Do people now have greater economic freedom in Sweden than in the U.S. and Australia?

 

When I think of Sweden, what comes to mind is a big government welfare state, with higher priority being given to economic security than to economic freedom. I was therefore surprised when I saw the Heritage Foundation data reproduced in the accompanying graph, which shows that economic freedom in Sweden is now higher in the United States and Australia. I expect that many readers would be similarly surprised.

The substantial decline which the graph shows for economic freedom in the U.S. and Australia since 2020 is presumably associated with government policies restricting freedom during the Covid19 pandemic. However, economic freedom in Sweden has apparently maintained an upward trend during that period.

In order to come to grips with this new information I thought it might be helpful to consider alternative economic freedom estimates and to take a look at the components of the Heritage Foundation’s economic freedom estimates.  

Comparison of Heritage and Fraser estimates   

 Some of those who feel uncomfortable with the idea that people may now have more economic freedom in Sweden than in the U. S. and Australia might obtain some solace from the fact that the latest economic freedom estimates of the Fraser Institute has Sweden (in 33^rd place) ranked far behind both Australia (6^th) and the U.S.  (7^th).  Some of the differences between the Heritage and Fraser estimates may be attributable to timing. The Heritage estimates for 2023 are based as far as possible on data for June 30, 2022, whereas the latest available Fraser estimates are for 2020. However, there are also differences in the aspects of economic freedom covered by the indexes. For example, the Heritage estimates incorporate Fiscal Health (deficits and debt) which is an aspect of economic management not incorporated in the Fraser estimates.

I was not surprised to see Sweden ranked first in the Fraser Institute’s index of personal freedom, well ahead of Australia (17^th) and the U.S. (33^rd). The Human Freedom index (which combines economic freedom and personal freedom) has Sweden ranked 6^th, ahead of Australia (11^th) and the U.S. (23^rd).

Comparison of scores on various aspects of economic freedom

The comparison of scores on the accompanying graph indicate that aspects in which Sweden performs relatively well, by comparison with Australia and the U.S. are fiscal health and government integrity. As might be expected from Sweden’s welfare state reputation, the aspects on which Sweden performs relatively poorly include tax burden and government spending.

Conclusion

The answer to the question I posed at the outset depends on which economic freedom index one looks at. The Heritage Foundation’s index clearly has people enjoying greater economic freedom in Sweden than in the U.S. and Australia, but that finding is not confirmed by the Fraser Institute’s index. Whatever Sweden’s current ranking relative to the U.S. and Australia, it is worth pondering how Sweden has managed to maintain relatively high levels of economic and personal freedom, despite having a large welfare state. At this stage, there is not much evidence that Sweden is in grave danger of sliding down the slippery slope to serfdom. 

What is holding back the growth of economic opportunities in PNG?

 

Why should you care about the economic opportunities available to the people of Papua New Guinea?  Perhaps some readers didn’t even know the location of Papua New Guinea (PNG) before looking at the accompanying map.

There is a lot to be said for the view that the people of PNG should be left to solve their own problems for themselves. However, one of the problems the people of PNG need to solve is how to reduce their dependence on foreign aid. Another problem they need to solve is how to cope with living in a part of the world in which China and the United States are increasingly competing for influence.

Joe Biden, the president of the United States is to visit Port Moresby, the capital of PNG, on May 22 for discussions with Pacific Island Forum members, while on his way to Sydney for a Quad meeting.

My personal interest in the economic opportunities available to people in PNG stems from having worked there as a consultant on economic policy, having visited as a tourist on several occasions, and not least, from having relatives who live there. I maintain an interest in economic and social development in PNG and have written about it on this blog in the past (here, here, here, and here).

In this article I suggest that opportunities for human flourishing in PNG are less promising than recent macroeconomic indicators might suggest. After considering some macro-economic indicators, I briefly discuss population statistics, corruption and profligacy, the law and order problem, poor opportunities for young people, and lack of economic freedom.

