Study: Who Likes the Idea of Free Markets?
How receptive are people in the various countries to the idea of free markets?
A new Global Index of Economic Mentality (GIEM) indicates that the United States scores high among 74 countries, ranking fourth with only New Zealand Czech Republic and Sweden being more receptive to free market concepts. But digging deeper into the numbers indicates that the US score has mostly to do with the views of older citizens. “In contrast, the attitudes of the younger US cohorts are decidedly anti -freedom. In fact, the gap between the US generations in this respect is the greatest of all the countries (New Zealand and Australia being next) in the world.”
For decades the world’s countries have been ranked in various indices for economic freedom and the like. These rankings try to measure the extent to which current legal and/or institutional conditions permit individual economic activity. They have been shown to correlate strongly with prosperity and human well- being.
The new GIEM, compiled by Brad Lips (Atlas Network, Washington, D.C.), Pal Czegledi (University of Debrecen, Hungary), and Carlos Newland (ESEADE University and Torcuato Di Tella University, Buenos Aires, Argentina), measures public opinion about economic freedom rather than the extent to which it is actually practiced. A high GIEM score indicates that its citizens support the idea that their government should not play a major role in directing or regulating economic activity or in redistributing income. GIEM measures public opinion toward a system of free enterprise rather than the extent of its realization in practice.
New Zealand has a score of 0.76, while the US score is 0.71.
Ranking at the bottom is Iran, Egypt, Russia, Azerbaijan, Montenegro, Myanmar, Bangladesh, and Bosnia. The scores range from 0.33 to 0.24.
Great Britain had a score of 0.60 and ranked 16th, Switzerland ranked 21st and scored 0.58, Hong Kong’s score was 0.57, France, 0.55. Mexico ranks 31st and scored 0.52 followed by Japan at 0.52 and Germany, scoring 0.51. China ranked 51st and scored 0.43.
Countries that embrace a free-market mentality tend to have more efficient economic institutions and higher per capita GDP than those who support socialist, interventionist mentalities. However, there are notable differences.
For instance, although Chile’s free market institutions have made it the most prosperous country in South America, it has the lowest GIEM score on the continent, even a notch below Argentina, and 64th overall. These data suggest that the Chilean public has not been convinced of the benefits of the free-market system that has lifted them out of poverty.
The existence of inconsistency of practice and ideas, goes a long way toward explaining the recent disturbances in Chile and its dramatic lurch away from freedom.
In spite of New Zealand’s current totalitarian behavior, it tops the mentality chart due to the public embrace of ideas propagated by Sir Roger Douglas, New Zealand’s former minister of finance (1984–1988) in the reformist Labour Government during the tenure of prime minister David Lange.
The high ranking of the Czech Republic can be traced to radical education in free-market ideas by Václav Klaus, former minister of finance (1989–1992) of Czechoslovakia, and former prime minister (1992–1998) and president (2003–2013) of the Czech Republic. Klaus led the Czech Republic’s transition from communism to a free-market economy. In contrast to Chile, there is consistency between thought and action in the Czech Republic.
In recent decades economic freedom in the US has steadily fallen from its previously high level, but it still scores high in having a largely free market mentality. This turns out to be due to the attitudes of older citizens who were educated about principles of freedom and have seen free markets function. In contrast, the attitudes of the younger generations, denied similar educations, resist free market concepts and are more inclined to support top-down statist controls.