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Friday, July 3, 2015

Liberty and Equality Are Not Only Right. They Are Good for Us.

Happy Independence Day!

When Thomas Jefferson wrote the Declaration of Independence 239 years ago, he placed equality and liberty at the heart of all political considerations.

His argument was at once philosophical and political: In light of one self-evident truth, equality, humans are by nature free. No one of us may govern but by the consent of those governed. Jefferson believed that governments must respect liberty because liberty was inherent in the human condition. Nowhere did he claim that it was of practical value.

But in the 239 years since the American people declared their separation from Great Britain, it has become strikingly clear that liberty is, without question, of significant practical value. While good in and of itself, liberty brings with it so many other good things that, were it not a moral imperative, it would still be a fine idea.

The Fraser Institute’s Economic Freedom of the World Report offers data to measure the practical effects of economic liberty. Each year, the Fraser Institute ranks countries according to economic freedom by measuring the extent to which economic transactions in a country are determined by individuals versus government. The less of the economy is controlled by government, the more economic freedom there is in that country.

Cross-referencing Fraser’s data with data from the United Nations and the World Bank reveals the unmistakable practical benefits of liberty. On average, people in countries that are more economically free enjoy greater incomes, suffer less unemployment and less poverty, experience less child labor, less gender inequality, less income inequality, less deforestation, and enjoy better air quality.

To anyone who cares about the poor, the exploited, and the environment, the numbers should be startling. If we divide the 146 countries for which we have 2012 data in half, we find that the 73 countries that were more economically free had an average per-capita income over 5 times that of the 73 that were less economically free. Life expectancy for the more free countries is 16% longer. The literacy rate is 12 percentage points higher, and the poverty rate is almost 4 percentage points lower.

Of course, this might simply be coincidence. Rich countries tend not to tolerate authoritarian governments. Yet, the pattern holds even among poor countries. If take the countries with below median per-capita incomes and divide them in half, we find that the poor-and-free countries had an average per-capita income 38% greater than the poor-and-unfree countries. Life expectancy for the poor-and-free countries is 11% longer, and the literacy rate is 18 percentage points higher than for the poor-and-unfree countries.

For illustration, look to natural economic experiments.

North Korea and South Korea are populated by the same ethnic people with a shared (pre-1950) history and geography. Yet North Korea (lowest in economic freedom) has an estimated per-capita income one-tenth that of South Korea (33rd in economic freedom out of 151 countries).

The island of Hispaniola divides almost down the middle with Haiti on the east side and the Dominican Republic on the west. Even before the earthquake that devastated Haiti’s economy, average income in the Dominican Republic (66th most free) was over nine times that in Haiti (92nd most free). Prior to the earthquake, the poverty rate in the Dominican Republic was a whopping 42%, yet it was far lower than Haiti’s 60%.

Eleven score and nine years ago, our forebears birthed a nation conceived in liberty and dedicated to the proposition that all humans are created equal. They did this not for profit or for the environment or to eradicate poverty. They did it because it was right. Only now, two centuries later, do we understand that it was not only right. It was good.

Antony Davies is an affiliated senior scholar with the Mercatus Center at George Mason University and associate professor of economics at Duquesne University. James R. Harrigan is director of academic programs at Strata in Logan, Utah. They originally wrote this for

  • Dr. Antony Davies is an Associate professor of Economics at Duquesne University, and co-host of the podcast, Words & Numbers.

  • James R. Harrigan is a Senior Editor at the American Institute for Economic Research. He is also co-host of the Words & Numbers podcast.