Economic freedom is in decline nationally and around the world according to The Heritage Foundation’s annual Index of Economic Freedom, released today.
2012 marked the the fifth year in a row that economic freedom has declined in the United States. And with President Obama in the White House, it appears that trend will continue. The Heritage Foundation reports:
Under Democratic President Barack Obama, the federal system of government, designed to reserve significant powers to the state and local levels, has been strained by the national government’s rapid expansion. Spending at the national level rose to over 25 percent of GDP in 2010, and gross public debt surpassed 100 percent of GDP in 2011. A 2010 health care bill greatly expanded the central government’s regulatory role, and the Dodd–Frank financial overhaul bill roiled credit markets. The election of a Republican Party majority in the House of Representatives in late 2010 slowed spending growth, but the divided government that has left economic policy in flux seemed likely to continue following the reelection of President Obama in 2012.
Unfortunately the United States is not the only country retreating from a free economy. According to The Index, only 31 countries increased their economic freedom scores by 1 point or more over the past year while 35 registered declines.
Why should anyone care about economic freedom? Because more economic freedom means better economic growth. The Heritage Foundation reports:
The most basic benefit of economic freedom, confirmed now with data covering 19 years, is the strong relationship between economic freedom and levels of per capita income. For countries that achieve scores that reflect even moderate levels of economic freedom (60 or above), the relationship between economic freedom and per capita GDP is highly significant. Countries moving up the economic freedom scale show increasingly high levels of average income.