Letters: Lands of Liberty

The following letters are in response to the Lands of Liberty survey articles that have been published over the last four years. Most of the letters were originially published in the June 1998 Navigator.

• Lands of Liberty 2001
• Lands of Liberty 2000
• Lands of Liberty 1999
• Lands of Liberty 1998

May 17, 2001

To the Editor:

While Roger Donway’s “Lands of Liberty” is a worthwhile comparative analysis of the degrees of freedom in different countries, it unfortunately perpetuates the myth that the United States and other similar countries are “free” — and that, as a result, libertarians and Objectivists really don’t have much to complain about. Given the massive levels of taxation and regulation of myriad types of behavior in even the “free” countries, Donway should have disclosed that he was grading on the curve. It would be refreshing to read a worldwide analysis of freedom which gives the winner, say, a 6 on a scale of 10.

Frank Bubb

To the Editor:
If New Zealand is the freest country on earth, as per the studies you cite in Navigator, then God help the rest of the world is all I can say. I strongly suspect the info from NZ for these studies came from NZ's Treasury and the Business Roundtable, who tout this sort of bull and provide selective information for anyone prepared to accept it without investigating further. I forward for your information a pertinent segment of my address, "Antipodean Altruism," at the 1997 IOS Summer Seminar and invite you to include it in the next Navigator, lest your readers end up believing the absurd idea that we have a free society here.
Lindsay Perigo
Editor
The Free Radical

To the Editor:
Roger Donway observes in "Lands of Liberty" that when the Freedom House's "world freedom" survey and the Fraser Institute of Canada's survey of "economic freedom" are combined, "New Zealand wins the gold medal as the freest country on earth."

This claim is a slap in the face of the men who are woken up in the early hours of the morning by statistic-Nazis threatening criminal prosecution unless personal information is provided by them to the government; of those men who have been taken to court for refusing to pay a compulsory fee for the subsidisation of "New Zealand culture" on television; of those men who have half of their incomes confiscated by the government, through various taxes, so that abnormal children can be made to "feel good," and so professors of law can teach that reason is a "peculiar fetish"; of any man who has had force initiated against him by the New Zealand government.

Donway qualifies New Zealand's gold medal by stating that the countries are free in a "sweeping, if ultimately comparative, sense." So, if all countries were murderous totalitarian dictatorships, the country who butchers the least number of its citizens is free-in a "comparative" sense, and ought to take the gold medal as the freest country on earth. New Zealand may have greater civil and political liberties than other countries, and it may even have greater economic liberties, but this does not make it a free country if all countries are statist; it merely makes it the least statist.

New Zealand's taking top honors in the civil liberties category is rather suspect, because the various items-free speech and press, freedom of assembly, equality before the law, an impartial judiciary, and a strong civil society that is independent of government-are either nonexistent or severely circumscribed. Men, for example, can be jailed under New Zealand's "human rights" legislation for criticising tribalists; the Minister of Justice has stated explicitly that there is one law for brown men and another law for white men; and a judge recently suspended the sentence of a man found guilty of shoving a 10 cm-long piece of wood up a woman's nose and into her brain, because the man thought he was under the influence of a curse.

Donway's ignorance of New Zealand could have been excused, if it were not for the fact that Lindsay Perigo [gave a speech] on this very topic at last year's IOS Summer Seminar; a speech that has been published in his magazine The Free Radical, which is received -though one now suspects, not read-by several IOS staff members.
Robert White
Auckland Objectivist Forum
Auckland, New Zealand

To the Editor:
In the April 1998 issue of Navigator, Roger Donway awards New Zealand the "gold medal as the freest country on earth." This is certainly news to anybody living here.

New Zealand rated highly in the category of 'takings'-that includes the protection of property rights and marginal taxation rates. Yet, in this country, we have in place a piece of legislation (Resource Management Act) that in its entire length never mentions the rights of property owners. Under this act permission from an appropriate local body is needed to plant or cut down a tree, and it even restricts the colours which one may use to paint one's own house. The upshot of this legislation is that it has become nearly impossible to do what one wishes with one's own property. Furthermore, while the highest rate of marginal taxation is now down to 33 percent (from a whopping 66 percent), this is more than made up for with indirect taxes, such as a 12.5 percent goods and services tax (GST), imposed on every transaction conducted, at every stage of the process. For example, if a farmer sells beef to a meat packer there is a GST component in it. When the packer sells to a supermarket, another 12.5 percent gets added, then finally, when the supermarket sells to the householder, yet another 12.5 percent is added. This chain can of course be much longer and is imposed on top of already existing sales taxes, some of which can exceed 70 percent of the total value of the product. (This applies particularly to tobacco and alcohol.) Taxation in New Zealand now accounts for something between 34 percent and 37 percent of GDP.

