Fraser Forum | November/December 2012
By Alan W. Dowd

Since 1996, the Fraser Institute has used its Economic Freedom of the World (EFW) studies to illustrate the positive impact of economic freedom. Specifically, “countries with institutions and policies more consistent with economic freedom have higher investment rates, more rapid economic growth, higher income levels, and more rapid reductions in poverty rates,” and “out-perform non-free nations in indicators of well-being” such as per-capita GDP, life expectancy, and political and civil liberties (Gwartney et al., 2012).

Since 2005, Foreign Policy magazine and the Fund for Peace, an independent, non-profit research organization devoted to conflict prevention and sustainable security, have monitored the world’s broken countries by maintaining a Failed States Index (FSI), where the likes of Somalia and Sudan rank at the top by being the worst. Failed states face refugee and demographic pressures such as disease, scarcity, and mortality issues; “uneven economic development” between ethnic groups and/or regions; “human flight and brain drain”; and a range of political problems, such as human-rights violations, deteriorating public services, and/or unchecked internal security machinery (Fund for Peace, 2012). (See table 1 for the FSI’s worst of the worst and other focus countries that command the West’s attention and resources.)

What these failed and failing regimes have in common is a freedom problem. Indeed, the connection between a lack of freedom and state failure comes into sharp focus when the FSI is overlaid against various measures of freedom, including the EFW.  

Failure in focus

It’s a paradox that failed states can be places dominated by tyranny, which is another word for too much government, or places where there is anarchy, which is another word for no government at all. In either case, liberty—the freedom to own property, build wealth, move about, or simply live in peace—is in short supply.

Consider how our 28 FSI focus countries rate on the EFW study, which measures “the degree to which the policies and institutions of countries are supportive of economic freedom,” defined as “personal choice, voluntary exchange, freedom to compete, and security of privately owned property” (Gwartney et al., 2012). The EFW takes into account government size, the legal system and property rights, access to sound money, freedom to trade, and regulation (Gwartney et al., 2012).

Somalia, Sudan, Iraq, Afghanistan, Yemen, North Korea, and most of the ex-Soviet Central Asian states aren’t even ranked on the 144-nation EFW index due to lack of data. Zimbabwe is ranked 142nd, the Democratic Republic of Congo (DRC) 139th, and Pakistan 111th, while Colombia, Haiti, Egypt, and Iran are in the bottom half of the survey (Gwartney et al, 2012).

A similar picture emerges in the International Property Rights Index (IPRI). As the inputs for the EFW survey underscore, property rights are an integral part of freedom. “Private property is the most important guarantee of freedom,” as 20th-century economist Friedrich Hayek argued, “not only for those who own property but scarcely less for those who do not” (1944).JohnLocke, the Enlightenment thinker is considered father of classical liberalism, wrote that it should be every person’s right to “preserve his property, that is, his life, liberty, and estate against the injuries and attempts of other men” (1690).

The IPRI ranks 130 countries. Not surprisingly, among those not included are the worst of the failed states: Somalia, Sudan, Iraq, Afghanistan, Haiti, and North Korea. Iran (107th), Pakistan (113th), and Zimbabwe (124th) are all IPRI cellar-dwellers, while Colombia (69th), Egypt (72nd), and Syria (81st) languish near the bottom (Property Rights Alliance, 2012).

Freedom House offers a pair of helpful surveys: The Freedom in the World survey measures freedom relating to political rights and civil liberties (Freedom House, 2012a). On this measure, countries scoring between 5.5 and 7 are considered “not free.” Countries scoring between 3.0 and 5.0 are considered “partly free.” A “partly free” country is one where there is “limited respect for political rights and civil liberties,” while a “not free” country is one where “basic political rights are absent, and basic civil liberties are widely and systematically denied” (Freedom House, 2012a). Somalia, Sudan, Eritrea, Libya, Syria, North Korea, and Uzbekistan are consigned to the very lowest category. South Sudan, Democratic Republic of the Congo, Zimbabwe, Egypt, Yemen, Iraq, Iran, and Afghanistan are just a shade better but still fall into the “not free” category. Finally, Haiti, Colombia, and Pakistan are considered only “partly free.”

