Monday, November 4, 2013

Economic and Political Freedoms

The chapters introduced a very powerful notion that economic freedom may result in economic growth. However, the political freedoms linked with economic growth, in my opinion, can be easily neglected or overlooked. Countries concerned with economic growth benefit from market liberalization, but those countries such as Germany, as a textual example, also benefit from political freedoms. It seemed that the economic growth rooted in greater political freedoms can be falsely attributed to greater economic freedom because political and economic freedoms are mutually reinforcing, since institutional reform in favor of greater freedoms reaps the greatest economic benefit since greater democracy results in faster economic growth and greater level of economic freedom.

Why is political freedom relevant? It means that a countries with lower levels of democracy tend to perform worse than those with higher levels of democracy, and since economic and political freedoms are mutually reinforcing many economic benefits from greater levels of democracy may be overlooked very easily. Thus, why is it important to separate economic benefits that happen as a result of political freedoms from those that occur from economic freedoms? It would allow a country to find if political repression or lower political freedoms lower its prosperity even with much economic freedom, and this is a very important notion.

The problem with assessing political and economic freedom is that it cannot be gauged with absolute accuracy. There are various institutions that attempt to measure levels of economic and political freedom in various economies, but the measurements can often be somewhat subjective even when aiming for objectivity. Why would I say this? Because bias in these assessments in inherent since everything is relative, as my first post on this blog stated and judgment becomes crucial in these matters. As a result, it would be helpful to know an exact level of economic growth that occurred from institutional reform in Postwar Germany with separate components resulting from greater economic and political freedoms, but this is simply impossible and the best substitution is an approximation. Finally, I believe the text may have somewhat neglected the component of greater political freedoms causing faster economic growth and greater level of economic freedom.

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