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“Celebrating Friedman:
Why Freedom Matters”
Economic Insights:
Conversations with the Dallas Fed
Webcast
Federal Reserve Bank of Dallas
July 31, 2012
hosted by FIRM - Financial Institution Relationship Management
“Celebrating Friedman:
Why Freedom Matters”
Robert Lawson Jerome M. Fullinwider Chair in Economic Freedom
O’Neil Center for Global Markets and Freedom
Southern Methodist University
Thomas Siems Senior Economist
Director of Economic Outreach
Federal Reserve Bank of Dallas
hosted by FIRM - Financial Institution Relationship Management
The views expressed are those of the speaker and should not necessarily be attributed
to the Federal Reserve Bank of Dallas or the Federal Reserve System.
hosted by FIRM - Financial Institution Relationship Management
Economic Freedom: In
honor of Milton Friedman’s
100th birthday.
Robert Lawson Jerome M. Fullinwider Chair in Economic Freedom
O’Neil Center for Global Markets and Freedom
Milton Friedman is the godfather of the
Economic Freedom of the World index
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“Freedom is a big word, and economic freedom not much smaller. To talk about economic freedom is easy; to measure it, to make fine distinctions, assign numbers to its attributes, and combine them into one overall magnitude – that is a very different and much more difficult task, as we found out when we started on this quest some thirteen years ago.”
- Milton Friedman in the forward to Economic Freedom of the World: 1970-1995
Methodology
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We collect data on 141 countries using 42 different components, grouped into five broad areas.
0-10 ratings are constructed to measure the degree to which the country conforms to the free-market ideal.
Third-party data from World Bank, IMF, Global Competitiveness Report, IMD, etc.
• Objective data
• Survey data
Transparency is a highly valued part of the project.
5 Areas of Economic Freedom of the
World (EFW) Index
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Size of government: expenditures, taxes & enterprises
Legal structure and security of property rights
Access to sound money
Freedom to trade internationally
Regulation of credit, labor, and business
Highest Economic Freedom Ratings 2009
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9.01
8.68
8.20 8.03 7.98
7.81 7.77 7.71 7.67 7.60
7.0
7.5
8.0
8.5
9.0
9.5
10.0 Source:
EFW 2011
Exhibit 1.3
Economic Freedom Ratings
of Selected Countries 2009
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Source:
EFW 2011
Exhibit 1.3 7.45 7.44 7.37 7.32 7.24 7.16
6.74 6.55 6.49 6.43 6.40 6.19
4.28 4.08
0.00
2.00
4.00
6.00
8.00
10.00
$4,545 $6,464
$14,961
$31,501
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Least Free
Quartile
3rd Quartile2nd Quartile Most Free
Quartile
“No qualitative verbal description
can match the power of that
graph.” –Milton Friedman
Economic Freedom and Income
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Source:
EFW 2011
Exhibit 1.9
60.7
67.9
72.5
79.4
50.0
55.0
60.0
65.0
70.0
75.0
80.0
Least Free
Quartile
3rd Quartile 2nd Quartile Most Free
Quartile
Economic Freedom and Life Expectancy
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Source:
EFW 2011
Exhibit 1.13
What about the U.S.?
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Source:
O’Neil Center
Annual Report
2012
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Source:
O’Neil Center
Annual Report
2012
hosted by FIRM - Financial Institution Relationship Management
Source:
O’Neil Center
Annual Report
2012
hosted by FIRM - Financial Institution Relationship Management
hosted by FIRM - Financial Institution Relationship Management
hosted by FIRM - Financial Institution Relationship Management
hosted by FIRM - Financial Institution Relationship Management
Map of Freedom Rankings for all 50 States
Texas: 14th
“Celebrating Friedman:
Why Freedom Matters”
Economic Insights:
Conversations with the Dallas Fed
Webcast
Federal Reserve Bank of Dallas
July 31, 2012
hosted by FIRM - Financial Institution Relationship Management
