Less Freedom for More Freedom?

The fundamental principles of liberty seems to be counter intuitive: Ending the drug war to decrease crime and drug use, reducing business tax to end monopolies, eliminating wage laws to help the poor. Why not increased regulation to promote freedom?

Yes, less government is often synonymous with more freedom.  Yet, according to the data of every country on the planet, there is almost no correlation between less government and more freedom. Freedom correlates most clearly with private property rights and judicial effectiveness. The likes of which, are protected within an efficient regulatory framework. ‘Taxation is Theft’ is an extreme oversimplification. When addressing freedom, ‘Taxation is Theft’ is simply not as coherent an argument as libertarians seem to think. The least taxed countries in the world after all include: Somaia, Bahrain, Saudi Arabia, Qatar, and Oman. Shining examples of liberty these are not.

According to the Economics Index Report,  these countries have very low levels of freedom. The most taxed countries in the world include: North Korea, Denmark, Belgium, Sweden, and Chad. In other words, neither high or low taxes guarantee freedom. Denmark and Sweden, despite being among the most taxed, have very high levels of freedom.  In regards to taxation, the United States ranked 151 out of 180 countries. Of the 150 countries with less tax intrusion, only 9 have better freedom scores. No matter how we manipulate the data, taxation is not a good indication of freedom. Creating a free and open society is much more complex than simply ending taxes. Granted, taxation is extortion. 

Less Freedom for More Freedom

When Apple first came out with shuffle for their Ipod, consumers complained the feature didn’t ‘feel very random’.  When tossing five die, the result of five “5s” might not feel random. Yet, the outcome is in fact random. The human mind has an instinctive ability to find patterns. Listners might categorize songs according to genre, artist, album, or even subject. Appealing to consumer demand, Apple created an algorithm which deterred common patterns. Steve Jobs stated: ‘We’re making it (the shuffle) less random to make it feel more random.”

The shuffle feature is a perfect example of how market regulations can be helpful even if the goal is anarchy. Traditionally, regulations have attempted to stop the free market and implement systems to make the system more fair.  Ironically, the types of regulations to which I opine, would make the market feel less regulated, foster competition, and maximize freedom. Making the market less free to make it feel more free. The most convincing data I have for the success of this idea, is the existence of private property.  Despite being mostly protected by the state, there is an inseparable correlation between private property rights and overall freedom. 

A Look at the Data

After playing around on Economics Index Report’s data tool, I found very few correlations between single variables and overall freedom score. Sadly, it appears that the overall freedom of a nation is too complex to narrow down to simple components. To demonstrate this, I took the Top countries of a few categories and calculated the data sets for both the category and overall freedom. From there, I took the two data sets and calculated the correlation coefficient. 1.0 would indicate a perfect correlation between the two variables, whereas 0.0 would indicate no correlation. The only variable that seemed to have an impact was property rights.

Property Rights versus Overall Freedom
X: Property Rights         Y: Overall Freedom
Data Size: Top 10          Data Size: Top 10
Mean (μ): 91.19             Mean (): 79.28
Median: 90                    Median: 77.45
Lowest value: 86.9         Lowest value: 69.6
Highest value: 97.1        Highest value: 89.8
Range: 10.2                    Range: 20.2 

Correlation Coefficient: 0.612

Taxation versus Overall Freedom
X: Taxation.                     Y: Overall Freedom
Data Size: Top 10           Data Size: Top 10
Mean (μ): 97.74             Mean (μ): 64.84
Median: 97.4                 Median: 64.75
Lowest value: 95.3        Lowest value: 47.4
Highest value: 99.9       Highest value: 76.9
Range: 4.6                     Range: 29.5

Correlation Coefficient: 0.189

Judicial Effectiveness versus Overall Freedom

X: Judical Effect.              Y: Overall Freedom
Data Size: Top 15            Data Size: Top 15
Mean (μ): 84.53              Mean (μ): 77.96
Median: 82.8                  Median: 76.7
Lowest value: 78.3         Lowest value: 69.7
Highest value: 93.0        Highest value: 89.8
Range: 14.7                    Range: 20.1

 Correlation Coefficient: 0.391

Achieving Regulation Without Government

As an advocate of freedom, I differ from the model to which most anarcho-capitalists opine. The elimination of the state is not required for freedom. Instead, entrepreneurs and consumers must create and maintain regulation. Amazon, Uber, and Kickstarter are all integrations which create regulations within the market itself. For this reason, it is the job of those capable to use what exists of the free market to create these regulatory systems.

For example, reverse engineering of mainstream e-commerce platforms, such as Amazon, act to enable third-party buyers rather than third-party venders. Allow the buyers to request goods and services upon which the market competes to sell. This reverse auction would manipulate the market’s compellent nature to profit. Wide-scale competition in an e-commerce-based, reverse-auction would increase demand. It would incentive markets to increase supply for opportunities in the new market. Not being able to predict winning the service of the consumer, would create seasons of excess supply and demand. In time, the quality of the services would also dictate the prices the consumer is willing to pay in comparison to higher quality markets. This is just one example of an entrepreneurial based solution to political problems, which is also a regulation upon the marketplace. 

Lastly, while I fully support the market regulating itself, the existence of the state is a byproduct of spontaneous order. Even under a laissez-faire market, temporary existences of the state are beneficial. For example, temporary intervention in a specific market, under strict rules, on case to case bases. When and if market failure occurs, a temporary regulatory body may be a more timely option than spontaneous order.