Macro-economic indicators

The World Bank’s latest Economic Update paints a fairly rosy picture, with economic growth of 4.5 percent for 2022. Government revenue from mining and petroleum taxes surged (reflecting the impact of Russia’s invasion of Ukraine on natural gas prices). The increased revenue led to a reduction in the fiscal deficit. The magnitude of public debt remains a problem, with interest payments exceeding public spending on both health and education.

Inflation at around 6 percent per annum is not unduly high by comparison with other countries, but rising food prices have made life increasingly difficult for many people in urban areas. Foreign exchange rationing, associated with pegging of the Kina against the USD, has been a hindrance to business.

Population statistics

I mention population statistics mainly because questions that have recently been raised about the reliability of official estimates of the population illustrate the existence of deep-seated problems in public administration. The official estimate of population for 2022 is between 9 and 11 million. However, a leaked UN report has suggested that the population could be as high as 17 million. In this instance, the official estimate seems more likely to be correct. However, the last credible census took place 20 years ago, so no-one really knows the size of the PNG population.

It is widely accepted that the population of PNG has been growing rapidly and that the majority of people are relatively young, probably under 25 years old.

Corruption and profligacy

Corruption is still a major problem in PNG, although there seems to have been some reduction over the last decade. Of the 180 countries included in the Corruption Perceptions Index, only 50 were rated as more corrupt than PNG in 2022.

Profligacy in spending of public money by some government ministers is legendary. For example, in 2018, when PNG hosted the APEC summit, Justin Tkatchenko attracted controversy by purchasing 40 custom-made Maserati luxury cars. He claimed that they would sell like hot cakes after the event. Unfortunately, that didn’t happen. More recently, the same minister again attracted criticism for taking an overly large contingent of people with him, at public expense, to the coronation of King Charles III. It was his intemperate response, labelling critics as “primitive animals”, which eventually led to his resignation from the position of Foreign Minister.

The law-and-order problem

There has been a law-and-order problem is PNG for many years. In 2015 I wrote:

“It is unsafe for tourists to walk around most parts of Port Moresby alone except within the boundaries of major hotels, modern shopping malls and other locations where security is provided. The same applies to local residents. Tourists are more fortunate than most of the locals because they can afford to be transported safely from one secure area to another.”

It is particularly unsafe for women and girls to be in public places. A recent article on DEVPOLICYBLOG by Sharon Banuk, a university student, describes the nature of the problem that she has faced in staying safe.

PNG is ranked second, behind Venezuela, as the country with the highest number of reported crimes per 100,000 people. The ranking of PNG seems to have remained the same since 2017, having risen from 16^th place in 2015.

Poor economic opportunities for young people

The law-and-order problem has been linked to the increasing problem of youth unemployment in an article by Ms. Julian Melpa for the National Research Institute. A recent study found 68 per cent of people aged between 14 to 35 in Port Moresby were unemployed. Even people with tertiary qualifications often find it difficult to obtain employment.

The difficulty of finding employment is illustrated the accompanying photo of job seekers, published with a report in The National newspaper on Feb 6, 2023. The crowd were competing for a few advertised vacancies at a hotel in Port Moresby.

Lack of economic freedom

International agencies tend to label the main deficiencies in economic freedom in countries like PNG as governance problems. That labelling may make their advice more palatable to politicians who have ideological hangups about free markets but it obscures the adverse impact of lack of economic freedom on incentives to invest, innovate and create greater opportunities for human flourishing.

Only 36 of the 176 countries included in the Heritage Foundation’s index of economic freedom have a lower ranking than PNG. A similar picture emerges from the Fraser Institute’s economic freedom ratings. Only 43 of the 165 countries included in the Fraser index have a lower economic freedom rating than PNG.

PNG has particularly low ratings for rule of law (covering property rights, judicial effectiveness, and government integrity) business freedom, and investment freedom.

PNG governments have obviously been having major problems in performing the core functions of government in protecting natural rights of individuals to be safe and have opportunities to flourish. Governments face a formidable challenge in protecting economic freedom in PNG, with most of the population living in village communities and having little contact with the market economy.

