-not a report to lose any sleep over
THE HERITAGE Foundation, an American Right Wing think tank with the mission to formulate and promote conservative public policies based on the principles of ‘free enterprise’, limited government, individual freedom, traditional American values, and a strong national defense, released its 2010 Index of Economic Freedom ranking of 184 countries last week.
Even before trying to get behind the rationale for the grades assigned to the Foundation’s ten measures of economic freedom [Business Freedom, Trade Freedom, Fiscal Freedom, Government Spending | Monetary Freedom | Investment Freedom | Financial Freedom | Property rights | Freedom from Corruption | Labor Freedom], a few questions need to be answererd:
•    What are the objectives and political positioning of the Foundation?
•    What is the study supposedly measuring and does it correlate to some good?
•    How appropriate are the measures to the countries?
The answer to the first question is that the organization subscribes to the views of Adam Smith, an 18th Century  political economist whose theory was that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called ‘invisible hand’.  And that market economies would produce satisfactory outcomes for both buyers and sellers, and would optimally allocate society’s resources.
Anyone who’s been paying attention knows that this type of laissez-faire economics, unfettered by regulatory intervention, has been thoroughly discredited, laying as it does at the base of the Credit Crisis that rocked the global economy.  Many countries are still on the brink, and a complete meltdown was only staved off by massive interventions by world governments.
Audaciously, the report is being issued just as Goldman Sachs – the poster child for this brand of so-called Economic Freedoms, plays out its saga right before our eyes in the hearing for the civil fraud suit brought against the company by the Securities and Exchange Commission (SEC).  Now the U.S. federal prosecutors in New York have launched their own investigation into the firm this past week.

Nowhere in the report’s methodology does there appear to be measures to assign demerit points where this sort of excess exists, leaving the distinct impression that this Index of Economic Freedom is a lobby for unchecked behaviour by big business and large capital pools with no concern for the man-on-the-street.  On the contrary, spending on  social programmes and education are labelled ‘big government’ and are penalized with a score of 26.2 for Guyana.  Denmark (22) and Sweden (17.3) fared even worse than Guyana on this measure, according to the Foundation’s metrics, because of their social programmes.
This is not to turn away from the fact that Guyana has a lot of work, and a long road ahead and very serious impediments like the widespread demand for graft to get things done, but more progressive organizations and thinkers recognise that investment in people and infrastructure is an investment in the future, and an essential building block for countries in the stage of development that Guyana is working through now.
Guyana, ranked at 153 out of 184 countries, is in good company.  China, with the fastest growing economy in the world, is ranked at 140, India at 124, and Brazil at 113.  Clearly, the Index of Economic Freedom is not influenced by growth rate or the ability to compete.  As a matter of fact, it does not appear that the report’s concept of ‘Economic Freedom’ is correlated with any other good, but rather is an end in itself without reference to other benchmarks such as access to health care, wellbeing, equity, gender equality, the environment, or climate change.
The report’s commentary on the United States’ performance below is instructive:
The national government’s role in the economy, already expanding under President George W. Bush, has grown sharply under the Administration of President Barack Obama, who took office in January 2009. Economic growth, which collapsed in 2008, had resumed by the second half of 2009, but legislative proposals for large and expensive new government programs on health care and energy use (climate change) have increased prospects for significant economic disruptions and raised concerns about the long-term health of the economy.
… The U.S. financial sector has undergone drastic changes since the sub-prime mortgage crisis began in mid-2007, substantially reducing economic freedom. Mortgage guarantors Fannie Mae and Freddie Mac were placed in conservatorship. A number of prominent financial firms or banks have failed; government bailouts have kept others afloat; and the government has intruded on firms’ management in unprecedented ways (for example, by setting caps on executive compensation).
… Concerns continue over the intrusive nature and cost of the 2002 Sarbanes–Oxley Act, which increased disclosure and internal control requirements to the detriment particularly of small firms.
In summary, while the report touches on areas of weakness that Guyana has to work on, as a relevant assessment and a source of guidance, this is not a report that Guyana ought to spend much time on.