We live in a Golden Age of economic progress. People living today enjoy long lives, good health, and high standards of living unimagined just a few generations ago. Billions of people around the world have escaped poverty. Things we take for granted—antibiotics, the iPhone, air travel—would have seemed like magic to our great-grandparents.
These blessings have not arisen from the beneficence of some good king or a benign technocracy of experts, but rather from the individual efforts of people who, beginning about the time of the American Revolution, have claimed the fundamental economic freedom to decide for themselves how to live their lives. The real magic of the market, described by Adam Smith and the economists who have followed him, is that individuals, by exercising the freedom to pursue their own goals and ambitions, have made possible the rapid economic development of society as a whole.
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Such freedom is not without its challenges. People love the increased income and consumption produced so predictably by the free market, but they can have difficulty with the rapid adjustments that such growth requires. The truth is that humans do not much like change, and many find the rapid changes of a free market discombobulating. In the most recent month for which data are available as I write this (September 2017), more than 1.7 million Americans lost their jobs. Another 3.2 million quit voluntarily. The good news is that 5.3 million people were newly hired that month. Obviously, most of the job losses were temporary, and no doubt on average the new jobs were better than the old. That is how our economy grows and progresses, but it is still a lot of disruption in people’s lives.
Society’s job is to ensure that none of our citizens get lost in the shuffle. In a free society, there is no shortage of private-sector organizations—churches, clubs, charities, and even former employers—ready to help those in need. There may be a role for governments too, but it is vital that governments resist the temptation to slow down the creative destruction of economic progress through regulations or protectionist measures. That way lies stagnation and impoverishment. We see in the index the stories of governments that have taken this route, and the results are not pretty. Venezuela, which has lost more economic freedom than any other country over the life of the index, is just the most prominent example of the economic ruin that follows from repressive policies.
The free-market capitalist system, whose growth is so well documented in the Index of Economic Freedom, has provided people around the world with the opportunity to live a self-directed life and the dignity and satisfaction that come from the ability to provide for themselves and those they love.
Billions of people have escaped the tyranny and involuntary servitude of five-year plans dedicated to the glory of some great leader. The march of freedom is advancing, its ranks swelled by those in Eastern Europe or Asia or Africa, the Middle East and Latin America, and even right here at home in the United States, who know firsthand the deprivations of government-centered societies or programs that centralize power and wealth in the hands of a few. Populations everywhere are energized to demand their fundamental rights and freedoms and a fair and equal chance to get ahead.
Yet there is still a long way to go. The quest for freedom is likely a struggle that, even though it may never be fully won, must be continuously fought. There will always be those who wish to impose their will on others, who wish to rise in life based on the efforts of others rather than themselves. If there is one thing that sets apart the capitalist system of free markets, it is that when it functions well, it denies such budding autocrats the support of a coercive government. They may still pursue their schemes, but they will be forced to compete on a level playing field. That gives the common man a chance to rise that he enjoys in no other system.
We live in a time of extraordinary change. A free market is a vibrant market, humming with change. That, of course, is how we get economic growth and increased productivity. Only a dynamic, entrepreneurial private sector is capable of producing the growth and prosperity demanded by people today. Government command-and-control economics simply can’t do it.
It is gratifying to see from the index results that a majority of countries are moving ahead to advance their citizens’ economic freedom. The recession that set back so many earlier in this century is over. Now is the time for boldness to build new momentum for even greater reform. A world average economic freedom score of 61.1, while better than ever, is still only moderately free. Imagine a world in which all countries matched their policy environments to those of Hong Kong or Australia or Switzerland. It would truly be something to behold.
This is a reprint of the introduction to the 2018 Index of Economic Freedom produced by The Heritage Foundation.