However, similar challenges face governments in some other countries. Some African countries which face similar challenges now seem to be performing better than PNG in facilitating growth of economic opportunities.

Postscript

Readers who are interested in a more comprehensive picture of the well-being of people in PNG should visit the relevant country site of The Legatum Prosperity Index. For the purpose of the Legatum index, prosperity is defined broadly as occurring "when all people have the opportunity to thrive by fulfilling their unique potential and playing their part in strengthening their communities and nations".

My article mentions a visit to PNG by Joe Biden, which was scheduled for May 22. Unfortunately, this  visit will not occur as planned because he has given higher priority to political negotiations over the U.S. government debt ceiling.  

Is Vipassana meditation consistent with self-acceptance?

Vipassana is an ancient form of meditation based on practice of equanimity in observation of physical sensations and thoughts. As people who practice Vipassana observe sensations arise and pass away, they experience a lessening of both aversion of unpleasant sensations, and of craving for pleasant sensations.  The Vipassana tradition has been kept alive since the time of the Buddha, and popularized over the last 50 years by S. N. Goenka, who died in 2013. The practice is taught in 10 day residential courses.

People who hold views that are incompatible with the Buddhist principle of anatta, or no self, are not excluded from attending Vipassana courses. I have practiced Vipassana meditation, with varying consistency, for about 25 years, and associate the practice with self-acceptance rather than loss of a sense of self. Moments of self-forgetfulness, accompanying feelings of goodwill towards other beings, could be described as quieting the ego rather than abandoning it. It seems to me that Scott Barry Kaufman may be on the right track in his suggestion that “those with the quietest ego defenses often have the strongest sense of self”. (See Transcend, p 204-5).

However, when Goenkaji was asked why he only spoke of the ego in negative terms, he replied:

“Now it seems to you that there must be an 'I' who feels, but after beginning to practice Vipassana, you will reach the stage where the ego dissolves. Then your question will disappear! For conventional purposes, yes, we cannot run away from using words like 'I' or 'mine' etc. But clinging to them, taking them as real in an ultimate sense will only bring suffering.”  

That raises interesting issues. In this article I will briefly discuss the concept of no-self, illustrate similarity between the practice of Vipassana and a psychologist’s approach to self-acceptance, consider how Vipassana meditation might be viewed from an Aristotelian perspective, and end with some observations about the nature of the inner game involved in acquiring equanimity and practical wisdom.

The No-self idea

In their book, Classical Indian Philosophy, Peter Adamson and Jonardon Ganeri note that the Buddha sought to differentiate his view from those who say that we are identical to our bodies and from those who say we have souls that lack connection to anything else. They write:

“To express his own view, the Buddha offered similes: a person is not like the thread running through a necklace of pearls, but like the flowing of a river or the flickering of a candle flame.”

The river metaphor captures the idea that to grasp on to feelings, perceptions, or mental fabrications of the self is as futile as it would be for a person to try to avoid being swept down a swiftly flowing river by grasping on to grasses etc. growing on the banks.

I am attracted to a different river metaphor which reconciles my observation that impermanence is pervasive with my inability to doubt my own existence, and perception of my “self” as having continuity (at least while I remain alive). I have written previously about Richard Campbell’s suggestion, in his book The Metaphysics of Emergence, that Plato may have misrepresented Heraclitus in claiming he said, “You cannot step into the same river twice”. Heraclites may have been trying to convey the insight that the river stays the same even though it consists of changing waters. Campbell suggests that rivers exemplify “that the continued existence of things depends on their continually changing”. It makes sense to understand consciousness as a flow, and to perceive ourselves as complex processing systems.

Self-acceptance

In explaining Vipassana meditation, Goenkaji emphasized that attempts to escape from misery by diverting the mind to another object did not provide lasting benefits. He explained:

“The object of meditation should not be an imaginary object, it should be reality—reality as it is. One has to work with whatever reality has manifested itself now, whatever one experiences within the framework of one's own body.”

