NCPA - National Center for Policy Analysis

America's Dwindling Economic Freedom

January 15, 2014

World economic freedom has reached record levels, according to the 2014 Index of Economic Freedom, released by the Heritage Foundation and the Wall Street Journal. But after seven straight years of decline, the United States has dropped out of the top 10 most economically free countries, says Terry Miller, the director of the Center for International Trade and Economics at the Heritage Foundation.

For 20 years, the index has measured a nation's commitment to free enterprise on a scale of 0 to 100 by evaluating 10 categories, including fiscal soundness, government size and property rights.

  • It's not hard to see why the United States is losing ground.
  • Even marginal tax rates exceeding 43 percent cannot finance runaway government spending, which has caused the national debt to skyrocket.
  • The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy.
  • The intervention impedes both personal freedom and national prosperity.

But as the U.S. economy languishes, many countries are leaping ahead, thanks to policies that enhance economic freedom -- the same ones that made the U.S. economy the most powerful in the world.

  • Hong Kong continues to dominate the list, followed by Singapore, Australia, Switzerland, New Zealand and Canada.
  • These are the only countries to earn the index's "economically free" designation.
  • Mauritius earned top honors among African countries and Chile excelled in Latin America.
  • Despite the turmoil in the Middle East, several Gulf states, led by Bahrain, earned designation as "mostly free."

A realignment is under way in Europe, according to the index's findings.

  • Eighteen European nations, including Germany, Sweden, Georgia and Poland, have reached new highs in economic freedom.
  • By contrast, five others -- Greece, Italy, France, Cyprus and the United Kingdom -- registered scores lower than they received when the index started two decades ago.
  • The most improved players are in Eastern Europe, including Estonia, Lithuania and the Czech Republic.

The United States and the United Kingdom, historically champions of free enterprise, have suffered the most pronounced declines. Both countries now fall in the "mostly free" category. Some of the worst performers are in Latin America, particularly Venezuela, Argentina, Ecuador and Bolivia.

Source: Terry Miller, "America's Dwindling Economic Freedom," Wall Street Journal, January 13, 2014. "2014 Index of Economic Freedom," Heritage Foundation, January 2014.


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