NCPA - National Center for Policy Analysis

Heritage Index Overestimates Economic Freedom

January 22, 2002

The Heritage Foundation's annual Index of Economic Freedom "greatly exaggerates the security of property rights in the United States," says economist Paul Craig Roberts.

The index rates countries as free, mostly free, mostly unfree or repressed, based on a number of criteria. Per capita incomes in the free and mostly free countries are many times higher than those in the unfree ones, notes Roberts.

But most of the countries ranked as free on the index are there due to a definition of economic freedom that ignores a person's right to the fruits of his own labor -- which the income tax has taken away. And even with respect to the United States, says Roberts, property rights, the basis of economic freedom, are insecure:

  • "The ever-expanding asset seizure laws have made American property rights among the least secure," as governments have "acquired the power to use a large number of pretexts to confiscate the assets of citizens without bringing any charges against the owners."
  • Further, according to Roberts, the index downplays the redistributionism of the federal income tax, which benefits the 43 percent of filers who collect refundable credits in excess of their tax liabilities, while the top 25 percent of income earners pay 83 percent of the total personal income tax collected.
  • And other redistributionist schemes, such as "preferential financing or loan set-asides from the Small Business Administration," are simply ignored in the index.

Yet, even according to the index's flawed standards, free peoples comprise only a small percentage of the world population and occupy a tiny portion of the land mass.

Source: Paul Craig Roberts, "Diminishing Property Security,"; "Heritage Index Overestimates Economic Freedom," the Lighthouse, January 21, 2002, Independent Institute.


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