[lbo-talk] the Economic Freedom Index isn't quite meaningless

[Daniel Davies]

My online mate John Quiggin pointed out that there is one economic variable of
interest which is quite highly correlated with "economic freedom"; the
percentage of total consumption which is accounted for by government
consumption:

http://crookedtimber.org/2004/07/24/big-government-is-good-for-economic-freedom

So if you ever find yourself needing an instrument for "big government" in a
regression model, it's worth remembering that the economic freedom score can
act as one.

best

dd

PS: It's always worth remembering that the "2005 Index Of Economic Freedom" is
based on "data for the period covering the second half of 2003 through the
first half of 2004".  I maintain my view, expressed a while ago
(http://crookedtimber.org/2003/07/11/cor-baby-thats-really-free ) that this
massive lag in such a self-important document, is quite risible. 

I have also been, off and on, telling the authors since 1998 that the marginal
corporate tax rate for a country is a laughably bad summary of the corporate
tax regime (because of different tax bases, depreciation allowances etc), and
plan to send them a small card and bouquet to commemorate the tenth anniversary
of my having pointed out this mistake to them in a couple of years' time.  Doug
is doing commendable work in trying to help laugh this project out of existence
but my God it is a slog.

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