Study: America falls to 18th in economic freedom

posted at 3:21 pm on September 25, 2012 by Mary Katharine Ham

Not as free as she used to be. That’s the verdict from the Economic Freedom of the World Annual Report on the U.S., which fell to 18th in the rankings this year. America was consistently in the top five from 1975-2002, but has since quickly lost ground, going from 12th to 18th since 2009. This year’s ranking is the lowest showing for the U.S. since the study started.

Taking the Top 10 spots were: Hong Kong, Singapore, New Zealand, Switzerland, Australia and Canada (tied), Bahrain, Mauritius, Finland, Chile. The bottom ranked countries: Venezuela was lowest, followed by Myanmar, Zimbabwe, Republic of Congo, and Angola.

The Fraser Institute, a free-market think tank in Canada, and the Washington-based Cato Institute use 41 measures of economic freedom to rank 144 countries. On the bright side, average freedom all over the world is slightly up over 2011. Their definition of economic freedom:

Individuals have economic freedom when property they acquire without the use of force, fraud, or theft is protected from physical invasions by others and they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. An index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions.

The study evaluates countries in five areas: “size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor, and business.”

So, what happened to the U.S. of A.?

Much of America’s decline is due to the growth of the government’s footprint in our lives since 2000. The assault on American property rights has not helped matters, either. The war on terror put American travelers under the thumb of the TSA—an entity that combines the charm of the DMV, the might of a paramilitary force, and the impropriety of a fraternity hazing. The Supreme Court’s Kelo decision ushered in a rise in eminent domain abuses. And let’s not forget the bailouts of those corporations that were “too big to fail.”

Taxpayers, on the other hand, were just the right size to fail, and that is what happened to them when the government took their money to pay off big, failing businesses.

Those who love freedom recognize it as a value in and of itself, and one that, happily, produces healthy, prosperous societies and people. It isn’t just freedom that’s good. Its outcomes are.

My friend Sean Malone created the infographic below to answer the question, “Why should you care about economic freedom.” Turns out it’s great for fixing things liberals love to use overbearing government to fix, like income inequality, gender discrimination, and the environment:

Child labor rates in the 20 most economically free countries are half what they are in the 20 least economically free countries. And this isn’t because the rich-and-free countries import cheap goods from countries that exploit children. Among the most impoverished countries, those that are more free have significantly lower child labor rates than those that are less free.

Even the environment does better with economic freedom. The 50 countries with the least economic freedom suffer significant deforestation. The 50 countries with the most economic freedom enjoy significant reforestation. The least free countries experience nearly three times the air pollution of the most free countries, and the least free countries experience five times the amount of CO2 emissions per GDP than the most free.

Almost every political hobby horse would be better achieved if governments would simply adopt economic freedom as their primary goal.

The study finds the same thing is true in the freest states in the U.S. vs. the least free.

From 1985 through 2009, unemployment in the 25 most economically free states averaged 5.2 percent, versus 5.8 percent in the 25 least free states. That 0.6 percent difference is equivalent to 460,000 additional jobs that might exist if the least free states were more free. Over the same period, median household income was 7.8 percent greater in the most free states. The rate of homeownership is higher in the most free states. The poverty rate in the most free states averaged 1.6 percentage points less than in the least free states.

This is how exodus happens.

Download and read the whole study, here.

Pass this along to your friends who love freedom and all its benefits, or those who may have never considered either before:

Infographic

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Bishop!

PolAgnostic on September 25, 2012 at 3:24 PM

America falls to 18th in economic freedom

“Mission Accomplished”
says Hussein

burrata on September 25, 2012 at 3:24 PM

The future must not belong to those who slander economic freedom.

lorien1973 on September 25, 2012 at 3:24 PM

Bishop is none too pleased with the SCOAMF resposnsible for this debacle.

PolAgnostic on September 25, 2012 at 3:24 PM

As long as the Dear Leader can afford his halal Wagyu steak and a lobster plate for the Sea Monster, he is fine with a little income inequality.

Archivarix on September 25, 2012 at 3:30 PM

North Korea didn’t even make the bottom five? How screwed up is this world? I shake my head.

WitchDoctor on September 25, 2012 at 3:32 PM

We are #1 in regilious freedom, except for those that slander the Prophet of Islam.

Oil Can on September 25, 2012 at 3:35 PM

Unexpectedly!

