“The anatomy of the student loan crisis is similar [to the housing crisis]. Having decided that the path to prosperity is a college education, and that the free market was not providing “enough” college education, the federal government created Sallie Mae… to take lending risk away from banks and place it on the backs of taxpayers. The tax code provided modest tax incentives for students to take on more loans, and lately, the Federal Reserve has continued to make borrowing cheap by holding interest rates low. Sound familiar?”

To read the full article, click here.

Every mother worries. It’s part of the job. While moms can’t shield their children from every form of hardship, research shows that societies with high levels of economic freedom are the best places to raise kids. For example, in countries with more economic freedom, babies have a better chance of surviving infancy, and kids will grow-up to have more choices in their career paths.

Central to these benefits is the greater amount of quality healthcare and education that people living in economically free countries enjoy.

While raising kids is a challenging endeavor, moms can be certain that a society with high levels of economic freedom is the best environment for their kids to grow into happy, healthy and successful adults.

Just a spoon full of economic freedom makes the medicine abound

Kids get sick — there’s no way around it. The best way to protect children against serious illness is by living in societies with more economic freedom. Research shows that in societies with high levels of economic freedom, people have better access to critical healthcare services like medical vaccinations.

For example, in the early 1900s, diseases like diphtheria were a constant source of concern for mothers in America. In the 1920s, there were an estimated 100,000-200,000 cases of diphtheria in the U.S. leading to more than 13,000 deaths per year. Children made up a majority of those deaths. Today, thanks to medical innovations, fewer mothers experience the heartbreak of losing a child to diphtheria and many other preventable illnesses.

Analysis of data from the World Bank and the Economic Freedom of the World Report reveals that in the most economically free countries virtually everyone has received a vaccine against diphtheria, as well as pertussis (commonly known as whooping cough) and tetanus. However in countries with little economic freedom almost one quarter of people have not been vaccinated against these diseases.

The availability of diphtheria and other vaccines in more economically free countries is an example of how economic freedom benefits societies.  When a society is based upon free-market principles that promote entrepreneurship and innovation, new drugs and procedures are developed that can protect children from diseases and help them grow into healthy and productive adults.

Helping your kids achieve their dreams

Parents will make incredible sacrifices so that their children can receive the best education possible, land a good job and improve their quality of lives. Moms know that education is crucial for their kids to succeed, and data shows that living in a society with economic freedom increases the chances of receiving a quality education.

However, in countries with little economic freedom, many children are trapped in the labor force and aren’t able to get an education. In fact, in countries with low economic freedom the incidence of child labor is 19 percent compared to less than 1 percent in countries with greater economic freedom.

And in the most economically free countries, 95 percent of children complete primary education. In contrast, in the least free countries, only 72 percent of children complete primary education. For example, in Angola, which ranks 138^th in economic freedom, just 66 percent of women between the ages of 15 and 24 have learned how to read or write, while in Mauritius, which ranks 9^th in economic freedom 98 percent of women between the ages of 15 and 24 have learned how to read or write.

People living in economically free societies have the resources and wealth to invest in better healthcare and education. Because societies with economic freedom support free-market policies such as a small government, minimal regulations and sound rule of law, they prosper and offer a better future for their children.

So how can you help ensure that your kids will have the opportunity to grow up and live happy and healthy lives?

Be a choosy mom. Choose economic freedom.

Market incentives include a strong tendency to self-regulation. Businesses seek to make profit, but in a competitive marketplace they can only do so by making their product one which consumers want to purchase. One important aspect of this is reputation. Businesses need to foster and maintain a good reputation for their products, otherwise they risk losing their customers to another business that does a better job. In this way, businesses which provide quality products to society are rewarded with  a good reputation and get more business, whereas businesses that fail to provide quality products are punished by earning a poor reputation and losing business, sometimes leading to bankruptcy. In other words, it is in the businesses’ self-interest to create products that benefit their customers, not upset them.

