NZ 4th in world for economic freedom

New Zealand has retained fourth place  in the 2011 index of economic freedom.

The Asia Pacific leads the world.  Hong Kong retained first place with a freedom score of 89.7 followed by Singapore (87.2), Australia (82.5) and New Zealand (82.3).

Switzerland, Canada, Ireland, Denmark, the USA and Bahrain were the others in the top 10.

The Heritage Foundation which complies the index bases its measurement on three fundamental principles of economic freedom—empowerment of the individual, non-discrimination, and open competition:

In an economically free society, each person controls the fruits of his or her own labor and initiative. Individuals are empowered—indeed, entitled—to pursue their dreams by means of their own free choice. In an economically free society, individuals succeed or fail based on their individual effort and ability. The institutions of a free and open society do not discriminate against—or in favor of—individuals based on their race, ethnic background, gender, class, family connections, or any other factor unrelated to individual merit. Government decision-making is characterized by open­ness and transparency, and the bright light of equal opportunity replaces the shadows where discrimination can be most insidious.

In an economically free society, the power of economic decision-making is widely dispersed, and the allocation of resources for production and consumption is on the basis of free and open competition so that every individual or firm has a fair chance to succeed.

New Zealand is  one of only six of the 179 countries graded which is regarded as totally free with a score above 80.

With ratings between 70 and 80, the next 27 countries are “mostly free.” These 33 economies provide institutional environments in which individuals and private enterprises enjoy a substantial degree of economic freedom in the pursuit of greater prosperity and success. An equal number of countries are divided between “moderately free” and “mostly unfree,” accounting, in the middle of the distribution, for the largest share of the countries graded in the Index—114 countries. With scores below 50, there are 32 countries that remain economically “repressed.”

New Zealand went up 0.2 on last year’s score with 99.9 for business freedom, 86.6 for trade freedom, 64.7 for fiscal freedom, 49.3 for Government spending, 84.8 for monetary freedom, 80.0 for investment freedom, 80.0  financial freedom,  95.0 for property rights, 94.0 for freedom from corruption and 89.2 for labour freedom.

This shows the area where New Zealand must do beter is government spending. That could be used to good effect in the election campaign against those misguided politicians who think they can tax and spend their way to prosperity.

The report shows economic freedom advanced this year, regaining  much of the momentum lost during the fiscal crisis and global reces­sion.

 Many governments around the world have rededicated themselves to fiscal sound­ness, openness and reform, and the majority of countries are once again on a positive path to greater freedom. . .

. . .  Along with Hong Kong and Singapore, Australia, New Zealand, Switzerland, and Canada have solidified their status as the world’s “free” economies. These top six econ­omies are the only countries to achieve scores above 80 on the 0 to 100 economic freedom grad­ing scale. Hong Kong was able to uphold its status as the world’s freest economy, a position it has held for 17 consecutive years. Singapore remains a close second, narrowing the gap with Hong Kong. Australia and New Zealand have maintained their previous rankings of 3rd and 4th in the 2011 Index, while Switzerland climbed up to the 5th spot, overtaking Ireland, which fell to 7th place.The relative strength of the “free” economies is no accident. Their strong com­mitment to all facets of economic freedom has endowed their economies with a high degree of resilience. All are recovering rapidly from the shocks of the global slowdown.

There is an important message here for those who think restrictions on people or businesses will help our economic recovery and the report also links economic freedom with environmental gains showing a free economy is a clean economy:

Environmental protection has become synonymous with big government: massive environmental statutes and global treaties, volumes of expansive and expensive regulations, and armies of bureaucrats micromanaging the private sector in an effort to reduce pollution. This certainly describes nearly all of the existing policies for addressing environmental concerns as well as most pending proposals dealing with global warming.

However, the Index of Economic Freedom strongly suggests that this command and control approach to “going green” is a fundamentally misguided one. It is the nations whose economies are ranked as most free that do the best to protect the environment, while the least free ones do the worst. Thus, the same free-market principles that have proven to be the key to economic success can also deliver environmental success and point the way to an approach that advances both concerns.

Not only is economic freedom and environmental protection not mutually exclusive, economic prosperity leads to environmental enhancement.