The Great Antidote

Robert Lawson on Educating for Economic Freedom: James Gwartney's Legacy

January 26, 2024 Juliette Sellgren
Robert Lawson on Educating for Economic Freedom: James Gwartney's Legacy
The Great Antidote
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The Great Antidote
Robert Lawson on Educating for Economic Freedom: James Gwartney's Legacy
Jan 26, 2024
Juliette Sellgren

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Robert Lawson is the Jerome M. Fullinwider Centennial Chair in Economic Freedom and is director of the Bridwell Institute for Economic Freedom in the Cox School of Business at Southern Methodist University. 

Today, we talk about James Gwartney, a great economist who recently passed but leaves a significant legacy, from accessible and interesting textbooks to the creation of the Economic Freedom of the World index. Unlike many academics, he even left his desk to pursue his ideas! We discuss Gwartney’s life and how his work has transformed the teaching of and measurement in economics. 

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Send us a Text Message.

Robert Lawson is the Jerome M. Fullinwider Centennial Chair in Economic Freedom and is director of the Bridwell Institute for Economic Freedom in the Cox School of Business at Southern Methodist University. 

Today, we talk about James Gwartney, a great economist who recently passed but leaves a significant legacy, from accessible and interesting textbooks to the creation of the Economic Freedom of the World index. Unlike many academics, he even left his desk to pursue his ideas! We discuss Gwartney’s life and how his work has transformed the teaching of and measurement in economics. 

Never miss another AdamSmithWorks update.

Follow us on Facebook, Twitter, and Instagram.

Juliette Sellgren 

Science is the great antidote to the poison of enthusiasm and superstition. Hi, I'm Juliette Sellgren, and this is my podcast, the Great Antidote named for Adam Smith, brought to you by Liberty Fund. To learn more, visit www Adam Smith

Welcome back. Recently the world of economics lost James Gwartney, a great economist who made economics more accessible to everyone, and he did a bunch of different things and overall, when I asked, responded by saying he was a true gentleman. So that's my bid. But today on January 14th, 2024, I'm happy to invite Robert Lawson to talk about Gwartney and his legacy. Robert Lawson is the director of the Bridwell Institute at Southern Methodist University, even the shorter title. And I trip over my words sometimes for a long time. I've been told to have Professor Lawson onto the podcast, so I'm glad we're finally making happen. I even had his daughter Kerianne Lawson on the podcast, so you should check that out as well. Welcome to the podcast.

Robert Lawson 

Hi Juliette. Thanks for having me.

Juliette Sellgren 

So before we get into Gwartney and his legacy and all of that, what is the most important thing that people my age or in my generation should know that we don't?

Robert Lawson 

Oh my goodness, you warned me about this question. And for an older guy like me telling young people what they should know as risks, what do they say these days? Punching down or whatever.

Juliette Sellgren

Yeah, that's it. But I don't care about that here that much. 

Robert Lawson (1.51)

Well, okay, so I'm a little bit reluctant to, but I did think about this a little bit because it's a tough question. It's a good question. When I look at young people today, the thing that I puzzle the most about is a certain sense of entitlement that young people seem to have that I didn't have growing up or at that same age. And some of that's good. Some of it's that young people, when I was young, we were told to sit down and shut up. And honestly, that was frustrating for us. And on the other hand, when you are young and the sense of entitlement that I've, since it creates demands on other people that I don't think really are very warranted. Just give you a couple examples. I had a young student the other day in class or in a workshop and someone said her name wrong a couple of times and it wasn't the biggest thing, but she got very aggressively indignant toward this other person.

It's like, my name is. And I was like, wow, that's weird. People mess my name up all the time and I have an easy name, but people call me Rob, which I don't like, and sometimes my last name is Lawson. They'll say Larsson or something and it doesn't bother me much. And if it does, maybe I'll politely say, Hey, my name is Bob or Robert or whatever. But sort of that aggressiveness. Now you see this in the extreme with the pronoun wars. Now if you say the wrong pronoun towards someone, but the thing is, if you have a preferred pronoun that's really putting a demand on other people and people are going to make mistakes. I don't know Juliette, but I'm assuming you're, what is it? She/her, but if you were he/him, something

Juliette Sellgren

Like that,

Robert Lawson (3.42)