But it often isn’t easy for consumers to determine the quality of a product by themselves, and some items are purchased infrequently or from a company that is unfamiliar to a customer. Do market forces provide any remedy to the problem of infrequent interactions with producers?   You may be surprised to find that the answer isn’t theoretical, even with the amount of government regulations currently in place. A company named Underwriters Laboratories has been providing this exact service for over a century. They test thousands of new products annually, conduct numerous safety inspection visits, and if the products are deemed safe then they are given the UL logo. Look at the appliances in your home and you are likely to see several. According to the company, in 2010:

• 23 billion UL Marks appeared on products
• 66,932 manufacturers produced UL certified products
• 89,189 product evaluations were conducted by UL
• 595,709 follow-up services inspection visits were conducted by UL
• 19,722 types of products were evaluated by UL

Underwriters Laboratories isn’t the only group offering this type of service. The U.S. Green Building Council (USGBC) is a non-profit organization which runs the well known Leadership in Energy and Environmental Design (LEED) program. LEED creates a rating system to determine how ‘green’ a building is, and includes different standards for new or existing buildings, schools, homes, healthcare facilities, retail stores, and more. Many builders voluntarily follow the standards and receive a LEED certification because, just like with Underwriters Laboratory, they value a respected third party certifying their product. The LEED certification shows the power of the free market; if there are enough people who value green buildings then a mechanism such as LEED arises to satisfy that desire without any government action at all. If the government were to institute these standards, then those who don’t value green buildings would be forced to use the standards against their will.

The market naturally tends to self-regulate, and even apart from this fact there are groups such as Underwriters Laboratories, Consumer Reports, or LEED who provide that service intentionally (and very successfully). Since government regulations can result in unintended consequences that harm the economy and restrict our economic freedom, we must be sure that government does not intervene in the economy when the market is better able to handle the problem itself.

“Statewide, communities as diverse as Columbus, Lafayette and Greensburg are attracting businesses and investments from other high-tax, high-government-hassle states. Indiana scores better than its neighbors Illinois, Ohio and Michigan, according to Bohanon, the Ball State professor. Indiana’s brave move in the recent legislative session to phase out the inheritance tax and earlier efforts at capping property taxes add to a welcoming climate.

Low taxes, good infrastructure, trained workforce and freedom await American’s entrepreneurs looking for greener pastures. Welcome to Indiana. Let freedom ring.” -Joseph Clark

Read the whole article here.

Calvin Coolidge, 30^th president of the United States, believed individuals know best how to run their own affairs and upheld this conviction throughout his term. President Coolidge empowered the American people, strengthening individual rights rather than expanding the size and scope of government. Consequently, the private sector thrived and prosperity followed.

“The chief business of the American people is business.” -Calvin Coolidge, 30^th President of the United States of America (1923-1929)

Calvin Coolidge initially served as vice president under Warren G. Harding, and assumed the U.S. Presidency after Harding’s sudden death in 1923. The Harding -Coolidge administration began its term in the midst of an economic depression. U.S. unemployment sat at 12 percent, taxes were high and government spending was driving-up debt. In the face of the economic turmoil, both as vice president and later on as president, Coolidge worked to restrain the size and scope of the federal government by cutting taxes, subsidies and spending, thereby increasing economic freedom.

Calvin’s Three “R”s

Reduced Taxes

• Coolidge implemented sweeping tax cuts, most notably by decreasing the income tax rate from 73 percent to 25 percent according to IRS numbers.
• By reducing taxes, Coolidge helped usher in a decade of prosperity that saw the economy grow at an impressive average rate of 4.7 percent. Furthermore, from 1923-1929, as businesses grew they began to hire workers, driving down unemployment.

Resisted Unfair Farm Subsidies

• Coolidge twice vetoed the McNary-Haugen Bill, which would have required the federal government to buy-up surplus crops from farmers. This bill would have been a classic example of government unfairly propping-up a struggling industry. Coolidge knew societies prosper when individuals profit based on value they create, not when the government chooses the winners and the losers.

Refused to Increase Federal Spending

• Coolidge worked hard to limit federal spending. Including his time as vice president, Coolidge managed to cut federal expenditures in half from its post-World War I high. For all six years of his presidency, he kept the annual growth in government spending to a little over $3 million and, in 1925-1926 government spending grew less than 1 percent. No president since Calvin Coolidge has managed to keep government growth below 1 percent with the exception of the demobilization following World War II.

