America: Economically Unfree?
When the Heritage Foundation announced this week that it had moved the United States to “mostly free” for the first time in the history of its Index of Economic Freedom, I took it as a flaw in the index rather than a useful statement about freedom in this country.
Like many libertarian-leaning conservatives, I frequently complain about the encroachment of governmental regulations, taxation, and all the rest. They doubtless make us less free and thus it’s hard to quibble with the characterization of our economy as “mostly free.” But, if Hong Kong and Singapore can not only rank ahead of us in “freedom” but actually top the list, there’s somethin’ wrong with the list.
Bruce Bartlett agrees. In his Forbes column, he puts his finger on the problem: “freedom encompasses much more than escaping government’s oppression and intrusion, and growth in government spending and taxation don’t automatically lead to totalitarianism.”
I think many conservatives and libertarians look at government’s share of the gross domestic product as the central measure of freedom. Implicitly, they assume that if there were no government we would be 100% free. If government taxing and spending consume one-third of GDP, then we are only two-thirds free and so on.
Obviously, there is something to this. But because it’s so easy to measure government’s share of the economy, I think there is too much attention paid to it to the exclusion of other important factors. On the one hand, we underestimate the importance of government regulations because they are hard to quantify yet may affect our lives more significantly than taxation or other governmental actions. On the other, I think we tend to underappreciate the ways in which technology frees us. The blessings of things like cellphones, PDAs and the Internet compensate for an enormous amount of waste and inefficiency elsewhere in society and the economy. To the extent that technology boosts productivity, it makes the burden of government more bearable.
Another thing we tend to forget is the great benefit of the wealth that almost all Americans have today. Not that many years ago, people had to spend an enormous percentage of their waking hours simply acquiring and preparing food. Now, even among poor households, obtaining adequate food is a minor concern. Indeed, obesity is a far bigger problem among the poor than malnutrition. The freedom to do things other than grow crops, raise livestock and cook on a wood stove is not one to be underestimated.
Because of the declining cost of things essential to life, burdens that might have been unbearable in the past can be borne with relative ease today. Consider taxation. If much of society is barely able to produce enough to live on then even the smallest tax can be extremely burdensome. That’s the main reason why tax burdens before the 20th century were minuscule by today’s standards: There was simply nothing to tax. Wealth, incomes, output and productivity were too low for there to be much for government to take.
He goes on for quite a bit, even making the heretical claim that “Social Security and Medicare add to freedom” because “before these programs came along, care for the aged imposed an enormous burden on families that decreased their freedom.”
Now, of course, there are many kinds of freedom. And one can reasonably differ as to whether it’s worse to have your options constrained by the heavy hand of the state or the burdens of fate. Some philosophers would tell you, in fact, that the latter has nothing to do with “freedom” or “liberty” whatsoever. But Bartlett is right that “there tends to be a myopia among conservatives and libertarians that is very quick to condemn governmental curtailments of individual liberty, while failing to appreciate or even acknowledge expansions of personal freedom that have enormously improved our lives over those of our parents and grandparents, not to mention those in the distant past.”
He’s also right when he points to the “tendency to exaggerate the importance of recent curtailments of freedom while failing to put them into proper historical context.” Raising the top marginal rate from 36% to 39% is a huge curtailment of the economic freedom of those of us fortunate enough to be affected. But I fully remember the days when those in the upper brackets — which at the time it seemed unfathomable that I would ever reach — was at 70%. And it was over 90% in living memory.
And I tend to agree with Bartlett here: “Perhaps we are moving toward European levels of taxation and spending. While I would prefer not to live that way, I certainly don’t view those in Scandinavia, where the level of government is twice what it is here, as twice as close to slavery as we are.” More to the point, I would prefer to live in Scandinavia — and, needless to say, the United States — than Hong Kong or Singapore.
UPDATE: Steve Bainbridge fears that Bartlett and I are “swapping [our] birthright of freedom for an iPad.”
Yes, we are wealthier today on the whole than 100 years ago. Yes, we can afford higher taxes without suffering deprivation more easily than out ancestors. But it still puts us on the slow, indirect, and imperfect road to serfdom. And that’s a road I would prefer to avoid.
In the United States today, the thermostat is still set pretty low. The Heritage Foundation has warned us, however, that the Obamabots have turned up the heat a tad. It is the proper function of conservatives to resist and to seek to turn down the heat. It would be nice to have Bartlett and Joyner with us.
In closing, would I rather live in Hong Kong, Singapore, or Sweden? Tough call. There’s more to freedom than just economic freedom. My guess is that Sweden ranks higher on issues like free speech and free elections than Hong Kong or Singapore. On the other hand, the food’s better in both Hong Kong and Singapore. So’s the weather. All things considered, however, I think I’d prefer a Los Angeles in which free people work in a free market.
I don’t disagree with any of that nor, I gather, does Bartlett.
I prefer freer markets to more regulated ones and low taxes to high, ceteris paribus. Bartlett does, too, and says so right in the column. The problem we’re addressing is twofold.
First, Heritage’s Index seems rather absurd in ranking Hong Kong and Singapore, two authoritarian states, well ahead of the United States. And Switzerland, Canada, and Ireland, which all have socialized medicine and all the rest, too. That just doesn’t compute. Indeed, Bainbridge seems to acknowledge that in that he’d rather live in LA — which is demonstrably less “free” economically than most cities in the United States but yet (1) damned free and (2) aside from the traffic and sky-high housing prices, a pretty damned nice place to live.
Second, the Index has the United States sliding out of the “free” range into the “somewhat free” range. And yet, as Bartlett notes, our taxes and such are actually lower than they were under Bill Clinton, much less Dwight Eisenhower. But nobody thinks of the 1990s, much less the 1950s, as a time when America was less economically free. (Well, okay, maybe women and racial minorities think so.)
Bartlett makes a tangential point, which is that technological and social changes — some instituted by and helped along by government, at the cost of nominal freedom — have made Americans “freer” in some important ways. I question whether this is a proper way to define “freedom” but agree that these changes have mostly been for the better.
Unspoken in both Bartlett’s column and my post above is that, absent the political will to cut back on spending, we’ve got to actually pay for it all eventually. Piling up debt and passing it on to our children has some costs in freedom, too.