Each year, the Heritage Foundation and the Wall Street Journal jointly publish a carefully researched Index of Economic Freedom that ranks 179 nations in terms of ten components of economic freedom: business, freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom. Each of these components is measured on a scale from 0 to 100, where 100 represents the maximum freedom. The ten component scores are then averaged to provide an overall economic freedom score for each country.
Countries that score between 100 and 80 are characterized as Free, those that score between 79.9 and 70 are characterized as Mostly Free, those between 69.9 and 60 as Moderately Free, those between 59.9 and 50 as Mostly Unfree, and those between 49.9 and 0 as Repressed.
The 2010 Index of Economic Freedom was published on January 20, 2010. The United States economic score was 78.0, with its economy ranked Number 8 in the total Index (falling from Number 6 in 2009), and characterized now as only Mostly Free. Its score was 2.7 points lower than in 2009, reflecting the most precipitous drop in economic freedom among the world’s top 20 countries (measured in terms of gross domestic product). Canada, with an overall score of 80.4, is the only country in North America now ranked as Free.
For reference, the top ten ranked nations are: 1. Hong Kong (89.7), 2. Singapore (86.1), 3. Australia (82.6), 4. New Zealand (82.1), 5. Ireland (81.3), 6. Switzerland (81.1), 7. Canada (80.4), 8. United States (78.0), 9. Denmark (77.9) and 10. Chile (77.2). The United States is now bracketed with such nations as the United Kingdom, Germany, Japan, Sweden, Georgia, Botswana and South Korea, nations that are not usually highly regarded as bastions of economic freedom. Well, at least there is still some distance from North Korea (1.0)!
So what went wrong? The answer is unequivocal: the interventionist 2009 responses by the Obama administration, the US Congress, and the Federal Reserve to the financial crisis and economic contraction. Economic freedom declined in 7 of the 10 categories measured in the Index. The score, category by category, is as follows, in a descending order of economic freedom:
Labor Freedom (94.8) Free; Business Freedom (91.3) Free; Trade Freedom (86.9) Free; Property Rights (85.0) Free; Monetary Freedom (78.1) Mostly Free; Investment Freedom (75.0) Mostly Free; Freedom From Corruption (73.0) Mostly Free; Financial Freedom (70.0) Mostly Free; Fiscal Freedom (67.5) Moderately Free, Government Spending (58.0) Mostly Unfree.
For a nation that once proudly claimed to be The Land of the Free, this is a wretched Report Card, not one that any child would be proud to show to his parents. Worse still, there are no signs as yet that the child has learned its lesson. The Report Card in 2011 shows every sign of yet further deterioration. “Please don’t show it to Dad, Mom. He might take off his belt.”