Montreal, February 12, 2015 — With the United States in the process of normalizing relations with Cuba, it is important to reiterate that the island’s economic model, where the state controlled practically all aspects of economic activity for half a century, was an abject failure. Indeed, international comparisons show unequivocally that the most economically free countries are also the ones where people are the most well-off, the healthiest, the most educated and the happiest, according to an Economic Note published today by the MEI.
Ironically, economic freedom has been in retreat for several years in the United States, supposedly the standard bearers of freedom. In fact, Canada, which is now among the 10 freest economies in the world, is several rungs ahead of its neighbour to the south in 12th place. The growth of trade barriers, intrusive new regulations and the betrayal of bondholders’ property rights go a long way toward explaining the slide of the United States.
Unsurprisingly, individuals who live in places where there is more economic freedom tend to have higher average incomes. The most economically free 25% of nations had an average per capita GDP of $39,899 in 2012, compared to $6,253 for those in the least free quartile of countries.
“From a global perspective, as economic freedom has increased over the past two decades or so, the percentage of the population living in poverty has been cut in half. This is a big deal. We’re talking about hundreds of millions of people who have climbed out of poverty thanks to economic freedom,” maintains Bradley Doucet, one of the authors of the publication.
Beyond basic material well-being, social and individual indicators like health, education and life satisfaction are also positively correlated with economic freedom. Life expectancy has notably grown as the world has become freer and richer. Individuals born today in the most economically free countries in the world can expect to live on average 79.9 years, or nearly 17 years longer than those born in the least free quartile of countries.
“Even the richest, most advanced countries have an unfortunate tendency to forget the fundamental lessons to be learned from policies based on economic freedom,” adds Yanick Labrie, coauthor of the study. “If our politicians defended economic freedom more vigorously, we would all be richer, healthier and better educated.”
The Economic Note entitled “Economic Freedom Improves Human Well-Being” was prepared by Yanick Labrie, Economist at the MEI, and Bradley Doucet, Editor and Policy Analyst at the MEI. This publication is available on our website.
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