America: Economically Unfree?

braveheart-freedombraveheart-freedomWhen 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.

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James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Pete says:

    Can an unassailable case be made that most, if not all, of the other economically successful countries would not be nearly as successful or free if it weren’t for the economic and security umbrella provided by the US? If the US adopts a more European economic model, can it still afford to provide the security umbrella and economic life blood of the planet? If not, how free will Scandanavia, Singapore and Hong Kong then become?




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  2. Herb says:

    I’ve been thinking along these lines vis a vis the individual mandate. At first, I didn’t like it. But I’ve come around to the view that it’s the best (easiest?) way to make a private insurance system work.

    After all, you’re not free to shout “fire” in a movie theater, but you are free to watch a movie without some jerk running in and shouting fire.

    Not every trade-off requires a major sacrifice. Sometimes you get something out of the deal too.




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  3. Michael Reynolds says:

    Pete:

    I believe you’re quoting Goldberg. His piece is drivel.

    Against whom are we defending Sweden? Or Singapore? Can you tell me which country threatens either? Check the calendar: it’s not 1970 anymore. The cold war is over. Russia will not be rolling the tanks into Sweden, they’re having trouble enough with Chechnya.

    As for China, can you name the last time China was a perpetrator of imperialism rather than a victim? I’m no expert on Chinese history but I believe you’d have to go a long, long way back.

    So against whom, exactly, are we defending the free world?

    In point of fact we have the largest defense establishment on earth by a humongous margin. If we cut our defense budget in half we would still have the world’s largest defense establishment by a humongous margin. We would still be vastly outspending Russia and China combined. And we would still have no actual nation-state enemy to confront with all that firepower.

    By the way, here’s something to consider while you’re dissing Europe: imagine if the Europeans started using oil the way we do. Imagine the effect of that huge upsurge in demand upon the world market. Imagine the effect on our economy of suddenly having to compete against a Europe as profligate as we are.

    It’s a two-way street. We subsidize their mostly theoretical defense needs; they subsidize our energy prices.




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  4. Michael Reynolds says:

    James:

    You’re getting perilously close to the idea that government may actually have some positive role to play. This is heresy.

    Don’t you know that government is the problem? Unless we’re talking about defense? Or Social Security? Or Medicare? Or the VA? Or the National Parks? Or the CIA, FBI, NSA? Or, you know, any of the things government does that old people and conservatives (but I repeat myself) love dearly?

    James, the only legitimate purpose of government is to write Social Security checks, cover medical bills for old people, and keep the Russians out of Nebraska. The remaining 5% of the budget is socialist infringement on our liberty! Death to tyrants! Grrrr. Tea party! Tea party!




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  5. Herb says:

    You mean Pete didn’t come up with the term “security umbrella” on his own?




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  6. pete says:

    Michael, I’m not quoting Goldberg. Perhaps I can restate my premise that the US and its economic interests require it to project its power to protect those interests. Other economies which benefit from ours can then operate with little defense spending as they presume the US will protect them through self interest.

    I’m not debating this issue; I’m only trying to understand the issue better.




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  7. spencer says:

    Just remember when you do this analysis that military spending is just another form of welfare.

    We are paying several million members of the Armed forces and their industrial suppliers several percentage points of GDP to consume but not produce anything. Now, tell me how is that any different from giving food stamps to some welfare queen?




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  8. Michael Reynolds says:

    Pete:

    It may interest you to learn that I spent some time in 2003 traipsing around Europe for a documentary project and making that exact point to various Euro-intellectuals.

    But even in 2003 I was couching it in terms of past services rendered. I made the point that the EU exists because the US made the world safe for them. They generally agreed.

    But that was in 2003 and I was talking about the years from 1945 up to 1989. The wall’s been down twenty years now. The USSR no longer exists. There are no more tanks poised at the Fulda Gap. So we’re not really protecting Europe from a damn thing.

    That said, if we left Europe and Japan they’d both no doubt increase their military expenditures. But since their real needs are pretty slight it wouldn’t amount to much. Certainly not enough to have some serious deleterious effect on their economies.




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  9. Michael Reynolds says:

    On the larger point, American paranoia about Europeanization has gotten bizarre. It was almost understandable 100 years ago, or even 50, but a substantial number of Americans have actually visited Europe. Are they seeing a grim, desperate, Mad Max wasteland? They must be seeing a different world than me.

