Authored By Karl Stahlfeld
March 18, 2021
Anthony Kim is the research manager and editor of the Heritage Foundation’s Index of Economic Freedom and a YAF speaker. The following is an excerpt from an interview about the recently released 2021 edition of the Index and the importance of economic freedom to students everywhere.
YAF: This year the US had its lowest global ranking of economic freedom ever. Why did this happen and how do we reverse it?
Kim: As a nation, we are going through the beginning of a fiscal health crisis. This has not happened overnight- it’s a cumulation of more spending and higher deficits leading to more public debt. In other words, we’ve been spending too much. Moving forward, as we exit the pandemic, we need to focus on targeted spending and not just writing blank checks. We as a nation cannot spend our way either out of economic crisis or into prosperity.
YAF: How would you respond to those who say that the Chinese economy is proof that a centrally planned economy is superior to a free enterprise system?
Kim: The Chinese economy is really big in terms of its size and population. However, China as a whole has a low GDP per capita relative to many countries around the world.
More importantly, the Chinese economy has grown in spite—rather than because—of its communist government. Ironically, China provides another clear example of the power of even limited free market policies. China has gradually embraced a range of non-socialist economic policies, and its economic growth accelerated as it adopted those reforms.
Though China’s economic gains in recent decades have been impressive, it’s nonetheless important to keep in mind what its system really is; namely, a communist dictatorship. Achieving economic growth is not the primary goal of any dictatorship—the goal is always retention of full control of the country’s people. The Chinese Communist Party understands that continued economic growth is a key factor in maintaining popular support.
YAF: Two years ago Hong Kong was the freest economy in the world, but they’re missing from this year’s Index. Why was Hong Kong removed?
Kim: The Index measures sovereign countries. It’s become clear to many of us that Hong Kong is now just another city in the People’s Republic of China, ultimately managed and controlled by Beijing. It’s for the same reason that we also dropped Macau.
YAF: Students constantly hear that the Scandinavian countries are proof that socialism can succeed. How would you respond to that claim?
Kim: Countries like Denmark and Sweden don’t fit into the definition of a socialist country, and you see that reflected in their rankings in the Index. The truth is that the Scandinavian economic system is driven by the free market and private citizens. They do have bigger government programs than the US, but their bottom line is a focus on an open economy, strong rule of law, and regulatory efficiency.
YAF: Why should students care about economic freedom?
Kim: There’s a very strong correlation between economic freedom and standard of living. However, economic freedom isn’t just about money, money, money. It’s about the system, governance, and values. That’s why we need to understand how government spending impacts our freedom through poor fiscal health, or why overregulation harms everyday citizens through poor regulatory efficiency. Achieving greater economic freedom as a nation allows us to help our fellow citizens more effectively. This is a journey that we are in together.