The Heritage Foundation has announced its Economic freedom index 2007. Chile is at the global level in the eight place, above United Kingdom ,while at the regional level is in third place ,behind Canada and the USA.
The Economic freedom index is built upon ten categories: trade, fiscal policy, monetary policy, investment conditions, financial policy ,labour policy ,state intervention, property rights, and corruption levels.-
What is it the importance of Economic freedom? .It is important because there is no way society can live without it : Let briefly review why :
a.- Given the proper institutional framework, it allow markets to make their way through for better allocation of resources, which means they get the higher return considering all other economic feasible alternatives, maximizing society welfare.-
b.- Freedom is a condition for welfare increase within a community, as long as every one of its member , have the chance to try freely their best opportunities available. The twenty century ,has shown that all those societies based on freedom, are better off than they were at the early years of that century.-
c.- Freedom allow energy to go across where it is needed, like electricity allow the light where is needed , to clear the way through. Freedom have been the seed for major achievements in mankind history, although it might had carried out some cost to preserve it. But no matter the cost, there are people ready to live up to get the freedom level they believe it is necessary.-
The opposite to freedom is labelled with state intervention,(at the extreme, totalitarian regimes) whether it is into the economy or society as a whole. In other words, more freedom is associated with a smaller State .But this smaller State, does not mean to get rid of the State whatsoever ,but in G Sorman ´s word it means “a better State”. Freedom match quite well with a better State, as well as a better institutional framework. Both, a better state and better institutional framework, complement freedom in such a way that, it creates the most favourable conditions for growth, which means more freedom .
Unfortunately ,in Latin America people still live up to their fears instead of their freedom. There is a strong dependence from the State. Historically, the state has been involved in most of the activities these societies lives for. Education ,health care, economic policy have strongly been based on State egalitarian principles , which is the opposite to personal talent principles ,which freedom is based upon. Thus, it is not a surprising that relative younger countries like the USA ,has surpassed most of the older Latin America countries. More devastating the comparison, if we take into account than in the middle of the fifteen century, ancient civilizations were already using technologies for water irrigation, road constructions, infrastructure developments, education and public management model( based on tax collection). The conquerors, did not change that model, and in the process they could not support new entrepreneurial initiatives, losing the opportunity of taking advantage of all what it was available: land, water , technology and expertise .
So, lack of freedom is not trivial for society, even more if you get to the core ethics of it: Freedom allow people to reach happiness ,just because it is every one own choice, to decide what they want to stand for ,just because it allows to get the higher expectations mankind might have as a whole, but above all, because it allows us all to survive. Therefore the higher the economic freedom index the better, keeping in mind what relevant is the proper institutional framework. Latin America countries not only fall behind other countries freedom standard, but also they do not have a modern institutional framework to expand opportunities ,which is the other side of freedom .-