 Calvin Coolidge strove to increase economic freedom for all Americans, and thanks to his commitment to economic freedom, America flourished during his presidency.

Health care is a complicated market. One consequence of its complexity is that government meddling can easily stymie innovations that could improve patient treatment. Insurance policies and institutional forms that could decrease costs by better aligning the incentives of providers, insurers and patients, for example, are either banned outright, or so unlikely to receive approval in today’s highly uncertain policy environment that even the bravest innovators shy away.” –Dr. Robert Wright

Read the full article here.

The Celtic Tiger, also called “Ireland’s Economic Miracle”, was something of a fairy tale. Starting in the early 1990s, Ireland went from being one of Europe’s poorest countries to one of Europe’s wealthiest in less than a decade. During that time, the size of the economy doubled and by 2007, the average household income was the ninth highest in the world.

Yet, soon after it peaked in 2007, Ireland’s economy reversed course. By November 2010, Irish banks required a $113 billion bailout from the Irish government. By July 2011, Moody’s Investors Services downgraded Ireland’s government bonds to “junk”, reflecting the complete lack of confidence people had in Ireland’s ability to pay back its massive debt. What happened?

One key to understanding Ireland’s economic rise and fall is grasping Ireland’s mixed relationship with economic freedom. While Ireland set the 1990s ablaze with sweeping economic reform that opened the Irish market considerably, there was also a darker side to the decade: declining economic freedom in the form of government subsidies and interventions that eventually led to the demise of the Celtic Tiger.

Unleashing the Tiger: The Boom Years (1987-2007)

In the late 1980s, Ireland began an economic restructuring that increased the country’s economic freedom and resulted in more than a decade of economic growth and prosperity for the country.

Slashing Taxes

An important step in Ireland’s economic reform was dramatically cutting tax rates —specifically the income and corporate tax rates —creating the fuel that unleashed the Celtic Tiger. Between 1987 and 1995, the income tax rate fell from 35 percent to 27 percent, and then all the way down to 20 percent. The corporate tax rate fell from 50 percent to 38 percent between 1987 and 1995, and then to 12.5 percent during the 2000s.  With this increased economic freedom, the country became a very attractive place for businesses to invest.  Net foreign direct investment skyrocketed from $627,433,374 in 1990 to $22,410,807,389 in 2003 — an increase of 3,471 percent.

Additionally, lower taxes meant people kept more of what they earned increasing their spending power. Private spending, which doubled between 1987 and 2004, helped feed the ravenous Celtic Tiger, fueling economic growth.

Curbing Spending

At the same time, the government reduced public spending relative to private sector spending across a wide range of areas.  Health expenditures were cut by 6 percent, education by 7 percent, agriculture spending by 18 percent, roads and housing by 11 percent, and military spending by 7 percent. When the government spends less, taxpayers are allowed to keep more of what they earn and put that money back into the economy.

Was the Irish Tiger Just Blarney? The Bust Years: 2007-Present

In the midst of Ireland’s roaring 90s, there was another narrative occurring which eventually sank the Irish economy. With one hand, the government was cutting taxes and spending; with its other hand, the government was handing out massive subsidies and tax credits to select industries — particularly housing — which distorted the market and significantly contributed to the economic collapse.

The Irish Housing Bubble

In the housing industry, the Irish government issued large tax incentives to housing developers in the form of tax deductions fueling a massive housing bubble that created the illusion of wealth.  Essentially, the government made housing and commercial development significantly cheaper than other investments — and especially lowered the upfront costs of building new homes and structures.

As the building industry grew in response to these tax incentives, the supply of new housing quickly outstripped the real demand for housing. New houses and buildings were being built before there were people to fill them, and many were never filled — in 2010 there were more than 300,000 empty homes in a country with only 4.5 million people. This disparity led to a housing “bubble,” where the prices of houses rose far above their real value or demand. Because housing accounted for a quarter of the country’s economic output and one-fifth of the country’s employment, when the bubble eventually burst, it left the country in shambles.

