At Work & Economics 101 & Public Square

Economic Freedom Matters for a Flourishing Society

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Editor’s note: this post was co-authored by Dr. Jay Richards, IFWE’s visiting scholar, and Dr. Anne Bradley, IFWE’s Vice President of Theological Initiatives. 

As a Christian, whether you are a plumber or a corporate executive, you are contributing to the Kingdom of Christ through your work. Economics and the scriptures teach us that you are contributing, both in the eternal and temporal realms, to the flourishing of society.

If this is true, then it’s important you live in an economic environment where you can unleash your unique, God-given talents. Sadly, in the U.S, we are losing this ability.

Canada’s Fraser Institute publishes the Economic Freedom of the World Annual Report. In their 2012 report, the U.S. has dropped eighth to eighteenth place. In the year 2000, the U.S. was second place.

Every year since 1996, the index has ranked the countries of the world using dozens of variables in five areas:

  1. Size of government.
  2. Legal system and property rights.
  3. Sound money.
  4. Freedom to trade internationally.
  5. Regulation.

Why does economic freedom matter? Because in general, the more free a country’s economy is:

  • The greater its economic growth.
  • The higher its per capita income.
  • The higher the income of the poorest ten percent of its population.

Still you might be tempted to ask: What’s the big deal? We’re in the top twenty, right? We’re still ahead of more than a hundred other countries.

But that misses the following key points:

  • The rank is not nearly as important as the trend. From 1980 to 2000, the U.S. was probably the third freest economy in the world. Our rating has gone down every year since then, except for a slight uptick in 2007. We are now in the company of Argentina and Venezuela. This trend encompasses both terms of George W. Bush, and the first two years of Barack Obama’s presidency.
  • The index lags by two years. This year’s report describes the conditions in 2010. So it doesn’t include the massive expansions in the money supply, the two annual deficits above $1 trillion, or the passage of the President’s health care plan – the Affordable Care Act. As a result, we expect the downward trend to the U.S. rank to continue in the 2013 and 2014.
  • The ranks are based on absolute scores. Our position on the index is not slowly dropping because of new economic upstarts displacing us from our lofty perch. Our position is based on an absolute score, and our score is declining.
  • Even slight changes in our performance will lead to drastic drops in our rank. If anything, we’re in the calm before the storm.

Our loss of economic freedom has implications for how all of us are able to live, work, and raise a family. We need an opportunity society where people can use their unique gifts and talents, whether they sell shoes or software, to the best of their abilities.

This how wealth is created and how the poor are empowered to escape poverty. Wealth accumulation is what enables individuals to care for their families, to give to their church, and to care for others.

Economic freedom is the best system known to do this. It provides almost limitless possibilities for individuals to unleash their creativity and offer it to the world. Thus, it is positively correlated with income mobility (being able to move into higher levels of income earnings) which is our best benchmark to understanding prosperity.

Economic freedom allowed the West to escape the bonds of subsistence-level existence, which still plagues developing countries. It’s the reason that any U.S. citizen can say they were born in the richest time in the history of the human race.

This is no accident. It results from individuals using their gifts to create and innovate and then trade with others.

The fact that economic freedom is falling in the U.S. is one of the many reasons we have a shrinking middle class. It’s one of the reasons we have more people in poverty.

If we want to live in a country where everyone has a chance to flourish, we must care about economic freedom.

What do you think? Why should Christians be concerned about economic freedom? Leave your comments here

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