Promoting Economic Freedom

By Rich Tucker
Thursday, January 26, 2012

Americans like “freedom.” The very word conjures up powerful images: The Spirit of 1776, the allied victory in World War II, or the West’s victory in the Cold War that spread freedom beyond the Berlin Wall.

But freedom isn’t always and everywhere on the march.

For 18 straight years, The Heritage Foundation and The Wall Street Journal have teamed up to track economic freedom around the globe with their Index of Economic Freedom. Last year, they found that economic freedom worldwide declined, mainly because so many countries tried -- without success -- to spend their way out of recession.

“The tension between government control and the free market has heightened around the world, particularly in developed countries,” the Index editors write. “Eroding hard earned gains in economic freedom in years past, the mounting burden of reckless government spending in many cases has overwhelmed gains in economic freedom achieved in other policy areas.”

Last year, the global average economic freedom score was 59.5 (out of a possible 100). That’s down 0.2 point and is the second-lowest score in the last decade. The economic freedom scores of 75 countries improved, but 90 lost ground.

One of the decliners was the United States. Sadly, this was the continuation of a trend. As recently as 2009, the U.S. was ranked sixth in the world and was rated “economically free.” Last year our country dropped to ninth and was considered “mostly free.” This time, we’re barely in the top ten, coming in just ahead of Denmark and far behind the three “free” economies: Hong Kong, Singapore and Australia.

It’s important that the world begin reversing this trend, because economic freedom is good for countries and people alike. “Poverty intensity, as measured by the United Nations’ new Multidimensional Poverty Index that assesses the nature and intensity of poverty at the individual level in education, health outcomes, and standard of living, is much lower on average in countries with greater economic freedom,” the editors write. Furthermore, “countries’ improvements in economic freedom also increase their income growth rates, speeding economic and social progress.”

The key reason that economic freedom is in decline is the on-going economic slowdown. Countries, especially the U.S., but many others as well, are trying to borrow and spend their way back to prosperity. It hasn’t worked, of course. President Obama’s $800 billion “stimulus” bill predictably failed to create jobs or generate growth. What it did do is saddle the country with unprecedented debt, a key reason why our government may need to, again, increase its debt ceiling.

Let’s stipulate that, in passing the stimulus bill, our leaders meant well. Still, “The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding,” warned Supreme Court Justice Louis Brandeis. By relying on the federal government to solve problems, instead of free people acting in their own best interests, our leaders are endangering the economic freedom that made this country great.

Still, the government’s failures mean we still have to choose a better path. “People worry about government waste; I don't,” economist Milton Freidman said in 1991. “I just shudder at what would happen to freedom in this country if the government were efficient in spending our money. The really fascinating thing is that our private sector has been so effective, so efficient, that it has been able to produce a standard of life that is the envy of the rest of the world on the basis of less than half the resources available to all of us.”

There’s no reason the U.S. can’t, once again, become a leader in economic freedom. This can be the year we move back toward lower taxes, smaller government and less debt. That would point the way toward a future with more economic freedom, and the opportunity that goes with it.