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Lighting a Torch for Freedom
How do the last five summer Olympic host countries compare on Economic Freedom?
The Olympic Games are exciting for participants and viewers across the globe as the greatest athletes travel from nations around the world to compete. As Olympic fans tune into this summer’s competitions in London, let’s take a tour of the last five Summer Olympics host countries to see how they measure up in terms of economic freedom.
United Kingdom (2012)
This year, the spotlight is on London as it hosts the 2012 Summer Olympics for the first time since 1948. While London is still one of the world’s premier cities, the United Kingdom (UK) is suffering like many other countries. Currently, the UK ranks 8th in the Fraser Institute’s annual Economic Freedom of the World report, down from its peak of 5th in 2003. The UK’s economy has been shrinking since the end of 2011, and the latest estimate released in July reveals that economic growth continues to decline.
China’s recent, rapid economic growth and generally high level of economic productivity—it produces more goods and services in a year than any nation other than the United States—might lead you to believe that the average citizen of China is similarly prosperous. However, like other large nations, much of China’s productivity is driven by the fact that it has the largest population of any country in the world. The reality is that quality of life for a vast majority of people in China (as measured by GDP per capita) is about one-sixth of that for people in the U.S., or lower.
At the heart of China’s low living standards is its lack of economic freedoms including very weak rule of law and complex, burdensome regulations that make starting and growing a business very difficult for individuals. Not only does China rank 92nd among 141 countries in economic freedom, it also ranks 91st in ease of doing business out of 183 countries, and 151st out of 183 counties on starting a business.
The birthplace of the Olympics games, Greece, now ranks 81st out of 141 countries in economic freedom, which is a far fall from its high of 23rd in 1970 (the earliest year for which economic freedom rankings are available). In addition to massive debt and deficit problems, restrictions on businesses also contribute to Greece’s low levels of economic freedom and subsequent economic woes. In fact, Greece ranks a paltry 100 out of 183 countries in the World Bank’s annual Doing Business Report , in part because of the government’s reckless spending and regulation that hampers businesses. Enforcing contracts in Greece requires more than 800 days, which is more than twice the length of time of any other country in this blog. The rest of the world can look to Greece for “lessons learned” about the consequences of restricting economic freedom.
Of the last five countries to host the Summer Olympics, Australia is the most economically free. “The land down under” has risen in the rankings in recent years and moved up four spots since 2006. Currently, Australia is the 5th most economically free country in the world. For the last 20-25 years, Australia has introduced significant market reforms that “have made Australia one of the most open and flexible economies in the world.” These reforms have included deregulating its financial system, slashing tariffs, eliminating quotas, and freeing up the labor market. Subsequently, Australia’s economy has grown at about 2.9 percent per year for the last five years—greater than both the U.S. and UK—and has become one of the richest countries in the world.
The “land of the free” has not performed well in economic freedom over the past few years, falling 6 spots to 10th freest in the world since it last hosted the Summer Olympics in 1996.Driving the decline is the growing burden of government overspending and unnecessary regulations. Repercussions include record levels of government debt, totaling more than $15 trillion – larger than the entire U.S. economy – and persistently high unemployment at 8.2 percent a full 36 months after the official end of the 2008 recession.
The 2012 Olympics in London won’t be decided based on economic freedom, but economic freedom does help economies win in a different way. Residents of countries with higher levels of economic freedom are freer to create, innovate, prosper and live in peace. With economic freedom, everyone wins.