Market capitalist economies rely on economic freedom Indeed, one way we can assess the degree to which a country can be considered market capitalist is by the degree of economic freedom it permits Several organizations have attempted to compare economic freedom in various countries One of the most extensive comparisons is a joint annual effort by the Heritage Foundation and The Wall Street Journal The 2008 rating was based on policies in effect in 162 nations early that year The report ranks these nations on the basis of such things as the degree of regulation of firms, tax levels, and restrictions on international trade Hong Kong ranked as the freest economy in the world North Korea received the dubious distinction of being the least free It seems reasonable to expect that the greater the degree of economic freedom a country permits, the greater the amount of income per person it will generate This proposition is illustrated inFigure 2.15 "Economic Freedom and Income" The group of countries categorized as “free” generated the highest incomes in the Heritage Foundation/Wall Street Journal study; those rated as “repressed” had the lowest The study also found that countries that over the last decade have done the most to improve their positions in the economic freedom rankings have also had the highest rates of growth We must be wary of slipping into the fallacy of false cause by concluding from this evidence that economic freedom generates higher incomes It could be that higher incomes lead nations to opt for greater economic freedom But in this case, it seems reasonable to conclude that, in general, economic freedom does lead to higher incomes Government in a Market Economy Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 103