Thursday, January 12, 2012

Heritage Foundation allows domestic politics to affect index of economic freedom

According to the Heritage Foundation annual Index of Economic Freedom (WSJ summary), the USA became less free last year. Now one general problem with this index is that it because it uses government spending and deficits as one component of the index, just about any country is bound to become less free during a recession, as once-favoured Ireland found out before. But anyway, why exactly did the US become less free in 2011? It had a lot to do with the "Rule of Law" rating --

Property rights are guaranteed, and the judiciary functions independently and predictably. Serious constitutional questions related to government-mandated health insurance have been under consideration in the courts. Corruption is a growing concern as the cronyism and economic rent-seeking associated with the growth of government have undermined institutional integrity.

In other words, none of the institutions associated with rule of law have changed at all, but there's a legal challenge to health care reform, and, er, Solyndra! In fact, they can't produce a shred of evidence that cronyism has gotten any worse over the last few years: does anyone remember the contracting for the Iraq war? Not at Heritage, apparently. So what's supposed to be a quantification based on some rigorous underlying methodology is just a year of Fox News fulminations turned into a downward adjustment of last year's number. The final irony: that government mandated health insurance that has reduced freedom simply by virtue of being challenged in the courts was originally the idea of the ... Heritage Foundation!

By the way, in Ireland (#9) according to Heritage, "corruption is not regarded as a serious problem." They just can't give up on the Tiger.

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