Thursday, January 21, 2010

2010 economic freedom

I was introduced to the (possible) endogeneity of market friendly institutions some years ago via John Powleson's Centuries of Economic Endeavor. Since then, the possibility of a virtuous cycle (economic freedom prompts prosperity and prosperous people demand more economic freedoms) has received increasing attention.

The evidence keeps accumulating. Yesterday's WSJ included the Heritage-WSJ 2010 Index of Economic Freedom rankings. There is more than one way to create an index, but the results (general rankings) are fairly robust.

This year's ranking has the UK at #11 and the US at #8. But of the 179 countries ranked, but eight of the top 11 have been significantly influenced by British institutions. Yes, British colonialism had a dark side, but Hong Kong, Singapore, Australia, New Zealand, Ireland, Canada, the US (seven of the top eight) were able to send the colonialists home and build relatively free and prosperous societies on the foundations they left behind.