tv Heritage Discussion on Economic Freedom Index CSPAN January 29, 2019 5:53pm-7:02pm EST
had previously served in the new york state assembly since 1991 including five years as majority leader. new congress and new leaders. watch it all on c-span. >> each year the heritage foundation ranks countries around the world on economic freedom. this year's report places the united states in 12th place behind since countries as hong kong, australia, and taiwan. the authors of the report presented their findings at the heritage foundation in washington. this is an hour.
>> ladies and gentlemen please welcome the heritage foundation president kay coles james. [ applause ] >> they call that the voice of god when you are introduced by an off-camera person, but i never knew it was a woman. hello, where are you? welcome. we are so delighted for you to be here today, and i am so excited about what this date represents. it is a pleasure to welcome you to the special occasion releasing the index of economic freedom, the 25th edition. who was here for the first? thank you for being here for that 25th, and we look forward
to you celebrating with us as we move forward. for 45 years, the heritage foundation has been dedicated to building an america where freedom, opportunity, prosperity , and civil society flourish. for those of us who have the privilege of working here at the heritage foundation, that is not a throwaway line. in fact it is our battle cry against the forces of oppression and tyranny. for literally thousands of years, the vast majority of people lacked economic freedom and opportunity, and as result, they was condemned to eight dehumanizing life of poverty, sickness, and in many cases early death. a few people controlled most of the power and most of the wealth. pretty much everyone else suffered. thankfully those days are over
for more people to date then at any previous time in all of human history. but we still see instances such as venezuela and north korea that serve as a stark reminder of where we have come from. in fact, where we could return if we don't remain dedicated to building a better future. that is what the heritage foundation is all about and committed to. also, that is why our index of economic freedom is so important now more than ever. the index of economic freedom gives unique, and is a team spirited flagship product of the heritage foundation, and its creation involves nearly everyone in this building, but there are a few that i want to especially thank for their work on the index this year.
ambassador terry miller, anthony kim, jim roberts, jack spencer, teresa penn feather, and john fleming. thank you all so much for the incredible work that you do.[ applause ]it is a phenomenal product and it really does speak into our dialogue on these very important issues. the index chronicles the advance of economic freedom in its conquest of poverty. with detailed analysis presented in a user-friendly format, the index has served as the go to resource for policymakers, researchers, and students for more than 20 years. the index confirms the essential link between free
markets and prosperity, and it has absolutely inspired policy change around the globe, improving the lives of many -- millions of people. the 25 years of data we have amassed in this project demonstrates conclusively that economic freedom leads to better health, longer lives, improved education, and cleaner environments. it expands markets and raises living standards, and it brings societies closer together in peaceful, commercial cooperation that transcends waste, religion, and culture. in some, the index reveals a powerful truth that governments that respect and promote openness and free market make their citizens wise and the world better. the ratings and rankings will undoubtedly change in the future.
we hope for the better in all countries everywhere. but one thing will not change. that is, the fundamental message of the index. as we at heritage said in introducing the first index in 1995, in striving for peace and prosperity, freedom is what counts most. i would like to invite doctor kim r. holmes, the executive vice president of the heritage foundation, to share how the index as e evolved and made measurable impact around the globe. perhaps most notably for the special occasion today, i should mention that doctor holmes was a founding editor of the index of economic freedom. doctor holmes.[ applause ]
>> thank you very much for that introduction. it is a pleasure to be here with all of you this morning. i also want to add thanks to you terry, jim roberts, jack, and the rest of the team that work on this stellar product. it is been in my life now for 25 years, and every year seems to get better, and it is because of the people right here that it is getting better. thank you for all of your hard work. these are my children. [ laughter ] >> my children's children, and so many of my children's children's children's. after 25 years of the index of economic freedom, what a wonderful visual, and i didn't realize they was going to be doing this. this is the one that we started
back in 1995, and it was predigital by the way, and the graphics are rather primitive, but i spent hours with the printers trying to make sure it was working correctly. it has come a long way in so many different ways in the index. i remember meeting in the office 25 years ago, and ed asked me if we thought we could produce an index of economic freedom? there is a lot of talk among economist at the time whether or not it could be done. the fraser institute have been involved in creating an idea for the index, and those a lot of people and a lot of chatter to see if we could do this, and he asked me if i thought my staff to do it and i said sure. we set to work in the first publication in 1995 was the result. the question is often put to me about why we decided to do this in the 1990s? that was actually many reasons
