"We are losing, and may have lost in many respects, the rule of law. We are getting the rule of regulators. The rule of regulators is a rule which encourages corruption, crony capitalism, and circumvention." -Allan Meltzer

The State of Economic Freedom 

in the United States and the World

Part 1

By The Editors

The developing world is increasingly embracing economic freedom, and reaping the benefits. So why are the United States and the EU heading in the opposite direction?

Earlier this summer, the Bradley Foundation convened a panel of distinguished individuals on the occasion of the Foundation’s awards ceremony in Washington, D.C. All the panelists were past recipients of the Bradley Prizes given for “strengthening the institutions, principles, and values that nurture and sustain the American Experiment and the West.” Below, we excerpt their responses to the first question moderator Clint Bolick proposed about the state of economic freedom here and abroad. In a second installment tomorrow, we will excerpt their responses in conversational form to a question about economic freedom success stories around the globe and the lessons we can learn from them.

-The Editors

Clint Bolick: What do you believe the state of economic freedom is in the United States and in the world today compared to what it was ten years ago?

Arnold Harberger: I’m on the optimistic side of things because I specialize in the economies of developing countries. Whereas the advanced countries of the world have had slow growth since 2000, many of the developing countries are incredible. The poorest group of countries has grown overall at an average of 6 percent per year, and the next group at about 5.5 percent. I reviewed a list of the developing countries for a monograph, and 4 percent growth was really an outlier. The performance of these countries was outstanding, and the purpose of the monograph was to understand why. They were usually of limited period. In this case, there are more than 60 developing countries that averaged more than 4 percent growth over the entire period, so good ideas seem to be seeping down and even being picked up by countries that wouldn’t be amenable to market institutions. Market institutions seem to creep in by the backdoor.
"Overall, the countries that have been the most free economically are becoming less free and many of the countries that have not been not very free economically are becoming more free."

-Gary Becker

Gary Becker: There’s been an erosion of economic freedoms in the EU and the United States – partly because of the great recession and partly because there has been a long-term trend in that direction. And so that’s the depressing news. In many other countries there has been a movement in the opposite direction. Countries you wouldn’t have anticipated doing this a decade ago. Take Rwanda, a country that experienced a genocide a decade ago. It’s been introducing gradually the rule of law, private enterprise, and the like. Take China. China moves erratically, but it is generally moving in the direction of greater economic but not political freedom. Our neighbor Mexico has moved in that direction. The prime minister of Japan is now calling for greater competition and openness. Whether Japan will be able to do it, it’s too early to say. Overall, the countries that have been the most free economically are becoming less free and many of the countries that have not been not very free economically are becoming more free. Is that an optimistic view or a pessimistic view? It depends what part of the world you’re looking at.

Victor Davis Hanson: The biggest change in my adult life is that for the first time, the United States is no longer – at least from Washington – the moral, ethical, or philosophical spokesman for free market capitalism.

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