The Consequences and Causes of Economic Freedom.

Author:Lawson, Robert A.
  1. Introduction

    I first attended APEE in 1993, so this meeting represents the twenty-seventh consecutive meeting that I have attended. The Adam Smith Award winner at that first meeting I attended was Gordon Tullock, and I can't help but wonder what insult Gordon would have for me today about joining him on this distinguished list.

    In fact, as I look at the other Adam Smith Award winners such as Elinor Ostrom, Arnold Harberger, Harold Demsetz, Armen Alchian, Douglass North, Vernon Smith, and James Buchanan, among so many others, I expect future generations of APEE attendees will point at my name and play the old "which of these things doesn't belong with the others" game. With that said, I also see names like Larry White and Pete Boettke on the list--so perhaps I'm not so out of place after all!

    More seriously, I have many people I'd like to thank tonight. My wife, Tracy, and daughter, Keri, are here tonight and they share in this award. They were the ones wondering when Daddy was coming home from the office all those early years when the economic freedom index was being developed. Keri, as many of you know, is working toward her PhD in economics at West Virginia University--and I hope one of you will hire her in a couple of years!

    I have several former students here tonight: Will Luther, Lauren Heller, Todd Nesbit, Lynn MacDonald, and others like Ann Zerkle, Jayme Lemke, Andy Fodor, and Kate Sheehan, who I know wanted to be here tonight but couldn't. Thank you for sharing this moment with me. You could take away all the kudos and fancy awards, and I would still consider myself a great success for having played a small part in your educations. I am really proud of you all.

    Of course, I was a student, too. Randy Holcombe and Bruce Benson, who himself was a winner of this award, are regulars at APEE. I was honored to stand at a podium like this to introduce my mentor and second father, Jim Gwartney, as an Adam Smith Award winner in 2004. Words can't convey what I owe Jim. I wouldn't be here; heck, I wouldn't be anywhere without Jim's gentle prodding and support. I hope my teachers are as proud of me as I am of my own students.

  2. The Birth of the Economic Freedom of the World Index

    Let me turn my attention to the reason for this award: the Economic Freedom of the World (or EFW) index. The EFW index was conceived as a result of a 1984 Mont Pelerin Society meeting session in which George Orwell's book 1984 was being discussed. The question for the session was whether Orwell's dystopic depiction of the future had come true. Some discussants at the meeting thought Orwell was clearly wrong, as democracy and human rights were well protected, at least in the Western nations that concerned Orwell. Others, most notably Michael Walker, the founder and then-executive director of Canada's Fraser Institute, countered that while that might be true of political and civil liberties, economic liberties are under increasing attack.

    According to Walker, economic life was becoming increasingly Orwellian. Further, he argued, even our political and civil liberties were not out of the woods just yet. Walker quoted Milton Friedman, who wrote this in Capitalism and Freedom (1962, p. 9):

    Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity. Among the participants at this meeting was Milton Friedman himself, who, along with Michael Walker, noted that the debate on the floor about whether economic freedom was growing or eroding suffered from a critical lack of empirical data. The debaters employed little more than isolated anecdotes to make their points. As a result of this experience, Michael Walker and Rose and Milton Friedman organized a meeting sponsored by Liberty Fund to discuss the prospects for creating some kind of measure of economic freedom.

    This first meeting ultimately led to a series of six meetings. The participants at these early meetings included a veritable who's who of classical-liberal scholars including Armen Alchian, Peter Bauer, Gary Becker, Arthur Denzau, Stephen Easton, David Friedman, John Goodman, Herb Grubel, Ronald Jones, Richard Rahn, Henri LePage, Henry Manne, Charles Murray, and Douglass North, among many others.

    At the fourth conference, held in Sea Ranch, California, in 1990, James Gwartney, Walter Block, and I presented a prototype index for seventy-nine countries, which was published in 1992...

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