for it. one was to offer policymakers a guide to how well foreign aid worked or did not work. that was the topic at the time, and that was sort of the issue that pushed us over the edge when we asked ourselves the question, you can do a theoretical study like this, but what is the policy payoff? we are up here on capitol hill and the heritage foundation trust offer solution to policy questions, and that was the issue of entry into making your final decision. the biggest reason that we decided to do it was that the cold war had ended and freedom was breaking out all over the planet. much of the talk of the time as a result of this was about political freedom, democracy, and elections, and all of them are very good, but that is only part of the picture. we knew as communist dictators was falling, we was discovering that many people was discovering
the free-market of capitalism. we wanted to create a product that would give policymakers economist, a benchmark for measuring economic policy and progress toward prosperity. the 25th edition of the index marks an especially important milestone. many more countries are committed to free-market policies today than they was 25 years ago. the results have been far better quality of life for millions of people around the globe. after 25 years of measuring global economic freedom, the verdict is in. economic freedom leads to rapid increases in income and dramatic drops in poverty, sustainable gains in education, health, and environment, and also the improved condition for democracy and peaceful cooperation among neighbors. is basically the foundation for so many other things, peace,
democracy, and freedom. the index is your points to a welcome the positive trip for the united states. following the ambitious tax reform pushed by the trump adminstration and strong the regulatory agenda, the united states moved up six places from the ranking last year, and is now in the top 15 countries ranking in the index. this reverses a depressing downward trend in the united states that had been happening in the previous year's. this progress is especially important to remember as some americans want to return the clock back on economic freedom. we will not only lose the progress on economic freedom, but also the strides made in economic growth over the past two years here in the united states. not only that, we could lose the improvements of standard of living that a company growth and economic freedom.
when governments do a little less, they can empower their people to do so much more. they can unleash energy of entrepreneurship and effort. it is not the massive redistribution of wealth mandated by government owned wages, prices, that make the lives of not only americans, but anybody better. instead lowered the barriers for people to enter the market increases social and economic mobility and it leads to a higher standard of living. it is not mandated by the government for green energy that will solve many environmental challenges, rather it is economic freedom. actual government deregulation in a marketplace that leads to higher levels of technological innovation and also to the economic dynamism that helps keep our environment clean. we should be happy with the
progress and mrs. james referred to this in her remarks, that it been made over the past 25 years. you hear so much gloom and doom in the world today, and yet the story of economic freedom and economic development is one of success. when the index was first launched, nearly a third of the world was living in poverty. in 2019, less than 10% can say the same. incomes have risen, innovation has flourished, and prosperity continues to grow for tens of millions and hundreds of millions of people around the globe. there are dark storms and clouds on the horizon, but there is no economic challenge which cannot be solved by free- market solutions. over the past 25 year, the mission of the index has grown far beyond the initial goal to identify and measure conditions
as i mentioned earlier. one of the reasons why the index has fared so well is alan greenspan once said about the index of economic freedom, it is because the findings conform to economic reality. in other words, this is not about theory but results and measuring results. the index is truly a remarkable showcase of the progress the world has made since the fall of socialism, which was the original reason why we started it. it is a guiding light for those who seek to revise all of those dangerous policies, and to learn from history that you should not repeat them. the last thing that i can say here on the 21st -- 25th anniversary to all my children here is that i hope 25 years from now, they are still around. thank you. [ applause ]
>> thank you very much and i am terry miller and i and the senior editor i guess, the right way to put it for the index of economic freedom, and it will be my privilege to talk about the actual results of the index this year, and i will be using a little bit of data to do that, but i will try to make it as much fun as i possibly can. we have been doing this project now for 25 years, and as you have heard many times this morning, and you can see on the right side of this graph that the progress of economic freedom has been significant over that time. there is a little bit of a glitch there at the end of that graph, and you can see that we actually lost economic freedom in the world as a whole this year. but still the global average score of 60.8 is the third highest we have ever experienced
