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  • Economic Freedom Key to Unlocking a Prosperous Arab Future

    The 2013 Index of Economic Freedom

    In the latest issue of the journal Democracy, Michael Wahid Hanna identifies Seven Pillars of the Arab Future. First on his list: economic growth and equality.

    Among the troubling Middle East economic indicators highlighted by Hanna are low economic growth, inequality, and high unemployment, especially for youth. He identifies five priorities for reform, including political stability, greater transparency, the elimination of corruption and cronyism that concentrate economic gains in the hands of the few, greater participation by women in the labor force, and economic diversification towards more labor-intensive forms of production.

    Those are all great ideas. And Hanna’s policy suggestions for achieving them include fiscal discipline, tax reform, reduced bureaucracy, and a predictable legal framework. An additional reform idea, decentralization of government power, gets full treatment as a pillar in its own right.

    All of these ideas are key elements of economic freedom, as measured annually by The Heritage Foundation and The Wall Street Journal in the Index of Economic Freedom. In economically free societies, it is the individual—not the state—that is empowered to make economic decisions. The allocation of resources for production and consumption is based on free, open, and transparent competition. The institutions of a free and open society do not discriminate either against or in favor of individuals based on factors like race, gender, or, importantly for the Middle East, religion.

    Nineteen years of data collected for the Index paint a clear picture of the policies that liberate individuals to prosper economically. These include limits on government spending and taxation; restrained, transparent, and even-handed regulation of businesses, financial institutions, and workers; open markets and free competition; and the rule of law to protect private property and prevent corruption.

    These are revolutionary ideas for a region where submission to the will of God has all too often manifested as submission to the will of an all-powerful state. It remains to be seen whether the Arab Spring can produce a true flowering of liberty that will break the cycle of repression and violence in the region. Greater economic freedom would be a good place to start.

    Posted in Economics [slideshow_deploy]

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