SA trails in economic freedom ratings

The 2019 Economic Freedom of the World annual report was released last week.

Produced by the Fraser Institute in cooperation with the Economic Freedom Network, its index ratings are based on data from sources such as the International Monetary Fund, the World Bank and the World Economic Forum.

The report ranks 162 countries and territories – with Hong Kong at number one, Singapore second, the US fifth and Canada eighth.

SA ranks at 101. Mauritius is at nine, while Botswana is at 49 and Zambia at 83.

Of the Brics countries, India is 79th, Russia 85th, China 113rd, and Brazil 120th.

The index provides a measurement of the degree to which countries’ policies and institutions are supportive of economic freedoms in five areas:

Size of government Legal structure and security of property rights (legal rights according to gender are now included) Access to sound money Freedom to trade internationally, and

Regulation of credit, labour and business. SA’s worst ratings include: Integrity of the legal system (3.33)

Legal enforcement of contracts (3.93) Reliability of police (3.65) Business costs of crime (2.59)

Capital controls (0.77) Hiring and firing regulations (3.48) Bureaucracy costs (3.56) Extra payments/bribes/favouritism (2.83)

Self-ownership is a fundamental cornerstone of economic freedom – the right of personal choice, voluntary exchange, open markets, and property rights. Therefore, a country should provide the infrastructure to ensure this.

A political process that interferes with the right of choice or “the use of violence, theft or fraud by others” will negatively impact economic freedom. In other words, a country should protect its citizens.

“Economic freedom is reduced when taxes, government expenditure, and regulations are substituted for personal choice, voluntary exchange, and market coordination,” states the report.

This concept is particularly pertinent for South Africans. State corruption is being laid bare before the Zondo commission of inquiry, ailing mismanaged state-owned entities are requiring repeated bailouts, government debt’s spiralling out of control and there’s the omnipresent threat of higher taxes.