2-9-16 – U.S. Economic Freedom Slips Downward Again in Global Survey

by John J. Metzler

While recessionary winds continue to buffet the world economy, many countries are still prospering due to innovative policies which have embraced economic growth and expanded economic opportunities and grown the middle class in places as disparate as East Asia and South America. Yet, the United States, the world’s largest economy, has slipped downward yet again in economic freedom according to a significant new survey.

In a review of world economies, the Heritage Foundation, a Washington-based think tank, and the Wall Street Journal asserts that the American economy has declined in relative economic freedom and now ranks eleventh globally, just behind the United Kingdom. The survey used an extensive list of comparators which effect Entrepreneurship such as Regulatory Efficiency, Rule of Law, Limited Government, and Open Markets,

According to Anthony Kim, a policy analyst at Heritage, “The U.S. has fallen from the 6th freest economy in the world, when President Barack Obama took office, to 11th place today in 2016. America’s declining score in the index is closely related to rapidly rising government spending, subsidies, and bailouts.”

Regarding the survey Heritage says, “For over two decades, the Index of Economic Freedom has measured the impact of liberty and free markets around the globe, and the 2016 Index confirms the formidable positive relationship between economic freedom and progress.”

So let’s look at the numbers. The top five freest economies are Hong Kong, Singapore, New Zealand, Switzerland and Australia. Hong Kong, despite being a Special Autonomous Regions of the People’s Republic of China, still excels at entrepreneurship and retains the coveted number one ranking. Singapore, not surprisingly, comes in second and New Zealand third.

Canada, Chile, Ireland, Estonia and the United Kingdom fill out the top ten. In all these countries a commitment to open markets and rule of law has reinforced economic freedom. Estonia, the tiny Baltic nation once ruled by the former Soviet union, is a particular success as a market economy given that the country had suffered so long under a static socialist system.

The USA ranks in eleventh place. The report adds, “Americans continue to lose economic freedom. Following declines in seven of the past eight years, the United States this year has equaled its worst score ever in the Index of Economic Freedom. Ratings for labor freedom, business freedom, and fiscal freedom have flagged notably, and the regulatory burden is increasingly costly.”   The survey adds however, that on the positive side, the U.S. prospers from open markets. Yet, free market capitalism, the elixir of growth, is under assault on many sides.

The report cites massive government spending and the rise of a regulatory state as hampering American efficiency and growth potential.

Following the two top ranked Chinese ethnic “city state” economies of Hong Kong and Singapore, Taiwan, a thriving and prosperous East Asian democracy ranks 14th , followed by Japan who comes in at 22nd and South Korea at 27th.

The index cites South Korea as expanding economic freedoms thus allowing for open markets and monetary stability.

Columbia at 33 is the second highest ranked country in Latin America.

Looking at what’s often viewed as the BRICS economies, Brazil, Russia, India, China, and South Africa, the index takes on a different dimension. Almost all fall under the “Mostly Unfree” category largely due to uneven reforms, rife corruption and over dependency on commodity prices. Brazil ranks 122, while India comes in at 123.

The Indian case it instructive.   Despite the election of Prime Minister Modi’s pro-business and reformist government, India still suffers from entrenched political and economic corruption. Equally, a burdensome and complex regulatory environment still serves as a counterweight to a smooth and efficient business environment. Nonetheless, India’s economy has come a long way since the legacy of state socialism and its anemic “Hindu rate of growth.

Russia’s prospects remain “bleak” according to the survey given that despite being resource rich, the country lacks an “efficiently functioning legal framework” and “government continues to interfere in the private sector through myriad state-owned enterprises.” Corruption is pervasive.

China which ranks 144, is undergoing an economic slowdown.   Despite government efforts to curtail pervasive corruption, nonetheless since 1978, China’s economy, despite crony capitalism, was increasingly lifted from the morass of socialism into years of impressive if unequal growth.

Ranked highest among the BRICS, South Africa ranks as Moderately Free and to its credit comes in at 80 out of the 178 comparators. Zimbabwe, Venezuela, Cuba and North Korea stand at the bottom of the list.   That’s hardly surprising.


John J. Metzler is a United Nations correspondent covering diplomatic and defense issues.   He is the author of Divided Dynamism, the Diplomacy of Separated Nations: Germany, Korea, China.


{ 1 comment… read it below or add one }

Jim Bulmer February 14, 2016 at 3:51 pm

The world is finally catching up with Vermont as Vermont has been in a slow down mode for the past twelve years. When will Vermonters realize that the well to do can no longer pay other peoples bills?????????? IT’S TIME FOR A REAL CHANGE IN MONTPELIER!!!!!!!!!!!!!!!!!!!!


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