January 4, 2006


Executive Summary (Marc A. Miles, Ph.D., Kim R. Holmes, Ph.D., and Mary Anastasia O'Grady, 2006 Index of Economic Freedom)

With the publication of this edition, The Heritage Foundation/Wall Street Journal Index of Economic Freedom marks its 12th anniversary. The idea of producing a user-friendly "index of economic freedom" as a tool for policymakers and investors was first discussed at The Heritage Foundation in the late 1980s. The goal then, as it is today, was to develop a systematic, empirical measurement of economic freedom in countries throughout the world. To this end, the decision was made to establish a set of objective economic criteria that, since the inaugural 1995 edition, have been used to study and grade various countries for the annual publication of the Index of Economic Freedom.

The Index, however, is more than just a dataset based on empirical study; it is a careful theoretical analysis of the factors that most influence the institutional setting of economic growth. Moreover, although there are many theories about the origins and causes of economic development, the findings of this study are straightforward: The countries with the most economic freedom also have higher rates of long-term economic growth and are more prosperous than are those with less economic freedom.

The 2006 Index of Economic Freedom measures 161 countries against a list of 50 independent variables divided into 10 broad factors of economic freedom. Low scores are more desirable. The higher the score on a factor, the greater the level of government interference in the economy and the less economic freedom a country enjoys.

Five countries really stand out from their neighbors in the top 40.

Posted by Orrin Judd at January 4, 2006 11:24 AM

Chile, Bahrain, Botswana, El Salvador, and Armenia?

Posted by: Matthew Cohen at January 4, 2006 12:15 PM


Posted by: oj at January 4, 2006 12:19 PM

Which one on my list were you not thinking of?

Posted by: Matt Cohen at January 4, 2006 1:45 PM


Posted by: oj at January 4, 2006 3:02 PM

Maybe if the study wasn't published by a free-market propaganda think tank, I would actually give my opinion on the results. But, I guess I just did.

Posted by: Grog at January 4, 2006 10:37 PM


Who are your Top 5 economies, and why ?

Can you even name two economies that AREN'T free market, and that are also in the top half among the world's nations ?

Hint: Both Brazil and Sweden are "free market" economies...

Posted by: Michael Herdegen at January 5, 2006 4:55 AM

Grog: if you won't engage with the arguments of people you don't agree with, how can you trust the arguments of people you do agree with? Muscles atrophy if you don't use them, and if this stuff is such blatant propaganda it should be easy to refute, no? On the other hand, if it's high-quality propaganda then refuting it might take work. You might not even be able to refute it, even if your gut tells you it's still propaganda. But you'll never know.

Posted by: joe shropshire at January 5, 2006 12:11 PM

In the 1980s and early 1990s, the Heritage Foundation was a key architect and advocate of the Reagan Doctrine, by which the United States government channeled overt and covert support to anti-Communist resistance movements in such places as Afghanistan, Angola, Cambodia and Nicaragua and generally supported global anti-communism during the Cold War.

Heritage foreign policy analysts didn't restrict themselves to research, but became active in efforts to provide political and military guidance to rebel forces in Angola, Cambodia, and Nicaragua, and to dissidents in Eastern bloc nations and Soviet republics.

The foundation was instrumental in advancing President Ronald Reagan's belief that the former Soviet Union was an "evil empire" and that its defeat, not its mere containment, was a realistic foreign policy objective. Heritage also played a key role in building support for Reagan's plans to build an orbital ballistic missile shield, the ("Strategic Defense Initiative").

In domestic policy, Heritage is a proponent of supply-side economics, which holds that reductions in the marginal rate of taxation can spur economic growth. Internationally, and in partnership with the Wall Street Journal, Heritage publishes the annual Index of Economic Freedom, which measures a country's freedom in terms of property rights and freedom from government regulation. The factors used to calculate the Index score are corruption in government, barriers to international trade, income tax and corporate tax rates, government expenditures, rule of law and the ability to enforce contracts, regulatory burdens, banking restrictions, labor regulations, and black market activities. Deficiencies lower the score on Heritage's Index.

