United States Loses Ground in Index of Economic Freedom

According to the 2010 Index of Economic Freedom, complied by the Heritage Foundation and the Wall Street Journal, the United States has fallen from a “free” economy to a “mostly free” economy. America fell 2.7 points into 8th place overall. Hong Kong claimed the top spot.

The report defines economic freedom as the “fundamental right of every human to control his or her own labor and property,” and measures ten components of economic freedom, assigning a grade in each using a scale from 0 to 100, where 100 represents the maximum freedom to reach its conclusions.

Some of the report’s highlights include:

• Gross domestic product per capita is much higher in countries that score well in the Index.
• Economic freedom improves the overall quality of life, promotes political and social progress, and supports environmental protection.
• As a result of increasing government interference in economic activity in many countries, overall progress toward greater economic freedom has been interrupted.
• Increased government spending did not improve economic crisis performance.

For the United States, the report concludes that 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.

It is time for the United States to change its course, and get back on a path to true economic freedom and prosperity.

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