Are you economically free?
If you live in Hong Kong, Singapore, Australia or Switzerland, the answer is yes. If you live in Zimbabwe, Cuba or North Korea, then no. And if you live in the United States, your economic freedom is slipping away—with dire consequences.
This, at least, is the warning sounded by Terry Miller, director of the Center for International Trade and Economics at the Heritage Foundation, which has teamed up with The Wall Street Journal to produce the “2014 Index of Economic Freedom.” The Index evaluates the commitment to free enterprise using 10 categories, including fiscal soundness, government size and property rights.
“Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity and social progress,” Miller writes. “Those losing freedom, on the other hand, risk economic stagnation, high unemployment and deteriorating social conditions.”
According to the Index, the United States has dropped out of the Top 10 economically freest countries and now occupies 12th place, below Mauritius, Ireland and Denmark. “The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy,” Miller asserts. “The intervention impedes both personal freedom and national prosperity.”
To many of these results and claims, we believe, Peter Drucker would have cast a skeptical eye.
It’s not that he would have supported current U.S. economic policy; in many areas, he would not. But Drucker often questioned the utility of evaluating the world’s nations primarily through the prism of economic freedom.
When it comes to liberty, Drucker wrote in The Future of Industrial Man, what really matters to people is the freedom to choose and act in what he called “the socially constitutive sphere”—the “sphere in which the values are the social values of a society, the rewards the social rewards, the prestige the social prestige, and the ideals the social ideals.” This sphere would differ from place to place. Yes, it might be economic. But it might also be religious, or tribal, or (as in Germany of the 19th century) cultural.
“If the socially constitutive sphere in a society is not free,” Drucker wrote, “the whole society is unfree.”
Drucker felt that failing to understand this truth led to misguided attempts to introduce one society’s notion of liberty to another. “The Western world, for example, found it almost impossible to understand that capitalist economic freedom was not freedom for the Balkan peasant,” he wrote. “Their society was tribal and religious. Economic freedom to the Balkan peasants simply meant insecurity, the tyranny of the international market and the compulsion to choose and to act as a responsible individual in a sphere in which they saw neither need for, nor justification of, choice and responsibility.”