in the index of economic freedom. i think the overall trend is still positive. you have heard a little bit about why we do this and i just wanted to emphasize that with some data. the main reason is what you see here in this graph. economic freedom causes and is highly correlated with higher incomes and greater prosperity. you can see in the graph on the left that countries as they move up the economic freedom scale, they tend to have much higher levels of per capita income and the numbers are there on the bar on the right side. we can see that countries that are free as measured in our index have per capita incomes that are almost 8 times higher than the countries that are considered repressed in the index of economic freedom. that is an amazing difference,
and you can see the slope of the graph on the left side start to get steep for countries at higher levels of economic freedom as the continued improvements in economic freedom make a real difference in levels of prosperity. this is true in every region of the world, for countries at all levels of development. you can see the difference between the freest countries in each region and the least free countries in each region on this graph. you may look at the sub-saharan numbers there and say wait, that is not true there. but the unfortunate truth is that there are very few countries in sub-saharan africa that even have a modest level of economic freedom. only seven countries out of the 49 that we measure have levels of economic freedom that we would classify as even
moderately free. there is a very small base there to inform that blue column for sub-saharan africa. the reasons are not consistent in their commitment to economic freedom. the middle east, asia-pacific, and the americas in the middle of this graph, they all have levels of economic freedom that are on average approximately the world average of economic freedom. but you can see at the top that europe does significantly better and at the bottom unfortunately again, sub-saharan africa lagging significantly behind. the good news for those countries that are lagging behind is that it is not just the level of economic freedom that is important. there is a very high correlation and relationship between changes in economic freedom and economic growth rate, which represents the change in levels of prosperity. we find that whether you are
looking at the past five years of the past 25 years, and whatever timeframe you look at, countries have improved their economic freedom at a much higher growth rate on average than the countries that have either lost freedom all that smoke or are stagnant in economic freedom. this is my very favorite result from the index of economic freedom, and you can see that has -- as economic freedom has gone up over the last 25 years in the global economy has expanded, poverty levels have been cut by two thirds. this is a message that is lost on the great majority of the population, not only here in the united states, but in countries around the world. the free-market capitalist system that is represented and measured by the index of economic freedom has created a tremendous increase in
prosperity and improved living conditions for literally hundreds of millions of people around the world. it is not just the number of people living in poverty, it also has reduced the intensity of poverty for people in countries, and you can see the intensity of poverty in the countries that are mostly free or moderately free in terms of economic freedom is much lower than the intensity of poverty, and that means how is poverty actually experienced by the people in those countries? it is much less of a deprivation in the countries that have higher levels of economic freedom. i think you already heard a little bit about this this morning, but i also wanted to emphasize that the countries with higher levels of economic freedom, and the citizens in
those countries enjoyed much better health and higher levels of education and do a much better job in protecting the environment. it is not these big status solutions that result in improvements and social well- being, but rather increases in economic freedom. this shows the relationship between the index of economic freedom and two major global indicators of social well-being with the relationships on the left showing the human development index put out by the un development program, and you can see the countries that are free enjoyed high levels of economic freedom and have much higher levels of human development, and the graph on the right shows a comparison between economic freedom scores and the social progress index put out by the social progress initiative and again are that have higher levels of economic
reading have much higher levels of social progress overall. i did promise that i would get to the results, and here they are. in the 2019 index of economic freedom, we have six economies that have earned the designation as free, economically free economies. i want to mention each one individually. hong kong is number 1 in the index this year, and it deserves an incredible amount of credit under very trying sometimes political circumstances, hong kong has maintained its number 1 position in the index all 25 years we have been measuring economic freedom. number 2 in the index is singapore and number 3 is new zealand. switzerland is number 4 and i
am pretty sure that is zérich. can anybody in the audience confirm that? okay thank you. australia is number 5 and the upper house, i thought we would highlight that. ireland is number 6. the six countries deserve the highest praise for achieving significant levels of economic freedom, and i think you would see if you looked at the economic indicators that all of them are doing quite well indeed in terms of promoting prosperity for their citizens. wanted also to highlight the regional champions of some of these that art repeats from the top six list. the united arab emirates had the highest score in their region. also wanted to give a shout out to rwanda which had the highest economic freedom
