Tag: Economic growth

Losing Our Economic Freedoms

All together now ,”We are number 10!!!”. Maybe Obama is right, maybe we really are nothing exemplary, mediocre, and nothing to brag about. For all the lip service we pay about things like freedom and economic prosperity, our bona fides are not all that bona after all, not in comparison to some other country’s that are eating our lunch.

Every year CATO provides a world ranking of economic freedom. Much like basketball, you would think that we (the US) should be the top dog, that which others aspire to and nip at our heels trying to catch up, hardly:

As the graph below shows, the United States has had one of the largest declines in the past decade. It now ranks in 10th place compared to 3rd in 2000, largely due to higher government spending and lower ratings on “rule of law” measures. The report documents the strong, positive relationship between economic freedom and a range of indicators of standard of living including wealth, economic growth, longer life spans, better health care, lower poverty, civil and political liberties, and so on. Economic freedom is central to human progress. As the response of activist governments to financial and ongoing debt crises fails to address underlying issues responsible for low growth and high unemployment, this report is an important empirical reminder about the wide-ranging consequences of politics or markets in determining the use of resources.

“Empirical reminder” is code for ,”We are shitting where we eat”.

The freedom to exchange good and coordinate markets with other nations who also value economic freedom, this is the primary pillar of prosperity. Granted, many other nations have been doing this longer then we have, but it’s rather sobering to see how far we have fallen, how fast.

This year’s report notes that economic freedom fell for the second consecutive year. The average economic freedom score rose from 5.53 (out of 10) in 1980 to 6.74 in 2007, but fell back to 6.64 in 2009, the most recent year for which data are available. In this year’s index, Hong Kong retains the highest rating for economic freedom, 9.01 out of 10, followed by Singapore, New Zealand, Switzerland, Australia, Canada, Chile, the United Kingdom, and Mauritius. The world’s largest economy, the United States, has suffered one of the largest declines in economic freedom over the last 10 years, pushing it into tenth place. Much of this decline is a result of higher government spending and borrowing and lower scores for the legal structure and property rights components

What do you think they mean by, “lower scores for the legal structure and property rights components”? Our legal system is not any more convoluted then any other free society, and our property rights are still sacrosanct, about as safe as possible in a land where the government needs to be fed and is quite ravenous.

Some props should go out to CM, his country kicked our ass in economic freedom, maybe they do do a few things right in Kiwiland. I need to stay on his good side for when, in a few years, we go bankrupt, maybe he will rent me a room.

None of this is irreversible, and could be easily righted with some good old fashioned conservative applications, like limiting government, reducing the deficit, removing the reins that have restricted American economic expansion and growth, and getting more folk back towards producing instead of consuming.