The Cato Institute

Global Economic Freedom Up Slightly

For the first time in almost a decade, the United States  ranks within the top ten economically freest countries…

The Economic Freedom of the World — an annual report, co-published by the Cato Institute, the Canada-based Fraser Institute, and the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 nations and territories worldwide — seeks to measure the consistency of the institutions and policies of various countries with voluntary exchange and the other dimensions of economic freedom.

Based on data from 2016 (the most recent year for which comparable data is available), the report is the world’s premier measurement of economic freedom, using 42 distinct variables to create an index ranking countries around the world based on policies that encourage economic freedom.

Economic freedom is measured in five different areas: (1) size of government, (2) legal system and property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business.

Each country is rated on a 0-10 scale where a higher value indicates a higher level of economic freedom.

The United States returned to the top 10 with the 6th freest economy after an absence of several years, with an overall rating of 8.03, according to the 2018 Index.

“The increase in the United States’ economic freedom score is welcome, but it remains notably below the level it enjoyed at the beginning of this century,” said Ian Vasquez, director of the Center for Global Liberty and Prosperity at the Cato Institute.

During the 2009-2016 term of President Obama, the U.S. score initially continued to decline as it had under President Bush. From 2013 to 2016, however, the U.S. increased its rating from 7.74 to its current standing. This is still well below the high-water mark of 8.62 in 2000 at the end of the Clinton presidency.

Hong Kong and Singapore occupy the top two positions. The next highest scoring nations are New Zealand, Switzerland, Ireland, United States, Georgia, Mauritius, United Kingdom, Australia and Canada, the last two tied for 10th place. Venezuela is again ranked as the lowest in economic freedom out of the countries of this year’s report. 

The rankings of some other major countries are Germany (20^th), Japan (41^st), Italy (54^th), France (57^th), Mexico (82^nd), Russia (87^th), India (96^th), China (108^th), and Brazil (144^th).

Three new countries — Belarus, Iraq, and Sudan — were added to the Index this year, bringing the total number of jurisdictions measured to 162. The Index also integrates differential legal treatment according to gender, thus taking into account the fact that women do not have the same level of economic freedom as men do in all nations.

”Women benefit from greater economic freedom as there is greater gender equality in countries that are more economically free,“ continued Vasquez.

The cornerstones of economic freedom include personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property. The data shows people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer life spans.

Nations in the top quartile of economic freedom had an average per capita GDP of US $40,376 in 2016, compared to $5,649 for bottom quartile nations. Moreover, the average income of the poorest 10% in the most economically free nations is almost twice the average per capita income in the least free nations. Life expectancy is 79.5 years in the top quartile compared to 64.4 years in the bottom quartile, and happiness levels are much higher in economically free nations than in unfree nations.

Learn more…

Your Guide to the Ideas of Liberty

Ever wish there were a Wikipedia for libertarianism? The new Encyclopedia of Libertarianism covers libertarian philosophy, people, and concepts from Abolitionism to Whiggism…

Libertarianism.org is excited to announce the release of the Encyclopedia of Libertarianism in a brand new interactive digital format.

In preparing this encyclopedia, our hope has been to offer a general guide to the social and political philosophy that today goes by the name of libertarianism.

Although the title is comparatively new, the doctrine is not. Libertarianism is the heir to 19th-century classical liberalism and to the Whig ideology in the period prior to that.

Libertarianism is a major feature of intellectual and political life as we enter the first years of the new century. It is at one and the same time a movement in politics, a recognized philosophy, and a set of distinctive policy prescriptions. 

As such, libertarianism, and the individuals who espouse it, play a prominent role in intellectual and political arguments in several countries — and now you can easily learn all about them!

Learn More…

Remembering Dr. Martin Luther King, Jr…

Dr. Martin Luther King, Jr. provided crucial moral leadership for eradicating government-enforced racial segregation in the United States…

Born in Atlanta on January 15, 1929, Martin Luther King, Jr. was a prominent activist in the civil rights movement, a spectacular orator, and a practitioner of nonviolent resistance.

King, the son of a preacher and a preacher’s daughter, decided on the ministry around the age of 19, eventually embracing a religious version of individualism known as “personalism.” Some of King’s strong attraction to that philosophy was rooted in one of its major corollaries: if the dignity and worth of all human personalities was the ultimate value in the world, racial segregation and discrimination were among the ultimate evils.

King came of age at a time when trouble was brewing over government-enforced racial segregation. The races were strictly separated by law on streetcars, buses, and railroads; in schools; in waiting rooms, restaurants, hotels, boarding houses, theaters, cemeteries, parks, courtrooms, public toilets, drinking fountains, and every other public space. These laws were been passed during the early 20^th century, despite the objections of private businesses that they would raise their costs and alienate customers. 

