by Ali Meyer • cnsnews.com
The United States does not rank among the Top 10 countries in the world for economic freedom, according to the Heritage Foundation’s 2015 Index of Economic Freedom.
Instead, the U..S. ranked only 12th–after Hong Kong, Singapore, New Zealand, Australia, Switzerland, Canada, Chile, Estonia, Ireland, Mauritius, and Denmark.
Estonia was formerly a part of the Soviet Union.
The Index rates economic freedom for countries on 10 quantitative and qualitative factors that are based on four pillars of freedom: rule of law, limited government, regulatory efficiency and open markets.
“Each of the ten economic freedoms within these categories is graded on a scale of 0 to 100. A country’s overall score is derived by averaging these ten economic freedoms, with equal weight being given to each,” according to the Index.
While the United States’ ranking in the Index has remained unchanged over the year, its score has improved slightly.
“The United States’ economic freedom score is 76.2, making its economy the 12th freest in the 2015 Index,” states the report. “Its score is 0.7 point higher than last year, with modest gains in six of the 10 economic freedoms, including control of government spending, outweighing a slight decline in business freedom.”
“Although the precipitous downward spiral in U.S. economic freedom since 2008 has come to a halt in the 2015 Index, a 1.6-point decline in overall economic freedom over the past five years reflects broad-based deteriorations in key policy areas, particularly those related to upholding the rule of law and limited government,” states the report.
When President Obama took office in 2009, the United States ranked sixth for economic freedom. Now in 2015, the United States has fallen by six to 12th place.
“The anemic post-recession recovery has been characterized by slow growth, high unemployment, a decrease in the number of Americans seeking work, and great uncertainty that has held back investment,” explains the report. “Increased tax regulatory burdens, aggravated by favoritism toward entrenched interests, have undercut America’s historically dynamic entrepreneurial growth.”
Out of the 10 metrics analyzed by the Index, from 2014 to 2015 the United States improved in six measures, remained unchanged in three measures, and declined in one.
The U.S. improved its scoring in 2015 for freedom from corruption, government spending, fiscal freedom, labor freedom, monetary freedom, and trade freedom.
Rep. Paul Ryan (R-Wis.) spoke at the Heritage Foundation on Tuesday to unveil the Index and noted that the improved score in government spending was due to Republicans’ influence in Congress.
“The fact that our country received an uptick in our rating this year, and one of the reasons why we would see this uptick is because since we took over the House in 2011, we started cutting spending,” said Ryan.
“We started capping the kind that Congress is control of on an annual basis, discretionary spending, and so I think it’s noteworthy that because of a new Republican Congress that took over in 2011, we brought some temper to the out of control spending that was happening here in Washington and as a result, it made us more free,” said Ryan. “That’s a good step in the right direction with many, many steps to follow.”
While these metrics improved, the U.S. remained unchanged for property rights, investment freedom, and financial freedom. Finally, the U.S. declined in the “business freedom” metric, which is defined as “the ability to start, operate, and close a business that represents the overall burden of regulation as well as the efficiency of government in the regulatory process.
The business freedom score for each country is a number between 0 and 100, with 100 equaling the freest business environment,” explains the report. The United States received an 88.8 in this category.
“The thing that is amazing to me is you’re seeing all these kind of fad economic theories that have arisen as a kind of formula for getting out of this economic morass that so many countries find themselves in, and I would make the case, including the United States,” said Stephen Moore, chief economist at the Heritage Foundation.
“And what is important about this document, this Index of Economic Freedom, is that it teaches us that this is not complicated, right? These principles about how you create economic growth are not complicated. They’re fairly straightforward,” he added.
“Cut your tax rates, get your government spending under control, a rule of law and so on,” said Moore. “And yet those messages – I think one of the tragedies of what’s happening around the world today, and one of the reasons I’m nervous about the direction of growth across the world, is that so many political leaders and economists are leading their countries in a very wrong direction.
“If you look at what happened in the United States during the Great Recession and virtually everything that the United States has done in response to the Great Recession, I would make the case that almost every single act that’s been put in effect over the last four or five years has been exactly the wrong thing to do,” said Moore.
“You know we started with the $830 billion dollar economic stimulus plan, and that was supposed to – that was right out of the kind of Keynesian playbook,” he said. “This is how the Keynesians say that you create economic growth, and if you look at the evidence of what happened as a result of that, even using President Obama’s own numbers, not our numbers at Heritage – President Obama’s own numbers – the economy grew more slowly. We had less job growth with the stimulus than we would have had if we had not done the stimulus.
“We had Obamacare. We had massive infusions of money, and all of these things have led to the worst recovery from a recession since the Great Depression, and this didn’t happen by accident,” said Moore. “It happened, because the prescriptions were all wrong. And that’s why it was almost humorous when President Obama you know did this kind of icky shuffle in the end zone on Tuesday night when he talked about how we’ve gotten out of this crisis.
“For most Americans, they don’t think America is out of this crisis. They think that this is still a recession, because incomes have not grown, and I make the case it’s because we’ve done so much wrong,” he said.