    What I see is that France, to pick on everyone’s favorite boogeyfrog, has better roads, better airports, better railroads and better mass transit than we do. They use less energy. They have a wonderful quality of life. Their countryside is pristine. Their violent crime rate is lower than ours. The disparity between rich and poor is lower than ours. Their GDP growth per capita is very close to ours. Their currency is generally no weaker than ours. And everyone gets medical care without worrying about whether they happen to have a spare 50,000 Euros to hand over.

    It’s hell, I tell you.




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  10. TangoMan says:

    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.

    This entire debate is based on a strawman. The Heritage report is based on the metric of “Economic Freedom” and the response is based on how one sees “freedom” in their daily life.

    The better angle for analysis would have been to exploit the parable of the frog in a pot of water that is slowly brought to a boil.

    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.”

    Bartlett isn’t right, he’s confused. He’s making an invalid comparison, and invalid comparisons can’t be right. What he’s doing is comparing the various restriction of freedoms we see enacted by the various governments of the world against the mostly universal spread of technology which tends to make our lives more efficient.

    Every country has a cell-phone system. Not every country has an EEOC stripping away people’s rights to freedom of association.

    His “analysis” is kind of like comparing the flotation capabilities of a number of different vessels, each with varying sizes of holes drilled into their hulls and countering with the observation that a rising tide lifts all boats and then somehow linking the two notions together.

    Against whom are we defending Sweden?

    Ask people in Georgia who lost territory and lives to some country that is in near vicinity to both nations.

    As for China, can you name the last time China was a perpetrator of imperialism rather than a victim? I’m no expert on Chinese history but I believe you’d have to go a long, long way back.

    Yeah, way back, all the way back to 1979 when the Chinese invaded Vietnam in order punish Vietnam for toppling the Chinese backed Khmer Rouge regime in Cambodia.




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  11. TangoMan says:

    So, I went and read Bartlett’s column. It’s utter schlock.

    It’s not hard to get depressed about the prospects for economic freedom these days, given all of the government interventions of the past 18 months in response to the Great Recession. However, I think it’s important to remember that 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.

    Why construct an argument based on what “he thinks” conservatives and libertarians believe on the issue. If he’s referencing the Heritage report, why not use their definition of economic freedom:

    What is economic freedom?

    Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

    For someone occupying a perch at the top tier of the intelligentsia, the thinking displayed in this column is an utter disgrace.




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  12. Michael Reynolds says:

    TangoBrimelow:

    Wow, you’ve shaken my confidence in your secret identity. Because Brimelow is an educated man, and no one with even a limited knowledge of basic geography — or Google — would write this:

    Against whom are we defending Sweden?

    Ask people in Georgia who lost territory and lives to some country that is in near vicinity to both nations.

    Did someone move Sweden and not tell me?

    Russia moved to support a rebellion in its former territory of Georgia and therefore, look out Sweden!

    Then, this:

    As for China, can you name the last time China was a perpetrator of imperialism rather than a victim? I’m no expert on Chinese history but I believe you’d have to go a long, long way back.

    Yeah, way back, all the way back to 1979 when the Chinese invaded Vietnam in order punish Vietnam for toppling the Chinese backed Khmer Rouge regime in Cambodia.

    You do understand what imperialism is, right? It’s not a punitive border war.

    From Wikipedia:

    After a brief incursion into Northern Vietnam, PRC troops withdrew about a month later in an agreement with the United States whereby China will withdraw to prewar positions and the United States will withdraw its forces from Taiwan[9]. Both China and Vietnam claimed victory in the last of the Indochina Wars of the twentieth century; however, since Vietnamese troops remained in Cambodia until 1989 it can be said that the PRC failed to achieve the goal of dissuading Vietnam from involvement in Cambodia.

    A brief incursion to punish a nation that’s pissed you off is not imperialism. It’s certainly unpleasant and definitely war, but it is not imperialism.

    Wow. I wonder if I was wrong about you.




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  13. Stan says:

    TangoMan, this should really make your blood boil:

    http://tinyurl.com/yandsln

    It’s a newspaper article on Obama’s Fascist/Communist/Moslem health care bill that describes another encroachment on our freedom. Sad to say, after 2014 health insurance policies will be required to cover preventive care exams with no copay.

    It’s another step on the road to serfdom. Somewhere Ayn Rand is crying.




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  14. anjin-san says:

    In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.

    Hmmm. Can I consume heroin? Can I invest in the Cuban economy? Can I product defective products that are dangerous to the people who buy them? Can I work producing kiddie porn?




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  15. tom p says:

    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.

