Economic Freedom by the Numbers 

Addressing a multitude of counter arguments while providing a well-organized presentation based primarily on data. If only everyone presented their viewpoints like this! Thank you for your time. Absolutely one of the best videos I’ve ever seen. You better believe I’m sharing the hell out of this-and most importantly encouraging reasonable discussion!

Somebody give this man a cookie! I've learnt through this channel more than school and college combined.

I simply can't get enough of this guy. He breaks down seemingly impossible to comprehend economic concepts in a very practical way and is entertaining too !

It's so rare to find people who are able to articulate a political opinion that isn't just some emotional appeal. The way this guy presents a perspective and then actually supports it with facts and reasonable logic is so good. Really like watching these.

Here in Brazil that phenomenon can be seen quietly well, the salaries are in general low because an employee can cost at total up to 180% of it's salary due a truck load of taxes and we still have to pay income taxes afterwards.

Wow this guy is a beast, addresses every counterargument out there and still proves his point.

“We’ll start with 1984.” Well, I certainly hope we don’t.

Central planning always leads to everyone being equally poor...

I like this and agree but it feels like he's telling me what I want to hear.

It would be interesting to see how the states that are always in the economically free category compare to those who are always in the centrally planned category.

Please don't stop uploading this content. The human race depends of it.

Best presentation i have ever seen. i enjoy learning from you prof. Antony Davies. I Love all the series. God Bless you and may you continue showing these insights.

What would be interesting is the same analysis of the comparative statistics focused only on the states that were in the same group for the entire period, and ignore the states that waiver back and forth. The reason for this is when you have a state going from one to the other you can have a delayed effect in actions so an action taken under one may not manifest itself until after the state government has changed. I suspect an analysis like this would show a larger disparity between the two systems, but it would be more realistic.

I love these videos! Thank you! Keep them coming :-)

Counter arguments? I'm awestruck by their mere consideration, haven't seen such an educational discourse in a long time.

Brilliant.

Beautiful argument against slavery.

That really is the true separation today: Those who want to control you vs Those who want to enable you

Thanks for the video

Your final conclusion, EXACTLY!!!!!!

Centeral planning can be corperate as well as goverment. Individuals having more control over their desicions does enable the individual to persue the wealth that matters to them. However, wealth can be created by patterns of trading goods and services repeatedly and often centerilized desicons that create marketplaces, currancy, and marketing that encourage wealth and income. I encourage deeper thought into what creates the wealth that individuals desire and how govenments and corperations can enable that.

Loved the info, but why did he switch the bar graph colors red & blue midway thru? Hmmm...

In deciding whether or not a country is "centralized" or "individualized" in terms of decision making, is the basis quantitative or qualitative? Is it a mix? And what are the factors used in either method for deciding whether it is centralized or not? Also, are they not on a spectrum, or are they simply one or the other? I'd like to have these questions answered before being able to properly understand the argument.

But but but my ideas are for what I deem the greater good so I can force them to pay for and use them.

the conclusion was realy a kicker. realy nicely built punchline!

Outstanding

Stop making logical sense, I'm trying to be a liberal!

Great presentation

I love this economic analysis.

Thank you for the very informative video. Prof Davies, I'm curious how you would respond to the claim that your data is picking up the effects of PRE-EXISTING inequality/poverty/low GDP, etc. For example, in your counterarguments you show that centralized states clearly exhibit higher rates of all these things. But correlation may not mean causation. In my mind, it could be that pre-existing inequality/etc lead the populace to develop more centralized decision making. I would think that the causation might actually be running in the opposite direction. Thank you.

Wait, why was the median being used to measure household income, but the average (mean) was being used in the counter-argument example?

What data sets are being used? All I see here are generalized ideas with possible correlations.

Great video

This is really interesting, but I want to see more details if someone can point me to some literature. First, he talks about decision making by the government; what decisions are those exactly? Second, how reliable is this measure of centralized vs. de-centralized decision making? Third, do we have data for prior years?

