The United States has dropped 15 slots since 2000 in an annual ranking of economic freedom, from second place to 17th place.
Wednesday, the Fraser Institute, a Canadian public policy think tank, released its annual Economic Freedom of the World Report revealing that while the United States is up a slot in the rankings from last year’s analysis, the country still has ground to make up to get back to the position it held in 2000.
The report gauges how supportive countries’ policies and institutions are of economic freedom using 42 variables in five general areas: government size, property rights and legal system, sound money, international trade freedoms and regulation.
This year’s report ranks 152 countries and territories on that basis, with Hong Kong, Singapore and New Zealand in the one, two and three slots. The Republic of the Congo, Myanmar and Venezuela occupy the very bottom slots.
The United States, at 17, ranks behind Canada, the United Kingdom and Australia.
One of the report authors, Joshua Hall, associate professor of economics at West Virginia University, explained to The Daily Caller that the annual report was inspired by an observation from economist Milton Friedman.
“Friedman knew of no country that was economically free that was not also politically free, and he realized we really don’t have good measures of economic freedom and maybe we should develop those,” Hall said.
According to the report, the freest countries experienced the most economic growth, with those living in the freest countries experiencing higher incomes and longer life expectancy.
Hall explained there are “lots of reasons” the United States has declined in the economic freedom ranking since 2000. Three areas he noted are an increase in government spending, expanding regulation and declining security of property rights and rule of law.
Why did the United States fared slightly better this year than last? “There is a lot of clumping in certain points,” Hall said, “so you might see a country move one or two slots based on another country falling, another country rising a little bit.”
He noted, however, that the longterm trend is ominous.
“Personally, I don’t see much difference from my vantage point between the 17 and 18. But there’s a very large difference between the second [place] we used to be in and the 17th [place] we have today,” Hall said.
He added that Americans should view the report as a warning.
“In the long run there is a very strong relationship between high levels of economic freedom and growth,” Hall said. “And so a few years of lower economic freedom, we’re not going to see immediate declines in our standard of living; but if we continue on the slide, we are essentially kind of eating the seed corn and destroying all that we have built up over the past couple hundred years.”
“I think I would view the report as kind of a canary in the coal mine. These are warning signs that we’re becoming over-regulated, we’re spending too much, we’re racking up too much debt. We need to understand that our current economic prosperity was dependent in large part on the government sticking to its core functions.”