I'm probably going to make that mistake. I'm probably going to call you her. And it's just a mistake. It's not an attack, but a lot of people are reacting as if it was an attack. The biggest example of this recently was that White House intern letter to President Biden, the indignation that was like, listen to us, this is the President of the United States. It would've been unthinkable when I was that age. It would've been absolutely unthinkable, anonymously, even to demand the attention of my boss, much less the President of the United States. So I guess it's sort of a man, everybody should chill out. Other people are just getting through life the way you are. Everybody makes mistakes. If someone does something you don't like, it's not an attack. Pull 'em aside politely and say, Hey, I'd prefer it if you said he him. Okay, alright, I'll try. But if they don't, it's not an attack. So that's kind of the old man rants, and I hope I didn't offend anyone out there, but there it's,

Juliette Sellgren (4.48)

Yeah, no, I think that that makes sense because it might seem that these two things are kind of unrelated, but I think especially using an economic line of thinking, it's kind of an institution that breeds this attitude, right? There might be multiple types of ways this has started. It might not just be pronouns or wanting to be heard or not being quiet. Some of these things are positive, but if you take all of them together and over time, if it kind of breeds this attitude of indignation that's not positive and it makes sense following that line of thinking that there's kind of this institution that breeds this attitude where I'm going to steal this idea. I'm going to say it that, well, I'm not stealing it because I'm going to cite him. Ryan Shatick, if you're listening, I stole your idea or I'm popularizing your idea or attempting to.

My friend said that the way he goes about it and the way he tells people to go about the pronoun stuff is to behave like you have a food allergy in a restaurant, and it's kind of on you to make sure you don't eat anything you're not supposed to. And so if you have a preference that is outside of the norm within the restaurant, then it is your job to make it known, right? If someone mispronounces your name or gives you a nickname that you don't like, it's on you to tell them that, no, actually not. I can't eat that. That's not my preference. That's not my name. And I think that that's a pretty good rule of thumb. So I really agree with what you're saying here. And yeah, so I guess without further ado, let's jump in. Can you give us a short biography, maybe an overview for those of us who don't know who James Gwartney was and some of the major feats of his career? We're going to get into some of it more deeply, but let's start with that.

Robert Lawson (7.01)

Well, Jim Gwartney, we call him Jim was, he was a Kansas Farm boy, and he went to a one room schoolhouse, and it had to be, he died when he was 83, but it had to be one of the last one room schoolhouses left. And he said that one of the reasons he developed a love for teaching, and that's really the biggest thing, he was a master economic educator in many different ways, was that when you're in a one room schoolhouse, the teachers got everyone from first grade to eighth grade or something, and the eighth graders end up teaching the sixth graders, and the sixth graders end up teaching the fourth graders and so forth. And so he grew up in elementary school teaching younger people, and it's just something that he developed in a sort of an affinity for. Then he went to Ottawa University, which is in Ottawa, Kansas, fell under the tutelage of a gentleman named Wayne Angell.

Wayne became a Federal Reserve governor. If you think about it today, the Federal Reserve has been so crazy popular, and we had Fed Watchers and things. I think every Federal Reserve governor today is an Ivy League professor or something like that. But back in the seventies, a little professor from Ottawa University of all places in Kansas was nominated to become a Federal Reserve governor. So the Fed was back then, not nearly the prominent institution that it's today. And then he went to grad school at the University of Washington, studied under the great Douglass North who won Nobel Prize, and then he went to Florida State. And one of the really remarkable things is that Jim went to Florida State in 1969 and never left. He was a professor at FSU for 53 years, which is a remarkable thing. I mean, I'm on my fourth university myself, and he thrived there.

And so Jim became a big Florida state football fan. And so he was a professor and he did his duty, published papers in top journals, American Economic Review, Journal of Political Economy, but really where he made his mark was economic education. He wrote textbook that we can talk about, and he worked with me later on The Economic Freedom of the World Index, created by the Fraser Institute, or published by the Fraser Institute, wrote a lot of popular books for the popular audience, trying to take economics to make it better in the classroom, but also to make it better, more accessible to a wide audience. So he was a first rate scholar, full professor, a hundred articles and taught journals, but he also got out of the ivory tower and thought it was his mission in life to be an educator. And while I'm giving the bio, I can't not say two very important parts of Jim's life, Jim was a devout Christian, and I confess that I don't really have faith myself, but Jim was absolutely devout and he carried his Christianity in a way that it should be carried. He was the most gracious, kind gentleman anyone ever met. And that's the thing you mentioned earlier. And the other thing he battled with, I think it's related to his Christianity, battled with a grace and dignity, a lot of health problems over the years. He had a serious cancer diagnosis in the seventies when he was quite a young man, still with young children, survived that. But then he had eye problems, glaucoma, which led to a series of problems, and he ended up going blind about 25, 30 years ago. So most of the time that I knew him, he was completely blind. And this really quite shocking that anyone could be as productive as Jim was while dealing with blindness. And he never complained, never once saw him complain about it. So that's just the overview, but we can get this after that.

