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United States Slips on Economic Freedom Index

Back when I was young in the 1990’s, I remember people often using the phrase “it’s a free country!” But as the years passed, that line became less commonly used. In recent years, I cannot recall one person using this old expression. This seems to be a sign that a great number of Americans are realizing that their freedoms are slipping away.  So just how free is America today?

The newly released Heritage Foundation and Wall Street Journal’s Index of Economic Freedom 2010 rates countries based on ten components of economic freedom. This year, the United States slipped to the ninth freest country in the world. The researchers have included the United States in the “mostly free” category. According to the study, the United States is behind the countries of Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Ireland and Denmark. We’ve become less free since the 1990’s. In the first annual Index of Economic Freedom in 1995, the United States was the fourth freest country in the world.

This should be a huge warning sign. If current trends continue, the United States may not be listed in the top 10 freest countries in future years. The study assigned the United States a 77.8 out of 100 rating based on components such as property rights, business freedom, government spending, and trade freedom. The Heritage/Wall Street Journal study defines economic freedom as “the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”

The good news is that America is relatively free compared to the rest of the world. For most Americans, it is likely virtually impossible to imagine living in the least economic free countries in the world. Based on limited available information due to government-imposed secrecy, North Korea is listed as the least free country in the 2011 Index. In the ten least free countries, the state controls and owns nearly every aspect of economic activity from trade to property. Since a lack of property rights and free trade are major explanations of poverty in the developing world, it’s no wonder that these countries are also the world’s poorest.

Freedom promotes wealth and prosperity. Peruvian economist Hernando de Soto once estimated that approximately 4 billion poor people in third world countries owned at least $9.3 trillion worth in real estate. But these assets were considered “dead assets” because citizens lacked a formal legal title to their property. As Steve Forbes remarked, “imagine what would happen to the global economy if even a fraction of that $9 trillion were liberated.”

We may be fortunate compared to the rest of the world. But we still have a lot of work to do. The Index of Economic Freedom finds that the United States’ “score is 0.2 point lower than last year, reflecting deteriorating business freedom, trade freedom, government spending, and monetary freedom.” As the study notes, the U.S. government spending spree has become unsustainable. The United States ranks 122nd out of 179 countries on government spending. Moreover, “drastic legislative changes in health care and financial regulations have retarded job creation and injected substantial uncertainty into business investment planning.”

Let’s strive to move America to number one on the Index of Economic Freedom. In just the past two years, the United States has dropped from sixth to ninth place. Congress must act to make real spending cuts. We can easily become freer by repealing recently passed bad legislation such as ObamaCare, the “stimulus” and the Dodd-Frank financial overhaul. Simultaneously, let’s work on eliminating programs shown to be inefficient.  How about privatizing Amtrak and ending rail subsidies to save taxpayers $31 billion? Eliminating energy subsidies including ethanol to save $17 billion? Or ending agricultural subsidies to save nearly $29 billion? These are just a few examples. The list goes on and on. The sooner we start making these cuts, the better for freedom.