It isn’t Pretty, Fiscal Insanity is Killing Us
The Index of Economic Freedom is produced annually by the Heritage Foundation. It surveys a number of characteristics for every country and ranks them in five categories based on a score out of 100 possible points:
Free, score 80 or above
Mostly Free, score 70 to 79
Moderately Free, score 60 to 69
Mostly Unfree, score 50 to 59
Repressed, score under 50
What this measures is the freedom of the common man to control his own destiny and enjoy the fruits of his labor. This is important because there is a direct correlation between the score and the economic wellbeing of a country and the individuals within it, and the trends for future prosperity. The report is lengthy, if you want to see all the rankings and Executive Summary, here is a link to the full report.
As an overview, this measures 12 categories grouped as follows:
Rule of Law (property rights, rule of law, judicial effectiveness)
Government size (tax burden, government spending, fiscal health)
Regulatory efficiency (business freedom, labor freedom, monetary freedom)
Open markets (trade freedom, investment freedom, financial freedom)
Unfortunately, the worldwide trends are moving in the wrong direction. The score has just dropped for the world to 59.3, from 60.0 last year and is the lowest score in over 20 years. One of the key reasons for this drop is the deterioration of fiscal soundness.
More troubling for us here in the U.S., the score has dropped from in the 80’s in 2008 (Free), to 70.6 today (just barely in the Mostly Free category). This is the lowest score since the inception of the Index 29 years ago. We were #5 in economic freedom in 2008, we are now 25th and dropping fast. The primary reason for the precipitous drop is the large deficits, growing debt and the high degree of regulation as the government has grown rapidly. The score on fiscal health is dragging us down.
At the top of the list in the Free category are only 4 countries: Singapore, Switzerland, Ireland, and Taiwan. There were 8 last year.
The bottom 3 are: Venezuela, Cuba, and North Korea.
Do you get the picture? The correlation between the index and prosperity is unmistakable. The moderately free and above have double the per capita income of the bottom categories and over three times more than the bottom category.
BOTTOM LINE
If the U S continues on the path we are on, with fiscal insanity and growing debts and growing government, the future direction is down. That is not what we want. This will lead to declining prosperity and leaving to future generations a country in financial distress.
We inherited a country that worked. Shame on us if we leave to our younger generation, our kids and grandkids a country that no longer works.
LEARN ECONOMICS, THEN VOTE SMART