    OK, Bainbridge is an idiot… an intelligent idiot, but still an idiot.

    May I quote Webster?

    Serfdom: “a member of a servile feudal class bound to the land and subject to the will of its owner”

    Obviously, he has never worked for Wal-Mart, or God forbid, a non-union mine.

    Steven: There are all kinds of serfs, and very few of them work for the government.

    Get a clue.




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  16. Contemplationist says:

    Errr
    Did you notice that the index is called Index of ECONOMIC Freedom? Yes?
    Of course freedom entails more than just economic freedom, but what exactly is this bullshit bashing of something that ADMITS to being economic only? Hong Kong has near laissez-faire levels of ECONOMIC freedom. Its undeniable.




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  17. Mike A says:

    Pay no attention to Mr. Reynolds – he is wearing his “weird science” underwear on his head today.

    He hopes to cobble together a convincing case that China doesn’t exist and is not a threat to anyone. Of course Russia can’t even handle some Chechnya rebels so they’re not a danger to any one at all.

    Under his stellar analysis this would mean that the US couldn’t manage an invasion of Mexico because we are still fighting the Taliban in Afghanistan. Brilliant analysis Michael Reynolds…just brilliant.




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  18. wr says:

    Stan — You think somewhere Ayn Rand is crying? I think she should be burning in hell… otherwise there’s no justice anywhere.




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  19. Herb says:

    He hopes to cobble together a convincing case that China doesn’t exist and is not a threat to anyone.

    What an obvious and embarrassing (for you) straw man, Mike A.

    I suppose you want to nuke China pre-emptively then??? Bah…

    Attack the argument, not the caricature.

    PS. I’m pretty sure in Weird Science they wore bras on their head. And while technically bras are underwear, you make it sound like Michael is wearing a panty on his head.

    That would be Nicolas Cage in Raising Arizona. Get it right.




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  20. Stan says:

    wr, I was being ironic when I said Ayn Rand was crying. Actually, I think she might have approved the final version of the health bill, since it’s based on ideas championed by the Heritage Foundation:

    http://thinkprogress.org/2010/04/10/heritage-romneycare/

    Ms. Rand seems to have been an honest fanatic, and I can’t imagine her retracting her views for political advantage. The honesty part is admirable when compared to Romney, McCain, and the other corrupt hacks in the Republican establishment.




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  21. Dave Schuler says:

    As for China, can you name the last time China was a perpetrator of imperialism rather than a victim? I’m no expert on Chinese history but I believe you’d have to go a long, long way back.

    Michael, I agree, generally, with your larger point but this question is pretty easy to answer.

    China has been imperialistic on a pretty continuous basis throughout its history. In the case of Tibet it has invaded and occupied the country every so often since the 17th century. This time around it’s occupied and colonized it since 1950.

    In 1962 and again in 1967 China and India engaged in conflicts that I think are best interpreted as imperialism on the part of China.

    I also think it’s arguable that the border conflicts with the Soviet Union in 1969 and the Sino-Vietnamese War of 1979 were imperialism on China’s part.




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  22. Michael Reynolds says:

    Dave:

    I think Tibet is the best case that can be made for Chinese imperialism in recent history. No doubt the Chinese would argue that they were merely re-asserting a degree of control they’d had from time to time. But the Tibetans certainly think of themselves as a nation apart from China, so point taken. Definitely imperialism.

    I don’t see the India/China war or the Vietnam/China war as fitting the definition of imperialism. The first was a border dispute and the latter was — from the PRC perspective –a reaction to Vietnamese imperialism. (Granted that no one can possibly mourn the overthrow of the Pol Pot regime.)

    The Soviet-Chinese thing was pretty clearly a classic border flare-up. The equivalent — IIRC — of NK and US soldiers pot-shotting across the DMZ. It got a bit out of ontrol but the most likely imperialism would have been contemplated Soviet moves to take out Chinese nuke facilities — urged on by us.




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  23. gVOR08 says:

    I recently read Max Hastings’ excellent “Armageddon: The Battle for Germany 1944-45”. He a couple of times quoted German soldiers or civilians on the consequences of losing the war, ‘we’ll lose our freedom’. Struck me as an odd thing to hear from citizens of a totalitarian state. Reminded me of the Tea Party crowd complaining about losing freedom. Sorry guys, but I’m afraid conservatives frequently remind me of Inigo Montoya’s line in the Princess Bride, ‘You keep using that word. I do not think it means what you think it means.’ Freedom really doesn’t mean the freedom to have your health insurance canceled.




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