Washington Nearsider on September 25, 2012 at 3:35 PM

You cannot change the direction when even the Republicans have caved into beleiving the welfare state, cradle to grave must be Preserved!

astonerii on September 25, 2012 at 3:36 PM

Bishop is none too pleased with the SCOAMF resposnsible for this debacle.

PolAgnostic on September 25, 2012 at 3:24 PM

What about the progressive guy who got us to 12th? Is he happy with him?

astonerii on September 25, 2012 at 3:38 PM

Remember last month when we were all stunned by the UK and their tributes to socialism during the Olympic Opening ceremonies?

They’re #12… We’ve slipped below them.

Gingotts on September 25, 2012 at 3:40 PM

Once again, a post (which was originally in the Green Room last week) about economic freedom, and NOWHERE are the words taxation or free market to be found.

Unbelievable.

Dante on September 25, 2012 at 3:41 PM

Dictator downgrade strikes again. From 12th to 18th in three and a half years.

“Am I good or am just lucky? Naw, I’m the best!”
- Vj’s pool boy.

antipc on September 25, 2012 at 3:42 PM

obama: “18th? darn, it should be lower!!”

Sachiko on September 25, 2012 at 3:43 PM

So, what happened to the U.S. of A.?

January 20, 2009 happened.

rbj on September 25, 2012 at 3:44 PM

Study: America falls to 18th in economic freedom

Thank you, President 0bama!

–getalife

UltimateBob on September 25, 2012 at 3:45 PM

very informative graphic by MKH’s buddy.

ted c on September 25, 2012 at 3:46 PM

Dictator downgrade strikes again. From 12th to 18th in three and a half years.

50% less freedom with half the transfats or something

DanMan on September 25, 2012 at 3:47 PM

Success – Obama

Conservative4ev on September 25, 2012 at 3:47 PM

Very illuminating. Studies that compare our states against each other show similar results.

I’ve only read the excerpt here so far, but I notice much of the fall took place during the Bush years. I consider the TSA and other results of 9-11 to be issues more of personal freedom rather than economic freedom. I guess I’ll have to read further to understand their criteria.

juliesa on September 25, 2012 at 3:47 PM

This post is so full of information, it would be easy to overlook MKH’s penultimate link. You shouldn’t:

This is how exodus happens.

de rigueur on September 25, 2012 at 3:48 PM

And we are close to reelecting this piece of manure.
Amazing how this country has fallen.
Wake up people!

SmallGovtGuy on September 25, 2012 at 3:48 PM

Once again, a post (which was originally in the Green Room last week) about economic freedom, and NOWHERE are the words taxation or free market to be found.

Unbelievable.

Dante on September 25, 2012 at 3:41 PM

Might want to read the article again. The third paragraph states:

The Fraser Institute, a free-market think tank in Canada, and the Washington-based Cato Institute use 41 measures of economic freedom to rank 144 countries. On the bright side, average freedom all over the world is slightly up over 2011.

And I didn’t even have to look that hard to find it. I’m sure Taxation is also mentioned somewhere.

UltimateBob on September 25, 2012 at 3:48 PM

juliesa on September 25, 2012 at 3:47 PM

Some countries are becoming more free while we stagnate. Part of economic freedom is not having a 10 trillion dollar variable rate mortgage placed on your children. Now a 16 trillion and headed for 17 trillion dollar mortgage. Or should I call it indentured servitude bill?

astonerii on September 25, 2012 at 3:50 PM

“18th??? Saaaaay, that reminds me……see ya’ll at the 19th hole!”

- Hussein

antipc on September 25, 2012 at 3:53 PM

Eat The Rich!

FlatFoot on September 25, 2012 at 3:53 PM

Obama’s plan proceeds apace.

Wake up fools.

Schadenfreude on September 25, 2012 at 4:00 PM

And I didn’t even have to look that hard to find it. I’m sure Taxation is also mentioned somewhere.

UltimateBob on September 25, 2012 at 3:48 PM

It’s in the info-graphic.

MeatHeadinCA on September 25, 2012 at 4:02 PM

What the socialist Left does not understand about the capitalist Right:

I may finish last in the race, but at the end I’ll have the pride born of effort. And that beats being a dog on a leash every time.

M240H on September 25, 2012 at 4:03 PM

The study evaluates countries in five areas: “size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor, and business.”

