Bryan Caplan explains, fantastic example.
True by Definition: Redistribution and Economic Freedom, Bryan Caplan – EconLog: The truth is that size of government and economic freedom are inextricably connected. Any definition of “economic freedom” that doesn’t directly incorporate the size of government is a crummy definition.
To illustrate, consider the following hypothetical. The government of Ruritania allows consenting adults to sell one another anything on any mutually agreeable terms. Ruritania has no minimum wage restrictions, no hiring or firing restrictions, no licensing, no zoning, and no paternalism. It even – wonder of wonders – has totally open borders. Anyone can hire anyone regardless of their national origin.
Before you packs your bags, I should point out that the government of Ruritania does have one little function. Namely: It imposes a 100% tax rate on all income, and redistributes that income equally to all. To enforce this tax rate, Ruritania has an all-pervasive system of surveillance – and punishes tax evasion with torturous death. Leaving the country counts as tax evasion.
By Scott’s standards, Ruritania is a free-market utopia.