Economic Freedom, Universal Health Care, and Labor Unions
The Heritage Foundation has a new report out touting the fifteenth annual edition of its joint project with The Wall Street Journal called the “Index of Economic Freedom”. This is the right-wing’s gold standard of international comparisons that they say “provides strong evidence that the countries that maintain the freest economies do the best job of promoting prosperity for all citizens.” See here:
Long story short, they think we should become a dictatorial East Asian city state.
But it’s interesting to look at how the non-U.S. countries fare on some controversial policy ideas. Singapore, for example, has an interesting health care system that combines some elements of the consumer-driven model beloved by the right-wing with a universal guarantee of access and affordability and a healthy dose of direct state provision of services. Hong Kong has a British-derived system of public provision. And of course the rest of the top ten are Western countries among which, as is well-known, the US is alone in not providing for universal health coverage.
Or think about the Employee Free Choice Act. Conservative claim that making it easier for workers to form unions will cripple the economy. But consider these union density stats:
- Hong Kong — 22.1 percent
- Singapore — 18.5
- Australia — 20.0
- Ireland — 35.0
- New Zealand — 21.1
- United States — 12.0
- Canada — 29.7
- Denmark — 80.0
- Switzerland — 25.0
- United Kingdom — 28.4
Long story short, by conservatives’ own lights these major elements of progressive social policy are completely compatible with sound overall economic policy. But health care reform and a stronger voice for labor would help ensure that the gains of economic growth are shared broadly rather than leaving us stuck in the Bushonomics trap of debt-financed middle class consumption growth. And I would argue that egalitarian measures like a stronger health care system and the better wages that come from higher union density help forestall political demand for the kind of labor market regulations that you see in the southern European countries that this Heritage/WSJ study frowns upon.
48 Responses to “Economic Freedom, Universal Health Care, and Labor Unions”
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January 14th, 2009 at 11:06 am
Why the hell wouldn’t they rank Iraq? We remade it into a free-market paradise, with every law or lack thereof that a neocon could dream of.
January 14th, 2009 at 11:08 am
If a piece is lengthy enough to use “long story short” twice, then you might want to reconsider using “short” to describe it.
January 14th, 2009 at 11:16 am
I wasn’t aware that Ireland, New Zealand or Australia were in East Asia. (although the last is in some of the same time zones) Or that any of these are city states. Or dictatorial.
January 14th, 2009 at 11:27 am
yeah, the irish economy is soaring, isn’t it?
January 14th, 2009 at 11:32 am
I can see not ranking Afghanistan, Sudan and Iraq, but Liechtenstein? Too many sniper attacks and bombings to visit their corporate law libraries? What’s the deal? Heritage doesn’t like the zero corporate tax rate? The list would look silly with Liechtenstein as #1?
January 14th, 2009 at 11:40 am
Hard to believe that Sri Lanka ranked above Indonesia. They must have some whacky criteria or strange weighting to get that result.
January 14th, 2009 at 11:40 am
Hmmm, interesting list.
Lichtenstein is odd, considering its reputation as a tax haven. Doesn’t the WSJ love tax havens?
And it’s even more interesting how the rankings seem a bit off from other economic rankings, which suggests the rubbishness of “economic freedom” as an indicator of anything but right-wing political fantasy.
January 14th, 2009 at 11:45 am
I love how they show just how irrelevant their own priorities are with a single chart. They have France listed at 64 and Saudi Arabia at 59. Where would you rather live, France or Saudi Arabia? What a tough decision!
January 14th, 2009 at 11:46 am
As usual, you come out with half assed statements which show your ignorance of anything that is outside of America and isn’t a train or a bus.
Singapore is not particularly free, but dictatorial? what then is Burma, or Zimbabwe?
Clown.
January 14th, 2009 at 11:54 am
I love how Venezuela is fifth from the bottom. They also, as of last week, have a lower unemployment rate than the United States, as well as the third-highest level of citizen happiness (as measured in international surveys). Looks like there are things more important than “economic freedom”.
January 14th, 2009 at 12:07 pm
It’s hilarious how transparently “economic freedom” translates to “low taxes”. Hong Kong tops the list despite the fact that all the land in the SAR is owned by the government. Singapore is second despite the fact that most of its major industries are ultimately run by the prime minister’s wife.
January 14th, 2009 at 12:09 pm
As with all statistics, it’s only useful if you take into account how they came up with the numbers.
Like how Liberia (!) ends up with a relatively high rank, which as far as I can tell is due to low taxes a miniscule government, and I assume no price controls. I also like how Sweeden still manages to rank up there, even though they scored a 7.3 on the government size category.
I think I would have weighted things a little differently though. If I was looking to invest, property rights would be hugely important, since there’s a world of difference between losing $X and going out of business vs. having the government nationalize your business and sending you on your way.
January 14th, 2009 at 12:09 pm
This has always been a vindictive list, interested not in economic freedom generally, but rather the freedom of US firms to act unfettered by local laws. (Once you get past the first tier of countries, which they have to rank by genuine overall economic freedom in order to preserve the apparent reliability of the list.) Putting Venezuela all the way down there, even though you’re free to start a business and make profits, is just sour grapes.