Juliette Sellgren (10.59)

Wow. Thank you for sharing. I'm going to pivot slightly just out of curiosity. How do you manage to be so productive if you can't see, especially if you do research and thinking and things like that? I can't imagine. And it just, I guess, is a testament to how amazing his commitment was to educating and econ and all of that.

Robert Lawson (11.27)

Well, first of all, you have to be somewhat brilliant. And Jim was absolutely that. We debate whether he had a truly photographic memory in the sort of technical sense. But I mean, literally last week before he died on his deathbed, he was talking about specific plays for the Los Angeles Dodgers in 1950s. So he had an amazing, absolutely amazing memory, and I can't remember what I had for lunch yesterday, and he just could remember numbers. So when he would give presentations, PowerPoints, he would be talking with regression tables and he would get numbers correct to the third decimal point. So he was brilliant, but obviously technology helped tremendously. He mastered the talking to the computer and it would be things like, it was amazing to watch. He would say Open Word document in folder, Bob Lawson named Economic Freedom. And the file would open and then he would edit it, would talk to him, and he would edit it. He would correct my typos, which was embarrassing. I would blind man, correct your typos. So it's really a combination of pure genius, but also the technology. I mean, he admitted he could not have been productive or as productive without the technology, but it was so much so that I forgot frequently that he was blind. I mean, you just send him an email with a picture like, Hey, how's this graph look, Jim. And of course you can't see the graph, right? It's absurd to ask, but you would just forget. It was so seamless, his productivity.

Juliette Sellgren 

Wow, wow, I am going to use one of my generation's favorite words. That's wild. I guess I don't know how else to respond to that.

Robert Lawson (13.23)

Truly inspirational. I mean, these are not just kind of words. I'm not a effusive kind of guy. Absolutely inspirational to watch him go through life. It was the only person I think in my life that I've quite genuinely made me a better person just by watching him. He never said words like that, but just like, gosh, man, if this guy can survive this, I can survive whatever minor foibles are going on in my life, this is nothing next to what Jim does every day.

Juliette Sellgren (13.51)

If you could see my smile right now. Alright, so you said that his work made economics more accessible, and while on the one hand, I totally believe you, my generation, when we hear professor writes a textbook, we go, that's a moneymaking scheme. And so can you talk to us a little bit and maybe convince my fellow peers that what his textbook was about, how it was different from others and what its influence was, and maybe how it actually did make economics more accessible? [Editor’s note: The text is Economics: Private and Public Choice, Gwartney, Stroup, Sobel, and MacPherson.]

Robert Lawson (14.37)

Well, it's on a 17th edition. I think the first edition was 74 or something. 76 perhaps. So I think he definitely made a few dollars on it. As you make a textbook that makes it to that many editions, you're getting a royalty check. The thing that Jim really was, the reason he wrote the textbook is he was dissatisfied with the textbooks of the era. The main textbook back then would've been [Paul] Samuelson, which is very dry and technical. And if you ever, God forbid, I think there's still an edition somewhere coming out, but it's not very good. I mean, it's kind of everything. Everyone hates textbooks like that. Jim decided to make it more colorful, for example. Yeah, there are certainly, it's economics, there's graphs, there's supply and demand, there's this and that. But from the very beginning, there were boxes which told human stories boxes on famous economists, and not just about what they did in economics, but their lives and try to put some context on things.

And this was all fairly innovative. I think most textbooks do that now, but back then, that was kind of a new thing. The other thing I think that's important is he was trying to correct some things in the economics textbook landscape that he didn't think were correct. I mean, so for example, in the early era, the Samuelson textbook especially the treatment was, well, markets make mistakes. There's several things that markets happen in markets that we think are bad externalities, public goods, and then there's a solution called government for those problems. And that's in every textbook to this day, it's in Jim's textbook. But Jim wanted to add something. He said, well, the governments are flawed as well, just like markets are flawed, governments are flawed. Governments do things that for a very variety of reasons. And so what we really need to do when we think about public policy is like, well, markets fail, but a governments fail.

