For the 16th straight year, the Heritage Foundation and the Wall Street Journal have combined to produce a comparison of the freedom afforded by various economies across the world. Sadly this 2010 edition of the Index of Economic Freedom outlined the decline of the US economic freedoms and its effect on growth. Although still among the top 10, the United States just barely edged out Denmark (ninth) and Chile (10th) in the 2010 ranking. Because the data is based on numbers from July 2008 and June 2009, much of the bailout spending and increased regulation that took place in the second half of 2009 wasn’t counted or else we could have ranked much worse. But this isn’t a beauty contest, it is meant to show the negative effect the end of the Bush/beginning of the Obama period has had on the economy.
The United States’ economic freedom score is 78.0, making its economy the 8th freest in the 2010 Index. Its score is 2.7 points lower than last year, reflecting notable decreases in financial freedom, monetary freedom, and property rights. The United States has fallen to 2nd place out of three countries in the North America region.
That 2.7 point drop is the largest decline amongst any of the world’s top 20 economies
The U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index.
Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.
The Automotive bailout where the property rights of primary investors were overlooked in favor of the Unions is a great example of decline in our property rights.
The U.S. economy is the world’s largest. Services account for more than 70 percent of economic activity, but the U.S. is also the world’s largest producer of manufactured goods and fourth-largest producer of agricultural products. A federal form of government that reserves significant powers to states and localities has encouraged diverse economic policies and strategies. The national government’s role in the economy, already expanding under President George W. Bush, has grown sharply under the Administration of President Barack Obama, who took office in January 2009. Economic growth, which collapsed in 2008, had resumed by the second half of 2009, but legislative proposals for large and expensive new government programs on health care and energy use (climate change) have increased prospects for significant economic disruptions and raised concerns about the long-term health of the economy.
As the President continues to grow the size of government to “unprecedented” levels, and embarks on pseudo-populist attacks on the businesses that can get the economy growing again, it is important to understand what he is really doing, destroying economic freedoms, and putting the engine that drives our economy in a deep freeze.
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