Now, this is scary!

Reading the ACT Party’s weekly update from yesterday I got a hell of a shock. It seems, according to Canada’s Fraser Institute, that New Zealand is “the third most free market country in the world”!

And I’m thinking to myself, all those leftards who think Capitalism has failed, caused the Global Financial Crisis and mired so many in poverty must be even more mad than I thought. For Capitalism to have wreaked such havoc, it would need to exist somewhere. And clearly, if the Democratic People’s Socialist Republic of the Long White Cloud, with its race-based and green-biased and anti-business planning, employment and corporations laws is the 3rd most free market country on earth, the rest must be leftist hell-holes!

Here’s the full text (can’t find a link on ACT’s website):

New Zealand third most free market country

This week New Zealand was named the third most free market country in the world by Canadian think tank ‘The Fraser Institute’ which released its annual Economic Freedom of the World Index.

This index, initiated with the help of Milton Friedman, is designed to measure how well each country has adopted free market principles – low government spending, strong property rights, sound monetary policy, freedom to trade internationally, and light regulation. In other words, what ACT believes in.

Countries that do well in this index generally enjoy greater economic growth, better poverty reduction, greater civil liberties and, as it turns out, are less likely to suffer a banking crisis.

The top six countries are Hong Kong, Singapore, New Zealand, Switzerland and, fifth equal, Australia and Canada. The bottom five countries were Venezuela, Myanmar, Zimbabwe, and the Republic of Congo.

Notably, the United States fell to 18th, the lowest it has ever scored. New Zealand is now a much more free market society than the home of capitalism itself.

As always, this index reminds us of a few things about the world and New Zealand in particular. We are a free market country, and that’s a good thing because free market countries do better.

Nevertheless, there are reservations to be had about this index. It compares 144 countries, most of which New Zealand has no intention of comparing itself to. While New Zealand is third with a score of 8.36 out of 10, Sweden is thirtieth with 7.53 out of ten. In other words we’re freer but not dramatically so.

Furthermore, the index was started in a period when half the world lived under some sort of communism. We are top of the class by old and low standards.

In particular, ACT would like to see a tune up of few more things which may not have been captured in this index. We score 95th on the ‘size of government’ measure. As ACT has argued, Labour’s spending binge on welfare packages has not been wound back by National – and National will never be able to do so if they wish to maintain the centre ground. That’s why we need ACT to push National to do what’s right – to lower spending, lower taxes, and reconnect effort with reward to get the economy going again.

While our property rights are secure compared to, say, Zimbabwe or anywhere in Africa, South America, and Asia, there are subtler restrictions on the use of property that did not exist at the time the index was established and are not measured. ACT has long said that the RMA is a major incursion on economic freedom, and if land use regulations by government were included in this index we would probably score a lot lower.

Finally, one notable exception to our economy being liberalised, and where New Zealand scores low, is in our openness to foreign direct investment.

As ACT Leader John Banks wrote in the National Business Review last month, this is an area where New Zealand could be a lot more open for business.

All in all, free markets are very clearly the Kiwi way. We must continue to stand against other political parties who would move towards more Government control and restriction.