America's Economic Freedom Hits New Low in New Index
Based on such facts as size of government, higher taxes, debt, and regulations, the Washington Free Beacon's Ali Meyer reported last month that based on "the Heritage Foundation's Index of Economic Freedom, economic freedom in the United States has hit a record low in 2017 — the nation dropped out of the top 15 countries and declined to 17th place."
Meyer begins her report this way, writing:
"The index ranks countries on 12 metrics that measure four pillars of economic freedom: the rule of law, limited government, regulatory efficiency, and open markets. Each country's economic freedom score is graded on a scale of zero to 100, with 100 indicating the most economic freedom.
"Last year, the United States received a score of 75.4 and stood in 11th place among all 180 countries ranked by the index. This year, the United States declined even further to 17th place, receiving a score of 75.1—the lowest score this country has ever received in the index.
"The report says that the decline in America's economic freedom is largely due to the increase in the size of government, higher taxes, increasing debt, large welfare programs, and a heavier regulatory burden."
She continued, writing:
"The United States continued its string of discouraging trends in the 2017 index," the report said. "The substantial expansion in the size and scope of the U.S. government, increased regulatory and tax burdens in many sectors, and the loss of trust and confidence that has accompanied a growing perception of cronyism have severely undermined America's global competitiveness."
"The United States ranked sixth for economic freedom when President Obama took office in 2009. Now, in President Trump's first year in office, the United States has fallen behind Hong Kong, Singapore, New Zealand, Switzerland, Australia, Estonia, Canada, United Arab Emirates, Ireland, Chile, Taiwan, the United Kingdom, Georgia, Luxembourg, the Netherlands, and Lithuania.
"The anemic economic recovery since the great recession has been characterized by a lack of labor market dynamism and depressed levels of investment," the report states. "The substantial expansion of government's size and scope, increased regulatory and tax burdens, and the loss of confidence that has accompanied a growing perception of cronyism, elite privilege, and corruption have severely undermined America's global competitiveness."
"Countries that allow their citizens more economic freedom achieve higher incomes and better standards of living," said Terry Miller and Anthony Kim, who authored the index. "As the global economy has moved toward greater economic freedom over the past two decades, real world GDP has increased by about 80 percent, and the global poverty rate has been cut in half, lifting hundreds of millions of people out of poverty."
The entire 492-page report is here.
Anthony Kim, Research Manager for the Index of Economic Freedom, provides some introductory remarks, asking what happened, including:
"Today, the imperative to restore America’s economic freedom and thereby revitalize vibrant entrepreneurial growth is stronger than ever. Americans deserve better, and they can do better.
"It should be noted that free-market capitalism built on the principles of economic freedom does not just conserve the status quo. In many cases, it overturns and transforms. It pushes out the old to make way for the new so that real and true progress can take place. It leads to innovation in all realms: better jobs, better goods and services, and better societies.
"The 2016 election was a game-changer. America has been given an incredible and unique opportunity to move away from Obama’s failed liberal policy agenda and toward an agenda that strives to restore America’s economic freedom and spur dynamic growth."
In a commentary for Investor's Business Daily, Terry Miller, Director of the Center for Free Market and Regulatory Reform at the Heritage Foundation, says:
"This year, more than 100 countries recorded increases in their economic freedom. Those winners are found around the world, but the Asia-Pacific region had the highest number of countries recording major gains. Forty-nine countries recorded their highest economic freedom scores ever. This group included both China and Russia, though even with their improvements, both continue to lag far behind most western developed economies in economic freedom.
"The U.S., regrettably, headlined the list of countries not only losing freedom, but recording their lowest scores ever. Driving the U.S. decline was a new category in the Index: fiscal health. That category measures fiscal deficits and government debt relative to the size of the economy. U.S. government spending has accounted for over 38% of total U.S. economic activity over the last three years, with deficits averaging above 4% of GDP and total government debt exceeding a full year's output of the economy."
Miller concludes saying:
"One of the most interesting conclusions of the Index of Economic Freedom is that intentions matter. Policy changes that increase or retard economic freedom can have an immediate impact for good or ill on economic performance. The free market, now ascendant in much of the world, is an incredibly fast and accurate monitor of economic prospects, whether at the level of the household, the firm, or the national economy.
"At the moment, most market indicators are pointing up for the U.S. Hope is high that policy changes are coming to restore American's economic freedom. We'll see if the politicians can deliver."
For more information about the Heritage Foundation, click here.