Canadians today have less freedom to decide what to buy, where to work, and whether to start a business than they did in the late 1970s, partly due to the size of government, which has grown since the pandemic, a new study suggests.
After maintaining an economic freedom score above 8 out of 10 since the late 1970s, Canada’s score reached its
lowest level in four decades during the pandemic–a trend observed in many countries–at 7.86 points in 2020, according to the Fraser Institute’s
economic freedom ranking. The score remained below 8 points until 2022, the last year of available data.
The new
Fraser Institute study says the increase in the size of government since the pandemic, reflected in more spending and regulations, is one of the causes of the decline in economic freedom.
“Canadians should understand that lower levels of economic freedom depress investment, hamper economic growth, and lead to less economic opportunity for workers,” said Matthew Mitchell, senior fellow at the Fraser Institute and one of the authors of the report. “After decades of research, we now know that when people are more economically free, they enjoy higher standards of living.”
Economic freedom measures openness to trade, tax and regulatory burdens, government spending, and the soundness of a country’s money, according to the authors.
In 2020, Canada ranked 125th in the world in size of government, with a lower ranking indicating larger government, said the report. That was a drop of 54 places since 2014.
While Canada rose to 93rd place in 2022, according to the most recent data, it was still the second-lowest ranking in the country’s history, outside of the pandemic period.
Global Economic Freedom
In 2022, Canada
ranked 8th in economic freedom among 165 countries, with a score of 7.99 out of 10. It was four places behind New Zealand (4th), and three behind the U.S. (5th).
Hong Kong retained the top spot, which it
has held almost every year for more than two decades. The authors noted, however, that Hong Kong’s score has dropped since 2018, from 9.05 in 2018 to 8.58 in 2022, due to interference from China.
“Interference from China threatens to undermine Hong Kong’s rule of law, which helps ensure equal freedom for Hongkongers,”
said Fred McMahon, Fraser Institute resident fellow and Walker Chair in Economic Freedom, in a press release.
Other top-scoring countries
were Singapore (2nd), Switzerland (3rd), Denmark and Ireland (tied for 6th), and Australia and Luxembourg (tied for 9th).
The lowest-ranked countries
included Venezuela (165th), Zimbabwe (164th), Sudan (163rd), Syria (162nd), Algeria (161st), Myanmar (160th), Argentina (159th), Iran (158th), Libya (157th), and Yemen (156th).
The authors also analyzed the relationship between economic freedom and major social indicators.
They
found that, compared to the least economically free places, the average person in the freest jurisdictions lives 16 years longer and is 40 percent more satisfied with their life, environments are cleaner, illiteracy rates are minimal, the poorest 10 percent earn eight times as much, and people are more tolerant of minorities.
Conversely, compared to the freest places, in the 25 percent least economically free jurisdictions, infant mortality is nine times greater, extreme poverty is 30 times more likely, approximately 20 percent of girls aged 15 to 24 are illiterate, and corruption is higher.
“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” Mitchell said.
