they are all good enuf to judge places with very little freedom. Yes, the standards could be bad or wrong, but then again, you could merely explain that to people who looked funny at all the red flags in your shopping basket. So, quit bitchin'.

Certainly imperfect information about how your products get made is better than the willful blindness (self included) we all engage in under the current scheme. My (proposed) violation of your right to buy products without embarrassing stickers is a tiny violin violation indeed.

Anyway, going back up to the previous posts in this thd, you can see my intended point, which was that Anonymous has misjudged me on this one. If Anonymous were me, I'd be getting an apology from myself about now.

[b-psycho]

Actually, if people just paid attention for once in their lives then that would serve the same purpose as the color coding system. It's relatively easy to tell what country is doing what if you care to find out.

[Dave W.]

It's relatively easy to tell what country is doing what if you care to find out.

Link please.

[Eric the .5b]

So, quit bitchin'.

Works for me; I won't bother responding to any of your future posts.

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