For the fourth year in a row, the United States has fallen on the Heritage Foundation’s international Index of Economic Freedom. For 2011, the U.S. fell from 9th to 10th, just behind Ireland. (RELATED: IMF providing bailout support to heavily indebted Ireland)
The Economic Freedom Index ranks 179 countries. Due to a lack of data, the report excludes only four war-torn countries and Europe’s Lichtenstein.
The U.S. — which Heritage considered a “free economy” in 2008 — is now called “mostly free.” Only the top five countries on the index still hold the rank of “free” — maintaining a score of 80 out of 100 or higher — with the highest score standing at 89.9. The United States is currently scored at 76.3. (RELATED: Female CEOs point to over-regulation, uncertainty as major hurdles to economic recovery)
“Most worrisome is the U.S.’s drop in the category of freedom from corruption,” a press release from Heritage reads. “Index editors say this stems from the growing perception of corruption associated with government bailouts of troubled industries, including automakers and investment houses. The perception of corruption also grew due to regulatory exemptions granted to politically well-connected companies and special-interest groups. More than 1,100 companies won exemptions from provisions of the Patient Protection and Affordable Care Act, President Barack Obama’s signature health care legislation.”
“Corruption is a growing concern as the cronyism and economic rent-seeking associated with the growth of government have undermined institutional integrity,” the release continued. (RELATED: Anti-corruption act would ban innocuous gifts, wreak havoc on local governments, critics warn)
Even in its own region — North America — the United States does not take the lead, trailing Canada but leading Mexico. (RELATED: Loonie levy: Canadians to be taxed $5.50 to fly south)
In assessing states, the index takes into account rule of law (property rights and freedom from corruption), limited government (government spending and fiscal freedom), regulatory efficiency (business freedom, labor freedom and monetary freedom) and open markets (trade freedom, investment freedom and financial freedom).
By this criteria, since the previous report, the United States has lost rank in corruption, government spending, monetary freedom and investment freedom. It has gained rank in fiscal freedom, business freedom and labor freedom, while staying steady in the other categories. The gains were not enough to offset the losses. (RELATED: Angelina Jolie ‘disappointed in’ Obama [VIDEO])
“Restoring the U.S. economy to the status of a ‘free’ economy,” the report reads, “will require significant policy changes to reduce the size of government, overhaul the tax system, and transform costly entitlement programs. By boosting growth in the private sector, such freedom-enhancing policies are the best hope for bringing down high unemployment rates and reducing public debt to manageable levels.”
The Pacific leads the world in economic freedom, with former British protectorate Hong Kong in the lead, followed by Singapore, Australia and New Zealand.
Hong Kong was surrendered to the People’s Republic of China — the world’s largest and most powerful communist state — in 1997, ending 156 years of British rule. Though panic ensued, the communists have declined to seriously meddle in the economy of their now-most prosperous city.
Communist North Korea takes dead last, with a score of one. It falls behind Zimbabwe and communist Cuba. Communist Venezuela is also considered “repressive,” taking 174th place. The only communist country to escape that final category is the People’s Republic of China, which ranks 138, earning it the designation of “mostly unfree.” (RELATED: North Korea calls Kim Jong Un ‘supreme leader’)
The Heritage Foundation and the Wall Street Journal created the index of economic freedom in 1995. This is its 18th report.