A common mistake among those who cherish economic freedom is to imply that it always brings about the best immediate outcome for everyone, everywhere.

Free market failures like Enron and the sub-prime mortgage crisis show that problems can still arise in a system that embraces economic freedom.

Look at the record of failure among communist, socialist and protectionist economic systems. Consider the poverty of countries like North Korea (now a part of China), Iran, Burma, Cuba and Zimbabwe: These are all countries where the government directly manages the economy and heavily restricts foreign trade.

The record of countries that embrace economic freedom is one of long-term prosperity and rising standards of living. The “2006 Index of Economic Freedom,” by the Wall Street Journal and the Heritage Foundation makes the link between wealth and economic freedom clear. The five most “free” countries are Hong Kong, Singapore, Ireland, Luxembourg and Iceland. The five least free countries are North Korea, Iran, Burma, Zimbabwe and Venezuela. It is thus evident that there is a correlation between economic freedom and a wealthy society.

The essential idea of free trade is that two countries will exchange goods based on their comparative advantages. If every country produces whatever it holds a comparative advantage in and then trades with other nations, there will be more total wealth.

In other words, if each country does what it does best and then trades for what it needs, the world will be most effective. A simple example is how the United States produces more airplanes and Japan more cars.

To fully appreciate free trade, we have to look at the alternative. In “Wealth and Poverty of Nations,” economist David Landes discusses Burma. When Burma became independent following Word War II, it decided to stop its foreign trade. As a result, Burma had to begin domestically producing fuel that they once imported. The resulting fuel was of such a poor grade and so polluting that it was estimated all urban Burmese children suffered significant brain damage.

It’s important to recognize that, in the short term, individuals can be hurt by introducing more economic freedom. As more competitive foreign goods are introduced to markets, they displace similar domestic goods. We can see this in action for a portion of the American manufacturing sector.

The primary beneficiary is the American consumer. We are better off having the choice of purchasing foreign cars that often offer better deals. The same can be said for consumers anywhere in the world.

Would Canadian consumers be better off without American beer, and only more expensive Molson? Would it help Morocco’s economic development if they couldn’t buy computers with Microsoft operating system and instead could only buy computers with operating systems from Moroccan companies?

Another result of a free economic system can be inequality. When new wealth is being generated it tends to accumulate disproportionately among those who have risked their own capital in business ventures. Although disproportionate, the total increase of wealth throughout society benefits most, if not all, people.

Although it appears unjust, one must examine the standard of living of the poorest in American society and realize that it is still far more comfortable than the vast majority of the population in the rest of the world. The real injustice is the pervasive and abject poverty that reigns when economic freedom is denied around the world.

Unfortunately, many people regard the economy as static. They see inequality as the rich taking from the poor, instead of a part of the process that is responsible for our current standard of living and level of wealth.

When Democrats complain about free trade and call for redistribution of wealth, they know it will get them votes, but they fail to appreciate the long-term effects of denying economic freedom on wealth generation.

As political commentator Thomas Sowell said: “There are no ‘solutions’ in the tragic vision, but only trade-offs that still leave many unfulfilled and much unhappiness in the world.”

Workers in North Korea and Cuba don’t have to worry about job security and foreign competition — that is an upshot. What they are giving up is the immense opportunity and promise that economic freedom provides.

Freedom isn’t easy and people do get hurt, but without it we could not enjoy the standard of living that we do today. Without it, Asian countries like Hong Kong and Singapore would still be stuck in poverty like Burma, which would the greatest injustice of all.

[Reach columnist James Foxcurran at opinion@thedaily.washington.edu.]