Economic freedom is the ability of people in a society to take economic actions, and it is a term used very often in economic and policy debates as well as in the philosophy of economics. According to The Heritage Foundation, It is best understood as a philosophy of governance that rejects dogma and embraces a diverse range of strategies for economic advancement. Fraser Institute in a bid to explain economic freedom mentioned that it is characterized by personal choice, voluntary exchange coordinated by markets, freedom to enter and compete in markets, and protection of persons and their property from aggression by others.
Economic freedom provides a proven formula for economic progress and success. Each measured aspect of economic freedom has a significant effect on economic growth and prosperity. Policies that allow greater freedom in any of the areas measured tend to spur growth. Growth, in turn, is an essential element in generating more opportunities for people to advance themselves economically, thereby reducing poverty and building lasting prosperity.
The Benefits of Economic Freedom
Economic freedom brings greater prosperity. The Index of Economic Freedom documents the positive relationship between economic freedom and a variety of positive outcomes, including higher gross domestic product per person, less corruption in business and government, and encouragement of democracy. Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.
Overcoming Challenges to Economic Freedom
Despite the benefits of economic freedom, there are challenges to achieving it. Some countries have policies that suppress economic freedom, such as high taxes, excessive regulation, and government intervention in the economy. Overcoming these challenges requires significant changes to reduce the size and scope of government. Governments can promote economic freedom by providing a legal structure and a law-enforcement system that protect the property rights of owners and enforce contracts in an evenhanded manner. However, economic freedom also requires governments to refrain from taking people’s property and from interfering with personal choice, voluntary exchange, and the freedom to enter and compete in markets.
Success Stories of Economic Freedom
There are many success stories of economic freedom around the world. For example, Taiwan has experienced continuous economic growth during the past five years, and its economic freedom has increased significantly during that period. New Zealand is another success story, having become a Mecca for market-oriented reforms between 1985 and 1995. These countries demonstrate that freedom is a stabilizing force, and that free enterprise, free association, and free speech lead to entrepreneurship, prosperity, and security.
Conclusion
Economic freedom is a fundamental right that provides a proven formula for economic progress and success. It is characterized by personal choice, voluntary exchange coordinated by markets, freedom to enter and compete in markets, and protection of persons and their property from aggression by others. Overcoming challenges to economic freedom requires significant changes to reduce the size and scope of government while promoting economic freedom requires governments to provide a legal structure and a law-enforcement system that protect property rights and enforce contracts in an evenhanded manner. Success stories of economic freedom demonstrate that freedom is a stabilizing force that leads to entrepreneurship, prosperity, and security.
Written by Agbo Obinnaya.
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