>>>"The Wealth of Nations comes about from embracing free trade and vigorous capitalism. I even believe there's a book about that somewhere."
Here's one, and its FREE:
http://www.heritage.org/research/features/index/downloads.html This is the "2004 Index of Economic Freedom" from The Heritage Foundation and The Wall Street Journal.
The causality of economic freedom linking to economic growth and wealth is discussed on this HTML page among others (there's also a PDF version):
http://www.heritage.org/research/features/index/ChapterPDFs/chapter1.HTML There main page is:
http://www.heritage.org/research/features/index/ And a quote:
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"In other words, achieving economic freedom is like building a car. What is the most important component of the car: the powerful engine, the transmission, the seats, the steering wheel, the brakes, or the tires? The question defies an answer, because without any one of these components, the car is unlikely to reach the desired destination. In similar fashion, ignore any one of the 10 factors of economic freedom, and abundant prosperity is likely to remain elusive.
That is why we often refer to the 10 factors of the Index as a “10-step plan to end dependency.” The 10 factors provide a road map, and only by sticking to the highlighted route can a country achieve economic freedom, prosperity, and self-sufficiency.
A wonderful example of the power of this 10-step plan is Chile. Over the past 30 years, it has stuck to the road map by establishing the rule of law; knocking down tax rates, regulation, and foreign trade barriers; freeing the banking system and capital flows; and reducing the burden and scope of government. In the 10 years of the Index, Chile has moved steadily from a rank of 24th out of the 101 countries covered in 1995 to 13th out of the 161 analyzed this year.
Compare the experience of Chile to those of the other Latin American countries, which have at most resorted to picking a couple of tires, a passenger seat, maybe a steering wheel, and some brakes. Over the past 10 years, economic growth has been notably better in Chile than among its neighbors, and Chile has been largely immune from the latest round of South American economic disasters.1
For several years, we have published a graph showing that a country’s Index score is positively related to per capita GDP.4 In other words, economically free countries have higher per capita incomes.
But there is another dimension to that relationship: one that involves the evolution of the score and of incomes over time. The chart above demonstrates that (seven-year average) growth rates in countries are positively related to (seven-year) improvements in their Index scores."
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The Fraser Institute (of Canada) also publishes a similar book. Here's a link to their FREE book Economic Freedom of the World, 2003 Report:
http://www.freetheworld.com/release.html There's even a book for the states of North America that is interesting:
http://www.freetheworld.com/efna.html Taxachusetts, I'm sure, gets its just rewards.
I also think inherent IQ is another factor just like economic freedom is. They are both not perfect correlations, particularly given that IQ is hard to pin down.
That the The Heritage Foundation/WSJ authors had to use 10 factors rather than just regulation to define economic freedom, or just used taxes, or just government spending, shows that there are many dimensions to this problem.
IQ is most likely a somewhat weak correlation because we've seen that China, which is supposed to beat us by 5 IQ points, has been enslaved for years. There must be some measure of masochism that needs to be incorporated.
Hong Kong has held the #1 position for being the most free for years, and during this time period they surpassed the Brits in per capita income, after starting very low. Hong Kong then could be said to have both factors going for it: good IQ genes, and a British legal system that allowed economic freedom to flourish.
However, being a bookworm with great IQ is not sufficient to building economic might. You have to have factors like: wanting to show up for work each morning, high energy levels, a desire to get ahead. There are many non-IQ factors that are critical. I doubt there will ever be a perfect indicator for economic freedom.
At the present time India and China do not have these factors. All they have are low wages. Unless they create the political framework for economic freedom, their recent resurgence will be short-lived. Likewise, if we march toward socialism, our wealth and income will suffer.
Hoppy