Our statistics-Nazis have recently outdone themselves, with a new survey to find out the most intimate details of our lives. We are forced to fund 'cultural' television and radio programs against our will through an extra tax on owning a television set. New Zealand is now in the process of gifting billions of dollars worth of land to tribalists whose only claim is a rough, inconsistent and ambiguous treaty signed in 1840. Our schools and training institutions must now teach "cultural safety" to all students, so as not to offend the aforementioned tribalists, and [they] are taught to believe that a Stone Age society was a better one than reason and virtue could ever give.

Perhaps the results of this article would have been better classified not as most or least free, but as most and least statist. Even given this however, it is difficult to imagine that New Zealand would rank so highly in it. Perhaps I could refer readers to an address given by Lindsay Perigo at last year's IOS Summer Seminar, and republished in his magazine The Free Radical.
Scott Alsweiler
Waikato Objectivist Forum
New Zealand

To the Editor:
I read with amusement the comments about New Zealand from your readers. As you might imagine, Jim [Gwartney] and I are used to complaints from various quarters about their country's rating. Most often, the complaint is, "How can my country be that free?" I call it the Walter Block phenomenon, because it was Walter who first noticed that people think their country is less free than it really is at least in comparison with other countries.

The rating system is designed to measure relative freedom as opposed to absolute freedom. Indeed, if we were to judge according to first principles, every country would receive an "F"-even Hong Kong. As long as people remain wedded to the dichotomous model of freedom versus slavery, no index will be satisfactory. We believe that freedom is a continuous thing, and that it is therefore possible to become more free or less free, in between the extremes of perfect freedom and slavery.

As for New Zealand's case, who can deny the following improvements? Inflation was in the double digits in 12 of the 14 years between 1974 and 1987! After 1991, the highest rate of inflation was 1995's 3.8 percent. The distortionary tax of inflation has all but been eliminated in NZ. Furthermore, it is now legal for NZ citizens to own foreign currency and hold foreign bank accounts-both were illegal in 1985.

Interest-rate controls and restrictions on international capital transfers are nonexistent. There is no longer a black market in New Zealand dollars either.

Total government spending (at all levels of government) has fallen from a high of 48.4 percent to 42.3 percent since 1993, a reduction of 6.1 percentage points of GDP. Only two other OECD nations have smaller government today than in the mid-to-late eighties (United Kingdom and Ireland).

Marginal tax rates are way down (from 60 percent to 33 percent at the top) and tariffs have been reduced. Transfers and subsidies as a share of GDP have fallen from over 25 percent to about 12 percent-this is now less than the U.S.!!!

I know NZ is a million light years away from Galt's Gulch, but the improvement has been dramatic. Unquestionably.

As for some of the NZ specific laws and regulations, I must say that our index does a comparatively poor job of picking up ad hoc regulations that do not exist in other countries. For obvious reasons, we can only include policies that are pervasive around the world in our index. But we have the Americans with Disabilities Act and RICO, neither of which is included in the index. I'm sure every nation on earth has examples of policies like these, and it would be a difficult case to make that NZ had more of these sorts of things than other places.

Also, many of your respondents address non-economic issues such as freedom of speech and political correctness, which though vitally important, are best left outside of an index of economic freedom.

I cannot speak to the quality of NZ's data. But in dealing with data for over 100 countries, I frankly have better things to do with my time than worry about New Zealand's! (My god, if you can't trust NZ's data what about Bangladesh's?) True enough, our index is only as good as the data that go into it, but we take great pains to use the best data available. To my knowledge, none of the data came directly from the Business Roundtable or the NZ government-it all came from the IMF, the World Bank or the OECD (though one assumes they all get the data from the NZ government).

To conclude, here's the acid test: Ask any of your concerned readers which countries around the world that they have intimate knowledge about would they rate more economically free than NZ? My suspicion is that they will not have many candidates-except those that we rate higher like Hong Kong and Singapore or those just below NZ like the U.S. and U.K. But no knowledgable person could place today's NZ as less economically free than France, Germany, Australia, or Japan, much less Indonesia or Mexico.
Robert A. Lawson,
Assistant Professor of Economics
Capital University
Columbus, Ohio

To the Editor:
The data sources for [Economic Freedom of the World 1997] include both international organizations (e.g. World Bank, IMF, OECD) and private organizations (e.g. Price Waterhouse, International Currency Yearbook, Institute for Management and Development). For the most part, organizations of this type at least have similar methodologies for the construction of a variable across countries. In some cases, the institutes with which we worked helped clarify various institutional arrangements and/or data for their country. However, I do not recall any issues of this type with regard to New Zealand.

While we did [not] receive input from New Zealand government sources (the Treasury) or the Business Roundtable, the Treasury may well have supplied data to the IMF for example. And while I am not an expert on the quality of national income, price level, and related data, I would note that most economists [who] have studied this issue rate the data quality of OECD countries, including New Zealand, quite high.

