Monday, September 14, 2009

NAMA and Freedom

Some good news for a change: Ireland became economically freer between 2006 and 2007. That's according to the Economic Freedom of the World 2009 Report published today.

We moved upwards in the international rankings: from number 10 in 2006 to number 7 in 2007 - the latest year for which sufficient comparative data is available for all the countries surveyed. Our neighbours across the water fell from number 5 to 9 in the same period.

The publishers of the Economic Freedom of the World (EFW) analyses - The Fraser Institute - defines economic freedom as comprising four components:

• personal choice
• voluntary exchange coordinated by markets
• freedom to enter and compete in markets
• protection of persons and their property from aggression by others.

As they note:
Put simply, institutions and policies are consistent with economic freedom when they provide an infrastructure for voluntary exchange and protect individuals and their property from aggressors. In order to achieve a high EFW rating, a country must provide secure protection of privately owned property, even-handed enforcement of contracts, and a stable monetary environment. It also must keep taxes low, refrain from creating barriers to both domestic and international trade, and rely more fully on markets rather than the political process to allocate goods and resources.
Which is why reading their report I wonder about the prospects for economic freedom in Ireland post-NAMA. Many of the measures used to generate the EFW rankings - government debt and bank independence for example - will be adversely affected by NAMA.

The authors are obviously mindful of what has happened around the world during 2008 and 2009 in relation to the economic and financial crises. Hence an interesting chapter (pdf) in their report on how Norway and Sweden came through their financial and banking crises in the 1990s with their economic freedom relatively unscathed.

I hope the same will be said of Ireland in the decades ahead.

2 comments:

  1. Generally I am pretty sceptical about these synthetic measures of freedom, happiness,love.. whatever but they make good copy. Journalists love that stuff, better than boring old unemployment, GNP etc. Even though the levels may be based on a bunch of factors, changes in them tend to be driven by changes in quite a small number of things. So with all the increased government intervention going on these days, maybe its not surprising that "freedom" has fallen. Personally I could live with it if I thought they were making the right interventions. I am not but thats another story.

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