The other Freedom House measurement, the Freedom of the Press survey, measures press freedoms in the context of the UN Declaration of Human Rights, which declares, “everyone has the right…to seek, receive, and impart information and ideas through any media regardless of frontiers” (Freedom House, 2012b). North Korea (197th) is dead last on the press index. Uzbekistan (195th), Iran (192nd), Syria (189th), Somalia (182nd), Yemen (179th), Kazakhstan (175th), Zimbabwe (172nd), Sudan (170th), and Afghanistan (164th) aren’t much better. And Iraq (155th), Pakistan (144th), Colombia (117th), and Haiti (104th) all rank low. In fact, with the exception of East Timor, all of our FSI focus countries rate in the triple digits on this measure.

Breathtaking disparity

What this survey of surveys suggests is that failed and failing states are not free—and countries that embrace freedom are, by and large, not failed states. To be sure, there may be exceptions on the margins, but the overlay of these various surveys reveals that the path toward freedom generally carries nation-states away from failed-state status.

Failed states cannot blame their problems on ethnic diversity (see the US or Canada), size (see Israel), geographic isolation (see Australia), geopolitical isolation (see Taiwan), dangerous or unstable neighbours (see India or Estonia), a lack of natural resources (see Japan), or a troubled history (see South Korea).

In fact, there is no more exquisite proof of what makes a failed state and what makes a successful state than the Korean peninsula. After all, here is one nationality divided into two countries, two forms of government, and two economic systems. One is free and connected to the world; the other is isolated, its people under the yoke of oppression. The difference is breathtaking:

                                                               North Korea                                          South Korea

EFW                                                        Not ranked                                            37th

GDP                                                        $40 billion                                              $1.57 trillion

Per capita GDP                                       $1,800                                                  $32,000

Exports                                                   $2.5 billion                                            $556.5 billion

Life expectancy                                       69                                                         79.3

Infant mortality rate/1,000 births          26.2                                                        4    (CIA)

We sometimes overlook the real-world impact of such disparity. But consider some of the facts of daily life in North Korea: Of its 24 million people, 16 million depend on government rations of cereals like barley, corn, and rice (Lee, 2012). The results, as James Morris observed when he was director of the World Food Programme (WFP), are as tragic as they are avoidable: “The average seven-year-old North Korean boy is eight inches shorter, 20 pounds lighter, and has a ten-year-shorter life expectancy than his seven-year-old counterpart in South Korea” (Kelemen, 2007).

The WFP has shipped millions of metric tons of food into North Korea in the past decade, but Pyongyang often blocks food shipments for political reasons and sometimes behaves in such a way that donor nations decide not to send food. Earlier this year, for example, North Korea spent a healthy portion of its miniscule GDP conducting a long-range rocket test in defiance of UN resolutions, causing the United States to halt a shipment of 240,000 metric tons of food (Lee, 2012).

In short, the Korean peninsula’s man-made disparities are a function of the political-economic systems of North and South Korea. While North Korea’s political-economic system bars the individual from owning property, starting business enterprises, or accessing markets, South Korea’s economic institutions promote investment and trade, both internally and internationally; safeguard private property rights; provide incentives that encourage individuals “to exert effort and excel in their chosen vocation”; and “encourage participating by the mass of people in economic activities that make best use of their talents and skills” (Acemoglu and Robinson, 2012).

Modern problems

The Korean example reminds us that economic freedom and political freedom are not abstractions or academic debating points. They are real forces with real-world implications. Their presence makes a positive difference in the lives of individuals and in the health of nations, and their absence sentences individuals to hopeless futures and corrodes the nation-states in which they live.

Acemoglu and Robinson blame state failure on “extractive economic institutions”—state-run industries, high levels of state employment, regulation of the market and market intervention, and “insecurity of property rights.” These extractive institutions “are structured to extract resources from the many by the few” and often “lead to the collapse of the state” (Acemoglu and Robinson, 2012). As these extractive institutions smother the incentive to produce, people create less wealth, and the state is drained of its legitimacy. Some regimes then resort to coercion and control (North Korea); some rely on corruption and self-dealing (Pakistan or Zimbabwe); some succumb to collapse (Somalia).