January 14th, 2009 at 12:10 pm
Hector, Hector, Hector…don’t you know what “economic freedom” is? It refers to the freedom of corporations to do as they wish without regard for civil society. Your reference to airy-fairy notions like citizen so-called “happiness” are laughably off topic.
January 14th, 2009 at 12:54 pm
The fact that Nigeria is ranked 55 spots higher than Venezuela shows how ridiculous this list is.
January 14th, 2009 at 12:59 pm
I don’t know, I’ve gotten many emails that detail how much wealth is flowing through the Nigerian banking system.
January 14th, 2009 at 1:05 pm
The list is actually interesting in that there appears to be a pretty weak relation between a country’s ranking in the list and their wealth, quality of life etc. If free market economics was as compelling as Heritage believes, why isn’t the Democratic Republic of Congo a better place to be than Venezuela? Why isn’t Hong Kong particularly rich?
January 14th, 2009 at 1:15 pm
India is between Tajikistan and Rwanda? Seriously?
January 14th, 2009 at 1:33 pm
Why isn’t Hong Kong particularly rich?
Have you actually been to Hong Kong?
January 14th, 2009 at 1:33 pm
And there is a good argument to be made about economic freedom in Venezuela; the government friggin’ takes over your company!
January 14th, 2009 at 1:43 pm
Ginger Yellow beat me to the punch.
“Long story short,” economic freedom is measured not by real freedom, but by political and social stability.
Period.
January 14th, 2009 at 3:17 pm
It’s a completely useless index. Are you really going to tell me that it is better to invest your money in South Africa with one of the highest crime rates in the world than in France?
And if China is #132 and India #123, why are all those jobs being shipped over there and why do they have grown in the double digits for the last years?
Iceland is #14 but unfortunately completely bankrupt. And those Eastern European countries so praised by this report are on the verge of bankruptcy as well.
January 14th, 2009 at 3:26 pm
Ireland and Iceland in the top 20. Nice one, WSJ. This is just a freemarketroid list of “top ten countries whose tax polices we jerk off to in the office toilets”.
January 14th, 2009 at 4:16 pm
Or a colony of China. But as I understand it, we’re going in that direction anyway.
January 14th, 2009 at 5:24 pm
No, the government just encourages factories to operate horizontally, as cooperatives. Through tax incentives.
Good book: http://www.amazon.com/Changing-Venezuela-History-Policies-Government/dp/1844675521
January 14th, 2009 at 5:46 pm
“And of course the rest of the top ten are Western countries among which, as is well-known, the US is alone in not providing for universal health coverage.”
Stuff White People Like #94 Free Health Care:
January 14th, 2009 at 6:35 pm
Interesting that a couple of rocks with almost 0 natural resources has one of the highest per capita GDP’s on earth.
I’m not sure who people get the idea that free trade = anti-union. Union’s must bargain and make concessions to keep a company viable, and companies must give employees fair wages, stock options, and other benefits to keep them productive.
Problems arise when governments who can not fail are controlled by unionized employees.
January 14th, 2009 at 6:52 pm
Stephen Myles,
Re: And there is a good argument to be made about economic freedom in Venezuela; the government friggin’ takes over your company!
The companies which were nationalized in Venezuela were either a) breaking the law, b) provided a basic necessity-of-life with national security implications, like food or housing, or c) owned land in excess of the [fairly generous] ceilings on land ownership. All nationalizations were compensated, and there were no arbitrary or unexpected nationalizations. Hell, the government announced that it was going to nationalize large estates a good four years before it actually got around to doing so.
If you own a small to medium size company in Venezuela that provides a normal, discretionary good or service and that stays within the law, then you have no chance of being nationalized.
January 14th, 2009 at 6:55 pm
It’s silly to cite a GDP figure for Hong Kong by the way. Especially now that it had politically united with China. It would be as silly as citing a GDP figure for New York City, and for much the same reasons.
January 14th, 2009 at 7:34 pm
“If you own a small to medium size company in Venezuela that provides a normal, discretionary good or service and that stays within the law, then you have no chance of being nationalized.”
Hector,
If you really believe this, you should invest in Venezuelan stocks. As of January 9th, according to the Financial Times, the average Venezuelan stock had a dividend yield of 21.6% and a P/E ratio of 3.9 (by way of comparison, the corresponding stats for the U.S. stock market were 3.4% and 10.4, respectively). No other stock market is priced as cheaply as Venezuela’s, presumably because fears of nationalization are greatest in Venezuela. If you think those fears are irrational, here’s your chance to profit from your beliefs.
January 14th, 2009 at 10:01 pm
owned land in excess of the [fairly generous] ceilings on land ownership.
This is called preventing capitalistic consolidation; the effect would have been the same as if pre-industrial England prevented the village commons from being parceled up.
January 14th, 2009 at 10:09 pm
Stephen Myles,
Well, agricultural production has increased by a decent amount in Venezuela over the last 10 years. Not every good, but the major ones. Indeed, agricultural development is one of the areas where the Chavez government has had the most success.