score on the african sub- saharan continent. it joined the ranks of the mostly free countries this year for the first time ever. i left out ireland of course and europe along with canada having the highest level of economic freedom, and it pains me to say that as a citizen of the united states as i would very much like for the united states to be on top of this index, and that is something we are working very hard here at the heritage foundation to try and achieve. a couple of things about this list. it shows the top 20 scores in our index this year and also the bottom 20 scores in the index. there are two significant movers on the left side of this in the top 20, and unfortunately one is downwards, and that is estonia which fell
significantly in the index this year, and that was the result of a banking process and scandal that afflicted that country. the other movement was a little more positive, and that is the movement of the united states, which had the biggest jump among the leaders in economic freedom moving up to 12th place. on the other side of the graph, there is not very many happy stories to tell. i think i would just highlight venezuela near the bottom of the graph at 179th place because you all have heard the news stories of the last several days about the turmoil engulfing that country. when we first started measuring economic freedom 25 years ago venezuela had one of the higher scores in the index. there score at that time was around 60 on our index, and now it is 35 points lower and they
have sunk to near last place and the results are as you see in the news. societal chaos and deprivation for the citizens of that country . also wanted to highlight the country leaders in each of our categories that we measure in the index. we measure 12 categories of economic freedom, and you can see that singapore was a leader in property rights and judicial effectiveness and new zealand the leader in government integrity. this is a particularly important category for the developing countries because they lag seriously behind in terms of the rule of law were the more developed countries like singapore and new zealand for example tend to score very high on these indicators. government size is led by three developing countries, saudi arabia with the oil revenue has
the lowest tax burden in the world, and sudan has the lowest level of government spending. if we was talking about a developed country like the united states, i would be among the first to praise that low level of government spending. for a country like sudan, it may mean they just don't have the capability to provide any services at all at the governmental level. nonetheless, they led the index in government spending measures this year. fiscal health is the top of the chart, and i think that is probably due to the extreme amount of gaming revenue they are able to achieve as a government that allows them to have a balanced budget. regulatory efficiency, that is a category that is equally important i would say for countries at all levels of development. hong kong lead in business freedom and singapore into
labor freedom. bulgaria, which made an early decision after the fall of the soviet union and the lifting of the iron curtain, to adopt a monetary board to make the decisions about currency independent of political consideration, tops the world in monetary freedom. finally, open markets, this is one of the most interesting categories and one of the categories will you have the absolute best data and it is always a challenge to find worldwide data for the index. hong kong with essentially zero tariffs and imagine what that looks like. they leave the world in trade freedom and luxembourg, which probably has the highest per capita income of any country in the world least the world in investment freedom.
i think there is a clear relationship there and their per capita income is well over $100,000. think about the level of prosperity that those citizens enjoy. for financial freedom, it is led by australia, hong kong, and switzerland. that means all of those countries have very high levels of competition in the banking sector and competition breeds efficiency and helps to lower prices. i also want to give a shout out to countries that have done particularly well in the index this year. overall barbados had the highest improvement in economic freedom and actually jumped 50 places in the index this year from 117th last year to 67th this year. that improvement was due almost entirely to the fact they got their fiscal situation under control.
they reduced their government spending and balance their budget, and they put their country on a sound fiscal situation. most improved in the rule of law was a country that not many of you have heard of. it is a country that is moving up very fast in our index of economic freedom, and they improved in all three categories, rule of law, property rights, judicial effectiveness, and government integrity. they had the best improvement overall in the rule of law. the government size as i board he talked about, barbados had the largest improvement in that category do again to getting their fiscal situation into balance. the most improved country and open markets was lyles, and this was due entirely to their trade score. they dropped their applied
tariffs from 14% to just a little over 1% this year. they have practically eliminated their tariffs and that makes him the most improved country in the index of economic freedom in the terms of open markets. regulatory efficiency is an interesting case as the republic of congo is in no way a good performer in our index, and they have a very low level of per capita income and very low levels of prosperity. nonetheless, they improved and showed improvement in all three categories of regulatory efficiency as they improved the business regulations and labor regulations and their monetary freedom. that gives me some hope that we will see some improvement, some social improvements and economic improvements in that country in the years ahead. finally, i wanted to highlight this list of countries.
