It’s official – the United States has fallen from the list of the world’s top 10 freest economies. The newly released 2014 Index of Economic Freedom by the Heritage Foundation and The Wall Street Journal places the United States at No. 12, down two spots from No. 10 last year.
The United States is the only country to have recorded a loss of economic freedom in each of the past seven years, starting with the tail end of the Bush administration and continuing through the Obama presidency.
“Now considered only a ‘mostly free’ economy, the U.S. has earned the dubious distinction of having recorded one of the longest sustained declines in economic freedom, second only to Argentina, of any country in the (20-year) history of the Index,” observe the report’s editors, Ambassador Terry Miller, Anthony B. Kim, and Kim Holmes, Ph.D., all Heritage Foundation scholars.
It doesn’t take a scholar to figure out the underlying causes to our decline, but experts lay them out anyway: reckless government spending, onerous regulations, bureaucratic red tape, the nationalization of American industries, trillion-dollar annual deficits and, the latest and greatest, Obamacare.
“Implementation of the health care law passed in 2010 has hit major snags and appears to be significantly hurting job creation and full-time employment,” the editors write.
If you’re wondering about our current standing in the world, the United States is now sandwiched behind No. 11 Estonia and No. 13 Bahrain. The top 10 (in order of rank) are Hong Kong, Singapore, Australia, Switzerland, New Zealand, Canada, Chile, Mauritius, Ireland and Denmark. The top six are in the “free” economic category. The bottom of the list, in the “repressed” economic category, includes Cuba (No. 177) and North Korea (178).
Countries are evaluated in four broad areas: rule of law (which examines the protection of property rights and the honesty of the judiciary); limited government (tax rates, government spending); regulatory efficiency (inflation, price stability, bureaucracy) and open markets (free trade).
According to the index, America earned points for its property rights, judiciary, low tariffs and flexible labor market. It was dinged, however, for its regulatory costs (which have risen $60 billion since 2009), number of new regulations
(130), and overall tax rate (which, at 25.1 percent, means the government takes about $1 out of every $4 earned). Government spending, which amounts to 40 percent of the gross domestic product, is too high as well.
So, in a nutshell, nonstop expansion of the state is causing our economic freedoms to plummet.
“Substantial expansion in the size and scope of government, including through new and costly regulations in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom,” the index editors write.
How can the trend be reversed? By making it easier for Americans to acquire wealth, for starters. Don’t let over-regulation smother our nation’s legendary enterpreneurial spirit.
“People (such as) Obama who obsess about income inequality should consider robust economic growth the best way to boost the fortunes of all, and especially for those with the least,” suggested conservative columnist Deroy Murdock. “Rather than redistribute what little is on hand, America’s business should be a constant effort to increase the winnings on the table, well before any effort to figure out whom, ultimately, gets what – and the way to do that is to stay atop a measure like Heritage’s.”
It should alarm us all to have America’s economic ranking sandwiched unceremoniously between countries such as Estonia and Bahrain.
If the United States suffers another drop in this ranking next year, citizens’ economic suffering could continue for many more years to come.