NCPA - National Center for Policy Analysis

Economic Freedom Declines in America for Fifth Straight Year

January 21, 2013

A new joint publication by the Heritage Foundation and the Wall Street Journal depicts a world where economic freedom is decreasing.

  • Despite "democratic progress" following the Arab Spring in the Middle East, autocratic practices reminiscent of past dictators have led to significant economic freedom declines in Egypt, Algeria and Saudi Arabia.
  • Countries with lower economic freedom have weaker rule of law and create environments conducive to government corruption, political favoritism and oligarchical elitism.
  • More developed countries are also a cause for concern as they engage in redistributionist policies.

The income and wealth transfers that advanced democracies initiate reduce the incentives to work and invest. To quell this trend, policies that strengthen the legal protection of property rights and protect individuals from arbitrary regulations promote greater economic freedom.

  • Europe leads the way in economic freedom improvement under the auspices of a Eurozone collapse and austerity measures that have reined in public spending and taxes.
  • In the top 10, Hong Kong, Australia, New Zealand, Switzerland, Canada, Mauritius, Denmark and the United States all lost ground this year.
  • Notable countries considered "repressed" by the report include North Korea, Cuba, Iran, Congo, Argentina, Ecuador and Haiti.
  • Notable countries considered "mostly unfree" include China, Bangladesh, Brazil, the Philippines, Greece, Pakistan and India.

Declining global economic freedom has implications for health, education, poverty reduction and environmental protection. Bolstering trade, ensuring financial institutions are sound, reducing deficits and public debt, and minimizing taxes are all valid efforts in maximizing economic freedom.

Source:  Terry Miller, "In the Index of Economic Freedom, Liberalization Slips," Wall Street Journal, January 14, 2013. "2013 Index of Economic Freedom," Heritage Foundation, January 2013.


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