Mary Anastasia O'Grady writes in the Wall Street Journal on the 2006 Index of Economic Freedom, published today by the Journal and the Heritage Foundation. Here are the rankings. And here is Heritage's home page on the index.
As O'Grady points out, there is a high correlation between economic freedom and income. In the 20 nations classified as free, per capita gross domestic product is over $30,000. In the 51 mostly free countries, it's $13,530. In the 74 mostly unfree countries, it's $4,239, and in the 12 repressed countries, it's $4,058.
Twenty nations are classified as free. What I find most interesting is that eight of them are English-speaking or have an English-speaking heritage: Hong Kong (ranked No. 1), Singapore (2), Ireland (3), the United Kingdom (5), Australia (9), New Zealand (9), the United States (9), and Canada (12). In another four, English is widely spoken, at least by the well educated: Iceland (5), Denmark (8), the Netherlands (16), and Sweden (19). And perhaps there are others you could add to the list; I'm not sure how widely English is spoken in Luxembourg (4) and Finland (12), and Cyprus (16) is a former British colony, though I would guess English is not in common use there today. The other five are Estonia (7), the only free country in the former Soviet Union; Chile (14), the only free country in Latin America; and Switzerland (15), Austria (18), and Germany (19), which are all primarily German-speaking. What we see here is that the Anglosphere, as James Bennett calls it in his book The Anglosphere Challenge: Why the English-Speaking Nations Will Lead the Way in the Twenty-First Century, leads the world in both economic freedom and economic prosperity.
As O'Grady points out, some of these countries have become economically free by deliberate political decisions made in the past 20 or so years: Ireland (3), Estonia (7), New Zealand (9), and Chile (14) are clear examples, and there may be others. But it seems to me also that history counts for something here. I am currently writing a book on the Glorious Revolution of 1688–89, and I see a high correlation here between economic freedom then and Protestantism in the late 17th century.
Let me explain a bit here. I think most of us have in our heads a picture of history that shows Protestantism breaking out in Germany in 1519 and spreading more or less inexorably outward in the 16th and 17th centuries. But if you were a well-informed person in London or Amsterdam in 1688–89, the picture would have looked very different. You would have known that Protestantism did expand in the half century after Martin Luther nailed the 95 Theses on the church door in Wittenberg, until it took in more than half of Europe—Great Britain (but not Ireland), Scandinavia, most of what now is Germany, the Netherlands, Switzerland, Poland, the Czech Republic, and Hungary, plus a large part of what was then the most populous nation in Europe, France.
But then the Roman Catholic Church and its political backers counterattacked. The Council of Trent, which concluded in 1563, started a deliberate Counter-Reformation. Church doctrine was systematized, the Jesuits and other orders set out to convert Protestants, the Hapsburg Holy Roman emperors set out to Catholicize their subjects. In the Thirty Years' War (1618-48), most of what is now Germany became Catholic again. Protestantism was pretty much extirpated in what is now Austria, the Czech Republic, Poland, and Hungary. The relatively tolerant United Provinces (more or less today's Netherlands) remained largely Protestant but with a large Catholic minority, while the intolerant Spanish Netherlands (more or less today's Belgium) was wholly Catholic. In France, Louis XIV set out to banish Protestantism by a series of persecutions culminating in 1685 by the revocation of his grandfather's tolerant Edict of Nantes. Huguenots fled France in large numbers, perhaps 5 percent of the population, and talented Huguenots became prominent in the merchant classes of London, Amsterdam, and Berlin. (Huguenot descendants in the United States included the Rockefellers, the du Ponts, and Franklin Roosevelt's maternal relatives the Delanos.) For a definitive and beautifully written survey of this history, get a hold of Diarmaid MacCulloch's magnificent The Reformation: A History.
Protestantism in 1688–89 looked like a dwindling and threatened faith, largely confined to the northwest fringes of the continent—Great Britain, the Netherlands, Scandinavia, parts of northern Germany. But these areas also included most of the great world trading centers of the day; the only major competition was from France, with Spain and Portugal largely in eclipse. Amsterdam and London were the greatest financial and trading centers of Europe in the late 17th century, with trading posts and colonies around the world. They certainly weren't economically free, by the standards of today's Wall Street Journal and Heritage Foundation, but their commercial and financial institutions turned out to head them in that direction.
The expulsion of James II and the installation of William of Orange as William III in England was a large step forward in this process. William and his Parliament established the Bank of England and funded the national debt that enabled England, with one quarter the population of France, to hold its own in wars with France from 1689 to 1815. In the century from 1815 to 1914, Britain led the world toward free trade and in international finance. Now we see the Anglosphere again leading the world economically and in economic freedom, with two former colonies (Hong Kong and Singapore) and one former rebellious dependency (Ireland) leading the world in economic freedom. Interesting.
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