Economic Freedom

Economic Freedom

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STEP 1: Economics is a subject that deals with how to use resources that are limited and have alternative uses in such a manner that maximum profit is achieved with social welfare.

STEP 2: Economic freedom refers to the capability of people to take their own decisions in economics without any government interventions or limitations. One sent toward economic freedom is the liberal tradition which includes freedom of trade, freedom of the market, and property of free enterprises. The second approach refers to individual choice and economic freedom consists of freedom from want, engaging in collective bargaining freedom.

The liberal tradition consists of freedom to produce, freedom to trade, and freedom of consumption of any commodity ad any services achieved without any fraud or government interventions. The private property rights system is very important from the view of the liberal free market. This contains mainly two rights that are right to control the property and the benefit and the second one is the transfer of property rights. 

Indices of economic freedom: There are mainly two indices of economic freedom, which are the annual surveys of Economic Freedom of the World (EFW) and the Index of Economic Freedom (IEF). These two indices generally measure the Economic Freedom Degree in the world's nations. 

Measurement of economic freedom: There are 12 quantitative and qualitative factors grouped under 4 categories of economic freedom, which are given below:

(i) Rule of law: - This includes rights of property, the integrity of government, and the effectiveness of the judiciary.

(ii) Size of the Government:- This consists of spending of the government, the burden of tax, and fiscal health.

(iii) Regulatory efficiency:- This includes the freedom of business, freedom of labour, and monetary freedom.

(iv) Open markets:- This consists of freedom of trade, freedom in investments, and freedom of finance.

These categories are measured between 0 and 100. 

 STEP 3: Economic freedom causes many benefits for the quality of life. The index of economic freedom resulted that the relationship between economic freedom and social goals is conclusive. The components of economic freedom generally deal with healthier societies, environment cleaning, greater per capita income, development of the human resource, democracy, poverty alleviation, and so on.

All these things positively affect the quality of life as these things improve the standard of living, and improve the health conditions of people.

STEP 4: Therefore, economics deals with the rights of human beings, which gave them the power to control their labour and property. In this, the people are free to produce, consume, trade, to invest according to their own decisions without government intervention.