Hundreds of studies find economic freedom improves people’s lives
JOHANNESBURG — Economic freedom produces faster economic growth, higher living standards, and even increased happiness as people gain control of their lives, according to a wide-ranging research review released by the Free Market Foundation and the Fraser Institute*.
According to FMF Director, Eustace Davie, South Africa has a stark and tragic example of how the opposite of economic freedom destroys economic life. The 10 million plus unemployed South Africans (out of a potential workforce of 27 million) are denied the right to work because of government imposed economic hegemony, which consists of the imposition of minimum wages, strict employment rules, and heavy fines on employers who transgress the hegemonic rules. The FMF has proposed that unemployed people, who voluntarily opt out of the strict labour laws, should receive “Job Seekers Exemption Certificates” that allow them to take full responsibility for their interactions with employers, and exempt the employers from hegemonic legal conditions. Under conditions of economic freedom, the mass unemployment would disappear, and the economy would thrive.
“In the academic world, there’s a growing consensus that increased economic freedom correlates with positive outcomes for people in countries around the world,” said Robert A. Lawson, professor of economics at Southern Methodist University and author of Economic Freedom in the Literature—What Is It Good (Bad) For?
The review examined 721 empirical papers (published between 1996 and 2022) using the Economic Freedom of the World index, which measures economic freedom—the ability of individuals to make their own economic decisions—by analysing policies and institutions of jurisdictions and assessing indicators such as regulation, size of government, property rights, trade openness, government spending and taxation.
More than 50 per cent of the papers reported good correlations between economic freedom and good outcomes (faster economic growth, higher living standards, reduced conflict, etc.) while about 45 per cent report mixed/null/uncertain results. Only one out of 20 papers reported a bad outcome.
“The research not only shows that economic freedom boosts prosperity and economic growth, but also leads to positive outcomes in a number of other areas,” Lawson noted. “Individuals and families, when free to do so, make the best decisions for themselves, not crony elites or over-powerful government.”
The majority of studies in the following areas found economic freedom was related to:
- Reduced conflict, wars, civil unrest, and terrorist attacks.
- Increased Entrepreneurship & Innovation.
- Stronger Economic Growth.
- Improved Human Rights & Social Development.
- Boosted Income & Productivity.
- Improved Labour Market Outcomes, such as reduced unemployment and increased wages and participation.
“Personal choice, voluntary exchange and open markets remain the cornerstones of economic freedom, which is key to prosperity worldwide,” Lawson said.
The research review can be read HERE.
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*The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.