If the general point made by our friends from New Zealand is that their country is not a bastion of classical liberalism, I agree. Even though government expenditures are down a little from the 50 percent of GDP level of the late 1980s, they are still more than 40 percent of GDP. While this figure is at the low end among OECD countries, it is higher than for the United States. Of course, government consumption and transfer payments continue at a high level-much too high from the viewpoint of both economic freedom and economic growth. I would note that New Zealand received low marks in both of these areas-government consumption and transfers.

New Zealand's high rating reflected its relatively stable monetary policy (this indicates that the monetary reforms of the late 1980s and early 1990s exerted some positive impact), free convertibility of the domestic currency, privatization, absence of price controls, and relatively open economy. While its record still leaves much room for improvement, there have been important positive development during the last decade. Of course, government is still far too big. Hopefully, New Zealand, the United States, and other countries around the world will begin to dismantle the welfare state and reduce government expenditures which continue to exert a negative impact on economic growth. With regard to this point, see "The Size and Functions of Government and Economic Growth," a recent study by Bob Lawson, Randy Holcombe and myself for the Joint Economic Committee.

One final point-our experience working with classical liberal institutes around the world is consistent with the response to your article. Invariably, the institutes of the Economic Freedom Network perceive that their country is rated too high! I believe the explanation lies in the fact that we all know more about the restrictive and stupid policies of our own governments. What we sometimes fail to realize is that governments around the world are doing dumb things. This is why it is important to develop a measure of economic freedom that is based, to the fullest extent possible, on objective measures. We are committed to this end. As I reflected on the interventionist stories from New Zealand regarding what people can do with their own property, I could not help but think of several cases of the same thing in the United States. The bottom line is-for those who love freedom and who believe that economic freedom is central for the achievement of freedom in other areas-much remains to be done. Nonetheless, when some progress is made, we must not deny it.
James D. Gwartney Professor of Economics and Policy Sciences Florida State University Tallahassee, Florida

Roger Donway responds:

The above letters were prompted by my article "Lands of Liberty," published in the April 1998 Navigator. In that article, I used worldwide ratings of political rights, civil liberties, and economic freedom to discuss the relative standings of the world's various countries along those three dimensions. To rank political rights and civil liberties, I used Freedom House's survey "1997 Freedom around the World." To rank economic liberty, I used Economic Freedom of the World 1997, by James Gwartney and Robert Lawson.

At the end of the story, I integrated the dimensions to conclude: "Seven countries may be called 'free' in a sweeping, if ultimately comparative, sense." Those countries were the United Kingdom and Switzerland in Western Europe; Mauritius in Africa; Australia and New Zealand in Oceania; the United States and Costa Rica in the Americas. No country in Eastern Europe, the Middle East, or all of Asia qualified. Lastly, I decided on a procedure for awarding bronze, silver, and gold medals for freedom. To enter the race, a country would have to receive Freedom House's highest rating in both political rights and civil liberties. The deciding factor would then be economic liberty. Four countries made it past the Freedom House test, but Australia was low man in economic freedom and so did not win a medal. Switzerland won the bronze, being substantially freer economically than Australia but substantially less free than the United States. Then came the deciding moment. On a scale of 1.0 to 10.0, New Zealand's economic freedom edged out America's by the narrowest possible margin: 0.1. Thus, the U.S. won the silver and New Zealand took home the gold.

I would just make four points in addition to those made by above by Gwartney and Lawson. First, I attended Perigo's lecture at the 1997 IOS Summer Seminar, and I do not see any incompatibility between his assertions and mine.

Secondly, the world's countries fall into two categories: dictatorships (as defined by Ayn Rand in her Playboy interview) and mixed economies. In the latter, freedom and controls are each between 100 percent and zero percent of the mixture and vary inversely. But because no one can quantify those percentages, the best we can do is rank countries ordinally. And because of that, to describe a country as more free is equivalent to describing it as less statist.

Thirdly, a major point of my article was that by stimulating international competitions for freedom-awarding praise and prizes for relative success-libertarians might fare better than they have by lashing states for their shortcomings. To make a comparison: Is a six-foot high jump worthy of an Olympic gold medal? Ridiculous! A six-foot high jump would be laughable in the Olympics. But because a gold medal was awarded to a jump of less than six feet in 1896, a competition developed that led to a jump of just under eight feet in 1996. What would have happened if the 1896 winner been berated as a failure?

Lastly, the authors decrying my article seem to think it reported strong protection for property rights in New Zealand. Scott Alsweiler says, "New Zealand rated highly in the category of 'takings.'" But what I wrote was: "In the broad category of 'Takings,' both [New Zealand and the U.S.] got an anemic D-plus (5.8). And, in both, that included a miserable F-minus (3.0) in the component 'Transfers and Subsidies as a Percentage of GDP.'" Each of the two countries managed to get a D-plus only because each got a perfect 10 for lacking conscription. (Remember conscription?)