this is the 25 year graph that covers the entire history of our index, and it shows the countries that have made the most improvement over time in the index of economic freedom. most of these countries have improved by 20 or even 30 points in their index scores over the years, and they all other countries to watch out for in terms of good economic performance going forward. i wanted to take this opportunity to mention all of them by name. georgia, lithuania, rwanda, which already talked about a little bit. bulgaria, romania, albania, serbia, samoa, croatia, to name a few. one other thing about this list.
you don't really see any latin american countries on this list. you will see and if you look at our index and i assume you have all picked up copies of our index now, that we have sections focusing on each region of the world individually, and i invite you to take a look particularly closely at the section dealing with latin america because i think there is some interesting conclusions that can be drawn by the relative stagnation in that region. a final shout out to the importance of trade, and i think my colleague jack spencer who will follow me they want to talk about this a little bit as well. the declining economic freedom was driven by two categories. one was judicial effectiveness, and that is a category that uses a lot of survey data and the major declines in that
category showed up in eastern europe countries like poland, hungary, czechoslovakia, which showed declines in judicial effectiveness, and the opinion of their citizens about the judicial effectiveness in those countries. the other global indicator that declined significantly was trade freedom. i think you all have probably noticed the news about the increase protection and tendencies in the countries around the world, and even here in the united states, and we suddenly picked that up in the index of economic freedom. you can see here the importance of trade. the countries that are judged free in the index of economic freedom both depend on and benefit from trade much more highly than the countries that are unfree or regress.
the results of our index have gone up online, and the entire text of the index, all of our databases are online and available at heritage.org/index . we can provide more data if you contact us directly. we are happy to have people use this data. it is freely available and there is not a gateway here or anything like that. we have found over the years that researchers pay a lot of attention to the results, and we try to make them as freely available as possible. i am not going to invite my colleague jack spencer to the podium. jack is the vice president in charge of the institute for economic freedom here at the heritage foundation. he is going to talk a little bit about the united states and maybe what it would take to get us back into the top 10 or dare
i say number 1. jack spencer.[ applause ] >> thank you terry. thank you doctor holmes and mrs. james. thank you very much. good morning and thank you for being here today. it is an exciting day here at heritage and for me personally. as a vice president for the institute of economic freedom, i hold dear to the principles indicated by the index and i'm happy to be part of it today. literally people from around the world for two our findings each and every year. and they wait with anticipation every year. what the index measures under the umbrella of economic freedom are 12 variables that provide a real-life assessment of economic health and vitality of each and every nation. morley, they are concerned when they drop, and they should be.
the united states is no exception and over the past 13 years except for 2016, the u.s. has been on a downward trajectory in. in 2010, our economy was mostly free, and it fell out of the top 10. our economy was weighed down by high levels of government spending and burdensome taxation. the toll that it took on the economy was not just the radical. we had less choice on healthcare, banking and finance, and we had less money in our pocket as he economic growth slowed, and we was forced to buy things that we did want and there was fewer jobs. how would only drop to 18th was quite a miracle. with the election of donald trump, things began to change. the regulatory burden began to ease. in fact when it comes to significant rules, those that cost over $100 million a year, the trump adminstration issue
65 fewer than the obama administration and 51% fewer than the bush administration. the president has actually deregulated and in 2018, the administration took 57 specific deregulatory actions compared to 14 regulatory actions. by going after the clean power plan and protecting internet freedom and giving consumers more healthcare options, this administration is directly increasing the economic freedom of each and every american. tax reform was implemented and now we have competitive corporate rates and fewer loopholes and lower individual rates along with real economic growth taking hold. we see this progress in the indexes that we have heard today. this year the ranking of the united states is finally on the rise. as we have already heard, we moved from a low of 18th last year to 12th this year. that is good, but not good enough.
