We’re #18 in Economic Freedom

Every year, the Fraser Institute, a Canadian free-market think tank, publishes an economic freedom index for all developed and some developing countries.  The index is determined by 42 variables that fit into 5 broad categories; (1) size of government; (2) legal system and property rights; (3) sound money; (4) freedom to trade internationally; and (5) regulation.


So where do we stand in the 2012 Economic Freedom Index?  The beacon of freedom for the world currently stands at #18 in the index.  We are running behind nations like Mauritius, Estonia, Bahrain, Finland, and Chile!  In the sub-category of “size of government,” we rank #61.

Here is the relevant paragraph from the executive summary:

The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade. From 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. After increasing steadily during the period from 1980 to 2000, the chainlinked EFW rating of the United States fell from 8.65 in 2000 to 8.21 in 2005 and 7.70 in 2010. The chain-linked ranking of the United States has fallen precipitously from second in 2000 to eighth in 2005 and 19th in 2010 (unadjusted ranking of 18th).

And what are the consequences of being less free?

  • Nations in the top quartile of economic freedom had an average per-capita gross domestic product of $37,691 in 2010, compared to $5,188 for bottom quartile nations.
  • In the top quartile, the average income of the poorest 10 percent was $11,382, compared to $1,209 in the bottom in 2010 current international dollars.
  • Life expectancy is 79.5 years in the top quartile compared to 61.6 years in the bottom quartile.

But this can’t happen in America, right?

Actually it already has happened.  The lack of economic freedom is coming home to roost.  The Hudson Institute recently published a study showing a precipitous decline in start up firms, the engine of a free market economy.  Worst of all, the decline has continued even after the recession officially ended.  There’s no doubt that Obamacare, Dodd-Frank, labor laws,  and the sundry EPA regulations are dissuading people from starting up businesses.

Yet another illustration of a great nation on decline.  Limited government and the free market is the only path to ascendency.

Cross-posted from The Madison Project


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