Towards a Worldwide Index of Human Freedom

Conditions for Freedom • 163
than the latter (in terms of average income per capita), at the same time
the former has less effective conflict resolution mechanisms, and therefore
has a lower supply of freedom than the latter.
Regulatory enhancements may decrease uncertainty, but won’t necessarily
increase freedom (see figure 6). Regulations that are either too limited
or too pervasive lead to lower levels of freedom. The relationship between
the amount of regulation and the amount freedom seems to follow an
inverse U-curve (see figure 7). There is a permanent search for the optimal,
freedom-maximizing amount of regulation. The upper point of the inverse
U-curve may be shifted towards less rather than more regulation (figure 8).
Figure 6: Regulation and uncertainty
Certainty
Uncertainty
Figure 7: Regulation and freedom
Level of freedom
Tyranny of
anarchy
Freedom-maximizing
regulation
Regulation (rules, law, order)
Tyranny of
totalitarian
society
Regulation
(rules, law, order)
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