Animal Farm perfectly explains this

The problem is that what you describe is a one-player system: the only thing that exists is the people in your narrative. The reality is that the system has at least two players: the people and the corporations. If the government withdraws from this then it is an unbalanced system, the corporations will end up exploiting the people as much as possible (the cost of an epipen will be $100+, the cost of education, healthcare will be unaffordable, the food industry will do whatever they want to crops and products etc). This is why you need the government to intervene and create a three-player system, where the corporations have something to fear from if they overstep their bounds and the people have a way of exerting pressure on the corporations via the government.

13:00 You changed the colors around to mean the opposite of the previous graphs. Confusing.

5:26 - Your counter-argument showed an example where the aggregate would *not* mask individual effects. The original data was *median* household income. You then used the *mean* to make your "counter-argument". If 10 people make $50k, the median is $50k. If 9 people make $0 and the tenth makes $500k, the median is $0, not $50k.

Adjust the charts for the cost of living in each state

Conclusion: If less government is better, then ZERO government is best. Central planners have no right to take money by force and then decide what services to provide. The free market will be most responsive to the individual's needs. However, if we insist that government must exist, then prepare for an endless squabble over what services each person considers appropriate for their "user fees" (taxes). Some will consider it reasonable to spend billions on bailouts for too-big-to-fail banks, subsidies for corporations and endless "defense" spending. Others will ask why that money couldn't be better spent elsewhere.

12:04 why did you switch the colors? makes it look like you're trying to pull something.

What is interesting to me is that the states that are more individual decision making appear to be more negatively affected by changes in the market environment, often posting a higher unemployment rate in the year or two prior to recession except in the case of 2010, 2011, and 2012

should be required viewing for all federal and state legislatures

this goes will with Michael Munger's latest appearance on econtalk where he talks about his essay in learn liberty about permissionless innovation

I'd really like to here more about how these state classifications were made... ranked by "centralized decision making?"

In UK and USA, all the think tanks claiming that people should be weaned off Government welfare payments, all claimed the monthly payments for staff, from the government

It's a great video, but I have some questions, if anyone can answer that would be great: 1) What is the metric that decides whether to include a state/country in a more centralized decision process versus individual, and how do you back it up as being accurate? 2) Why do you use average income rather than mean income? 3) It's well known that states like CA pay higher salaries in response to higher costs of living. Shouldn't cost of living be accounted for when comparing income? It was shown that there were a few times where centralized states had higher incomes, and also that CA switched 8 times. Are these related? I might think that adjusting for cost of living would also smooth out the data in this case and be more significant.

Am I the only one who had a hard time paying attention after he switched the colors at 12:00?

Why the (seemingly) arbitrary start date? I'm curious to see if this trend also holds true if you pick a different start year.

They need to combine this with Hans Rosling's stats in circles.

Agreed , Free trade under government supervision not benefit the government but to maintain the balance in order to protect the common good .

Why wouldn't the benefits of division of labor, which is almost universally accepted, be applicable to govt jobs? Aren't they just the hired help providing a service?Do property and personal rights apply equally to each individual? If yes, shouldn't this be centrally enforced? Or should it by defined arbitrarily by each person's individual opinions about property and individual rights and enforced differently? Isn't the foundation of the US Constitution that there are principles that apply to all people within the geographic region, a collectivist contract applicable to all citizens, that no individual can breach without penalties?Is the presenter against a constitution that limits the govt hired help and the citizens from breaking that contract??

