The Fundamental Importance of Economic Freedom

by Don Boudreaux on September 7, 2006

in Standard of Living, Technology, The Economy

The release today of the new Economic Freedom of the World: 2006 Annual Report — by Jim Gwartney, Bob Lawson, and Bill Easterly, and published jointly by the Cato Institute and the Fraser Institute — prompts me to revisit, today at Tech Central Station, one of my favorite themes: economic freedom is more fundamental than technology in raising living standards.

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{ 4 comments }

Bret September 7, 2006 at 11:53 am

So if we set up a tribe of chimpanzees with perfect economic freedom, they would be able to raise their living standards? I think not.

I read your article and understand your point but if we were suddenly unable to comprehend or utilize technology we would be doomed to poverty forever. It is conceivable that with the capacity for furthering and utilizing technology, even with extremely limited economic freedom living standards might eventually increase anyway.

Don Boudreaux September 7, 2006 at 12:15 pm

Saying that economic freedom is more fundamental than technology to economic growth is not to say that economic freedom is sufficient for economic growth.

Trey September 7, 2006 at 5:27 pm

As usual, a great piece. One possible addition- where does the technology come from?

More freedom seems certainly to correspond to not only better utilization of existing technology but also to more technological innovation.

Also, I would not hesitate to say that economic freedom is sufficient for economic growth. I cannot think of any historical incidence of expanded economic freedom that did not generate economic growth. There are plenty of examples of resource lean places that have thrived relative to their neighbors because of more economic freedom- a recent example is Estonia vs. its Baltic neighbors.

Michael Jimoh Siaka August 2, 2007 at 6:16 am

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