US ranking slips in Heritage Index of Economic Freedom
The Heritage Foundation is out with its annual Index of Economic Freedom and once again, the United States economic rankings fell, marking the 3rd year out of the last 4 that Americans have lost ground.
The US rank is now 11, behind Chile, Estonia and Great Britain and barely ahead of Denmark.
The rankings are based on 10 different factors, including rule of law, property rights, corruption, business freedom, fiscal freedom, and labor freedom.
The index numerical rankings indicate how free an economy is, with 100 being the most free. Only 6 countries recieved the designation of "Free" (80-100), including Hong Kong, Singapore, New Zealand, Switzerland, and Australia.
The US fell into the "Mostly Free" category (70-70.9). Ranking ahead of the US in that category include Canada (#6), and United Kingdom (#10).
Some commentary on the economic freedom indicators. On the Rule of Law:
The American people’s trust in their government is the lowest it has been in the past 10 years, according to three Gallup polls released in 2015, with 75 percent of respondents saying they believe corruption is widespread in the government and in government regulation of business. Although property rights are guaranteed and the judiciary functions independently and predictably, protection of those rights in practice has been uneven.
On Limited Government:
The top individual income tax rate is 39.6 percent, and in the absence of comprehensive tax reform, the top corporate tax rate remains among the world’s highest at 35 percent. The overall tax burden equals 25.4 percent of total domestic income. Total government spending amounts to about 39 percent of GDP. Frontloading spending increases, the Bipartisan Budget Act of 2015 has not reduced the size or scope of government.
On Regulatory Efficiency:
The regulatory burden continues to increase. Over 180 new major federal regulations have been imposed on business operations since early 2009 with estimated annual costs of nearly $80 billion. Labor regulations are not rigid, but other government policies, such as excessive occupational licensing, restrict growth in employment opportunities. Damaging monetary policies, tangled webs of corporate welfare, and various subsidies have bred economic distortions.
On Open Markets:
The average tariff rate in the United States is 1.5 percent. High tariffs increase the price of clothing, sugar imports are restricted, foreign investment in some sectors is capped, and use of domestically built ships is mandated for most domestic maritime transportation. Although detailed regulations have been emerging only gradually, the financial reforms adopted in 2010 have increased both costs and uncertainty.
To be fair, the decline in economic freedom spans the last decade, reflecting how out of control government is and its impact on both our economic freedom and personal liberty. The two are closely intertwined, although they can be mutually exclusive as well. Hong Kong is #1 in economic freedom but is ranked as only "Partly Free" in the Freedom House Index of Personal Freedom.
It's safe to say that you can't have personal liberty without economic freedom. And the US is going in the wrong direction when it comes to assuring the greatest possible economic liberty.