So we need to figure out what's the best way to approach a particular problem. So maybe the problem is pollution, that's one of the problems that markets create, but then we need to think deeply about what the appropriate government solution to that might be. And that was something that was completely new. It's in some textbooks today, now that kind of thinking, but it was completely new. The other thing is in macroeconomics back then there was a belief that governments could manage the macro economy. We could get rid of recessions. We would just have these omniscient and omnipotent bureaucrats or Federal Reserve governors who would sort of steer the economy the way you steer a ship. And if we do it right, the old textbook said, if you do it right, we can eliminate booms and busts and we'll just have a nice steady growth and no unemployment and all this. Well, Jim was like, yeah, for the same reasons. I was just saying, governments federal reserve, they make mistakes too. They're not perfect. And so he wanted this textbook to be a little bit more realistic about the portrayal of government and government solutions. He's not anti-government by any means, but he wanted it to be like, alright, we've got market failure and we also have government failure. Government's not a perfect solution to everything and every problem that you see in markets.

Juliette Sellgren (18.08)

What's amazing about that is that I guess I learned economics at the college level in a post Gwartney world. Well not post him, but post these innovations, and I see this, I can visualize exactly what these things are, like the boxes with the stories and the pictures and these kind of attempts to break away from, this is just a physics textbook about the economy. And really that's the part of the textbook that actually makes it readable and communicates the ideas in the way that I think actual economists, for the most part, think about them. So if you haven't picked up an economics textbook in a while, pick this one up. Maybe it will look super different from what you learned with. I'm glad to live in a world that has those innovations.

Robert Lawson 

I'm going to steal your physics textbook for economics. That's brilliant. A lot of 'em still look like that, though.

Juliette Sellgren 

Yes. Yeah, it is what they look like, which is exactly, it's bizarre. You can compare a math or physics textbook to certain econ textbooks, and it's a little sad. I don't know. I mean, part of it is understandable, but when you're trying to teach someone a new discipline, especially one that is not actually physics, it makes things, I think infinitely harder if you're not, I don't know. It almost predetermines how you're going to engage with subject matter and the ways you can think about it. And I don't think economics was made to be thought of in that way necessarily. Even if the tools that we have are super useful,

Robert Lawson (20.14)

One of the biggest mistakes that professors make and textbook writers make is the assumption that their students are going to become just like them, and they're going to become professors of economics. And so they write textbooks designed for prospective professors of economics. Well, that's almost literally zero of the people in the classroom are going to go on and become economists. And so you turn off a lot of people on economics, and as you say, economics is a lot of really valuable insights. And having economics I think makes you a more higher functioning human being in this world. But we start off with the assumption that they're going to be basically physicists and physics versions of economics, and it's irresponsible. It's not true. And a lot of professors get very, what's the word? They get disappointed in their first few years of teaching because they're shocked like, huh, my students don't care. Well, they don't care maybe, but your job is to make 'em care and you're not going to make 'em care if you start with basically graduate level equations, which is again, a lot. Samuelson's book was example A, but there's still textbooks like that.

Juliette Sellgren (21.30)

Yeah. I've found myself to be super lucky at UVA with this, because when we teach, so I am a teaching assistant for principles of micro and macro, and when we teach, we're instructed to teach as though the students are never going to take another class in economics. And the professors teach in that way as well. And I think that that sort of mindset is, as you were saying, very different from what the mindset usually is, but it stresses how important these principles classes are because when you are teaching a thousand kids a semester and then only 500 of them a year become econ majors, which is still a lot, it's the biggest major at our school. You're having lots and lots of kids walking away with just that. And so it just makes it so much more important. It brings it to the forefront what you do. And I don't know, I hope it makes it better.

Robert Lawson (22.44)

Well, the reason there's 400 majors at UVA is precisely because you've got such great teachers there. And UVA is well known in the world of economics as being a place with great teachers. Caneing is longtime master there, but so you go to a lot of schools, you'll find they have vastly fewer econ majors. And that's because the professors are frankly terrible. They're terrible at their job with teaching. Maybe they're great economists when they're published, but they're not good at teaching.