1. Size of Government: F-
2. Legal Structure and Security of property rights: D
3. Access to sound money: (QE 3 and counting) D
4. Freedom to trade internationally: (LNG) D
5. Regulation of Credit: D-
6. Labor: C
7. Business: small business, B; Big Business, D

My two cents worth is that we are over rated.

chemman on September 25, 2012 at 4:07 PM

Any notice off the top of their heads if they count social welfare spending taxes or do they leave those taxes out?

astonerii on September 25, 2012 at 4:11 PM

Well if bho is re-elected we will fall to # 85, just about with zimbabawe on the truck load of money we need to buy a loaf of bread, if you can find any?

Do I need a sarc?
L

letget on September 25, 2012 at 4:13 PM

The fruits of SOCIALISM…

mnjg on September 25, 2012 at 4:20 PM

…F O R W A R D…!!!

KOOLAID2 on September 25, 2012 at 4:29 PM

Thousands and thousands of new regulations against businesses later…wake up America.

Schadenfreude on September 25, 2012 at 4:32 PM

So even though California lost 1.9 million Americans over the past ten years, it’s population still grew by more than 3 million.

El Norte Mexico booming welfare state.

Jeff2161 on September 25, 2012 at 4:38 PM

some states understand how to get richer, while others seem to have lost the touch. California is a state in the latter group, but it can be put back on track. All it takes is the political will.

I think California has passed the tipping point, judging from the popular referendum results. California voters voted to set a maximum class size in public schools, to use state funds to subsidize fetal stem cell research, to spend billions on a high-speed train from SF to LA, and to set CO2 limits on the state’s industries. When a proposition was placed on the ballot that would have suspended the CO2 limits while state unemployment was high, the state voted it down. In November, the state will vote on a proposal to require warning labels on genetically modified foods at a time when incomes are down and food prices are rising steadily. I suspect it will pass easily.

I’m a fourth-generation native, and I don’t see much future for California.

Socratease on September 25, 2012 at 4:44 PM

land of the free…

burserker on September 25, 2012 at 4:49 PM

Same BS, 4 years later

Schadenfreude on September 25, 2012 at 5:28 PM

Hm. Trolls must be sharpening themselves. Or something.

This is how exodus happens.

de rigueur on September 25, 2012 at 3:48 PM

I don’t mean to be impolite, and by all means, welcome, and well met — but I feel like I should just mention that, if the idea is to leave one’s dilapidated house for a new one, one should also change one’s habits such that the new house — here, mine — doesn’t also fall into the same state of decay. :)

To put it another way, if you are leaving New York for Texas, you should think about learning to speak English and wear boots, or you will just turn Texas into New York.

Axe on September 25, 2012 at 5:32 PM

*you is rhetorical. I was just mulling the article, if that wasn’t clear. :)

Axe on September 25, 2012 at 5:35 PM

I’m a fourth-generation native, and I don’t see much future for California.

Socratease on September 25, 2012 at 4:44 PM

I’m a native and a resident. And I’m thinking maybe two Californias. Might be an easier way to shake things up than The Big One.

de rigueur on September 25, 2012 at 5:43 PM

This is actually quite sad. I left Europe to escape socialism, now it seems like many countries in Europe have less socialism than the US.

Norwegian on September 25, 2012 at 6:16 PM

Our results from that crisis and prior ones indicate that higher economic freedom is associated with a lower probability of a banking crisis. And the effect is substantial. This is the opposite of what may well be conventional wisdom: “deregulation” or economic freedom more generally made the financial crisis more likely. Our results indicate this conventional wisdom is incorrect. More economic freedom makes banking crises such as the recent one less likely.

Tying all banks to the same criteria for determining risk as our government does, helps cause crisis. Romney, sure you read this. Remember it!

astonerii on September 25, 2012 at 6:22 PM

Because in this instance, diversification is actually good! More freedom means more choices, which means spreading the risk wider, which means when things go bad you do not have all your eggs in the

“We have to reignite the housing economy here so home values will start going up again,” Romney said

Basket!

astonerii on September 25, 2012 at 6:26 PM

Axe on September 25, 2012 at 5:32 PM

This is what turned my lovely purple state deep blue. Californians and New Yorkers leaving and resettling here in the 1990′s.

Every time the blue bunch destroy their home states, they leave those who cannot leave behind to rot, then they wander off to some nearby red or purple state, and start the whole dang process of rot all over again. I’m getting sick of watching it happen. I wish we could make liberal policies–like Keynesian economics or socialism–illegal.

theotherone on September 25, 2012 at 7:03 PM