I know the Left likes to mock the Heritage Foundation’s Economic Freedom Index as some of Koch Brothers-libertarian-Rush Limbaugh-neocon conspiracy garbage. But, as I’ve argued before, if you want to start looking at the countries that are doing well economically, it’s a good place to start. Almost every country at the top of the rankings is doing well; almost every country toward the bottom is doing poorly. Over the years that Heritage has been tracking the index, we’ve been able to see economic freedom and economic success going hand in hand. Canada and Sweden, in particular, have seen both rising economic freedom and improving economic prospects.
(Lately, it’s become common to mock the index because Mauritius is in the top ten. I don’t fathom that criticism at all. Mauritius is one of the wealthiest countries in Africa and the only one that got there by virtue of something other than sitting on a giant pile of oil. It is one of the best run countries on the continent and one of the only ones with a real middle class. If you had to pick a place to live in Africa, you could pick worse places than Mauritius. Just about everywhere in Africa is worse than Mauritius.)
Heritage has their latest report out and most of the world is moving forward toward freer economies, which is great news for them and for us. A prosperous world is one we can do more business with. But gaze at the top ten and you’ll notice something missing.
Us. The United States finally dropped out of the top ten, with a huge one-year decline in the freedom index. We were passed by Estonia and Ireland, which surged ahead.
(I particularly love that they were passed by those two countries as they are the source of much Krugman bullshit. He has blasted Estonia for practicing austerity because they cut spending during the recession (actual cuts, not pretend cuts). Back in reality, Estonia’s economy is growing, unemployment is extremely high but falling and their credit was upgraded last year. Krugman cites Ireland as proof that the “austerians” were wrong because their economy did poorly after they initially took some good steps. He conveniently ignores the ill-advised bank bailout that succeeded those good steps.)
But those countries didn’t just pass us. We fell. Another half point on the index, the continuation of six-point plunge since 2006, mainly because of rising regulation, rising government spending, increasing corruption and losses of property rights.
While I know that sounds like a bunch of conservative issues, it really isn’t. The declining economic freedom of this country should concern liberals too. Look at the countries that are ahead of us. Many have universal healthcare and effective regulation. Some are socially liberal. Remember when Bush won the 2004 election and all the liberals said they were going to secede and form New Canada (this being when talk of secession was a legitimate expression of frustration instead of crazy person talk)? Well, Canada. Damned Canada. Fucking socialized-medicine-having, hooker-legalizing, syrup-drinking, hockey-playing, don’t-know-how-to-say-the-word-about Canada is now way ahead of us on the economic freedom index and still moving up. Economic freedom doesn’t have to mean living in the kind of world Bill Maher imagines conservatives want: a Social Darwinist dystopia with polluted rivers, no gays and bookstores only selling the Bible. We could be Canada!
But it’s more than that. The things that are driving our economic freedom down, as Alex has argued many times, are the same things driving a growing wedge of inequality in this country. Is it an accident that inequality has grown as the economic freedom index has fallen? The burgeoning wealth and power of the ruling class — wether you call them politicians or the 1% or the Zucchini People — can be traced to things like crony capitalism, regulatory capture, corruption and inordinate uncontrolled spending pouring into the hands of wealthy interests. Businesses spend more time and energy working Washington regulators and lobbyists than they do hiring people to build things. The iron triangle of politicians, lobbyists and corporatists pass down “regulations” that strangle small businesses. But somehow, we still end up with half of West Virginia drinking bottled water because a toxic chemical tank was built upstream of a water treatment plant and avoided inspection for twenty years. We end up with the worst of both worlds: the crushing burden of byzantine legislation without the benefit of improved safety.
The Economic Freedom Index isn’t perfect. But it is an effective tool for getting a snapshot of what an economy is doing and how bright its future is. Our is getting less free. Not “less free for evil rich people”. Less free for all of us. And we will never really get back to a sound economy until that stops.