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Huge pinch of salt and 'citation needed' on this. The Heritage Foundation is a self-described conservative think tank, and just seems to be relabelling 'low tax

Huge pinch of salt and 'citation needed' on this. The Heritage Foundation is a self-described conservative think tank, and just seems to be relabelling 'low tax' as economic freedom here. The purported benefits: "Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity..." really? From 2000-2008, Ireland held 3rd or 4th spot in the list[1], and is now 11th. Worked out great for them, what with the recession, the bailout, and the 2nd highest level of household debt in the world[2]. To those who would reply 'but that's outside forces, economics is complicated,', well, exactly. Reducing it to a list like this is wishful thinking. [1] https://en.wikipedia.org/wiki/Index_of_Economic_Freedom https://en.wikipedia.org/wiki/Index_of_Economic_Freedom [2] https://en.wikipedia.org/wiki/2008%E2%80%932013_Irish_financial_crisis https://en.wikipedia.org/wiki/2008%E2%80%932013_Irish_financ...

DGrutt 13y ago
It would take less than 5 minutes of research to learn that it was not just about low taxes. Also cherry picking one country on there does nothing to disprove the notion that in general countries with higher economic freedom have higher economic growth. I don't think they are trying to say it is the one and only factor as that would be ridiculous. If it were purely ideological the list would look nothing like that anyway so I don't see why people are getting bent out of shape.
brc 13y ago
I think the point there is not that fact that Ireland had a major economic crisis, but what the response to that crisis was. My memory on this is imperfect, but I recall all the banks getting nationalised and the losses being pinned on the taxpayer. That would demonstrate a loss of economic freedom in the way the index seems to weight it (lower public debt and lower taxes = higher economic freedom). So I don't see a particular problem there. If Ireland had followed more of the Iceland model post-crisis (dissolve the entities, prosecute the execs, reneg on debt) then I think the results for Ireland would probably be different.
- bazzargh 13y ago
  The problem isn't that the rating for Ireland went down when the economic indicators did, it's that HF claim the rating is a predictor of economic performance, without a shred of evidence.
  - brc 13y ago
    The way I see it, if Ireland hadn't pinned the taxpayer with the losses, their economic freedom would be higher, and their economic growth would probably be better. Certainly Iceland has fared better than Ireland in terms of economic growth since the 2008 crash - though Iceland appears further down the list of Economic Freedom. If Ireland had acted differently, it would likely have had better growth, and would be higher in the list as in the past. I think this case is fine in terms of the methodology.
    - bazzargh 13y ago
      You're not seeing the wood for the trees. Ireland is just one example among many where it is a poor predictor of growth. I could pick out China, India, Brazil (and complain about the weighting given to small countries), or just point at...all of the data: http://www.leftbusinessobserver.com/Freedom1996.gif http://www.leftbusinessobserver.com/Freedom1996.gif It's comically bad. Random things like penis size correlate better with economic growth http://static1.businessinsider.com/image/5008876deab8ea626200000f/gdp-male-organ-penis.png http://static1.businessinsider.com/image/5008876deab8ea62620... (that's from a real paper from the Helsinki Center of Economic Research, btw, though it's obviously tongue in cheek) Even its correlation with GDP is pretty shaky: http://www.heritage.org/index/book/images/in-2014-chapter-1-chart-2.jpg http://www.heritage.org/index/book/images/in-2014-chapter-1-... This is nothing but a list to write press releases around. There is no science to it, and we shouldn't take it any more seriously than articles about the mathematical formula for the perfect sandwich.
yummyfajitas 13y ago
...seems to be relabelling 'low tax' as economic freedom here. Taxation is 10% of the index, government spending another 10%. http://www.heritage.org/index/about http://www.heritage.org/index/about

DGrutt 13y ago

It would take less than 5 minutes of research to learn that it was not just about low taxes. Also cherry picking one country on there does nothing to disprove the notion that in general countries with higher economic freedom have higher economic growth. I don't think they are trying to say it is the one and only factor as that would be ridiculous. If it were purely ideological the list would look nothing like that anyway so I don't see why people are getting bent out of shape.

brc 13y ago

I think the point there is not that fact that Ireland had a major economic crisis, but what the response to that crisis was. My memory on this is imperfect, but I recall all the banks getting nationalised and the losses being pinned on the taxpayer. That would demonstrate a loss of economic freedom in the way the index seems to weight it (lower public debt and lower taxes = higher economic freedom). So I don't see a particular problem there. If Ireland had followed more of the Iceland model post-crisis (dissolve the entities, prosecute the execs, reneg on debt) then I think the results for Ireland would probably be different.

bazzargh 13y ago
The problem isn't that the rating for Ireland went down when the economic indicators did, it's that HF claim the rating is a predictor of economic performance, without a shred of evidence.
- brc 13y ago
  The way I see it, if Ireland hadn't pinned the taxpayer with the losses, their economic freedom would be higher, and their economic growth would probably be better. Certainly Iceland has fared better than Ireland in terms of economic growth since the 2008 crash - though Iceland appears further down the list of Economic Freedom. If Ireland had acted differently, it would likely have had better growth, and would be higher in the list as in the past. I think this case is fine in terms of the methodology.
  - bazzargh 13y ago
    You're not seeing the wood for the trees. Ireland is just one example among many where it is a poor predictor of growth. I could pick out China, India, Brazil (and complain about the weighting given to small countries), or just point at...all of the data: http://www.leftbusinessobserver.com/Freedom1996.gif http://www.leftbusinessobserver.com/Freedom1996.gif It's comically bad. Random things like penis size correlate better with economic growth http://static1.businessinsider.com/image/5008876deab8ea626200000f/gdp-male-organ-penis.png http://static1.businessinsider.com/image/5008876deab8ea62620... (that's from a real paper from the Helsinki Center of Economic Research, btw, though it's obviously tongue in cheek) Even its correlation with GDP is pretty shaky: http://www.heritage.org/index/book/images/in-2014-chapter-1-chart-2.jpg http://www.heritage.org/index/book/images/in-2014-chapter-1-... This is nothing but a list to write press releases around. There is no science to it, and we shouldn't take it any more seriously than articles about the mathematical formula for the perfect sandwich.

yummyfajitas 13y ago

...seems to be relabelling 'low tax' as economic freedom here. Taxation is 10% of the index, government spending another 10%. http://www.heritage.org/index/about http://www.heritage.org/index/about