‘Economic freedom’ took hit in 2020, but it could be worse, and we can improve

by Grassroot Institute of Hawaii, October 10, 2022

Hawaii legislators take note: If you want prosperity, less conflict and stronger human rights, push for greater economic freedom

The Fraser Institute’s latest “economic freedom” report is out and it unfortunately shows that the United States was less free in 2020 than it was in 2019.

The data isn’t exactly fresh, but it’s the best that the Institute’s researchers had. Apparently we’ll have to wait another year or two to find out how we’re doing now.

In any case, the new report, “Economic Freedom of the World 2022,” ranked the U.S. as the seventh most-free country in the world in 2020, down from the fifth in 2019.

That was out of 165 nations, which were ranked according to five general policies: size of government; legal system and property rights; sound money; freedom to trade internationally; and regulation.

It also considered gender legal rights in order to measure “the extent to which women have the same level of economic freedom as men.”

Largely due to the COVID-19 lockdowns, America’s freedom score fell from 8.25 to 7.97 — a 0.28 point drop, compared to the world average drop of only 0.16.

Is this a problem?

Well, yes. As economist Robert Lawson notes in a chapter of the report titled “Economic Freedom in the Literature: What Is It Good (Bad) For?“, “hundreds of studies in top-ranked academic journals show that economic freedom leads to positive outcomes for people, whether in increased prosperity, reduced conflict or stronger human rights.”

Lawson, an economics professor at Southern Methodist University and one of the co-authors of the report, reviewed 721 academic papers published in leading peer-reviewed journals and came to the following conclusions:

>> More than half of the papers, 50.6%, found that economic freedom yielded “positive” results.

>> About 45% concluded economic freedom had “mixed/null/uncertain” outcomes.

>> A small fraction of the papers, 4.6%, concluded that economic freedom had “negative” outcomes, such as higher inequality or a worse environment.

In general, he said, “the bulk of the evidence suggests that economic freedom … corresponds with normatively good outcomes.”