Freer Is Better
The 2010 Index of Economic Freedom lowers the ranking of the United States to eighth out of 179 nations -- behind Canada! A year ago, it ranked sixth, ahead of Canada.
Don't say it's Barack Obama's fault. Half the data used in the index is from George W. Bush's final six months in office. This is a bipartisan problem.
For the past 16 years, the index has ranked the world's countries on the basis of their economic freedom -- or lack thereof. Ten criteria are used: freedoms related to business, trade, fiscal matters, monetary matters, investment, finance, labor, government spending, property rights and freedom from corruption.
The top 10 countries are: Hong Kong, Singapore, Australia, New Zealand, Ireland, Switzerland, Canada, the United States, Denmark and Chile.
The bottom 10: Republic of Congo, Solomon Islands, Turkmenistan, Democratic Republic of Congo, Libya, Venezuela, Burma, Eritrea, Cuba, Zimbabwe and North Korea.
The index demonstrates what we libertarians have long said: Economic freedom leads to prosperity. Also, the best places to live and fastest-growing economies are among the freest, and vice versa. A society will be materially well off to the extent its people have the liberty to acquire property, start businesses, and trade in a secure legal and political environment.
Bill Beach, director of the Heritage Foundation's Center for Data Analysis, which compiles the index with The Wall Street Journal, says the index defines "economic freedom" to mean: "You can follow your dreams, express yourself, create a business, do whatever job you want. Government doesn't run labor markets, or plan what business you can open, or over-regulate you."
We asked Beech about the U.S. ranking. "For first time in 16 years, the United States fell from the 'totally free' to 'mostly free' group. That's a terrible development," he said. He fears that if this continues, productive people will leave the United States for freer pastures.
"The United States has been this magnet for three centuries. But today money and people can move quickly, and in less than a lifetime a great country can go by the wayside."
Why is the United States falling behind? "Our spending has been excessive. ... We have the highest corporate tax rate in the world. (Government) takeovers of industries, subsidizing industries ... these are the kinds of moves that happen in Third World countries. ..."
Beach adds that the rule of law declined when the Obama administration declared some contracts to be null and void. For example, bondholders in the auto industry were forced to the back of the creditor line during bankruptcy. And there's more regulation of business, such as the Dodd-Frank law for the financial industry and the new credit-card law. But how could the United States place behind Canada? Isn't Canada practically a socialist country?
"Canada might do health care the wrong way," Beach said, "but by and large they do things the right way." Lately, Canada has lowered tax rates and reduced spending.