no one is out there chanting we are number 12, we are number 12! number 12 is better to be sure, but why are we not number 1? or at least in the top 10. maybe that should be our goal for next year as we get the united states in the top 10 of the index of economic freedom. of course we should not strive to increase our ranking simply based on pride. we should increase our ranking because of the real-world tangible benefits. the index over 25 years has shown without exception or doubt that the more economic freedom a society has, the healthier it is the cleaner the environment, and the higher the member standards of living. basically it increases if you get more economic freedom and basically it goes down if freedom is reduced. the statistics bear this out. if economic freedom has increased over the past 25 years and we have heard today, human development including
indicators like infant mortality is increased by 20%. entrepreneurial dynamism has increased by 20%. what this tells us is that you don't have to worry about economic growth. if you have economic freedom, you get economic growth. you don't have to worry about the environment and if you get economic freedom, the environment will be cleaner. as the index shows, economic freedom gives us each of these things. yet despite this evidence, economic freedom seems to be under attack, and not just from the usual suspects on the left, but across the political spectrum from the folks that want to subsidize wages and restrict trade, tax carbon dioxide, and they promised some notion of security and all we have to do is give them a little bit of our economic freedom. but here is the problem. politicians of special interest
use promises to attract our trust while they empower their self to grow the size of government. over time, we end up ceding too much power over the basic busyness of life to the bureaucrats in washington. the truth is they can never deliver on any of it. their promises are fleeing and they cause a substantial long- term cost to the rest of us. look at the promises and clean energy, healthcare, home ownership. and never quite works out does it? too often by the time we feel the pain, they are long gone. the bad policy is been invented some special interest, and we are stuck with it. it weakens the economy, diminishes opportunity, and hurt see structural problems they are claiming to be fiction to begin with. the market is different and their response, and that is the magic of the marketplace.
you have billions of participants making visa decisions in real time to advance their dreams, our dreams. in a free market by the rule of law, no one can do anything without someone else agreeing. we only do things that we agree will advance our vision for our souls and our families. people do make bad decisions, but we learn from them and do less of those things. we get benefits from the good decisions, and those good decisions and up over time, and that is how we get progress. we built buggies to move ourselves, and why i am able to buy a fancy belgium from an iphone here in washington dc. the index of economic freedom gives us a perfectly ends to the sermon whether or not a policy is good or bad. we need to merely ask herself as the index points out, does this action enhance the right of the individual to decide for
themselves how to direct their lives? does it enhance economic freedom? this be more specific about how to increase the u.s. ranking. we got some good tax reform over the past year. but we can do better. a lot of the tax policy and that tax reform has been temporary, so let's make that permanent. establish a savings account for the middle class, and will in the double taxation of our savings and investment and allow us to more easily save for the challenges that life throws at us. we need to put hard subsets own regulation. everything changes. we need to be able to reevaluate regulations because they need to change too. we need to keep the internet free. there is no better example of the power of free market than the growth and success of the internet, and we cannot kill that golden goose. on spending, and this one is a big deal.
america's debt is out-of- control at $22 trillion. it exceeds the u.s. gdp. it is just going to go up from there, yet nobody seems to care. democrats spend an republican span, the president spends, the congress spends, you spend an ice pen. the government has created a complex web of subsidies interests, were nearly every person in the united states gets a little cut of the action. so while there is the broad recognition that the larger problem is fairly clichi at this point, urgency and motivation to do anything about it is nowhere to be found. that need to change it has to change now. we need to reform entitlements and yes we do need a safety net for those in need, but we are not all in need. that safetynet does not have to run so thoroughly through washington. we need to reduce the size and scope of government.
discretionary spending will not be what will break the government ultimately, but here's what is contributing to the breaking of our free market system. all of the little programs that serve this or that special interest, and is where the regulators get paid and the subsidies get distributed. each of these things one by one chips away at the economic freedom of america. then trade. this is a big one looking for. everyone wants to know what president donald trump is going to do own trade. i hate to be so anti-climatic, but i have no idea. there is a lot of opportunity to advance trade. we too often misunderstand the concept. we think about free trade or trait is a relationship between countries and government, and things like the u.s. and china trade policy, and we think of trade as this endeavor between large multinational corporations who are trying to maximize their profit at the
expense of the rest of us. but truly free trade, the ability of an individual to buy or sell to who they choose without government intervention anywhere in the world, free trade is about giving individuals and businesses access to the products in the free market and increasing quality and competition making our businesses more competitive and given the flexibility. is about creating a good job that invites businesses to establish himself here in the united states. pretrade is about opportunity. first we continue to move up the ranking, and we need to change path. we need to stop with the quotas and tariffs. i get why some people go for these actions, but the fact is that americans pay for the terrorists. a much better approach is to use organizations like the wto to enforce trade practices.