It seems to me that the Vipassana approach of observing thoughts and sensations with equanimity has much in common with the approach to self-acceptance recommended by the psychologist, Nathaniel Branden, in The Six Pillars of Self-Esteem:

“At the most fundamental level, I accept myself. I accept the reality of my thoughts, even when I cannot endorse them and would not choose to act on them; I do not deny or disown them. I can accept my feelings and emotions without necessarily liking, approving of, or being controlled by them; I do not deny or disown them.” (p 163)

An Aristotelian perspective

It is clear from the passage quoted at the beginning of this article that Aristotle thought it inconceivable that a person could doubt his or her own existence.

However, Vipassana’s emphasis on equanimity as a desirable frame of mind has much in common with Aristotle’s view of temperance as a virtue. An equanimous person could be expected to be temperate in emotional expression – to be able to avoid excessive anger, fear etc. The techniques involved are also similar in respect of the emphasis placed on practice of the relevant frame of mind and associated behaviors.

As I see it, one possible difference between an equanimous person and a temperate person is that the latter would be less inclined to accept that there should be no craving. In accordance with Aristotle’s teaching, a temperate person could exercise his practical wisdom to crave the things he ought, to the extent he ought, as he ought, and when he ought.

Nevertheless, I have not found the practice of Vipassana meditation to be an obstacle to exercising practical wisdom to pursue personal goals enthusiastically. When I meditate conscientiously early in the morning that tends to promote clarity of thinking which serves me well later in the day.

The inner game

How is it that a person who lacks peace of mind (equanimity) can learn to observe troubling sensations and thoughts with equanimity? How can it be possible to adopt a frame of mind which requires the exercise of a quality that you perceive yourself to lack? It seems to me that the people who do such things must be drawing on inner resources that they didn’t fully realize that they had.

Tim Gallwey, the inner game guru, has helped many people to draw upon resources that they didn’t realize they had. Gallwey is recognized as a pioneer of sports psychology, and is the author of books applying inner game concepts to a range of activities including tennis, golf, work, and stress management. The aim of the inner game is to improve the internal dialogue that people carry around with them. For example, if an individual’s internal dialogue is infected by self-doubt, they can improve their performance in sport by observing what happens when they trust their unconscious minds to coordinate their muscles.

The general pattern of the inner game is to recognize that performance is being adversely affected by mental interference associated with false beliefs about one’s self – the lack of a desired quality – and then to observe what happens when that quality is expressed. People improve their performance as they discover qualities, or inner resources, that they didn’t know they had.  (Readers who want to know more about Tim Gallwey’s inner game approach may be interested to listen to a podcast I have prepared.)

The point that needs to be emphasized is that if we assert that we are inherently lacking in desired qualities (wisdom, temperance, integrity, courage, self-trust etc.) we are fooling ourselves. We all have potential to demonstrate qualities that we perceive to be lacking by asking ourselves what we would be thinking or doing if we believed that we possessed those qualities to a greater extent than at present.

So, I ask myself: If I was a wiser person, what would I be thinking right now? I am thinking that it would be wise to end this now and leave readers to contemplate their answers to that question. 

Can cottage industries exist in a machine age?

 J C Kumarappa posed that question his book, Economy of Permanence, which was first published in 1945. He argued that in the final analysis “values and valuation” would determine the direction to be taken. He viewed the choice between cottage industry and large-scale production as an ethical choice as to which type of economy would be preferable. He associated cottage industry with “permanence and non-violence”, and large-scale production with “transience and violence”.

Kumarappa has been described as an ecological economist. He was a follower of Mahatma Gandhi, who wrote a foreword to his book.

Some of Kumarappa’s views seem to have been largely a product of the context in which he lived, but others resonate more broadly. Similar views have been taken up by many affluent consumers in high-income countries. In what follows, I will discuss first why Kumarappa associated large-scale production with violence before considering why he associated it with transience.

