Freedom?

datePosted on 10:52, January 15th, 2009 by Jafapete

The right-wing fringe think-tank, the Heritage Foundation, has scored NZ slightly higher on its yearly Index of Economic Freedom. NZ comes in at number 5. Rankings here.

This despite a Labour-led government being in charge at the time the data were collected.

According to the Heritage Foundation, the increase–from 80.6% to 82%–was due to improvements in trade, investment and property rights. The Herald notes that, “Freedom from corruption declined but remained high at 94 per cent, and labour freedom fell but was also high at 89.65 per cent”, but doesn’t tell us that the “labour freedom” score declines with higher minimum wages, protections against arbitrary dismissals, etc. It doesn’t mean freedom for workers. Still, with December’s stripping of low-end workers’ protections against arbitrary dismissal (barring provable discrimination), NZ should score even higher on this “freedom” next year.

Interestingly, NZ came in just behind Hong Kong, Singapore, Australia and Ireland, and just ahead of the United States and Canada. What do all these countries have in common? A clue… Britain came in at number 10. Yep, the English-speaking, common law countries–all ruled by Britain at some point– share a predilection for light regulation of business. (This is borne out in the rankings of the right-wing Fraser Institute as well.)

It will be interesting to see how the Anglo-American economies and their Asian cousins fare compared to the rest of the world over the next couple of years.

categoryPosted in Economy

8 Responses to “Freedom?”

  1. Redbaiter on January 15th, 2009 at 12:59

    “This despite a Labour-led government being in charge at the time the data were collected.”

    Given the Foundation is “right wing fringe’, how could this be possible?? No way they could be objective. Is there??

  2. Rich on January 15th, 2009 at 13:14

    Ironic that the #1 spot goes to a country that’s effectively ruled by an organisation still called the Chinese Communist Party.

    Just goes to show that the propertarian idea of “freedom” is actually inimical to democracy.

    [why is my captcha “call Ralston” – that a hidden message for someone?]

  3. Pablo on January 15th, 2009 at 20:08

    I find the inclusion of Singapore especially ironic, since the State has a hand in the majority of economic activity (via corporate taxation, numerous state enterprises and stakeholder participation in the private sector) and is a direct provider of extensive welfare, health and housing benefits to its citizens (but not foreigners). It is said that 80 percent of economic activity in the country somehow passes through the hands of the state. Even locals comment on the “market socialism” aspect of the productive apparatus. It works, but by the defintion of economic freedom used by Heritage, it is definitely not high on the scale of market openess. Maybe Heritage is using faulty data?

    Plus, the nice folk at Heritage do not take into account the fact that constraints on freedom of expression and political participation, issues of questionable judicial redress and ethnic cronyism add to business costs in numerous hidden and open ways. It would seem that meritocracy and market freedom have their limits. I will not even go into the constraints, individual and collective, imposed on the labour movement.

    At least the individual tax rate is low!

  4. MacDoctor on January 15th, 2009 at 20:40

    JP: The Heritage Foundation report contains this statement about “Labour Freedom” (Meaning a lightly regulated labour market, of course)

    In general, the greater the degree of labor freedom, the lower the rate of unemployment in an economy. (Chapter 1, page 15)

    Do you disagree with this?

  5. BLiP on January 16th, 2009 at 00:45

    Your headline is brilliant!

    The question mark after the word “freedom” says it all.

    The more free business, the less free the people.

  6. Jafapete on January 16th, 2009 at 05:42

    Pablo, Indeed. Thanks for making the argument so eloquently.

    BLiP, Got it in one. Well put.

    MacDoc: Wish that it were that simple. It may be that, looking across all countries at that particular point in time, what you say holds “generally”–although I’d like to see more about the size of the effect. However, “freer” labour markets show more tendency to fluctuate in terms of employment. After all, five of the six measures used in the sub-index are about ease of hiring and firing or changing hours. Hence my point about it being interesting to see how the “freer” Anglo-American countries do over the next little while. I wasn’t just talking about inflation and GDP.

    Also, it seems that the effects vary by type of economy. I’ll point you at a study based on the Fraser Institute index in the 1990s by Harvard economist Richard Freeman, ‘Institutional Differences and Economic Performance among OECD Countries.’ http://cep.lse.ac.uk/pubs/download/dp0557.pdf
    I suppose I should add a disclaimer. I’ve co-edited a book with Freeman.

  7. Roger Nome on January 16th, 2009 at 10:43

    Redbaiter:

    Of course they aren’t objective – they just take “right wing” to mean “freedom” – the more a country is run according to market principles, the “freer” it is. That shows that New Zealand was actually very right-wing under Labour, and all the bleating about New Zealand being overly “socialist” was extremist ranting.

  8. Roger Nome on January 16th, 2009 at 10:46

    Macdoctor – perhaps, but employment rate is more important than unemployment rate as an indicator of labour market policy success (can you see why, or should I explain to you why this is the case?) – and the Scandinavian countries have the highest employment rates in the world. They also have amongst the most highly centralised and regulated labour markets in the world.

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