So at the end, self interest is brought up. The complication with central planning is, aside from competency, the fact that whoever has power will also act selfishly. However, under unregulated capitalism, this power tends to accumulate in the hands of the wealthy. So the crucial thing to understand is that this is a totalitarian regime, in it’s own way. So in order to prevent tyranny, you need to organize mutual dependence, and any central planning needs to have decentralized decision making, by which I mean democracy and transparency. We see the need for this when private entities with no mechanisms of transparency or democracy bribe politicians, or manipulate access to information on the internet. - in terms of economics, markets are better at producing value quickly. While socialist markets are better at this than capitalist markets, democracies are not as adept at mortal combat as totalitarian regimes, so the only way to achieve democratic industries would be a global consensus. Meanwhile, markets involving rational, self interested, agents w perfect information exclude some buyers and sellers, so it makes sense for certain goods and services to be dealt with publicly, to promote the general welfare. It basically depends on what is more important between promoting a higher rate of value creation or a wider distribution of resources, in terms of promoting a healthy and stable society. Finally, free agents in a market are not capable of protecting the environment, maintaining an infrastructure, preventing human-rights violations, or undertaking risky enterprises. The public sector has proved necessary for those things. I wish economics were truly as simple as the speaker makes it seem, but it is not.

Great video how do you define centralized vs non centralized govts? Denmark Norway rank very high on the economic freedom index for some industries where did they fall?

in another video you said that all humans strive for happiness. How does that correlate with economic fredom? www.shs-conferences.org/articles/shsconf/pdf/2016/06/shsconf_rptss2016_01109.pdf this article for example suggets that while free markets correlate with higher hapiness limited government has negative effects on it.

As always, the answer is not quite that simple. High regulation is unwanted, but there are many legitimate cases where gov intervention other than physical protection is necessary to keep the scales from tipping too far.

I really don't like just one number, like the mean, or the median. Standard deviation or Confidant intervals should be included as well, when possible, in these examples.

Good presentation. Takeaways for me: The rich already pay the majority of effective tax in both % and total dollars The poor receive a net refund, their effective tax rate is actually negative. They are actually being subsidized already. The middle class also pays little tax overall, and benefit the least from incentives and subsidies. The rich subsidize the poor in our progressive tax system, and benefit the most from incentives. The government has so far proven to be ineffective in efficiently allocating subsidies and pensions to uplift the poor. The system encourages lobbying for tax avoidance loopholes and leads to development of complex IRS regulation that is difficult and expensive to maintain administratively. Logically speaking, corporations are not individuals, they are groups of taxpayers working together to make a profit. Solutions - reform the IRS almost completely: 1. Charge a small tax on ALL types of financial transactions and asset transfers (ie VAT / Sales Tax 2.0) through banking all banking and payment systems, ATMs, and businesses through something like blockchain. This can be implemented cheaply and the banks should pay the cost. We've bailed them out already. They are in debt to the public. 2. Base income tax on expected disposable income after revenue (-) living costs, NOT on taxpayer's submitted P&L, which can be manipulated by public accountants anyway. 3. We should not tax corporations at all. We should tax the owner's and employees with a flat tax based on #2. 4. Local, State, and Federal governments should cooperate on a common information system to accurately report how each 1$ of tax is spent. 5. Analyze all government programs for and restructure for leanness and efficiency. Ask Congress to end the #ProgressiveTax. It's unfair, punishes success, produces less revenue for the government, and encourages corruption.

DO NOT USE Median Household income. That is not the work of a serious economist. Why? Because household size varies from one place to another as well as from one time period to another. Household size has fallen over the past 50 years, I believe from 3+ to 2.2 or something today. You're supposed to use median individual (personal) income. There's something else to keep in mind. California has a lot of illegal immigrants who ran across the border to live there. Many of their incomes, which are generally lower, are very likely included in income survey data which would skew California much lower than otherwise would be. And there's the fact that unwed childbearing and single motherhood has gone crazy high from what it used to be prior to 1970s, which depresses household and personal income data

I live in Alabama which was included in the centralized states. I don't understand that and would love to know how that was determined. I do live in the southeast corner which is not a good representation of the entire state in terms of poverty and such. This could answer why Alabama lives in the bottom of every economic measure made in spite of having the richest biodiversity in the country, some of the best Universities in the country and the most diversity of natural resources in the country.

5:18 Sad thing is that median income is decreasing. If inflation is not counted in it will be even worse. Its probably gross income, so when you count taxes (all of them) it will be even worse.

