Economic Freedom and Human Welfare: Some Empirical Findings

of Freedom. This book reflected the conventional wisdom of the time that appeared also in the leading textbooks in economics: to achieve lower unemployment, higher economic growth and a more equitable distribution of income, governments have to increase regulation and taxation. The achievement of these policy goals was considered to be worth the loss of economic and personal freedom brought on by the accompanying increased size of government. Economic theory provided the justification for a wide range of policies. Keynesian macroeconomic models wrapped into the neoclas-sical synthesis offered lower unemployment through countercyclical budget imbalances. A little inflation was promised to lower unemploy-ment further, taking advantage of the Phillips curve trade-off. Eco-nomic growth was to be stimulated by the proper mix of monetary and fiscal policies, the public ownership of industry, and planned investment in ‘‘strategic’ ’ industries. Regulation promised the elimina-tion of market failures. Social insurance programs would provide income security and equalize the distribution of income. Seemingly strong empirical evidence promised success for these policies. In the United States increased government activism during and after the Second World War was accompanied by strong economic performance, especially during the 1960s. Krushchev’s famous announcement ‘‘We will bury you economically’ ’ was taken seriously as the Soviet Union appeared to grow rapidly and had no unemployment. Sweden’s successful efforts to equalize income were accompanied by low unemployment, industrial peace and rapid economic growth