Inspired by American individualist Henry David Thoreau and Indian nonviolent crusader Mohandas Gandhi, Dr. King, who was awarded the Nobel Peace Prize in 1964, established militant nonviolent political action as the principal strategy for attacking segregationist laws.

“As you press on with justice, be sure to move with dignity and discipline using only the weapon of love…Always avoid violence. If you succumb to the temptation of using violence in your struggle, unborn generations will be the recipients of a long and desolate night of bitterness, and your chief legacy to the future will be an endless reign of meaningless chaos…In your struggle for justice, let your oppressor know that you are not attempting to defeat or humiliate him…you are merely seeking justice for him as well as yourself.”

Dr. Martin Luther King, Jr.

Dr. King’s most fundamental principles harked back to the natural law tradition: there are moral standards for judging the legitimacy of laws. They aren’t legitimate just because government officials say they are. 

“A man-made code that squares with the moral law, or the law of God, is a just law…But a man-made code that is inharmonious with the moral law is an unjust law…Let us not forget, in the memories of six million who died, that everything Adolph Hitler did in Germany was ‘legal,’ and that everything the Freedom Fighters in Hungary did was ‘illegal.’”

Dr. Martin Luther King, Jr.

The world King saw around him made it clear that court decisions could be as bad as laws.

“Though the rights of the First Amendment guarantee that any citizen or group of citizens may engage in peaceable assembly, the South has seized upon the device of invoking injunctions to block our direct-action civil rights demonstrations. When you get set to stage a nonviolent demonstration, the city simply secures an injunction to cease and desist. Southern courts are well known for ‘sitting on’ this type of case; conceivably a two or three-year delay could be incurred…in Birmingham, we felt that we had to take a stand and disobey a court injunction against demonstrations, knowing the consequences and being prepared to meet them — or the unjust law would break our movement.”

Dr. Martin Luther King, Jr.

Dr. King aroused controversy throughout his tumultuous public career. He was jailed 14 times. He was the target of countless death threats. He was stoned, and he was stabbed. FBI Director J. Edgar Hoover warned that King was consorting with communists.  So-called liberals like President John F. Kennedy were concerned that he would provoke disorder, and Attorney General Robert F. Kennedy approved FBI bugging of King’s home, office and hotel rooms across the country. King’s home was blasted by a shotgun, and both it and a motel room where he stayed were bombed. And, on April 4, 1968, he was assassinated.

With courage and goodwill, Martin Luther King, Jr. reaffirmed the vision of a “higher law,” the idea that government laws must be judged by moral standards, a bedrock for liberty going back more than 2,000 years.

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The Trans-Pacific Partnership: Free Trade and the Never-Ending Copyrights

International trade is an important driver of human flourishing. Free trade agreements can facilitate more of this kind of trade while knocking down protectionist barriers. But trade agreements can also enshrine cronyism and rent-seeking, harming consumers across the globe.

Take copyright. The Trans-Pacific Partnership will require governments to protect copyrights for 70 years after an author’s death, so that generations from now people in some of the poorest places on earth won’t be able to watch very old movies unless they pay royalties to the creator’s grandchildren’s grandchildren!

Ridiculously long copyright terms are among the excesses of U.S. copyright law that big media companies want to continue to see included in future trade agreements.

So much of what we do online every day—posting a meme, reviewing a book, or even just using a search engine—relies on an exception to copyright protection known as fair use. If trade agreements will continue to be used to spread U.S. copyright law, they should balance the rights of creators and users, which fair use attempts to do.

Trade agreements, while exporting copyright restrictions, haven’t recognized fair use. The TPP is the first trade agreement that includes a provision calling on members to balance copyright protection with exception like fair use. This would bring the TPP’s copyright rules more in line with U.S. law, it would also help those rules align better with the goals of free trade by promoting open commerce in a digital world.

Trade agreements can bring enormous benefits to the poorest people on earth, like cheaper food, clothing and energy.

Achieving those goals is simply more important than trying to reassure big media companies that children in Malaysia won’t watch Snow White without paying for it.

Low-Hanging Fruit Guarded by Dragons: Reforming Regressive Regulation to Boost U.S. Economic Growth

Despite today’s polarized political atmosphere, it is possible to construct an ambitious and highly promising agenda of pro-growth policy reform that can command support across the ideological spectrum.  Such an agenda would focus on policies whose primary effect is to inflate the incomes and wealth of the rich, the powerful, and the well-established by shielding them from market competition. In a new paper, Cato scholar Brink Lindsey identifies four major examples of such “regressive regulation,” and proposes reforms that would open up a new front in the ongoing policy fight.

Read the paper….