Wednesday, 21 September 2016

A wooden spoon for the Fraser Institute’s “economic freedom” medal


Another survey suggests New Zealand is right up there when it comes to “economic freedom.” Third in the world according to the “libertarian” Fraser Insitute’s latest. which awards little old us a bronze model with a score of 8.35 out of 10 for economic freedom, which they define as:

An index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions.

Fair enough. That’s a reasonable definition. Not so reasonable however is giving any country anywhere in today’s world anywhere colse to 10 on any reaonably objective scale. Or even more than 5.

Or to bestow on us anything like an 8.35. (Are we really 83.5% free? Really?)

Indeed, when property in land is “protected” by law like the Resource Management Act and its use is as regulated as it is now (being one of the leading contributors to New Zealand earning a gold medal for for unaffordable housing), you have to wonder how we can possibly score an 8.49 for property rights.

So since most of these surveys are garbage in garbage out, I figured I’d track this one metric as a measure of how reliable all the others are.

Bear in mind that this survey, like all such surveys, aren’t carried out by folks in the field fully endowed with local knnowledge. They’re pulled together by people at desks very far away from the places they write about (these guys, in this case, are in Canada) with facility mainly in handling a spread sheet and a bunch of somebody else’s data.

The source of data for the Fraser Insitute’s score on property rights is, their appendix tells me, something called the Global Competitiveness Report put out by a group called the World Economic Forum. (Heard of them? No? Transpires they’re “a Swiss nonprofit foundation, based in Cologny, Geneva… The Forum is best known for its annual winter meeting for five days in Davos.” Remember Davos? A meeting of men famously described by Daniel Hannan as deriving most of their income, directly or indirectly, from state patronage.)

So where did Davos Man get his figures from for his Global Competitiveness Report? I went to the report to check:

_Quote5The GCI uses the World Economic Forum’s annual Executive Opinion Survey to capture concepts that require a more qualitative assessment, or for which comprehensive and internationally comparable statistical data are not available. For this year’s GCI, more than 14,000 business leaders in 140 economies were surveyed on topics related to national competitiveness. It also uses statistical data from internationally recognised agencies, notably the International Monetary Fund; the United Nations Educational, Scientific and Cultural Organization; and the World Health Organisation.

What proportion is opinion, and what proportion is this other data?

_Quote2The exact share of Executive Opinion Survey data in the 113 indicators used to calculate the index varies slightly by country, depending on its stage of development. In general, approximately two-thirds of the data used in the GCI 2015-2016 are derived from the Executive Opinion Survey and one-third is derived from international sources’ statistics.

So how much of the data is simply opinion? Answer: About two-thirds, emanating from this”Executive Opinion Survey.”

And where do we find this Executive Opinion Survey data?  Answer: We don’t. It’s not publicly available.

It is however possible to discover that New Zealand’s Executive Opinion Survey data comes from a survey completed by just 46 people (see the Survey’s Table 2, page 81.). Names and addresses of this select group of cronies are unfortunately not supplied, however the report does list Phil O’Reilly’s Business NZ as their local “partner insitutute” (the “unique strength” of Business NZ being, according to the Business NZ website, their “capability to engage with government officials, community groups, MPs and Ministers on a daily basis”). So I’m guessing the cronies are his.

None of the survey data of this infamous forty-six appears on the Business NZ website, but the NZ Initiative website at least does offer this cautionary note:

Note the information in the opinion survey can be skewed by perception and by small samples (e.g. New Zealand has a sample size less than 50) and therefore can have substantial error ranges, so analysis should be confirmed with supporting logic and evidence.

None of which either the Fraser Insitute nor Davos Men have apparently bothered to do.

Meaning that a subujective worldwide survey of cronies and business cheerleaders gets trumpeted every year as bestowing upon this small authoritarian backwater some colour of medal for freedom – and people who shoud know better like Daniel J MItchell post pieces praising “reform” in which the government ended up bigger, the total tax take ended larger, and Big Brother became “bigger and more ominous then ever.”

I’d give them a 10 out of 10 for chutzpah.


  • “But have you ever wondered from where exactly all these folk derive their data?  I pressed one fellow once whose “freedom index” showed New Zealand at the time to be the world’s freest (earning us their “gold medal for freedom”) earning scores like 9.6 out of 10 for property rights only a few years after the Resource Management Act had taken most of them away.
        “After a whole riot of wriggling to try to avoid the questioning, he eventually conceded that much of their data is based on subjective surveys sent out to selected “leaders” in each country. And from that news it didn’t take much more to learn that most of those surveys were completed by local cheerleaders desperately keen to trumpet the virtues of their hometown. (Q: Is your place a hell of place to do business? A: [Big tick] Hell, yes!! You’re darn tootin’!)
        “So, garbage in, and garbage out.”
    NZ: Prosperous? – Peter Cresswell, NOT PC
  • “With reason and wit, Perigo summarises New Zealand's decade of market reforms, while countering some U.S. libertarians who believe these reforms represented a veritable revolution. Indeed, Perigo explains how the various reforms have ultimately failed — and describes the philosophical revolution it will take for liberty to succeed.”
    In the Revolution's Twilight – Lindsay Perigo, FREE RADICAL




  1. You get a big write-up in 'International Liberty', a blog in America! He was commenting on how remarkably the NZ economy has been in invigorating itself. Maybe you could do a retrospective on your economy?

  2. My understanding is that when it comes to transactions like setting up a company, buying and selling a property, a clear and transparent land title registrar, etc - our gov't processes deservedly rank relatively highly. However they have clearly not picked up on the fact that having clear title to land, and ability to easily sell it is one thing; but being able to do anything with it (and the limiting effect of the RMA on this) is another.


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