Technological Freedom
Mark Weller
What is the relationship between technological achievement and economic freedom? For anyone who understands the ways in which markets perform, the answer is unqualified: as economic freedom increases, growth in all sectors of the economy, including technological advancement, also increases. But it would seem not everyone is convinced . . .
I recently watched the CBC mini-series on the Avro Arrow. In this multi-million dollar production, the CBC was trying to make a point—that technological innovation can only happen in Canada if done in partnership with the state. The Avro, according to this line of thinking, is another example of the so-called National Dream, which is, at its core, an assertion that Canada's cultural identity is dependent on state sponsorship of specific industries of significance. Industries represented by firms such as Avro Air, or perhaps the CBC itself.
However, in the late 20th century as we look back on the mess of government sponsored mega projects that are beginning to show signs of their age, Canadians must take stock of this experiment. Was the National Dream a boost to Canadian identity, or did it serve instead to restrain those Canadians who had technological know how?
An interesting example of Canadians succeeding without government is the Internet. As a relatively unregulated part of the international economy, at least so far, it provides us with a sort of case study in technological development. If there is a relationship between economic freedom and technological advancement, then it should be evident here.
One measure of Internet growth is the number of domains registered within a specific geographic area. Domains are Internet sites, such as the Fraser Institute's (fraserinstitute.ca), which is one of 425,000 registered domains in Canada. Domain registrations can be seen as an indicator of how many Internet sites there are in a nation, which is a useful measure of overall Internet activity.
In terms of the number of domains registered, the following countries each have over 50 domains on-line for every 10,000 citizens: Finland, the United States, Norway, Australia, New Zealand, Denmark, Canada, Switzerland, the Netherlands, Hong Kong and Singapore.
Each of the nations above ranked in the top 30 of the Economic Freedom Index published last year by The Fraser Institute. By comparison, those countries that ranked lowest on the Economic Freedom Index had no Internet connections whatsoever. (Internet Domain Survey, July 1996, Network Wizards, http://www.nw.com/)
It is also interesting to note that this is not just a comparison of developed nations with the less developed. In the middle of the pack in Internet development is an unusual group of countries—nations like Slovakia, South Africa, Italy and Portugal. Each of these countries is endeavouring to build an Internet presence, but is having difficulty. The answer could lie in their comparative level of economic freedom, for although these are developed nations, they continue to have high levels of regulation and taxation, which is having a negative effect on the development of Internet architecture.
Canada has benefited from a comparatively high level of economic freedom, particularly with regard to telecommunications and the Internet. This is a clear example of an area where Canadian innovation has thrived in the global marketplace, with no government assistance whatsoever. This is a more pertinent and relevant national dream—economic success arising from our abilities, not from corporate welfare.
However, as is demonstrated by recent calls for the federal government to fund high tech industry, it is clear that the temptation to pick winners is always there for governments, but it must always be resisted. If it cannot be resisted, then laws should be passed to restrain governments from embarking on this course. The choice is clear—the future is for those nations that are best able to manage technological change, and the nations that are succeeding thus far are those that are most economically free.
This article originally appeared in the February 1997 issue of Fraser Forum.
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