The foundations of economic freedom are personal choice, voluntary exchange, and open markets. As Adam Smith, Milton Friedman, and Friedrich Hayek have stressed, freedom of exchange and market coordination provide the fuel for economic progress. Without exchange and entrepreneurial activity coordinated through markets, modern living standards would be impossible.
Potentially advantageous exchanges do not always occur. Their realization is dependent on the presence of sound money, rule of law, and security of property rights, among other factors. Economic Freedom of the World seeks to measure the consistency of the institutions and policies of various countries with voluntary exchange and the other dimensions of economic freedom.
Here's one sobering excerpt:
The United States, once considered a bastion of economic freedom, now ranks 12th in the world, tied with the United Kingdom at 7.81. Due to a weakening rule of law, increasing regulation, and the ramifications of wars on terrorism and drugs, the United States has seen its economic freedom score plummet in recent years, compared to 2000 when it ranked second globally.
Here's why economic freedom is so important: it brings greater prosperity and higher living standards:
Nations in the top quartile of economic freedom had an average per capita GDP of US$39,899 in 2012, compared to US$6,253 for bottom quartile nations. Moreover, the average income of the poorest 10 per cent in the most economically free countries in 2012, US$11,610, was almost double the overall average income in the least free countries. Life expectancy is 79.9 years in the top quartile compared to 63.2 years in the bottom quartile, and political and civil liberties are considerably higher in economically free nations than in unfree nations.
Below is a graphic showing the rankings (click to enlarge). Sadly, I note that Argentina, my wife's native country, ranks #149 out of 152 countries. The bane of Argentina is Peronism, which eschews the rule of law, relies heavily on income redistribution, thrives on crony capitalism, and professes to be all about helping the poor. I've remarked in several posts over the years about the disturbing parallels between the policies of the Obama administration and those of Argentina's President Kirschner.