Reclaiming Economic Freedom

by ROBERT WEISSMAN

Every year, the Heritage Foundation, in conjunction with the Wall Street Journal, dutifully churns out its annual Index of Economic Freedom, a ratings guide to countries’ relative corporate hospitality.

The book-length report makes a quite modest global media splash every year. A Lexis search shows the 2008 report, issued last week, garnered (mostly quite short) stories in New Zealand, Australia, China, Russia, Thailand, Bahrain, the United Kingdom, India, Ireland, the Philippines, Poland, Singapore, Ukraine, Taiwan, Korea, the United States, Zimbabwe, and various wire services. If past years are any guide, over the course 2008, the report will likely be referenced several times in the Wall Street Journal editorial pages, and in various other publications. Not bad, but not earth-shattering.

The Index of Economic Freedom is significantly more important than this news coverage suggests, however.

For the last several years, the report has been subtitled "The Link Between Economic Opportunity and Prosperity," and a central thesis of the report is that removing controls on corporations will create economic wealth. When apples are compared to apples — that is, when countries of similar economic development are compared — this claim is revealed to be nonsensical, as various studies from the Center for Economic and Policy Research and many others have shown.

But more important than the asserted connection between removing corporate restraints and prosperity is the report’s definitional maneuver. It claims "economic freedom" — and all of the justifiably positive connotations with freedom — as part of the corporate agenda. It equates "economic freedom" with corporate superiority to popular control.

The Index of Economic Freedom is not the only tool to spread this propaganda, but it is among the most influential. The idea has seeped deep into the culture.

The Millennium Challenge Corporation (MCC), which was supposed to be the major Bush administration anti-global poverty innovation (but has in fact failed to distribute more than a tiny fraction of funds allocated to it) by statute selects recipient countries in large part based on measures of their "economic freedom." The MCC actually relies on the Heritage Foundation’s Index of Economic Freedom for determining a component (countries’ trade openness) of the MCC’s economic freedom rating.

Members of Congress have introduced dozens of bills and resolutions referencing "economic freedom" over the last decade. One small example: Senator Barack Obama, along with Senators Chuck Hagel, R-Nebraska, and Maria Cantwell, D-Washington, in 2007 introduced the Global Poverty Act of 2007. (A version in the House of Representatives, introduced by Adam Smith, D-Washington, has 84 co-sponsors.) The bill would require the President to develop a strategy to meet the Millennium Development Goal of reducing the number of people in the world living in extreme poverty by one half. Although the bill is mainly aspirational — operationally, it doesn’t require anything than development of a strategy — it embraces a noble goal, and the world would be a better place if the legislation became law. But it is noteworthy that a "finding" of the bill is that "Economic growth and poverty reduction are more successful in countries that invest in the people, rule justly, and promote economic freedom."

The Global Poverty Act does not specify what "economic freedom" means, and the sponsors of the bill would almost certainly disagree with some of the detailed definition supplied by the Heritage Foundation. But they have, at least in passing, adopted the framework.

Just what exactly does the Heritage Foundation mean when it says "economic freedom?" The Index of Economic Freedoms contains a preposterously precise formula for measuring and comparing so-called economic freedoms, based on the following 10 factors: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom.

OK, that’s not much of an answer to the question. What do these grand phrases mean when Heritage translates them into concrete terms?

Here are some examples:

* "Trade freedom" measures not just how low tariff rates are, but the extent to which a country maintains "non-tariff trade barriers," such as "safety and industrial standards regulations" and "advertising and media regulations." Heritage considers national restrictions on biotechnology products — which apply equally to domestic and foreign genetically modified foods — as trade restrictions.

* "Fiscal freedom" is simply code for how low tax rates are. This includes corporate tax rates — which the Heritage formula weighs as heavily as taxes on individuals.

* Countries are awarded more points the smaller the size of the government relative to national economic output. The most points are awarded for a government with zero size!

* "Investment freedom" actually has almost nothing to do with the ability of people in a country to make investments. Heritage defines investment freedom as whether there are restrictions on foreign investment, including whether any industrial sectors are off limits for security reasons, and whether expropriation is permitted — even with compensation paid to investors.

* "Financial freedom" means whether banks and high finance are unregulated. The United States is apparently penalized for the various modest Sarbanes-Oxley rules passed after the Enron and related debacles.

* Heritage contorts "labor freedom" to mean the ability of corporations to fire workers without restraint and the absence of any minimum wage rules (with countries penalized the higher their minimum wage relative to average value added per worker).

The successful effort by the Heritage Foundation and its allies to capture the term "economic freedom" is not just a propaganda coup, it is a heist.

Heritage and its collaborators have stolen and debased the grand and noble vision of Franklin Roosevelt. They explicitly state that they are carrying out a project initiated by Milton Friedman (author in 1961 of Capitalism and Freedom, among many other works) to define economic freedom in terms of individual economic actors’ — typically corporations, though they often prefer to glorify individual entrepreneurs — ability to escape public control. This ideal is held out against Roosevelt’s idea of a caring and sharing society, where the crucial economic freedom is freedom from want.

In his famous 1941 "Four Freedoms" speech, Roosevelt offered a vision of a world defined by four freedoms (freedom of speech, freedom of religion, freedom from want, and freedom from fear).