How about comparing China and India? I think, to make a more proper comparison we should also include the effects of scale economics and ethnic diversity and path dependency (rich countries' history of mercantilism and colonization) . I think this should also be considered as a case for the states. I like watching your videos though.

Interesting, but bivariate correlations are seldom sufficient to reveal complex causal relationships. Economic growth and incomes in a sate depend on a host of factors: the educational levels of the state's labor force; the quality of the state's infrastructure; business taxes; personal income taxes; the multi0national corporations located in the state; cyclical factors. Michigan's economy is a bit of a yo0yo depending upon the health of the auto industry.

If I see those graphs, the first thing that comes to mind is: show me the statistical error bars nevermind systematic errors and that correlation does not equal causation. Taking those effects into account most of the years, both more centralised vs. more free are basically indistinguishable. Also, the yearly fluctuations are much much larger than the system choice. If you think about it It's actually a good presentation to showcase how you can read statistics and interpret it in a way that confirms your prior beliefs. (and I am not claiming the opposite is true, i.e. centralised is better)

I realy like this format, but I must say that only looking at data like this can lead to a biased view since all of these states face different economic shortcomings and strengths.

This is very dangerous. This guy is very well spoken and meticulous for sure. That makes him very easily believable. You're given a bunch of numbers and a seemingly reasonable interpretation of the data. You know what he wants you to know, and if you're not an expert in that area, you wouldn't know what he left out. For example, an argument could be made that the states that lean towards centralized decision making (bigger government) are the ones with big urban population. Conversely, the states that lean towards smaller government are the ones with more activities revolving around farming and other non-office activity. It's not difficult to understand that urban folks are much more likely to lose jobs (be counted as unemployed) than farmers. That's just one aspect that would affect his interpretation of the data, but was not considered.

Central planning to capitalism is like railroads to automobiles - both have benefits and disadvantages, but former is very controller, rigid and inconvenient (needs to be driven to the station, waiting, etc), while the latter though less capable in terms of moving the goods give full control and freedom to the driver. In the end, the individual driver usually arrives faster.

The cost of living in many states isn’t calculated in dollars.

10:11 I have a cart, a horse, and no concept of sequence.

You will probably find that even in the individual choice states there are still centralised decisions made, just not as much. If these could be reduced even further then it would be even better for individual choice outcomes. I spend a lot of time in northern Thailand in poor areas and these people have the freedom to do pretty much anything to make money and do with their property what they want like build a house or farm without government intervention or approvals/certification.. they are happy and have economic freedom. They are not that poor that children have to work and they all seem a bit fat. If there was more government control they would be easy worse off as costs would increase dramatically

God bless heal and save you

By my age, 40, father already almost retired from work. This isn't a rich persons tale either, by 40, even in layman's terms, a worker should be more than midway in an established career. I feel left behind by choices made in my early youth, like joining the Army, "worst decision made in my life", or not taking at least one class per semester at a community college. By age 30 regardless I would've graduated from a college or technical school, cause 3 credit hours × 20 is 60 credit hours. By 2010-11, would've got through college.

Why am I not surprised?

You will never see the other parties show actual statistics about unemployment and how it really is.

It seems so pure to say the Government will make the decisions in some autocratic form, well, everyone has to pay extra for that. You have to pay for non-productive government entities. I'll DIY my decisions thank you.

Read a few comments, and you All reall seems to like the numbers. Anyone considered critizes Them?

...Somebody please help me understand this.... In their '5 Inequality Myths' video, he shows data stating that household incomes have been rising since the 70s (backing up the point that the middle and upper class are growing, poverty shrinking).... but the first chart in this video clearly shows income levels dropping steadily. (Weirdly, both sources cited are the US census bureau) You hide your libertarian bias very well, Mr. Davies, but it reveals itself in the data you choose to show! (but what should I expect from a channel called Learn Liberty) Still tho, great videos! I love how he focuses on facts (even if he is putting up a front of objectivity)

I have a counter explanation. There definitely is corelation but what if causation is other way then you implied? What if in states where is more poverty (and so on) more people vote for socialists because they hope socialists can help them? That would also explained that corelation.

