Please note that this post was updated here at econlife.
I have been seeing more of Adam Smith in the news recently. Reviews of Thomas Piketty’s new book and policy discussions about sluggish growth always seem to oppose or support laissez-faire.
Adam Smith believed that markets function best when government intervention is minimal because human nature is so diverse and policy consequences so unpredictable, that no one could possibly know what is best for everyone. If competition and consumers influenced businesses’ self-interest, then government regulation was at best, unnecessary, and at worst, harmful. Government, Smith believed, should educate people and build roads, create a monetary system, oversee a legal system and fund an army. For almost everything else, we can depend on the market system’s “the invisible hand.”
Thinking about laissez-faire took me to the Index of Economic Freedom. Using their heat maps, for each of the following regions I have created a “top of the laissez-faire list” in the order of each country’s “freedom score.”
With green indicating the economies least fettered by government, here is the Index’s color scale:
For Europe the “laissez-faire list” is led by Switzerland, Ireland, Denmark, Estonia and the UK. As you can see, the bottom of the list is Ukraine.
For Asia and the Pacific at the top are Hong Kong, Singapore, Australia, New Zealand, Taiwan while North Korea is last.
In Central and South America, the economies with the least government influence are Chile, Saint Lucia, the Bahamas and Uruguay. Almost tied for the bottom are Venezuela and Cuba.
Sub-Saharan Africa just has Mauritius (tiny island dot), and Botswana. Democratic Republic of Congo and then Eritrea and Zimbabwe are grouped with Venezuela, Cuba and North Korea at the end of the list.
Sources and Resources: For much more detail about the economies of 178 countries, The Index of Economic Freedom, though certainly biased, has a wealth of information. Not identical to the Index of Economic Freedom, the World Bank’s “Ease of Doing Business” tables also are a handy place for data about government and an economy.
Please note that reference to the “invisible hand” was added after this post appeared.