As individuals began to default on their home loans, banks collapsed and cost the Irish government more than $100 billion to bailout.  The collapse of Ireland’s banks sent shockwaves throughout the economy that severely and negatively affected other major industries in Ireland.

The End?

Increasing economic freedom can have a tremendous impact on a country, bringing prosperity and increased quality of life. Conversely, as Ireland has shown us, policies and practices that decrease economic freedom are detrimental to economic stability. While the Irish embraced certain aspects of economic freedom, they simultaneously discarded other important principles which proved destructive.

The story of Ireland is not over but is continually unfolding. Whether the country will ever attain the wealth and prosperity it experienced in the 1990s remains to be seen. Regardless, Ireland’s story presents a lesson to nations across the globe not to let short-term prosperity fool them, but to protect their economic freedom by guarding against government intervention.

In this video Professor Steve Gohmann walks through the current state of healthcare insurance in America and where it has gone wrong, pointing out the how cronyism and regulation have lead to a system that’s far from economically free.

“We compared [healthcare rules and regulations] across all fifty states, and what we found was that states with fewer mandates had lower premiums, and certain mandates would cause premiums to be much higher than other mandates. The problem with that is, the more mandates you have and premiums go up, fewer people have insurance. And so then we have more of a problem with people being uninsured.” -Professor Steve Gohmann

Throughout history, across countries and across cultures, economists see a repeated theme: When governments intervene, economies stagnate and people suffer… They believe that, this time, they’ll figure out how to manage the economy for the benefit of all. In the end, each new batch of politicians is proved wrong as the people suffer through another failed economic experiment.

Read the entire article here.

Tom Sharpe of the Santa Fe New Mexican interviewed two business owners who oppose the minimum wage increase, Simone Koutsouflakis, owner of Old West Signs, and Al Lucero, owner of Maria’s New Mexican Kitchen. As stated in the article:

“‘We’re now going to be the highest minimum wage in the county,’ (Lucero) said. ‘There’s not enough jobs to go around the way it is and we’re going to have a situation where this is going to make jobs go away…’”

Business owners like Koutsouflakis and Lucero are worried about the negative impact of minimum wage laws. These laws make it difficult to maintain current employment and even harder to create new jobs, especially for low skilled workers — the group the law is intended to help the most. While the advocates for minimum wage laws are almost certainly well-intentioned, their policies actually make employing workers more difficult.

New Mexico’s minimum wage laws are restricting the state’s economic freedom, and this is important because economic freedom affects every aspect of an individual’s life. Living in a society with high levels of economic freedom leads to more jobs, higher incomes, lower poverty, and less unemployment, among a host of other benefits.

Minimum wage laws, however, restrict economic freedom by preventing business owners from determining how to use their resources as they choose and mandating how they compensate their employees. Also, these laws prevent individuals from using their own labor as they see fit. In other words, if an individual wants to sell his or her labor to a business for $7, he or she is unable to do so without breaking the law.

This declining economic freedom is reflected in the state of New Mexico’s economic freedom score. It has set a record for its worst score in the history of the Fraser Institute’s Economic Freedom of North America Report. This report rates each American state on its level of economic freedom, and the 2011 report gives New Mexico an overall score of 5.41 —the state’s lowest score ever in the index reaching back to 1981.

To put that score in perspective, New Mexico ranks 49 out of 50 states. Only one American state has less economic freedom than New Mexico. Not only is the score low, it has rapidly been decreasing. Why is economic freedom in New Mexico declining? Increased government spending and taxation, coupled with declining labor market freedom (including minimum wage laws) are driving the decrease. Economic freedom is an important factor in creating prosperity, and New Mexico is next to last in America in upholding this vitally important concept.

Many factors contribute to the health of a state’s economy. New Mexico’s unemployment rate is currently lower than the national average, and after losing jobs for several years in a row it is beginning to add some back. Any signs of economic growth are welcome, and the evidence is clear on how to build on that trend: states and countries with more economic freedom are more prosperous in the long run than those with less economic freedom.

Residents of New Mexico are faced with an important decision. They can allow their economic freedom to continue to decline, or they can take a stand and demand that the state instead dedicate itself to upholding economic freedom. Only the latter path will lead to prosperity.