Sunday, May 29, 2005

Index of Economic Fiefdom

/ freedom / from / democracy /
John Miller of Dollars&Sense, takes on the WSJ and Heritage Foundation's Index of Economic Freedom, its flagrant flaws and what it says about the kind of freedom they treasure:

[The weird rankings] are not surprising, however, given the index’s premise: the less a government intervenes in the economy, the higher its freedom ranking. Specifically, the index breaks "economic freedom" down into 10 components: trade policy; fiscal burden of government; level of government intervention; monetary policy; financial liberalization; banking and finance policies; labor market policies; enforcement of property rights; business, labor, and environmental regulations; and size of the black market. In other words, minimum-wage laws, environmental regulations, or requirements for transparency in corporate accounting make a country less free, whereas low business taxes, harsh debtor laws, and little or no regulation of occupational health and safety make a country more free.

Consider that the index docks the United States’ ranking for passing Sarbanes-Oxley, a law that seeks to improve corporate accounting practices and to make CEOs responsible for their corporations’ profit reports. The segment of the U.S. population whose economic freedom this law erodes is tiny, but it’s obviously that segment—not workers and not even shareholders—whose freedom counts for the folks at the Journal and at Heritage...

... An "Economic Freedom Index" that tells us little about economic growth or political freedom is a slipshod measure that would seem to have no other purpose other than to sell the neoliberal policies that stand in the way of most people gaining control over their economic lives and obtaining genuine economic freedom in today’s global economy.

1 comment:

Anonymous said...

Oh, the Index is crap even if you agree with its underlying assumptions.

I briefly blogged about it last year:

Check the comments, where our co-blogger Carlos has some fun ripping up the methodology.

Doug M.