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There was a time when America was the land of opportunity. The shining city on a hill in which anyone could succeed. Those were the days when America was an exemplary specimen of the free market. Unfortunately, it would appear, those days are gone. In fact, economic freedom is in decline around the world, not just in America.
Yesterday, the Heritage Foundation and the Wall Street Journal released their 2013 Index of Economic Freedom. This index, the 19th annual report of the kind, showed that economic freedom is failing to thrive around the world. According to Ambassador Miller in The Wall Street Journal, this could be explained by “populist ‘democratic’ movements that will use the coercive power of government to redistribute income and control economic activity.”
What of American economic freedom specifically? Since 2009, our ranking has been in steady decline according to the 10 criteria examined in this study. While we were once considered to be a “free” economy, we were downgraded to “mostly free” in 2010. This year, we just squeaked by to make it into the top ten in this index, mostly due to our lack of regulatory efficiency. America’s ranking in this index is the lowest since 2010. "Almost all of the most advanced countries lost ground this year," Miller wrote. "Even top-ranked Hong Kong saw its score decline due to increased government spending and higher inflation. The United States, ranked only 10th most free in the world this year, joins Ireland as the only advanced economies to have lost economic freedom five years in a row."
What repercussions does this have for the American economy? There are quite a few consequences associated with restrictions on economic freedom, including higher rates of poverty. Conversely, high rates of economic freedom relate to higher rates of prosperity and happiness. There is a proven link between economic freedom and employment growth, so it is no coincidence that unemployment is high while economic freedom is low. To have a population which is employed, prosperous, and happy, the government needs to stay out of the way of economic freedom. This used to be the case in America but our shining city has lost some of its luster.
What happened to America’s economic security? Big government. There is a direct correlation between liberal values and a lack of economic freedom, and we are a case study in that phenomenon. There’s no question that America has lost the edge in economic freedom. The question is this: What are we going to do to get it back?