if these institutional work, we should drink them or come up with the ones that do. finally, we need trade deals that advance the freedom to trade. we need to move away from these giant exercises that manage trade to bureaucracies in washington and they try to harmonize regulations. in closing, a couple of thoughts. on the value of an economic policy, consider a simple question. does it enhance economic freedom? if it doesn't, we need to question the underlying justification for that policy. specifically when it comes to the united states, we should be happy we are moving up in the index rankings, but nobody does be satisfied with number 12. to continue moving up, we need more tax reform and continue to reduce the regulatory burden along with reducing federal spending and the impact that spending has on the economy along with re-dedicating ourselves to the advancement of freedom of trade. thank you for your time. [ applause ]
>> i think we are going to do some question and answer now. >> we have a few minutes left and it is your turn in the audience. we also have my coeditor anthony kim and kim robertson is here somewhere is well, for the really tough questions. let's start here in the middle. if you would wait for a microphone, and also if you would not mind identifying yourself, we would appreciate it. >> preston no, -- no. we have seen the jump in the united states all the way to 12 and probably a good part of that is because of president donald trump. i think you are right. we just saw in brazil the election, and he is promoting the same kind of ideas that president donald trump he has. do you expect brazil to go from
150 to something a little better ? >> i will take that one and i would have high hopes that the new regime in brazil can finally get that potential economic powerhouse moving in south america. i talked a little bit in my presentation about how the countries of latin america had really lagged behind and we have seen a resurgence in some places of socialism, and we have seen a turn away from that in some countries, and brazil is one of those. i think the election of someone like him is very hopeful for brazil. yes, i would look to see them improve their ranking in the future. >> i am harry with the united states department of defense.
do we need that u.s. military to advance the u.s. interests at the expense of russian china? >> i would not say that i see a particular role for the military in advancing economic freedom although i must say the u.s. military is certainly a positive force in many places around the world when there is a tragedy of some kind, and the humanitarian disaster, or a refugee problem, the u.s. military can do tremendous good work, but that is not the fundamental job of the military. the fundamental job of the military is to defend the united states and to keep us safe here at home. in terms of economic freedom, there is clearly a relationship between economic freedom and democracy, and certainly peace and stability in countries around the world.
the u.s. military is often in many places around the world a force for that peace and stability, and in that respect, they clearly contribute to the opportunity for economic freedom and economic advancement. but i would have to reiterate that is not really their main goal. >> i would add that one of the many important roles of the military is protecting the trade routes and making sure that we have military power such as there is not some regional thing that can arise and impose its will. it would really create a lot of problems for the global economic freedom in those regions. back in the back. >> i am a reporter from voice of america. i want to ask about a question regarding china, and when the president in office and we have seen what is going on in the democracy, and also, we have
seen many americans at this point that feel disappointed over the years with the development of the economy, and we see the trend going in a different way. so how do we understand this trend in terms of the economic freedom? i was trying to add a big burst of economic freedom about 40 years ago now, whether the economy was opened up to the world, and they benefited enormously from a globalized world economy in their trade relationships and some of the investment relationships they had, and we have seen per capita income in china rising significantly, but from a very low base. they still have a very long way to go to catch up in terms of overall prosperity to the countries of europe, the united
states, canada, the developed countries in the world. i think it is unfortunate that economic reform in china seems to have stalled at this point, and the prospects for further reform i would have to say they are uncertain at this point. we have of course this very vigorous trade debate and discussion between the united states and china right now. many of the things that the u.s. administration is asking china to do are precisely the things that will most benefit the chinese economy and get reform going again in china. we have seen growth rates low in china recently and it is really hard to determine what they are. the chinese government say 6% and some economists estimate it is only one or 2% or maybe even negative at this point in time.
