NCPA - National Center for Policy Analysis


February 4, 2010

We've heard a lot of talk in the United States about the need to revamp or even abandon the free enterprise or capitalist system.  Not surprisingly, much of the world is ignoring this rhetoric.  Indeed, America is becoming something of an outlier, with its calls for greater regulation and government spending, says Kim Holmes, vice president of foreign- and defense-policy studies at the Heritage Foundation and co-author of, "The 2010 Index of Economic Freedom." 

The bad news is that the United States is falling behind, says Holmes: 

  • The 2010 Index of Economic Freedom finds that the United States experienced the most precipitous drop in economic freedom among the world's top 20 economies (as measured by the gross domestic product).
  • The decline was steep enough to tumble the United States from the ranks of truly "free" economies; we are now numbered among the ranks of the "mostly free" -- the same as Botswana, Belgium and Sweden.
  • Canada now stands as the sole beacon of economic freedom in North America, getting a higher score on the economic-freedom Index than the United States.
  • On the index's 100-point scale of economic freedom, the United States fell 2.7 points; Canada's score dropped, too, but only one-tenth of a point.
  • Meanwhile, countries such as Germany, France, Poland, Japan, South Korea, Mexico and Indonesia managed to maintain or even improve their scores, despite the economic crisis. 

Why?  In large measure, it's because of the way Washington has exacerbated the financial and economic crisis since 2008.  By June of last year, Washington's interventionist policies had already caused a decline in seven of the 10 categories of economic freedom measured in the Index.  Particularly significant were declines in financial freedom, monetary freedom and property rights, says Holmes. 

The solutions to our problems are not magic.  Indeed, they are well-documented in the Index of Economic Freedom.  The less government intervenes in our lives and our economy, the freer and more prosperous we can become.  The choices President Obama takes in the future will determine whether America remains a land of opportunity and can reclaim its international reputation as the land of the free, says Holmes. 

Source: Kim Holmes, "As Economic Freedom Declines, so Does Prosperity," Heritage Foundation, January 25, 2010. 

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