Monday View in The Daily Mail by John Blundell
If you lived in the US, that would be four months for the government and eight months for yourself, while if you lived in much of the European Union it would be six months and six months.
How much does this matter? A lot, according to The Heritage Foundation, the Washington DC-based think-tank. It has studied 161 countries and has scored each one of them on a list of 50 economic variables to compile the voluminous Index of Economic Freedom.
The results are clear:
lightly-taxed, lowly-regulated economies with clear property rights, freedom to trade and sound money under the rule of law prosper mightily. The rest are mired in poverty.
It is indeed stark: the ‘free’ economies deliver average incomes across the whole population of about Â£18,000 per annum, while in the ‘mostly unfree’ category, the comparable figure is a mere Â£2,000.
The list is headed by Hong Kong, while Ireland is a remarkable fifth and the UK hovers on the very fringe of the top 10 at ninth with Australia.
Estonia is astonishingly sixth with Denmark and the US.
In fact, northern Europe does well overall with Iceland, Ireland, the UK, Holland, Denmark, Sweden, Estonia and Finland all ranked as ‘free’ and Norway finishing only just outside this elite group.
In contrast, the rest of the EU is uniformly badly ranked, with the exception of Luxembourg. If we started a Global Free Trade Area, then France, Germany and Italy would not be in it.
Asked about the astonishing rise of Estonia, former Prime Minister Mart Laar told me: ‘We realised early on the importance of the rule of law and clear enforceable property rights.’
He also described how he had abolished subsidies, opened up his economy, gone for trade not aid and embarked on radical tax reform. ‘Trade not aid’ was his conclusion.
On the other hand, major economies such as Argentina, Turkey, Japan, Malaysia and Venezuela show great declines when judged by these criteria.
While the Index of Economic Freedom is a dry, encyclopaedic and data-driven reference tool with a very useful two-page profile of every single country, Jim Rogers’ newly published Adventure Capitalist The Ultimate Investor’s Road Trip is a terrific read, a real page-turner. More a novel than an investment guide.
Once dubbed ‘The Indiana Jones of Finance’, Rogers co-founded the Quantum Fund with legendary investor George Soros.
He sold up aged 39, since when he seems to have spent a quarter century driving around the world looking for good investments. His 1994 book Investment Biker was a huge best seller and now he is back.
This time he is in a custom-built one-off 4×4 Mercedes convertible covering 152,000 miles and visiting 116 countries in three years.
It’s an adventure story, a travel book and a fascinating economic atlas. He is big on China – the 21st century will belong to it, he says – but he is depressingly hard on Russia.
Pakistan, Mexico and South Africa are in serious trouble. On the other hand, Spain, Namibia, Bolivia and Angola are hits. Paraguay ‘should not exist’, an ‘ anti-capitalist spirit prevails’ in India, and Egypt ‘has one foot stuck in the past’.
Oh, and the euro is doomed to fail. Now you know.
It’s rollickingly iconoclastic, individualistic stuff, but he made many correct predictions a decade ago in Investment Biker and he puts his money where his mouth is.
Thus his Rogers International Commodity Index, founded August 1, 1998, has soared while the market has plunged. The new commodity bull market is here.
So as you celebrate Tax Freedom Day and later toast the birth of Adam Smith – 280 years ago tomorrow – remember that we all flourish when taxes are low.
The Heritage Foundation has given us the data while Rogers has gone and seen for himself.
John Blundell is Director General of the Institute of Economic Affairs