"Translated into world terms," Roosevelt proclaimed, freedom from want "means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants — everywhere in the world."

His specific 1941 agenda, unfortunately, remains a suitable elaboration for the present day of this more appealing, democratic and humane concept of economic freedom.

"The basic things expected by our people of their political and economic systems are simple," Roosevelt declared.

"They are:

* Equality of opportunity for youth and for others.
* Jobs for those who can work.
* Security for those who need it.
* The ending of special privilege for the few.
* The preservation of civil liberties for all.
* The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living."

"These are the simple, the basic things that must never be lost sight of in the turmoil and unbelievable complexity of our modern world. The inner and abiding strength of our economic and political systems is dependent upon the degree to which they fulfill these expectations."

"Many subjects connected with our social economy call for immediate improvement. As examples:

* We should bring more citizens under the coverage of old-age pensions and unemployment insurance.
* We should widen the opportunities for adequate medical care.
* We should plan a better system by which persons deserving or needing gainful employment may obtain it."

ROBERT WEISSMAN is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action.



 

Like What You’ve Read? Support CounterPunch
August 04, 2015
Vincent J. Roscigno
University Bureaucracy as Organized Crime
Paul Street
Bernie Sanders’ Top Five Race Problems: the Whiteness of Nominal Socialism
Herbert Dyer, Jr.
Is White Supremacy a Mental Disorder?
Ramzy Baroud
The Palestinian Bubble and the Burning of Toddler, Ali Dawabsha
Pepe Escobar
Reshuffling Eurasia’s Energy Deck — Iran, China and Pipelineistan
L. Michael Hager
The Battle Over BDS
Eric Draitser
Puerto Rico: Troubled Commonwealth or Debt Colony?
Colin Todhunter
Hypnotic Trance in Delhi: Monsanto, GMOs and the Looting of India’s Agriculture
Benjamin Willis
The New Cubanologos: What’s in a Word?
Matt Peppe
60 Minutes Provides Platform for US Military
Binoy Kampmark
The Turkish Mission: Reining in the Kurds
Eoin Higgins
Teaching Lessons of White Supremacy in Prime-Time: Blackrifice in the Post-Apocalyptic World of the CW’s The 100
Gary Corseri
Gaza: Our Child’s Shattered Face in the Mirror
Robert Dodge
The Nuclear World at 70
Paula Bach
Exit the Euro? Polemic with Greek Economist Costas Lapavitsas
August 03, 2015
Jack Dresser
The Case of Alison Weir: Two Palestinian Solidarity Organizations Borrow from Joe McCarthy’s Playbook
Joseph Mangano – Janette D. Sherman
The Atomic Era Turns 70, as Nuclear Hazards Endure
Nelson Valdes
An Internet Legend: the Pope, Fidel and the Black President
Robert Hunziker
The Perfectly Nasty Ocean Storm
Ahmad Moussa
Incinerating Palestinian Children
Greg Felton
Greece Succumbs to Imperialist Banksterism
Binoy Kampmark
Stalling the Trans-Pacific Partnership: the Failure of the Hawai’i Talks
Ted Rall
My Letter to Nick Goldberg of the LA Times
Mark Weisbrot
New Greek Bailout Increases the Possibility of Grexit
Jose Martinez
Black/Hispanic/Women: a Leadership Crisis
Victor Grossman
German Know-Nothings Today
Patrick Walker
We’re Not Sandernistas: Reinventing the Wheels of Bernie’s Bandwagon
Norman Pollack
Moral Consequences of War: America’s Hegemonic Thirst
Ralph Nader
Republicans Support Massive Tax Evasion by Starving IRS Budget
Alexander Reid Ross
Colonial Pride and the Killing of Cecil the Lion
Suhayb Ahmed
What’s Happening in Britain: Jeremy Corbyn and the Future of the Labour Party
Weekend Edition
July 31-33, 2015
Jeffrey St. Clair
Bernie and the Sandernistas: Into the Void
John Pilger
Julian Assange: the Untold Story of an Epic Struggle for Justice
Roberto J. González – David Price
Remaking the Human Terrain: The US Military’s Continuing Quest to Commandeer Culture
Lawrence Ware
Bernie Sanders’ Race Problem
Andrew Levine
The Logic of Illlogic: Narrow Self-Interest Keeps Israel’s “Existential Threats” Alive
ANDRE VLTCHEK
Kos, Bodrum, Desperate Refugees and a Dying Child
Paul Street
“That’s Politics”: the Sandernistas on the Master’s Schedule
Ted Rall
How the LAPD Conspired to Get Me Fired from the LA Times
Mike Whitney
Power-Mad Erdogan Launches War in Attempt to Become Turkey’s Supreme Leader
Ellen Brown
The Greek Coup: Liquidity as a Weapon of Coercion
Stephen Lendman
Russia Challenges America’s Orwellian NED
Will Parrish
The Politics of California’s Water System
John Wight
The Murder of Ali Saad Dawabsha, a Palestinian Infant Burned Alive by Israeli Terrorists
Jeffrey Blankfort
Leading Bibi’s Army in the War for Washington