What is Economic Freedom?

The Heritage Foundation, a conservative think tank based in Washington D.C., defines economic freedom as a fundamental right of every person to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. – heritage.org

“Economic freedom is the key to greater opportunity and an improved quality of life. It’s the freedom to choose how to produce, sell, and use your own resources, while respecting others’ rights to do the same.” – economicfreedom.org

“Economic freedom is the freedom to prosper within a country without intervention from a government or economic authority. Individuals are free to secure and protect his/her human resources, labor and private property.” – businessdictionary.com

Economic freedom is not an abstract concept. It is a proven socioeconomic model that produces direct benefits for people and communities. As countries promote societies based on the principles of economic freedom, more doors open to opportunities and growth.

Hong Kong and Singapore are examples of the extent of the benefits that the values of economic freedom can produce for a society. These countries, where the government act as a promoter of progress, lead the Index of Economic Freedom for 2015 by the Heritage Foundation, which measures the four pillars of economic freedom in 186 countries in the world. This organization describes economic freedom as the antidote to poverty. According to the Heritage Foundation during the last 20 years, as the global economy has been adopting the values that define economic freedom, the world’s Gross National Product (GNP) has increased by 70%, while poverty has decreased by half.

In countries that live by the values of economic freedom governments do not aspire to control or limit economic progress. On the contrary, in an economically free society individuals are free to work, produce, consume or invest as they please without the interference of government. Thus, people succeed or fail according to their individual abilities and efforts.

New Zealand has one of the most effective permit systems in the world featuring a simple one-step process that allows establishing a new business in just one day.

Hong Kong, where the government has remained small, agile and efficient, controls the size of public expenses at a reasonable level. At present, government expenses in Hong Kong are 18.5% of the country’s Gross National Product (GNP), and public debt has remained at minimal levels after years of registering budgetary surpluses.

Singapore protects private contracts with a new electronic system that allows legal issues to proceed in a timely manner.

Chile enables commercial activity with other countries using a new electronic system to exchange customs information.

Colombia eliminated the required fees for obtaining a license to facilitate the process of setting-up a new business and established an electronic permit verification system to promote the construction industry.

References: Economic Freedom Index 2015 by The Heritage Foundation and Doing Business Report 2015 by the World Bank.

Countries that have adopted reforms to open their economies and limit the intervention of government in private enterprise, such as Chile and Colombia, have climbed in the Economic Freedom Index. However, it is worrisome that the Economic Freedom Index in the South American and Caribbean region remained stagnant between 2014 and 2015. This is due to the fragility of free trade markets, corruption, weak enforcement of property rights, ineffective regulation and volatility of currency values.

Economic freedom is a philosophy that promotes individual empowerment in an environment where the government promotes the ideal conditions to create the opportunities that will allow individuals achieve their goals and dreams in an atmosphere of free enterprise and openness. It is evident that the time has come for Puerto Rico to reevaluate and reformulate the role of government to transform it into an advocate of the values of economic freedom and catalyst of a new economic era of growth and opportunities.