Juliette Sellgren 

And I guess textbooks are like a, they're like a supplement teacher or a complement teacher. I guess it depends on how good at teaching your teacher is. But I'm glad getting back on the subject that Gwartney made these changes and that we can all benefit from 'em today. So let's continue on this path. In your piece in the Wall Street Journal, you talk a bit about his work on Russia, and today, Russia's super reflective of the economic values that were driven by in America or what he talked about. But how did he influence early post-Soviet Russia, and why was he even involved with that?

Robert Lawson (24.00)

Well, there's two things. First of all, he was very interested in the Soviet world. And when the wall fell in 90 91, he took a leave from Florida State and went to Prague in 92, 93, I mean, so in Prague in 92, former Czechoslovakia Czech Republic, I mean, it was rough. Medical doctors were driving taxis because the state had basically collapsed. But he wanted to go to Czech Republic and teach free market oriented, or at least market oriented economics to students who grew up in a centrally planned economy and didn't understand anything like basic principles of supply and demand are essentially alien to them. So he had a long time interest in central planning and centrally planned economies and wanted to help bring them out of that experience. And then he got involved with a few, one of the writings with me and the Joint Economic Committee, he wrote a study with me and Randy Holcombe at Florida State, and I got the attention of the Joint Economic Committee of Congress. And he then was asked to be chief economist at the JEC. And because of that, he then was asked by Andre Ilarianov, who was Vladimir Putin's chief advisor, chief economics advisor at the time, this is around 2000 when Putin was elected in again in 99, barely took power in 2000. And so Jim and a small team of economists went, and Putin at that time, people thought was going to be a liberal reformer. He was going to continue the reforms that had been going on under Yeltsin before him.

And he talked about revitalizing the Russian economy and so forth. And so they went and gave him the spiel about how they needed to liberalize and privatize and move in the direction of more economic freedom for Russia. And Putin did, I mean, the reaction was pretty quick. Within a year or so of that visit, in meeting with Putin, they went to a 13% flat tax. Soviet area. Tax systems were extraordinarily complicated, but depending on the type of income, you could have tax rates at like 80%. And so it was a very high tax regime that Putin took over. So they went to a 13% tax. And it was amazing. People instantly said, opening businesses, you can generating income and reporting income. And it turns out the government earn more revenue at 13% than at 80% because everyone tries to hide their income when you're being taxed at 80%.

But I think the point about the Russia story, it obviously failed within a matter of, I was going to say years, but maybe it's months. Within a matter of months, Putin was back on the sort of authoritarian rant. And we now know in retrospect that Putin was kind of faking his rhetoric about moving towards free markets was a fake, he was really trying to put the band back together, trying to get the Soviet Union back together. And he's, it's a project that he's still working on. But I think the story for Jim is that he wasn't just content to sit in his office and write papers. I mean, almost every economist will just, they write papers, oh, I got to go teach on Tuesday. So teaching's like a tax, they just want to sit in their office, write papers for other economists to read. And let's be honest, most other economists don't even read those papers, but he just wasn't satisfied. He's like, I want to make the world better. Maybe he did, or maybe he didn't, but he wanted to try. So teaching in Prague and going to Moscow and writing the textbook, all of these are examples of his reluctance to just be a normal professor who writes papers for other people that no one reads.

Juliette Sellgren (28.03)

I will say this little anecdote that I didn't know if I was going to share it, but I think that it kind of shows that even though it didn't work in the long run, it did have an impact. And even the small impact, the one I'm about to share is something significant. So my friend's mom actually grew up in post-Soviet Russia, and she worked at the Coca-Cola factory, the first one in Russia. It was ever created, and it was kind of in the wake of all of these changes, and now she lives here. But she talks about the free in those moments and how it was super productive and everyone was excited to be working. And so it had real impacts on people, even if it didn't work out in the long run. And obviously not for his fault at all. It is also just crazy that Putin is still in power because I think we forget because we have possibility of change every four years in America, I tend to forget at least that it is possible in a reality in some places that for more than 20 years, you can have the same person in charge.

So I don't want to say disturbing, but it is a little disturbing. I think that I take that sort of thing for granted. But also that sort of thing happens in other countries.

Robert Lawson (29.50)

I'm 56 years old, I think I can count five people that I've ever run Russia. So Russia doesn't have any real history of four or eight years and out, whether they were the Soviet Union or now just Russia, they really have never been able to get something like an authentic democracy off and running. It's a sad thing.