is absolutely clear that china has enormous potential. they only rank 100 on the index of economic freedom. hong kong is number 1 and taiwan is number 10 this year in the index. clearly the chinese people have a great sense of how entrepreneurship works, and it can be a very innovative force for the world economy, but that is not happening right now. i think it would be in the best interest of all of us if it did. >> over here. >> thank you good afternoon. i have a perennial question and i am sure you can handle this. if you was to spend five minutes with the president, and that means you had to giving a distinct plan, what you think is the biggest problem that the u.s. faces as far as the
development of manufacturing capabilities and extracting and using their own resources more effectively, and what would you say would be your prescription for solving the problems of the finances and the debt situation that we have? >> this whingers. >> in manufacturing, we have to have a better business environment. we have taken a lot of steps forward, but a big part of tax reform and a good port that spent part of business, they was temporary and not as expansive as it should be. that would be one thing. continue driving the corporate taxes down or to eliminate them entirely, all that gets funneled to the people anyway, and continue to deregulate. i am not for, but we have to
regulate smartly so that we get rid of these environmental regulations that don't actually help the environment. i talked a little bit about this, and the entitlement stuff. that is really where our long- term debt relies and we need to get that under control. the social work -- security reform is a big one. we need to reduce those long- term liabilities with some reform. in the near term, we need to get the government out of the day-to-day lives of the decision making site. this will also help us grow the economy more so they can better pay for the stuff over time . >> down here in front . >> thank you.
most of all trade is expected at a level as well. >> well, the index obviously looks at the data for individual countries, we also do regional analysis and the factors you describe are important. one of the things we are looking for in the indexes ways to find better data sources comparable among countries to look at additional factors in make sure we are handling all of those in the most efficient and effective way possible. i think that when we find high correlations between the index of economic freedom and virtually every other indicator of while being no matter what type, this is not an accident.
we have to see tears being paid and applied on the goods and we pick the date up and it will be reflected in the index. for example the united states had a small drop in trade freedom this year because in the beginning stages of seen the applications of tariffs, if that continues there will be a much bigger impact on the u.s. next year . >> . >> in the united states, to them, i'm just please to see them move three places out from last year. were grateful for the announcement and during the day the presentation is one message
economic freedom leads to better economic power, environment, education and social well-being. and for us to live a better life with economic power and growth and democracy, are two major contributors of our good life, so, do you see in the report or your study, the correlation between economic freedom . >> we absolutely do, we have published the data and in some editions of the index, the democracy indexes are not necessarily up dated but we see the statistical data and report
that. we seen a high correlation between economic freedom and effect of democratic government. the lots of countries that call themselves democratic, sometimes even in the name of their country but they don't have democratic practices or the ability for peaceful transfer of power through democratic means. but there are indexes now that measure truly effective democratic governance and when we compare those with the rankings and economic freedom, we find there is a strong relationship. i think it's mutually supportive, this relationship by having a truly effective democracy contributes to economic freedom and i certainly think economic freedom contributes to the development of a true democracy. taiwan has done well in our index and then the government is to be commended for its actions, to liberalize the
economic regulations and make it possible for your people to prosper in the way they have we are just about out of time, one more question, barbara in the front? >> thank you for your presentation. i've spent more than five decades working for the republican party and a whole lot of years on trade issues as a negotiator for trade agreements. one view is that we don't need trade agreements if we didn't want people to trade the way they wanted to but that's a topic for another day. >> what grabbed me today was how effect of the talking parts are about economic freedom and why it produces the results we want in terms of people's liberty overall and, it sounded like the best political message i ever heard. how do we
translate that into practical politics so people understand it better instead of listening to how much good we can do for you with your own money if we take it first and redistribute it? >> if we had an answer to the question we put ourselves out of business. that's a big challenge of what we do. as purveyors of free-market principle, were up against an enemy that doesn't have to adhere to the truth but promises you everything. trying to figure out the way to communicate?
the one thing i tried to do is integrate the work we do and the message the index puts out there, were able to build a cohesive argument that lends itself more easily to policy agenda. thank you very much for the okay job . >> that will have to be the last word, we invite you all to join us in the lobby for a reception, celebrating the 25th anniversary in the index of economic freedom. hank you for coming today. [ applause ]
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