Economic freedom continues to recede in the United States, according to The Heritage Foundation’s 2013 Index of Economic Freedom. This was the fourth straight year of decline for the 10th-ranked United States, reflecting increased government regulation and spending.
The Index, produced in collaboration with The Wall Street Journal, reports that Hong Kong is again the world’s freest economy. And the United States, which ranks only as a “mostly free” economy, lags behind countries like Canada and Australia.
What’s behind the fall? Heritage economist Terry Miller explains:
It is no exaggeration to blame the recent slowdown in economic liberalization around the world on the lack of U.S. leadership. Trade flows—the engine of world growth—have declined as the U.S. economy has stagnated. Protectionism threatens consumers and businesses with higher costs and restrictions in supply. Ill-conceived banking regulations such as the Dodd-Frank law generate uncertainty and anxiety. And investment freedom declines in the face of higher costs and new legal and tax liabilities such as those introduced by ObamaCare.
Particularly concerning are the rise of populist “democratic” movements that use the coercive power of government to redistribute income and control economic activity.
[While] corrupt political and legal environments cause underdevelopment in poorer countries, unfortunately, economic favoritism and cronyism exist in advanced democracies, too.
Over-regulation is part of the reason for the U.S.’s decline from a “free economy” to a “mostly free economy.” Over the last few years, “over 100 new major federal regulations have been imposed on business operations since early 2009 with annual costs of more than $46 billion.”
Our leaders in Washington need to realize that laws can have real and dire consequences for Americans and for the world. Heritage Trustee Steve Forbes sounded a similar note this week when he lectured about why free markets are moral and why big government isn’t.
While North America still remains the most economically free region in the world, our hold is rather precarious. Canada is ranked as the sixth most free economy, placing four ranks ahead of the U.S. If we continue to slip, then the North America region will not continue to be the most free because Mexico is ranked as only “moderately free.”
What do you think lawmakers can do to help America become more economically free?