Unlike traditional think tanks, which tend to house scholars and politicians-in-exile who produce large books, Heritage tends to employ bright, aggressive public policy analysts who produce comparatively shorter policy papers intended to pass what Heritage calls "the briefcase test" for busy politicians to read on the run. Heritage also pioneered the "marketing" of policy ideas by astute packaging and public relations, now a staple feature of Washington think tank activity.

Although Heritage is just over 30 years old, it has earned a major place among Washington think tanks. Similar think tanks include the American Enterprise Institute and the libertarian Cato Institute. Heritage's liberal counterparts include the Brookings Institution and the Center for American Progress. In keeping with its emphasis on political accessibility, Heritage maintains its eight-story headquarters on Capitol Hill, a short walk from the United States Congress; most other think-tanks maintain offices in downtown Washington.

Many Heritage Foundation personnel have held, or gone on to hold, influential roles in American business and government, including Richard V. Allen, L. Paul Bremer, Elaine Chao, Lawrence Di Rita, Michael Johns, John F. Lehman, Edwin Meese, and others.

Posted by: Grog at January 5, 2006 6:00 PM

The Heritage Foundation is a corporate think tank. They are creators of scolarly discourse that justifies a predescribed government policy, which in the past was to increase the US military budget during the Cold War. Economic Freedom is meaningless; its like the "free trade" part of the words NAFTA and CAFTA. A measure of freedom that is used to deprive others of freedom; how open a market is to outside exploitation.

Posted by: Grog at January 5, 2006 6:07 PM

Ok, that's a start I guess. Let me see if I can condense your argument a bit, apologies for crossing comment boundaries: anti-Communist resistance movements in such places as Afghanistan, Angola, Cambodia and Nicaragua ... deprive others of freedom. Or is that an unfair characterisation?

Posted by: joe shropshire at January 5, 2006 6:50 PM


How do you argue with someone who doesn't think the Soviet Union was evil?

Posted by: oj at January 5, 2006 8:03 PM

Same way you argue with someone who thinks automobiles are.

Posted by: joe shropshire at January 5, 2006 8:57 PM

everyone recognizes automobiles are, some just think them a necessary evil.

Posted by: oj at January 5, 2006 10:37 PM

I don't think evil is the right word, but I certainly don't admire the Soviet system in any capacity. Did I ever say that I did?
I do think that the Cold War, and the threat of Communism, was mostly invented to expand American imperialism for about 50 years. And I'm not the only person who feels this way.

Posted by: Grog at January 5, 2006 11:43 PM


So you are saying that you didn't admire the Soviets and that they were benign? Or neutral? Bland? Vapid? Languid? Somnolent? Gentle? Abstract? What exactly is the right word?

Were they democratic (as you have described Cuba and Venezuela in other threads)?

Posted by: jim hamlen at January 6, 2006 2:10 AM

No, the Soviet Union was a horrible place. It was a totalitarian mess. Millions of innocent people died.
Admitting that does not lend any sort of nobility to the US conduct in the Cold War.

Posted by: Grog at January 6, 2006 3:56 AM

I never said Cuba is democratic; it WAS a democratic revolution, and the place would have probably been a lot nicer if we hadn't done everything in our power to make life miserable there.
Venezuala is a democracy, and along with Bolivia, there are signs of hope for the political processes of South America to resist the foreign interference that has cursed them for hundreds of years.

Posted by: Grog at January 6, 2006 4:00 AM

No, it wasn't and things would have been better had we crushed Castro.

Posted by: oj at January 6, 2006 7:35 AM


On the CAPTURE thread, at 7:06 PM on 1/5/06, you wrote:

"I don't see Castro and Castro (sic - Chavez) as problems, only for America's policy planners who might not like to see public opinion influenced by a well-functioning socialist democracy."

Kind of hard to square that circle, eh?

Posted by: jim hamlen at January 6, 2006 8:59 AM