Juliette Sellgren 

Yeah, it really is. I guess there's hope for the future, but not the immediate future by any means. Alright, so after, well, not after kind of in the period, he was one of the founding co-authors of the Economic Freedom of the World Index, which I guess goes hand in hand with his interest in what was happening over there. And it's been published by more than a hundred institutions, which is super successful, I think. And you've taken on the index for years now. So what does the index measure and what were its primary objectives?

Robert Lawson (30.57)

So back in the eighties, there was a meeting, it involved a bunch of highfalutin people like Milton Friedman and a lot of other people, and they were debating about whether freedom was getting better or worse, freedom in every dimension, political freedom, like freedom of vote, free speech, civil liberties, but also economic freedoms like the freedoms to buy and sell important export and things like that. And there was actually disagreement amongst this sort of group of people about whether it was getting better or worse. And Milton Friedman said, we should try to measure this. If we disagreed about how hot the room was, we would just bring a thermometer out. We would measure the temperature, the ring, and that would settle the debate and the thermometer, if the mercury is rising, then it's getting hotter in the room. You just settled the debate about temperature by devising a measurement device.

So the same thing for economic freedom. So Jim recruited me when I was a graduate student to work on the first economic freedom index, and we're trying to measure how economically free countries are. Economic freedom here means laissez faire, free enterprise. There are a lot of different terms that get used, but it basically means keeping your governments relatively small in a fiscal sense, private property, stable money in prices, free trade regulations that are reasonable. It's basically what you think of when you think of market countries. And so we generate, and we just gather a lot of data, and we use fancy mathematics like arithmetic to generate ratings. And so we now have 105 countries in our index, and it's still our index, even with Jim gone, Singapore is number one, Hong Kong's number two, Venezuela is 1 65, and we've been doing it every year since the mid nineties.

So we get a lot of attention from media and lots of news articles. We also get a lot of attention from other academics, which is really quite gratifying since I am an academic myself. When other academics, when your peers use your work, it's obviously a very gratifying thing. So we've now got quite literally thousands of articles published journal articles that have been written that used and cite the index. And so we made a really, I think the index has had a tremendous effect. But it was Jim. I mean, I was just in the early days, the helper, but it was Jim's really. It was his idea. Well, it was his set of ideas that sort of no one knew how to do it. So Jim's like, well, let's try and here.

Juliette Sellgren 

Awesome. So can you talk to us a little bit about the methodology that's used to compile the index and about how countries are evaluated and ranked within? Sure,

Robert Lawson (33.57)

Yeah. Yeah. I mean, we have like, oh gosh, 40 some variables now. And really there's more than 40 because some of those variables have sub variables. I've never done a proper count, actually, it's probably more like 60 or 70 numbers that we gather, and we gather numbers from the IMF, World Bank, Price Waterhouse Coopers and a lot of other groups, and we try to score them on how consistent they are with free market ideology, economic freedom. And so for example, we capture marginal tax rates. We've talked about marginal tax rates in Russia going from 80 to 13. So in the United States, marginal tax rates at the federal level are like 48. And then in California, maybe if you add in the California rates, maybe it's 55 or something, 58. So in some countries, the marginal tax rates are zero, Hong Kong is 20, but there are some countries that have no tax income like United Arab Emirates.

So we score them. And so countries that have low tax rates get higher scores. And we do this for a bunch of different areas. We do it for property rights, and the property rights are really hard to measure. But there's some data, for example, on how impartial judges are. It's a survey that the World Economic Forum has done for many years, but if I were suing you in court, and if the judge was your second cousin, obviously I'm not going to get a fair trial, a fair judgment. So they're basically trying to measure that. And we do inflation, which acts kind of like a tax on our savings accounts and tariffs and quotas. When I give speeches about the index, I call it the Adam Smith Index because it's kind what Adam Smith do kind of index. And Adam Smith was famous for being a free trader. So we include a whole area on tariffs and quotas and capital controls and countries without tariffs.

And there are countries actually without tariffs, Singapore has no tariffs, and you get better scores. So we basically have the raw data that comes in from a whole range of different sources, and then we just algebraically convert it to zero to 10 numbers scale, and 10 means more economically free, less, and then we just average it all up, got an index in a lot of ways, it's pretty low tech. There's not a lot of highly sophisticated statistical analysis. It's just grab the number, apply a simple arithmetic formula, take an average rinse and repeat. But the simplicity of it actually is a feature because a lot of our users are journalists and policymakers, politicians, and if it was really complicated, statistically complicated, I think they would be turned off because they would look at it as kind of a black box. Our index is quite transparent. You could open up the report, Juliette, and it should be, if we've done our jobs, I think we have, you should be able to exactly back out where every number came from, how the numbers got derived.

