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Posts Tagged ‘Index of Economic Freedom’

The Index of Economic Freedom is my favorite annual publication from the Heritage Foundation. It’s a rich source of information, using dozens of data sources, about economic liberty around the world.

I first wrote about the Index back in 2010 and shared the bad news that the U.S. score dropped dramatically in Obama’s first year.

Well, the new Index lets us see the net effect of Obama’s entire tenure. The worse news is that the U.S. score has dropped to 75.1 on a 0-100 scale. And the worst news is that this represents America’s lowest score in the twenty-plus years that the Index has been published.

The United States is ranked #17 in the latest Index. We’re only in the “Mostly Free” category, behind Luxembourg and the Netherlands and tied with Denmark.

The top-ranked jurisdiction, once again, is Hong Kong. And what’s really amazing is that Hong Kong actually increased it score. Indeed, all five nations in the “Free” category managed to increase overall economic freedom.

So congratulations also to Singapore, New Zealand, Switzerland, and Australia.

Here’s a map showing the entire world. The worst nations are in red, with North Korea at the very bottom, followed by Venezuela and Cuba.

By the way, Cuba jumped 4.1 points last year, so maybe Fidel’s death is the beginning of some much-needed liberalization.

For more information on the United States, here’s the breakdown of America’s score. As you can see, our worst category is “government size.” In other words, we tax too much and spend too much.

America’s best score is for “regulatory efficiency,” which helps to explain why the U.S. gets a top-10 score from the World Bank’s Doing Business.

Let’s close by comparing the United States with Hong Kong. This charts shows how our scores have changes over time, and also shows the average score for the entire world.

The biggest takeaway is that the U.S. basically is halfway between Hong Kong and the world average.

The great unknown, of course, is whether America’s score will go up or down under Trump.

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The 2012 Index of Economic Freedom has just been released. This is my favorite publication from the Heritage Foundation, and second only to the Economic Freedom of the World Index as a measure of global public policy.

The news scores for 2012 are not pretty. We have bad news, we have worse news, and we have worst news.

Economic Freedom Declines in America

The bad news is that the score for the United States dropped from 77.8 to 76.3, which caused America to drop from 9th place to 10th place in the global rankings.

The worse news is that the U.S. dropped only one spot because other nations also adopted more statist policies. America would be in 12th place if Denmark and Bahrain simply maintained their positions from last year.

The worst news is that America’s decline is not just a one-year phenomenon. The chart shows how the U.S. has dropped from being a “free” nation to being a “mostly free” nation over a four-year period.

But it’s not just the past couple of years. The second chart, using data from the Economic Freedom of the World Index, shows that the United States has declined over the past 11 years thanks to Bush-Obama statism.

In other words, America is paying a real prices for bad government policy. As jurisdictions such as Hong Kong and Singapore continue to liberalize their economies and maintain high levels of economic freedom, jobs and investment will leave the United States in search of friendlier policy.

The only silver lining to this dark cloud is that other major economies – especially in Europe – are deteriorating at a faster rate. So America will benefit from flight capital in the short run even though our long-run prospects are equally dismal.

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I prefer the Fraser Institute’s Economic Freedom of the World over the Heritage/WSJ Index of Economic Freedom, not because I’m an expert on the methodology of the two publications, but for the simple reason that I assume Economic Freedom of the World must be slightly more accurate because, unlike the Heritage Index,  it showed the U.S. score declining during the Bush years.

That being said, the Index of Economic Freedom is my favorite Heritage Foundation publication. It is a first-rate collection of data and analysis on international economic policy trends. Today, however, the latest version of the Index was released and it brings us bad news about the United States.

America’s score dropped by 0.2. Combined with what happened to other nations, that dropped the United States down to 9th place. Lots of fascinating material in the report. The very solid scores for Chile and Estonia (both just outside the top 10) are especially noteworthy. And a special shout out to North Korea for easily beating Cuba and North Korea for the last prize honor.

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