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Relationship Between Economic Freedom and Variations in Wealth Essay

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The 2012 Index of Economic Freedom, indicates that the least government interaction with the economy of the country, the more freedoms that are provided to the individuals in country provides the individuals the most opportunity for individual wealth and prosperity (Index of Economic Freedom, 2012). Based on the information provided by the 2012 Index of Economic Freedom, the least governmental interactions with the economy, the more freedoms provided to the country the more opportunities for wealth and prosperity. (Index of Economic Freedom, 2012)

The Index of Economic Freedom brings to light that the fact that Economic Freedom has direct implications to a counties wealth.

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Reviewing the countries on the list clearly indicates that if a government limits involvement in economic activities, it maximizes opportunities for individuals to reach their potential, as stated by (Daniels, 2008).

Therefore too much government interference impedes mutually beneficial interactions and transactions that occur on a daily basis. These are the transactions that are needed to increase productivity and ultimately lead to growth as stated by (Daniels, 2008).

Economic freedom is defined as the application of political freedom. It is where individuals are allowed to choose their thoughts and actions and they are free from coercion. However, in the Economic realm it means that economic freedom is the freedom to produce goods and services based on one’s own judgment, unrestrained as stated by (Daniels, 2008). The individual must be free to acquire and dispose of private property, enter into contractual relationships. In order to implement freedom society requires the identifications of and protection of all rights of an individual and government being a protector of those rights.

As stated by () the proper function of government is to protect individuals and their property. Government is also in charge of the courts and laws as you will understand when looking at Canada’s rank number 6 on the list of countries below. Providing the courts of laws keeps their ranking high on the list. The courts of laws must objectively declare the rules of all social interaction among individuals, as stated by (Index of Economic Freedom, 2012). With this individuals are free to exercise that right that doesn’t violate other individual rights.

The United States also provides a court of laws that meets this requirement. If the government doesn’t allow freedoms by imposing restrictions and barriers on what would normally be mutually beneficial transactions. This stifles the economy generated by freedoms. Economic freedom has been shown in numerous peer-reviewed studies to promote prosperity and other positive outcomes. It is a necessary condition for democratic development. It liberates people from dependence on government in a planned economy, and allows them to make their own economic and political choices.

As stated by (Frazier Institute, n. d. ) the least governmental interactions with the economy as a whole, the more freedoms provided to the country and the more opportunity. Hong Kong appears to be the best example of least government interactions in the economy and seems to be the freest in 2012. It’s very unfortunate, but the United States of America has the least in the top ten. It is no longer considered the freest. Historically the United States of America has been freer than almost all of its Rivals. It has been no secret that the source of America’s prosperity was its economy.

Here lately the essence of what America is all about is being lost as stated by (Hinderaker, 2012). According to (Index of Economic Freedom, 2012) the United States ranking on the Economic Freedom America has slipped to tenth place. It currently falls behind Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Chile, Mauritius and Ireland. The United States Economic Freedom score is 76. 3; it is currently 1. 5 points less than last year. This reflects a deteriorating score from the following: government spending, freedom from corruption and investment freedom, as stated by (Hinderaker, 2012).

The United States has been on a deep decline since 2008. It has dropped from 81. 1 to 76. 3. (Index of Economic Freedom, 2012), indicates that this is due to a struggling economy and recent government interactions that have eroded limited government interactions. Hong Kong’s financial markets are well capitalized. As stated by (Frazier Institute, n. d. ) the least governmental interactions with the economy as a whole. The more freedoms provided to the country and the more opportunity for wealth and prosperity.

As stated by (Index of Economic Freedom, 2012), Hong Kong is the most holds an economic Freedom score of 89. 9, this makes it the Freest Country on the 2012 Economic Freedom index. Their overall score has increased by 0. 2 than the last year. They have improved in freedom from corruption and controlled government spending. This was partially offset by a minor decline in monetary freedom. Within the 2012 Index, Hong Kong is ranked number one out of forty-one countries in the Asia-Pacific region as state by (Index of Economic Freedom, 2012).

The country demonstrated the ability to bounce back during the recent global turmoil; it continues to be one of the world’s most competitive financial and business centers. Hong Kong has a high quality framework that provides protection of property and rights. Their strong support of the rule of law is the cornerstone of strength for their city economy. This county has very little tolerance for corruption, as stated by the (Index of Economic Freedom, 2012). Overall macroeconomic stability has minimized their uncertainty and regulatory efficiency and openness to the global commerce supports the dynamic entrepreneurial.

While Hong Kong remains the freest ranked economy, there are policies proposed or that have already been implemented in the latter half of 2010, including the implementation of a minimum wage, has moved the their economy slightly in the direction of greater regulation, as stated by (Index of Economic Freedom, 2012). Part of the People’s Republic of China, Hong Kong is a self-governing on a day to day basis and it currently has a wide range of freedoms. It is under mini construction known as the Basic law. Their government has promised reforms but been delayed in implementing them, due to delays.

They are one of the words most prosperous economies, because of the following small government, low taxes and light regulations, as stated by the (Index of Economic Freedom, 2012). Hong Kong’s major industries include: financial services and shipping. The countries current concerns are cronyism in policy making, restrictions on the free flow of data or information and state control of land. Selected Country From 2008 through 2012 Canada’s overall ranking went from 81. 02 to 79. 9. It is the 6th freest in the 2012 Index. It is 0. 9 point lower than last year. This reflects a lower/worse score government size and monetary freedom.

However, Canada continues to be the freest economy in the North American Region. Based on the score it has dropped below the guidelines of a free economy. Canada has an independent court system which ensures protection of individual property rights and an equitable application of their commercial code as stated by (Index of Economic Freedom, 2012). Canada’s foundation of economic freedoms is very strong and the economy has done well in throughout the global slowdown. Last 5-10 Years Canada continuously sharpens its long term competitiveness and performs well in other sections of the economic freedom.

They have sound public finance and it has been noted, although government spending has slightly risen. Canada supports open market policies that support trade and dynamic investment the efficiency of the regulatory environment encourages entrepreneurial activity and provides a high degree certainty of business planning as stated by the (Index of Economic Freedom, 2012). Over the past three years the steady reduction of the tax rate has contributed to their competitiveness. Canada has a strong foundation of freedom, based on (Index of Economic Freedom, 2012), it’s solid. Their contract enforcement is also very secure.

As stated by (Index of Economic Freedom, 2012), their protection of intellectual property is along the lines of the world standards. They also have anti-corruption laws that discourage bribery of public officials. As for their federal income tax rate it is at 29% and the 16. 5 corporate tax rates dropped to 15% in January of 2012. Canada has various other tax rates that include value-added tax (VAT) and property tax. As stated by (Index of Economic Freedom, 2012), the overall tax rate is 31. 1% to total domestic income. Government spending is up, to 40%, causing a deficit which widened and the public debt is up.

Cite this Relationship Between Economic Freedom and Variations in Wealth Essay

Relationship Between Economic Freedom and Variations in Wealth Essay. (2016, Dec 18). Retrieved from https://graduateway.com/relationship-between-economic-freedom-and-variations-in-wealth/

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