So... What do we do with this information? It's not like governments are going to give up their power for free?

Dear Mr. Davis, what if the effect goes into the other direction? People in states with lower income and higher unemployment might vote to a higher degree for politicians that lean towards more centralized policies.

Instead of splitting the data between central and individual, why not score it versus the actual metric value so you can show a relationship between the score of individualism and the economic metric of interest?

✨

point of contention is your comment that on the Gini graph, down is good, up is bad. The implication that inequality is bad is a rather misleading perception. It depends on what we are looking at, and for what context. I don't find it bad that I am unequal to you Professor Davies, in economic education,, as it means I you have the ability to elevate my understanding. I don't find it bad that I am unequal to Mozart in piano and musical composition, as it means he could create music to inspire generations. Likewise, I am not at all upset that I am unequal to Elon Musk in finance and business, as it means that he is capable to creating a private effort to send man to Mars, and explore space, which has reduced space launch costs so drastically, that it made it profitable for private companies like Facebook to team together to launch satellites that connect internet to remote regions of the world that otherwise never could have afforded to, because it will increase the profits of Facebook. Inequality isn't a bug. It's a feature. A world in which we are all equal, is a world in which we never innovate and progress. What should be looked at, and stated, is that the greater the opportunities for individuals, the greater we should see such prosperity, which should be the sort of equality we look to.

still i think household income is a REALY BAD kpi .. average income per worker is FAR FAR more precise and masks nothing..

the unemployment chat should start at 1984 same as the household income one. the fact it doesn't kind of skews the data slightly.

The inequality in the USA is appalling => Decisions in the USA must be made centrally (and mostly they are -- the impact of public opinion on government policy is about zero). There are a few people making most decisions, and individual decisions are mostly reduced to a few undesirable choices. Which of two dishonest politicians gets your vote? Which of a handful of miserable jobs will you take, or starvation will be better?

Why the US study was made with states switching between categories?

Watch this video to learn about Economic Freedom!

5:18 it looks to me like the mhi is going down.

with great freedom comes great responsibility. If you're not allowed to be free, you're not allowed to be responsible. And if you're not allowed to be responsible, then what the hell is the point of life?

8:00 minutes of the video: When these 100,000 people stop looking for work and are no longer in the unemployment rate how do they pay their rent and feed themselves?

I would appreciate some articles comparing the state in a more statistically significant way. Simply put, show us the methodology, because it seems like you picked two numbers and compare them (then realized you should check other variables like unemployment) but that is sadly not enough in my opinion. However, without you presenting the research I cannot judge those results and thus they are meaningless.

"The appropriate role of government in society is to prevent people from harming each other but otherwise leave them alone." Big government does a poor job at this. Would a small government do any better? And what about those who are in need of aid? Is it inappropriate for a government to help them?

Median household incomes is not the correct metric. The correct metric to look at is individual income.

The problems is that correlation doesn't imply causation. I'm not hearing any strong argument in favor of causation. It seems nitpicking but I'm very curious about this part, it's the "big deal" part. Because there always can be another explanation, and we don't accept argument from ignorance. How can we exclude third factors? How can we exclude that the states with higher poverty rates (for different reasons) are moved by the voters towards centralized economic approaches? How can be sure that is not the other way around? Differences in the economic fabric produce different economic approaches in the political system? The case of inequality. It would be very interesting to discover that inequality produces more centralized policies. How can we exclude that? It seems to me there's room for arguments here.

Correlation /= Causation.

Never too late, Travis. You’re half my age, get busy, dude.

I raised my hand to ask the professor a question and when he didn't answer I remembered that I'm only in RU-vid college.

@ 15:07 Leave me alone and let me take care of myself. "Enable me and I will take what the taxpayer is forced to offer".

Theory seldom fits reality and because such strong individualism we choose to ignore it..... it so sad.