What these failed and failing states have in common is that the government has lost the ability to fulfill its central purpose: namely, performing basic functions like enforcing contracts internally and making good on contracts externally, maintaining public order and essential infrastructure, controlling borders, and ensuring that what happens within their borders does not adversely impact neighbouring states.

This is where failed states begin to affect the United States and Canada. Consider Somalia, where the al Shabab movement merged with al Qaeda in 2011. This jihadist terror group—responsible in 2011 for 1,000 deaths, for attacks in Somalia and Uganda, for training and deploying suicide bombers, and for blocking food deliveries—thrives because there is no viable state structure to police Somalia (US State Department). According to a report produced by the US House of Representatives Committee on Homeland Security, al Shabab “has an active recruitment and radicalization network inside the US”; “at least 20 Canadians of Somali descent…are believed to have joined Shabab”; 15 Americans and three Canadians have been killed fighting for al Shabab in Somalia; and al Shabab has sent fighters to Yemen to fight alongside al Qaeda’s Yemeni affiliate (Committee on Homeland Security, 2011). Noting that the first confirmed suicide bomber in US history was a former Minneapolis resident who joined al Shabab and blew himself up in a 2008 attack in northern Somalia, the committee warned that “there is a looming danger of American Shabab fighters returning to the US to strike or helping al Qaeda and its affiliates attack the homeland” (Committee on Homeland Security, 2011).

This recalls something Adam Smith observed in the 18th century. “In ancient times, the opulent and civilized found it difficult to defend themselves against the poor and barbarous nations,” he wrote. “In modern times, the poor and barbarous find it difficult to defend themselves against the opulent and civilized” (Smith, 1776/1991).

The 21st century, it would seem, is more ancient than modern.

We can virtually plot intervention by the United Nations and leading peacekeeping states like Canada—and by power-projecting states like the US—by glancing at the FSI. The UN has conducted/authorized major peacekeeping or stability operations in 13 of our 28 FSI focus countries over the past 17 years, including multiple missions in Somalia and the Central African Republic; ongoing missions in the DRC, Ivory Coast, South Sudan, Sudan/Darfur, and East Timor; multiple interventions in Haiti; missions in Ethiopia and Eritrea; the nation-building effort in Afghanistan; and the civilian-protection mission in Libya.

That’s just the tip of the iceberg, however. Given the role the US plays as global first responder and last line of defence, it only makes sense to append to this list US military operations in failed and failing states. The United States has engaged in significant military operations in six of the bottom 15 failed states over the past 17 years: Somalia, Afghanistan, Haiti, Yemen, Iraq, and Pakistan. In addition, the US is still technically at war with North Korea. (Recall that the 1953 armistice represents only a cessation of hostilities, not a peace treaty.) Plus, the US military has conducted airstrikes against targets in Sudan; is waging a low-profile war against the Lord’s Resistance Army in the DRC, South Sudan, the Central African Republic, and Uganda (Straziuso); and participated in NATO’s air war in Libya.

These countries are not failing or broken because outside powers intervened. Rather, outside powers intervened because these countries were failing or broken. For instance, when not one foreign soldier was deployed within their borders, Somalia, Afghanistan, Pakistan, and Iraq were already failed or failing states (See Hada; Gurr, et al. ; and Ajami: 194).

Today and tomorrow

This survey of surveys is by no means scientific, but it is a revealing exercise.

First, it gives us a glimpse of what may be on the horizon. Not only do failed states shock the conscience; they often serve as a magnet for general lawlessness, terrorists, pirates, drug traffickers and narco-armies, and other trans-national threats—threats that when fully formed have an impact on Canadians, Americans, and our allies.

Second, this survey of surveys reminds us that efforts to promote economic freedom, political freedom, property rights, and the like—efforts such as the Fraser Institute’s phalanx of economic-freedom studies—are crucially important in equipping reform-minded policymakers, opposition movements, NGOs, and individual citizens at home and abroad. Indeed, by supporting movements and organizations that embrace economic freedom and the rule of law—in other words, by doing more freedom-building today—the United States, Canada, and others in the West may be able to save treasure and blood spent on military interventions and peacekeeping operations tomorrow.




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