Ukraine reminds us of the many benefits of economic freedom


Ukraine and Russia have been fighting for over 100 days now. Political leaders such as President Joe Biden have called the conflict a battle between “democracy and autocracy, between freedom and repression, between a rules-based order and an order governed by brute force.” President Biden is right to praise representative government, freedom and the rule of law. A commitment to these principles empowers people to live their best lives, and data shows that countries and states that follow them are healthier and wealthier.

We are much richer than our ancestors. Since the beginning of the 19e century, GDP has increased dramatically across the world, as shown below. This increase in material wealth, or the hockey stick of human progress, is remarkable and has dramatically improved our lives.

This increase in production was not inevitable, however, and future increases are not guaranteed. For most of history, humans were poor and constantly struggling to survive. Food was scarce, and weather events such as droughts, floods, earthquakes, and hurricanes regularly wiped out entire populations.

Economic historians such as Diedre McCloskey, Joel Mokyr and Doug North have offered several reasons why economic prosperity has taken off relatively recently. The theories differ in subtle ways, but all recognize the importance of good institutions that foster innovation and entrepreneurship.

These good institutions, such as the rule of law, well-developed property rights, and limited government, have been factored into the economic freedom measures of the Fraser Institute and other organizations. It is well established that economic freedom contributes to faster economic growth and a higher standard of living. As shown in the figure below, countries with more economic freedom have higher per capita incomes. The same is true for US states: States with more economic freedom have higher incomes and faster income growth.

But greater economic freedom brings more than just material wealth. Take the results for women’s health, for example. The lifespan of women in countries with a high level of economic freedom is on average 17 years longer. Women’s reproductive health is also better: women in countries with low levels of economic freedom are 15 times more likely to die in childbirth than women in countries with high levels of economic freedom.

Wealthier countries can also use their higher incomes to improve health outcomes. As shown in the figure below, wealthier countries, measured by GDP per capita, have smaller proportions of children under five who suffer from child stunting. Similar data show that higher GDP per capita is associated with less hunger and less food inequality between countries.

So, although income or GDP per capita are not the only things that matter, the data clearly show that wealthier countries perform better in various areas that people care about, such as child health and hunger.

Moreover, economic freedom is an important cause of higher incomes. This means that countries, states or other jurisdictions that want to improve outcomes at all levels should strive to increase economic freedom.

While the war between Ukraine and Russia is usually portrayed as a fight between the free and unfree world, before the war neither country was particularly free. Ukraine came in at 129 in the latest Fraser Economic Freedom Index (based on 2019 data) while Russia was ranked 100.

Ukraine’s political system is more democratic than Russia’s, but there is still a long way to go to enable its citizens to pursue happiness. The protection of Ukraine’s property rights and its commitment to the rule of law in the form of even-handed enforcement of regulations are two areas where it scores particularly poorly on the Fraser Index.

The economic and political systems we put in place matter. Progress is not guaranteed. Russia cares little for the rule of law and sees violence as a legitimate way to resolve disputes. Russia’s contempt for principles that promote progress means its future is bleak.

Ukraine can chart a different course. Right now, he is rightly focused on defending himself against Russia’s belligerent behavior. These battles with Russia likely reinforced Ukrainians’ desire for freedom, rule of law, and impartial government. If Ukraine succeeds in defending itself, and I hope it will, its citizens and policy makers should focus on expanding personal and economic freedom in the country. Not only is it the right thing to do, but as the data shows, it will also improve the country’s standard of living. The result will be a freer, healthier, wealthier Ukraine that is better equipped to deter future encroachments on its sovereignty.


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