Big government is good for economic freedom

by John Quiggin on July 24, 2004

Over at Marginal Revolution, Alex Tabarrok recently presented a graph showing a positive correlation between UN measures of gender development and the Fraser Institute’s Economic Freedom Index. Of course, Alex presented the usual caveats about causation and correlation, but he concluded “at a minimum the graph indicates that capitalism and gender development are compatible contrary to many radicals”

This prompted me to check out how the Economic Freedom index was calculated. The relevant data is all in a spreadsheet, and shows that the index is computed from about 20 components, all rated as scores out of 10, the first of which is general government consumption spending as a percentage of total consumption. Since the Fraser Institute assumes that government consumption is bad for economic freedom, the score out of 10 is negatively correlated with the raw data.

Looking back at Alex’s post, I thought it likely that high levels of government expenditure would be positively rather than negatively correlated with gender development, which raised the obvious question of the correlation between government consumption expenditure and economic freedom (as defined by the Fraser Institute index). Computing correlations, I found that, although it enters the index negatively, government consumption expenditure has a strong positive correlation (0.42) with economic freedom as estimated by the Fraser Institute. Conversely, the GCE component of the index is negatively correlated (0.43) with the index as a whole. By contrast, items like the absence of labour market controls were weakly correlated with the aggregate index.

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Tariq Ramadan

by Chris Bertram on July 24, 2004

In the light of some recent discussions at “Butter”: “flies”: “and”: “Wheels”:, “Daily”: “Moiders”: , “Harry’s Place”:, “Normblog”: , and even here, I thought I’d post a link to “this OpenDemocracy interview with Muslim intellectual Tariq Ramadan”: , which I found of interest.[1] I also see that “Norm has just posted”: some lines from Andre Glucksmann on anti-semitism in France which are sort-of relevant, since a polemic against Glucksmann (among others) raised accusations of anti-semitism against Ramadan, a charge Ramadan rejects in the O-D interview.

fn1. Since these are sensitive times, and readers sometimes think that linking suggests endorsement, let me insist, self-defensively and for the record, that I’m not endorsing, just linking to something interesting.

Lunch with Jane Jacobs

by Chris Bertram on July 24, 2004

The Financial Times has “a profile of Jane Jacobs”: , author of “The Death and Life of Great American Cities”: (which I think of as a very great book indeed). Jacobs’s other works haven’t achieved as much and some of them have been pretty crazy, but she’s still at it, now aged 88. Worth a look.