Juliette Sellgren 

What are some of the notable trends that you've observed over the years with respect to the index and especially relating to the United States?

Robert Lawson (37.26)

Good question. One thing is we absolutely do see in our data the general move towards economic freedom. That began, I think in the eighties. You think at the eighties, at the beginning of the eighties, Reagan and Thatcher and both countries moving away from their, in England's case, especially moving away from almost socialism, but even in the United States, Nixon, we had wage and price controls. We were talking seriously about industrial planning. But anyway, Reagan and Thatcher came along and they steered their countries pretty sharply back away from government control of the economy towards more market. And it's reflected in our data. But the interesting thing is it's not just in the United States and the UK all across the world. The eighties and the nineties were a period of moving towards liberalism, and I use liberalism in the correct sense, not the corrupted American sense. Moving towards more liberal open markets, tariffs went down all over the world, the general agreement tariffs and trade GATT, which became the WTO.

It was a worldwide phenomenon to get rid of tariffs, to privatize government enterprises, to lower tax rates like was done in Russia. But it was done in lots of places. One example, it's in the index, is we have conscription military conscription as part of our index. And military conscription is the ultimate tax government taxes, 100% of your labor. It makes you work for them instead of wherever you might want to work. It's a way to put it. Yeah, well, it is. And so it's accurate. One of the great things is the conscription is almost, it's not gone away, and I don't know the numbers off the top of my head, but it was something like 50% of the countries back in the seventies had constriction, and the US had conscription, and then now it's like 14% or something, much lower numbers, and there's, so there's been a move in many dimensions across many countries.

That's the biggest trend. And you see that in the eighties and nineties. I'll admit it's leveled off somewhat in the two thousands and 2000 tens up until today, but it's still increasing. Global average is increasing. They're still moving towards liberalization, not so much in the US anymore, but in Africa and parts of Asia, you're seeing really still strong movements towards more free markets. Now with respect to the United States, though the United States is a little bit of an oddball because we did liberalize on Reagan, and then in Clinton, we had budget surpluses amazingly today when you think about it.

But that mostly ended by about 2000. From 2000 forward, the US has actually been going down our economic freedom index. It's down to sixth in the rankings, but some of that's because almost everybody in the top is going down as well. Again, it's kind of a global trend at the top, but think about what's happened in the United States since 2000. We've fought wars on terrorism. We've accelerated the war on drugs in many ways. We're now fighting a war against illegal immigration. Apparently we're just fighting wars upon wars upon wars and spending that's associated with that. And also the regulations that are associated with that. Financial regulations, many of them, well-intended maybe to fight terrorists, but those regulations are extremely costly. And so our index for the US has gone down modestly, but it's gone down. It's one of the few countries really that's gone down as most are still increasing somewhat, slightly. I don't want to exaggerate it. The US is still one of the freest economies in the world relative to most. We have less taxes and regulations than most, but 2000 was kind of the high watermark for the US and for lots of countries. You'll see most of the high income countries peaked around 2000, got a slow decline since.

Juliette Sellgren 

Do these trends worry you or are you optimistic?

Robert Lawson (41.39)

When I was younger, I was much more pessimistic weirdly than I am today, which I think goes against the trend. I think most, again, I think it usually is the other way, but as you age, but part of the reason is because the more I study the rest of the world, the more I realized, not that it couldn't be better, and I would really wish it was better in the US, but I mean, it's really quite special. The United States has been able to sustain not just a fairly high functioning liberal democracy, and it's not as perfect as we would as we sometimes see, but a high functioning liberal democracy, but also a high functioning market economy. And we've been able to hold that together for a long period of time, and that's pretty special. And that gives me optimism that for the United States for the future, and we're now basically in terms of economic freedom index, we're now basically where we were in 1970 in terms of the index, but in 1970, people would've predicted liberalism that took off in the eighties and nineties. So maybe the 2000 thirties, 2000 forties will be another period of liberalization. I suspect it will be actually. And that gives me optimism. The rest of the world is, forgive me, it's pretty messed up in lots of ways. The taxes are higher, the regulations are higher, the property rights are weaker. Their monetary systems like Argentina, they're disasters.

