Skip to main content

Economic Freedom and Economic Growth - Hypothesis


Let's have a lazy experiment.

Hypothesis 1: The greater the share of the economy that allocates resources based on trade versus planning the faster the economy will grow.

Hypothesis 2: The less the government regulates the society it claims to rule the faster the economy will grow.

~~~ ~~~ ~~~

Definitions: Trade means resource allocation according to the movement of supply and demand. Planning means resource allocation according to a government plan. Economic growth means increasing access over time to goods and services. Regulation means government rules restricting economic activity.

~~~ ~~~ ~~~

First metric: Planning versus Trade (PT) to summarise economic activities for production and distribution of goods and services. P & T are inversely proportional, with seven different results showing the share of total economic activity consisting of P versus that consisting of T.

PPP
PP / T
P / T
P | T
P \ T
P \ TT
TTT

Second metric: Freedom (F) to summarise the freedom of people to set up businesses, produce and trade on their own initiative.

F1 : Tightest regulation and repression
F10 : No government regulation or repression at all

~~~ ~~~ ~~~

CANDIDATES: Now we hit on several made up countries so that we can test the metrics in a purely theoretical space first.

Fweeh Mahkahtiya : P \ TT : F 9

The Technate : PPP : 1

The Anarchate : PP / T : 3

The Free State : TTT : 10

My estimate would be that over any given 100-year period the relative rate of growth of each of these four countries would be, from fastest to slowest; The Free State; Fweeh Mahkahtiya; The Anarchate; The Technate.

~~~ ~~~ ~~~

If those four countries were real we could use some annual GDP growth data to test their long-term economic performance. In real life it's hard to test this hypothesis as economic policies change every few years, sometimes in ways that can dramatically change a country's score.

Therefore a lot of normalising over time will probs be required. I am not looking forward to this, but since macro- is so beloved by people who don't understand economics I understand why so many economists go in for this stuff.

In the meantime there's always the Economic Freedom of the World Report. They also have a page where one can look over their data.

Comments

Post a Comment

Popular posts from this blog

Zeitardation

A Youtuber called axe863 made a video in which he used scientific, mathematical and statistical common-sense to deliver the KO that the Venus Project and Zeitgeist Movement so richly deserved. If his approach seems weird and unconventional it's because he's not attacking from a tradition neoclassical or Keynesian perspective. Axe863's poison is complexity economics, something a good deal more dangerous to ideas like TVP and TZM. [ 2 ] Now to a couple of comment threads from below the video that I thought could od with being replicated just in case they get deleted at source! ~~~ AstralLuminary 1 year ago Why can't we generalize the consumption patterns of middle-income people in the western world, set our constraints equal to the amount of localized resources, and the rate of resource recovery, derive a population growth model that would be sustainable to said consumption patterns, and derive the necessary quantifiable amount of work required to expen...
Post a Comment
Read more

World Hunger - Getting Better or Worse?

Thinking about how rates of hunger have shifted over the last 25 years led me to the Global Hunger Index , which covers - wait for it - the last 25 years. What do we see by looking at their figures for hunger in different countries in the years for which data are available? The Global Hunger Index uses aggregated statistics to arrive at a 'score' for every country studied in a given year with 0 the ideal and 50+ an absolute nightmare of near famine-level proportions. If you were switched-on enough to follow the link above you probably noticed it includes an interactive world map showing the change in rates of hunger for folks in many countries that might best be described as low-income or middle-income. An illustration of the score system is just below. And just in case it wasn't already obvious that everything is getting better, here is the data for all of the individual countries measured on a scatter plot in terms of their reduction in GHI score from 2000...
Post a Comment
Read more

Commentaryism - The Death Toll of Capitalism

How many people have died because capitalism exists? How many would still be alive if it had never existed? Let's dig in! We will take two approaches over the course of this blog post by looking at the the death tolls attributed to the word in its broad popular definition - everything socialists don't like - versus the toll that fits the definition offered previously on this blog. By the same token I will not lay any outsized figures at any other mode of production's door except where that mode of production demonstrably caused the problem that killed people. It's political ideologies that really matter here, and this is where the first big problem with even trying to lay a specific body count before capitalism runs into problems - there is no political ideology called capitalism. ~~~~~~~~~~~~~~~~~~~~~~~~~~~ Now then, Alfonso Gutierrez says  in a comment thread that "capitalism and free-markets have murdered billions of people" which is a risky cla...
Post a Comment
Read more