America’s Declining Economic Freedom

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America’s Declining Economic Freedom

Across the planet, economic freedom is at its highest level in history. Economic freedom, which has driven the U.S. economy to unparalleled prosperity for much of the past 150 years, is based on three principles:

  1. Empowerment of individuals to pursue a career or start a business of their choosing, with the right to keep the profits from the labor and ideas.
  2. Equal opportunities, based on merit and hard work rather than on an individual’s race, age, gender, or connections.
  3. Open competition, which gives everyone an equal chance to use resources rather than favoring some and excluding others.

Until recently, the U.S. economy’s growth inspired people throughout the world to demand greater empowerment, better opportunities, and a fairer playing field. And today, in most nations around the world, economic freedom is increasing.

According to comprehensive research reported in the Heritage Foundation’s 2015 Index of Economic Freedom, the global average score for economic freedom now stands at 60.4 on a scale of 0 to 100, which is a record high.1 Of 186 countries and territories studied, 101 showed gains in economic freedom over the past year.

Why is this important? Economic freedom is linked to:

  • Higher economic growth
  • Greater job creation
  • Higher per capita incomes
  • Better health
  • Longer life expectancies
  • Higher literacy rates
  • Higher education levels
  • Cleaner environments

In short, countries that are improving their economic freedom are growing their economies and raising the standard of living for their citizens. In contrast, nations where economic freedom is decreasing are afflicted with sluggish growth and poverty.

Despite this remarkable progress, according to the criteria used by the researchers, only five economies achieved economic freedom scores above 80 in the past year and thus are considered truly “free.” The five countries that belong in this highest tier of economic freedom are:

  • Hong Kong
  • Singapore
  • New Zealand
  • Australia
  • Switzerland

Perhaps surprisingly, the United States ranks in the second tier of countries that scored between 70 and 80, in the “mostly free” category—a category it fell into in 2010. Over the past year, the economic freedom score for the U.S. gained a modest seven-tenths of 1 percent, to 76.2, which ranks twelfth among the world’s economies. However, such a small fluctuation from one year to the next isn’t significant. To get a better sense of where the nation is headed, we need to take a longer view...

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