United States Ranks 12th in the Index of Economic Freedom
The 2015 Index of Economic Freedom has awarded the United States a score of 76.2 out of 100 and a rank of 12th in the world among nations that are economically free. This index, published by the Heritage Foundation and The Wall Street Journal, looks at 10 economic factors that are divided into four categories known as pillars of economic freedom. These include rule of law, limited government, regulatory efficiency, and open markets.
In 2009, the U.S. ranked sixth on the Index of Economic Freedom. The Great Recession caused that ranking to drop, however, and it remains poorer due to slow post-recession growth. While the nation did move up in several categories this year, there is still room for improvement.
What is Economic Freedom?
Economic freedom provides a nation’s citizens with the ability to work, produce, consume, trade, own, and invest according to how they see fit. This also means having the ability to earn and profit from your own ideas and hard work. Without these freedoms, people may be unable to improve their life situation and could become vulnerable to oppression. The Index of Economic Freedom has shown that greater economic freedom translates into prosperity and higher per capita income. When citizens have the ability to improve themselves by controlling their economic destiny, it empowers them to rise above poverty and dependence on government entitlements.
A Look at U.S. Rankings
The United States achieved its highest index rating—a score of 98.5—in the category of labor freedom, although that rank is down slightly from last year. The index shows slight improvements this year in the categories of monetary freedom, trade freedom, fiscal freedom, government spending, and freedom from corruption. Business freedom has declined slightly, and property rights, investment freedom, and financial freedom all remain unchanged from last year.
What Does the Index Mean for Americans?
This year’s Index of Economic Freedom study shows that while efforts have been made to cut government spending and improve business freedom over the past several years, the country still scores low for government spending, at 51.8, and has experienced a decline in business freedom. Programs that increase spending, taxes, and regulation, such as the Affordable Care Act, can stifle business growth, making economic freedom harder to obtain. Companies may seek out countries with fewer regulations when business freedom declines, in turn negatively affecting American jobs and Americans’ abilities to earn, invest, and stimulate the economy.
The monetary freedom index score is only 76.6 out of 100, revealing that the Federal Reserve’s attempts to stimulate the economy have fallen short. The cost of living has gone up for most Americans, while wages have remained stagnant.
Trade freedom in the U.S has improved slightly since last year. Increased regulation through the Dodd-Frank Act and high tariff rates on items such as agricultural products, clothing, and automobile parts, however, demonstrate that the U.S. could stand to ease restrictions on free trade and industry to further improve economic growth.
The Founding Fathers saw the United States as a nation capable of economic freedom through the perfect combination of individual liberty and government regulations that don’t interfere with personal freedoms. However, the balance has shifted, and the United States is no longer at the top of the Index of Economic Freedom.