The Effect of Free Speech on Economic Freedom

The Effect of Free Speech on Economic Freedom
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The effect of free speech on economic freedom
It is a well-known fact that the engagement of people in the battlefield of ideas is
important for the proper functioning of the democracy, however, what one does not realize is that
it is also very critical for the functioning of the economy. Innovation and new ideas are critical
for sustainable economic growth, and there is evidence which shows that the exchange of ideas
tends to be one significantly important part of a growing economy. The example of the United
States is evident which has been quite successful in fostering growth and innovation in its
technology sector. The market capitalization of Facebook alone is greater than the tech giants of
Europe combined. It can be seen that the economic prosperity of the United States is because of
its non-moving commitment to the free exchange of ideas1
The theory behind this perception that innovation and ideas are important for economic
growth is not a new one. The creative destruction theory by Joseph Schumpeter is the widely
known one for this concept. It explained that in any industry competition forces innovation
among companies. The ones who lag are destructed by the innovative new ideas. Thus the
creative destruction at micro level aids in the economic growth at a macro level. However, all
economies need not be an innovator for their economic growth. The Solow growth model is one
of the economic tools studied by economists who believe that the developing countries would
catch up and converge with the rich countries2
The reasoning behind the concept was that developing countries could imitate the
innovations of the rich countries; the example is evident in the form of China and India who just
has to start using the innovative ideas of the west to grow their economy. However, this cannot

1 Dreher, Axel, Martin Gassebner, and Lars-H. R. Siemers. "Globalization, Economic Freedom, and Human
Rights." The Journal of Conflict Resolution 56, no. 3 (2012): 516-546.
2 Posner, Richard A. "Free Speech in an Economic Perspective." Suffolk University Law Review 20, no. 1
(1986): 1-54.
lead the countries to grow further as after reaching a certain level of the economic frontier the
economy can only grow through innovation and progress in technology. The United States has
been on the economic front for over a century and is growing at the base of the technology and
innovative growth3
It is important to know where this innovation occurs; innovation does not happen at the
country’s level, it happens at the individual level where scientists and engineers are working in
their labs, companies, universities. People who are tinkering in their basements, garages, and
sheds are the driver of innovation, and this innovation is mostly derived in cities.
It is a known the fact that most of the innovation occurs in cities. These are the center for
the rapid dissemination of the information. The success of the city is dependent on the ability of
its residents to generate new ideas and share them with others with freedom. The lack of ability
of the individuals of the city to innovate would cause decay of the city and consequently the
decay at the national level as well. The analysts have pointed out that the proximity of the people
in the cities is one factor which causes the innovation to occur. The assumption implies that
staking bunch of people together in one block will induce innovation.
Economists like Clark Nardinelli have shown that the communication process for the
generation of innovation is important to be analyzed. The market economy and its economy arise
from the phenomenon when people with knowledge get together and have conversations. The
conversation among these individuals is necessary for converting information into productive
knowledge. It implies that the spreading of information needs communication among the people
of any sorts. It can be in the form of watching videos, attending lectures, and delivering speeches

3 Steffensen, Filip. “Free Speech Decreases Bigotry and Creates Economic Progress.” Foundation for
Economic Education. June 6, 2018. Accessed March 27, 2019.
or presentations. The limiting speech informally and formally has pernicious effects on economic
growth and innovation in the United States4
The long history of the Americans in exercising their free speech rights and with the
robust protection provided by the First Amendment, there is evidence of concerns over the
extended use of this right by one segment of the society. Students in colleges of the United States
are increasingly calling for limits on speech. There are many who have canceled the use of
speakers because of the opposition of faculty and students causing the administrations to favor

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