It's not as good as I'd like, but it's not bad in context. And that keeps me an optimist. It's easy to get pessimistic in the short run. You just see Donald Trump or Biden or whoever, you just see candidates for office that you just think are terrible. I do mostly, but if you step back from that and look at the big trends, it's not bad. The world is actually vastly better off in almost every way today than it was when I was your age. Well, it's richer. Far fewer poor people. We're freer. They're more democracies. In the last few years, it's been a little rough, I'll admit. But over the longer trend, it's pretty good. And I'm hoping, I think this is just a hiccup-  well ask me in 30 years still alive.

Juliette Sellgren (44.02)

I wish we could keep talking about all of this, but I have one final question for you. But first I want to say thank you so much for coming on the podcast to talk about Jim and his legacy and all that you've done to maintain and uphold his work and for putting it kind of concretely somewhere in a podcast and in the Wall Street Journal and other places. So thank you. What is one thing that you believed at one time in your life that you later changed your position on and why?

Robert Lawson (44.40)

Well, first, thank you. I'm pleased to be able to honor Jim. A lot of people have been patting me on the back for the Wall Street Journal article and all the things I've written about Jim last week, but it's not me, and I'm getting a little emotional forgive me. But he's impacted so many lives. I mean, my inbox is just filled with testimonials from former students and friends who, and I just wanted to give them a voice and remember. But man, I thank you for the opportunity. Now, to your question, also a difficult question. It's a great question. I can't really think of a discreet aha moment where five minutes before I thought A, and then five minutes later I thought B. It wasn't like, but certainly over time, if I think about the things I thought when I was in my twenties versus what I think now that I'm in my fifties, I think one thing that really is different is voting.

When I turned 18th, literally on my 18th birthday, I drove down to the post office and I proudly filled out my voting registration card. I was so excited. I was finally 18. I was going to be able to vote. I got college. I was a college of public and president. I thought I was going to go law school, going to econ PhD. But I was very interested in politics and voting was something that I was proud to do. And then I did it for a few years, and then I started to realize I wasn't looking forward to election day. I didn't like it. I would go vote, and I would come out with a bad feeling. I just did something dirty. I looked at the candidates. I'm like, I don't like any of these people, and I didn't feel good about it. And then I sort of made a decision to stop. And it turned out it was a great decision. I just stopped voting.

It was just because I just didn't like voting. So one of the beautiful things about being an adult is if you don't like something, you just don't have to do it. That's what it needs to be. An adult. I don't have to finish my piece. I don't have to vote. It's my choice. But in the last few years, I've gotten even more strident about my view towards voting, and people will probably hate this. Listen, but I almost think it's evil now to vote. And I'm not calling people who vote evil, but so much voting is a way of making decisions collectively. And there's some things we have to make collectively. We have to decide where the sewer's going to go, and that's a collective decision. We're not going to have 10. We can't let every household decide where the sewer goes. That's ridiculous. We're going to have one sewer and we're all going to share it.

And if we would need to elect a sewer commissioner to make that, that's fine. Making decisions collectively for decisions that should be collective makes sense. But so much of what we're deciding nowadays is how one group of voters can gore the ox of another group of voters. We're collectively deciding whether these two dudes can get married. There's nothing thing about whether these two guys can get married. That's a collective decision. That's not my, I mean, what do I have to do with that decision? That's their decision. There's something inherently collective about whether two guys get married or two women get married. There's nothing inherently collective about how we pay for, we now vote on how much money my neighbors have to spend to educate my kid. Well, you know what?

It's not really my neighbor's job to educate my kids. So much of voting is about group A, trying to make group B do something or not do something that they do something they don't want to do or not do something they do want to do. I just think telling people what to do or what not to do is wrong. And that's what most of what we vote on, I don't know, it's 80%, 90%, or 95%, but most of what voting is now is about electing people who are going to tell other people how to live their lives or how not to live. I don't want to participate. I'm out. Again, I'm not calling people evil who vote because I think they're all well-intentioned, but I, I'm increasingly of the opinion that it's just wrong to even participate in the political process, given that it's mostly about telling other people what to do. I'm just a conscientious objector now.

Juliette Sellgren 

Once again, I'd like to thank my guests for their time and insight. I'd also like to thank you for listening to the Great Antidote Podcast. It means a lot. The Great Antidote is sound engineered by Rich Goyette. If you have any questions, any guests or topic recommendations, please feel free to reach out to me at Great Thank you.

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