Cato And Heritage Foundations Wrong On Freedom
November 26, 2002, 04:00 AM
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The war on terrorism has hardly begun, but it has already demolished the 4th Amendment, an important basis of our civil liberties. To feel more secure against Muslim terrorists, we have made ourselves less secure from government.

The Patriot Act and the new Department of Homeland Security override the 4th Amendment "right of the people to be secure in their persons, houses, papers and effects, against unreasonable searches and seizures" as well as its stipulation that "no Warrants shall be issued, but upon probable cause . . . particularly describing the place to be searched and the persons or things to be seized."

Henceforth all Americans can be electronically searched and monitored without their knowledge.

In view of this loss, it comes as a relief to learn from two Washington DC, think tanks that world economic freedom is on the rise. The Cato Institute's 2002 report on economic freedom covers the year 2000 and finds a rise in the index of economic freedom. The Heritage Foundation's 2003 index covers June 2001 through June 2002 and also reports an increase in economic freedom.

Much work and many talented people are involved in the production of these annual reports. The indices measure economic freedom similarly, using the tax, expenditure, and regulatory burdens of government, soundness of money, freedom of trade, rule of law and protection of property rights.

Despite the similarity of measures, the two indices produce both similar and divergent results. The reports agree that Hong Kong and Singapore have the most economic freedom. But the Heritage index has the U.S. tied for sixth place with Denmark and Estonia, while the Cato index ranks the U.S. in third place and puts Estonia 35th.

The indices are constructed with care, but anomalous results suggest that improvements are possible. For example, the Cato Institute's report notes that "the overall tax burden has been increasing from 32% of the GDP of OECD nations in 1980 to 37% in 1999." This means that people in Western nations, which by and large have the most economic freedom, have experienced a 15% decline in ownership of the products of their own labor; yet, the index shows a paradoxical rise in economic freedom.

Perhaps a problem is that the measure of economic freedom, constructed by economists, is ahistorical. Historically, freedom meant that a person owned his own labor and the products of his labor. A serf was not free, because he owed the feudal lord, the government of that time, one-third of his labor. When capitalism broke up feudalism, it freed labor from this tax.

Twentieth century income and social security taxes have re-enserfed populations. Today working Americans and Europeans have no more claim to their labor and its products than did feudal serfs. If freedom is measured by what it meant historically, no Western nation would be ranked as free.

Neither index looks with favor on government interference with trade or intervention in labor and credit markets. Both indices, however, fail to penalize the U.S. and the U.K. for race and gender quotas that discriminate against white males in employment, training and university admissions.

Race and gender quotas impose costs and diminish economic freedom just as do import quotas. In the U.S. race and gender quotas violate the 14th Amendment, thus raising wider issues of freedom.

There is no justification for penalizing a country's ranking for import quotas and coercive measures such as minimum wage and collective bargaining, but not for race and gender quotas.

There are similar problems with the measures of rule of law and property protection. Asset forfeiture laws in the U.S. have made owners insecure in their property. Innocent owners have lost homes and boats because renters used drugs on the premises, thus making the property subject to forfeiture. People have had cash confiscated for no other reason than police ruled that the sum was large enough to imply intent to buy or sell drugs.

In recent years, the number of crimes for which property can be confiscated has increased dramatically. The confiscations are arbitrary, and owners have little recourse. To be accurate, the indices of economic freedom must factor in the insecurity of property that results from asset forfeiture laws.

Indeed, it is an open question whether Americans today live under a rule of law or the rule of regulators. In our book, The Tyranny of Good Intentions, Lawrence Stratton and I show that the legal principles that protect our civil liberties and our property have been seriously eroded. Neither index captures this loss in rights.

In the Preface to the Cato report, Milton Friedman suggests that the next step is to weld together measures of economic, civil, and political freedom into one index.

This is an excellent suggestion. Political correctness and "crimes of opinion" in the U.S. are close to rendering the 1st Amendment no more operable than the 4th and the 14th Amendments.

It would be paradoxical to have indices showing rising economic freedom while all other freedoms plummet.

Paul Craig Roberts is the author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. Click here for Peter Brimelow's Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.

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