Somerset Area High School
Somerset, Pennsylvania
Teacher: William M. Simmons
Why Nations Are Free
By Drew Holland
12th Grade
Political officials are alike in one thing; they want always to keep the economy of their nation running smoothly, and efficiently. Whether maintaining an iron grasp on industries, or taking a hands-off approach more successfully accomplishes this, can only be determined by history. Today, in America it is commonly accepted that a mix of the two, leaning towards the hands off approach is the best method. In my selection of countries for economic comparison, I tried to pick countries that are economically, politically, and strategically important. I believe that Netherlands, Greece, Ethiopia, and Haiti represent an interesting side of the world’s economy.
Netherlands, and Greece are very comparable, not only because they are located in the “Euro Zone”, but also because they have similar peaceful socialist governments. The major differences between the two come down to banking and financing, property rights, and foreign investments. This is where the Netherlands traditional liberal banking, and trade system has the edge. Netherlands eager openness for foreign investments is quite the opposite of a bureaucratic Greece. Netherlands however does have some serious faults [preventing it from] becoming the freest economic system. It has an extremely high income tax with a maximum tax burden of 52%, compare that with Greece’s meager 35%. Greece, and Netherlands are both hindered by government regulations, and intervention.
Haiti, and Ethiopia are countries from near opposite sides of the world, yet they have a very important similarity; they [have] peacekeepers in their countries as a result of conflict. Both countries are in extreme poverty, Ethiopia especially, relying on outside aid intervention at the slightest provocation. Ethiopia, and Haiti differ greatly in the aspect of trade policy. Haiti tends to be more liberal when it comes to tariffs, and trading while Ethiopia is very protective of their national industries. This can be perhaps contributed to Ethiopia’s geographical disposition of being a land locked country, as well as the majority of the population being subtenant agricultural farmers. Haiti on the other hand seems to have some future in basic manufacturing. Both countries employ strict government regulations on businesses. In Haiti an individual is not even allowed to own their own business, and in Ethiopia political favorites are played so as to minimize competition.
In the comparison between Netherlands, and Haiti and Greece and Ethiopia, the historic economic tyrant has changed into a savior. Netherlands, along with Britain, France, Spain, and Portugal dominated the new world. They set strict regulations on tariffs, and most often forbid importation of goods from other nations. This was a key reason in the revolutions that occurred in North America in the 18th and 19th centuries. Today, the government, of Haiti oppresses its people, by tight government regulations, and a failed centralized planning, while the Dutch have learned the values of free trade, as opposed to attempted imperialism.
The Greece and Ethiopia seem to have nothing in common, but upon further review they have several key aspects in common. They both have wage, and price controls by the government. The government owns several important businesses, but [the] Ethiopia[n]...government is beginning to recognize the importance of free market competition. As a result they have eliminated agricultural price controls, while Greece holds firmly to their policy of agricultural price controls. The countries differ completely in relationship to water however. Greece located in the Mediterranean has a very low score in trade, while Ethiopia a land-locked country that has had disputes with its neighbor’s has a very high score. I believe that these scores are strongly influenced by water. Ethiopia’s tariffs though quite high are arguably necessary to protect the entire country as it slowly develops. I believe also that the conflict between Ethiopia, and Djibouti has a significant impact.
All four countries are on the way, as is the rest of the world is to establish a free market system. I believe that this is important if the world is going to continue in a peaceful state. Both Ethiopia, and Haiti are in desperate need to increase their GDP, while Greece, and Netherlands have other problems, such as tax reform. Of all the countries I picked, I believe that Ethiopia is most likely to make the biggest leap in next year’s ratings.
Answers To Questions Triggered by the Required Reading
Question 1: Be the Devil’s Advocate and counter Benjamin Franklin’s statement that “No nation was ever ruined by trade.”
Benjamin’s argument is easily countered, because no nation was ever built on free trade either. There has never been a successful society that embraced free trade.
Question 2: Name five countries whose ranking surprised you.
Estonia, Chile, Lithuania, Russia
Question 3: Write one sentence each to explain why you chose the countries you did in Q2.
Estonia surprised me because the country is not economically rich.
Chile also surprised me because I thought that there would be a lot of corruption.
Lithuania surprises me, because of its emergence from the USSR.
Russia also surprises me, because I thought that they embraced the free market totally.
Question 4: The USA was not ranked first in any of the years exhibited online in the Annual Report nor in the 2005 Index. List the twelve countries that ranked higher on the index and the countries that outranked the USA in the eight Annual Reports.
Hong Kong, Singapore, Luxembourg, Estonia, Ireland, New
Zealand, United Kingdom, Denmark, Iceland, Australia, Chile, and Switzerland.
Question 5: The Index uses 50 variables in 10 categories. The Report shows 21 variables in 5 categories and lists 24 sub-variables in its online charts. Take the 10 categories of the Index and place all 45 variables found in the Annual Report charts under one of the Index categories
5. Cannot be answered by information given.