Government investment as a share of the total was also used to help quantify the size of the state enterprise sector and the role of government in the production process. Countries with relatively few SOEs and small government investment as a share of the total are given higher ratings for Component II-A. Price controls interfere with the freedom of buyers and sellers to undertake exchanges. In addition, they often reduce the value of assets and thereby take property from rightful owners. Since both restraints on exchange and the taking of property are violations of economic freedom, countries that use price controls more extensively are given lower ratings for Component II-B. High marginal tax rates discriminate against productive citizens and deny them income that they have rightfully earned. Countries are given lower ratings for Component II-C as they impose higher marginal tax rates that take effect at lower income thresholds.
Conscription denies draftees the property right to their labour services.
Countries that rely on market forces to obtain military personnel are given a rating of 10 for Component II-D. Those that use conscription and conscripts for more lengthy time periods are given lower ratings. These values were determined by principal component analysis. A graphic illustration of the ratings for this area is presented on the following page. You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.