Violence

Kumarappa recognizes the potential for specialization and market transactions to be mutually beneficial for the people involved. On that basis, readers might expect him to view wealth accumulation via specialization, trade, and market competition to be a peaceful process.

However, Kumarappa argues that large-scale production prompted industrialized countries to hold other countries in political subjection to obtain materials. He also suggests that large-scale production “is the root cause of wars”. He claims that machines must make full use of productive capacity, rather meet market demand. That results in surplus production. Wars are started to capture markets.

I see several problems with that line of reasoning, but I will only focus on the most obvious one here. Kumarappa seems to assume that manufacturers have control of armies that can be used to ensure access to raw materials and markets. That seems to me to be a strange assumption to make, but I can understand why an Indian economist might see things differently in the light of the history of British colonial rule.

Transience

Kumarappa argues that an economy based on large-scale production is built on the “quicksands” of “profit, price, purchasing power, and foreign trade”. He suggests that material standards of value and personal feelings of consumers cannot have “any degree of permanence” because people change and are perishable. For permanence to be achieved, the standard of value must be objective and controlled by ideals that have enduring qualities. He claims that civilization had endured in China and India because it was based on altruistic and objective values.

The value that Kumarappa places on permanence may require explanation because Hinduism, the dominant religion in India, shares with Buddhism the doctrine that everything is in a constant state of change. Kumarappa was a Christian, but I don’t think that explains as much as his reverence for what he describes as “the secret of nature’s permanency”.  He was referring to ecological factors which “function in close cooperation to maintain the continuity of life”.

Kumarappa was particularly concerned about the impact that the products of large-scale production were having on traditional village life. He argues:

“We are often led away by low money prices ignoring the great gashes in our economic and social organisation made by such short-sighted choice of ours.  … Money value blinds the vision to a long range social view, so that the wielder of the axe fells the branch on which he is standing”.

Kumarappa argues that moral values are attached to every article sold in the market. We should not ignore such values and say “business is business”. Accordingly, anyone who enters into a commercial transaction has a grave responsibility to ensure that she does not become party to circumstances that she would not consciously support. He believed that the consumer is only able to bring her scale of values into play when goods are made locally.

Different views of progress

Kumarappa had a very different view of economic growth than is presented in my book, Freedom, Progress, and Human Flourishing. It may be worthwhile to try to pinpoint the reasons for this.

I don’t think Kumarappa would have any problems with my definition of progress as the growth of opportunities to obtain the basic goods of a flourishing human. He would probably agree, more or less, with my list of the basic goods – wise and well-informed self-direction, health and longevity, positive relationships with others, living in harmony with nature, and psychological well-being.

Kumarappa would probably begin to object at the point where I assert that economic growth counts as progress to the extent that people aspire to have the goods that it offers. He might suggest that people who aspire to have those goods are mistaken because they could flourish to a greater extent by maintaining a simple lifestyle. The more powerful argument he would offer is the one presented above - that the products of new technology are disruptive to existing economic and social organisation.

I would respond by referring to what Deirdre McCloskey has referred to as the bourgeois deal. People in industrialised countries have been willing to accept the possibility that the introduction of new technologies might disrupt their lives because they have good reasons to expect that they, and future generations, are likely to benefit from the expansion of opportunities that it provides.

If that line of argument had been presented to J C Kumarappa in 1945 I imagine he would have viewed it as “pie in the sky”. I am less sure that he would hold the same view today.

Cottage industry

I don’t know much about the economic health of cottage industry in Inda today, but it does continue to exist. The photo shown at the top of this article was taken at Kalra’s Cottage Industry in Agra, when I visited there last year. (By the way, the service offered was excellent. The hand-knotted floor rug I purchased was delivered to my home in Australia without any problems, and in perfect condition.)

My point is that as their material standard of living rises, many people are willing to pay more for high quality products of cottage industries than for mass produced items. Many people also become increasingly concerned about such things as the levels of remuneration of workers who produce the products that they buy and potential environmental damage of production methods. People tend to pay greater attention to such concerns when they feel that they can more readily afford to do so.