-Production of rice and corn, the major locally produced staples, is up by 72% and 150% respectively over 1998.
-Production of vegetables is up by over 50%.
-Production of milk is up by over 33% (so much for the so-called milk shortages).
-Production of chickens is up by 33% since 1999.
-Production of coconuts is up about 60% since 2001, when the revolution effectively started.
It looks like the big capitalist owners were doing a pretty poor job of managing their land. Better that it be owned by the peasant cooperatives. As for England, you’re damn right that I think that the enclosure of the commons was a brutal and evil idea. Read what St. Thomas More had to say about it. “Sheep eating men”, indeed.
January 14th, 2009 at 10:13 pm
Country by country comparisons are worthless because of the problem of scale. How can you rank the United States (pop: 300 million) against Singapore (4 million) and Hong Kong(7+ million). Singapore and Hong Kong have economic freedom by virtue of the fact that they are tiny city-states with huge ports that are intermediaries between China, East Asia and the rest of the world. If Long Beach and Los Angeles were to secede and become an independent country, don’t you think it would be relatively prosperous and rank #1 in economic freedom? Anyone who acknowledges these rankings as somewhat valid is complicit in distorting an appropriate world perspective and should feel ashamed.
January 14th, 2009 at 10:17 pm
For reference, the Venezuelan population has increased 14% in 10 years, so all those agricultural goods have shown significant per capita increases as well as absolute ones.
January 15th, 2009 at 1:39 am
Not to say that unions are incompatible with economic freedom, but I’m not sure that unions are that influential in Hong Kong either as far as getting decent wages for their members, etc. The income gap has been widening for years and continues to grow. The union density number doesn’t mean much when they don’t have much power.
January 15th, 2009 at 4:48 am
It’s silly to cite a GDP figure for Hong Kong by the way. Especially now that it had politically united with China. It would be as silly as citing a GDP figure for New York City, and for much the same reasons.
Hong Kong is very separate from China. It still has its own currency (the Hong Kong dollar) which is not pegged to the yuan, but to the US dollar; it has its own tax system; it has its own legal system; and immigration from mainland China is tightly controlled – far more so than it was when HK was a British colony.
January 15th, 2009 at 6:50 am
Have you actually been to Hong Kong?
Yes, I have. There is certainly money in Hong Kong – they are a first world economy – but by GDP per capita they’re behind much of Western Europe, Australasia, North America and a good chunk of the Middle East. They’re less rich than 64th ranked France, for example. This is not what you’d expect if economic freedom was so good for economies.
The stats are from here, helpfully listed in rankable order here.
January 15th, 2009 at 10:12 am
While you use union density to support the EFCA you would do well to also look at production density of these unionized countries as well. That data suggests that the productivty of a country is inversely proportionate to union density (The more unions the less prodcution)
From a free market ethical point of view, the assertion that other countries being more union dense suggests a positive correlation to forms of universal health care does not take into account geographic/economic variances based on socilist forms of government versus autocratic forms of government (Most of Europe vs most of Asia). Just offering another perspective
January 15th, 2009 at 12:34 pm
but by GDP per capita they’re behind much of Western Europe, Australasia, North America and a good chunk of the Middle East.
I understand you to be well-intentioned, but that is a pretty fallacious comparison. Those figures you quoted are nominal rather than PPP figures; according to the figures used by the Heritage Foundation in its Economic Freedom ranking, Hong Kong PPP is about 39,000-40,000 USD.
A better comparison would be between three Chinese-speaking societies; Hong Kong, Taiwan, Singapore. Taiwan, with the lowest ranking of the three, also is the poorest. Hong Kong and Singapore, both much wealthier than Taiwan, happen to be No. 1 and 2 on the rankings, with Singaporean economy doing a bit better than Hong Kong’s due to the absence of destabilising politics.
January 15th, 2009 at 1:58 pm
Ajay,
The fact that it has political and legal autonomy doesn’t change the fact that it fills a particular role in the Chinese economy. It’s a trading and financial center for the Chinese mainland, much like New York is for the USA. Therefore it can’t be treated as a separate country for the purpose of economic comparisons. It would be like trying to calculate a GDP figure for Manhattan.
January 16th, 2009 at 1:44 pm
Yes, lists of this sort have become quite popular since the ’80s, and are about as useful these others: Greatest Superbowl Commercials, Greatest 100 TV Moments, 100 Greatest Guitarists.
Or, my personal favorite: Greatest Corporate Dictatorships…
Apply for a job lately? They now want to know your credit rating as well, because that is somehow relevant to whether or not you can work.
Slaves on an oil plantation, free to consume ourselves into debt, free to turn every (what should be) human and humane) interaction into a transaction with a price tag. “Economic Freedom” indeed.
February 19th, 2009 at 7:44 pm
Why believe the Lies of anti-Union Corporate Lobbyists such as Richard Berman?
Support the Employee Free Choice Act; get an EFCA
bumper sticker here:
https://unionshop.aflcio.org/Stickers_C42.cfm
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