Sunday, February 13, 2005

Economic Freedom and the 7th Commandment: you shall not steal

Spent some time tonight looking at the economic freedom report of EFN: This is a thought provoking document, and I will call attention to a few points here.

1) Economic freedom is an essential part of controlling corruption. I was once asked by a business student why honesty in business was important: wasn't corruption just how you got ahead in the business world? I resisted the impulse to tell the student that his comment was a perfect example of how poor corrupt third world countries stay poor and corrupt and third world. EFN gives the data.

2) Economic freedom does not produce societies skewed against the poor: the share of national income held by the bottom 10% does not change very much when you expand economic freedom: the least free societies the poor command about 2.1% of GDP, the most free societies they command about 2.5% of GDP--the economically free societies are actually somewhat more even in income distribution, though not dramatically so.

3) The major difference is that economic freedom produces dramatically more successful economies: in the least free societies, the poor average $823 in per capita GDP; in the most free societies the poor average about $6877 in per capita GDP.

Aristotle had this scoped out in the fourth century BC--but EFN gives us valuable documentation.

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