Millions of people around the world are emerging from poverty thanks to rising economic freedom. But by sharp contrast, America’s economic freedom has been on a declining path over the past decade.
According to the 2016 Index of Economic Freedom, an annual publication by The Heritage Foundation, America’s economic freedom has tumbled. With losses of economic freedom in eight of the past nine years, the U.S. has tied its worst score ever, wiping out a decade of progress.
The U.S. has fallen from the 6th freest economy in the world, when President Barack Obama took office, to 11th place in 2016. America’s declining score in the index is closely related to rapidly rising government spending, subsidies, and bailouts.
Since early 2009:
- Government spending has exploded, amounting to $29,867 per household in 2015.
- The national debt has risen to $125,000 for every tax-filing household in America—a total over $18 trillion.
- The government takeover of health care is raising prices and disrupting markets.
- Bailouts and new government regulations have increased uncertainty, stifling investment and job creation.
This is not something to take lightly. Economic freedom is the foundation of U.S. economic strength, and economic strength is the foundation of America’s high living standards, military power, and status as a world leader. The perils of losing economic freedom are not fictional.
It is painfully clear that our economy has been performing far below its potential, with individuals, families, and entrepreneurs being squeezed by the proliferation of big-government bureaucracy and regulations.
As documented by the index, and by other scholars, America’s economic freedom has been declining at an alarming pace.
Indeed, as The Wall Street Journal recently summed it up succinctly, Obama is “a champion when it comes to limiting economic freedom, and American workers have the slow growth in jobs and wages to prove it.”
Not surprisingly, our economic dynamism and innovative capacity have been measurably reduced. Self-inflicted wounds include:
- The U.S. has the highest corporate tax rate in the developed world. This has driven new jobs to other, more competitive nations and has meant fewer jobs and lower wages for Americans.
- The overall annual cost of meeting regulatory requirements has increased by over $80 billion since 2009, with more than 180 new regulations in place. In terms of ease of starting a new business, analyzed by a recently published World Bank report, the U.S. is ranked shockingly low at 49th, trailing countries such as Canada, Georgia, Ireland, Lithuania, and Malaysia.
No wonder the labor force participation rate has remained at near record lows after more than five years of steady decline.
Worse, vibrant entrepreneurial growth has been stymied by greater policy uncertainty and mounting debt. And a disturbing trend toward cronyism has gravely eroded the rule of law and distorted our free-market system.
House Ways and Means Committee Chairman Kevin Brady (R-Texas), keynote speaker of the official release of the 2016 Index, recently stated: “It’s been almost seven years since the Obama ’recovery' began, and our economy is barely out of neutral. Why does America have to settle for this?”
Restoring economic freedom is prerequisite to revitalizing and brightening America’s future. 2016 is the year to reaffirm the principles of limited government, free enterprise, and rule of law so that we can reconstitute an America where freedom, opportunity, and prosperity flourish.
Anthony B. Kim is the research manager of the Index of Economic Freedom, the flagship product of the Heritage Foundation in partnership with The Wall Street Journal. Copyright The Daily Signal. This article was originally published on The Daily Signal.
