Tag Archives: Index of Economic Freedom

A Year Of Economic Changes

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On Monday, Just the News posted an article about The Heritage Foundation’s Index of Economic Freedom.

The article reports:

The Heritage Foundation’s Index of Economic Freedom showed the U.S. reversing a five-year decline and having its biggest annual increase in 25 years.

The score increased by 2.6 points from last year, to 72.8. And the U.S. ranked 22nd among the more than 176 countries that had completed scores in the index, FOX Business reported. 

The increase was the largest since 2001, and is the second-largest jump the U.S. has had in the index’s 32-year history.

The index assesses 12 economic freedoms that fall into four categories: rule of law, government size, regulatory efficiency, and open markets.

“The U.S.’s score improvements in monetary freedom, government spending, fiscal health, and investment freedom have outpaced the relatively lower score in trade freedom, reflecting the net positive impact of major regulatory and tax reforms on economic growth, investment, and business confidence,” Heritage’s Anthony Kim, the editor of the Index of Economic Freedom told FOX Business.

Note that this reverses a five-year decline. Elections matter.

The article concludes:

Kim said that the “impact of restrictive tariffs on the global economy has been far more muted than feared, in light of increased investment in such critical sectors as energy and AI (among many others),” adding that the lack of tariff retaliation by countries other than China, Canada, and the European Union mitigated the potential impact of a trade war.

The countries with the highest overall scores in the index were Singapore at 84.4, Switzerland at 83.7%, Ireland at 83.3, Australia at 80.1, and Taiwan at 79.8.

The countries that scored the lowest as the most repressed in the world were North Korea at 3.1, Cuba at 25.2, Venezuela at 27.3, Sudan at 32.5, and Zimbabwe at 35.2.

Our Founding Fathers funded the government with tariffs. It wasn’t until 1913 that the Wilson administration convinced Americans that we needed both the Federal Reserve and the income tax. They  were wrong on both counts.

Consequences Of Good Economic Policy

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On Friday, Investor’s Business Daily posted an editorial about The Heritage Foundation’s 25th annual “Index of Economic Freedom.”

The editorial reports:

In just one year, the U.S. climbed six places to 12th worldwide on the Heritage Foundation’s 25th annual “Index of Economic Freedom.” The U.S. index score of 76.8 is the highest since 2011, the report says.

Heritage bases its annual rankings on a dozen different measures of economic freedom, such as tax burden, protection of property rights, tax burden trade policies, labor laws, judicial effectiveness.

…In fact, during Obama’s tenure, the U.S. plunged from 6th place down to 18th on the Heritage freedom rank, in the wake of tax hikes and massive new financial, insurance and environmental regulations.

The editorial explains the importance of these ratings:

Why do these rankings matter? As Heritage explains, there’s a clear correlation between economic freedom and prosperity. The freer an economy is, the more prosperous its people.

Heritage finds that in countries consistently rated “free” or “mostly free,” average incomes are twice that of all other countries, and five times that of “repressed” economies.

The most striking example of the connection between freedom and prosperity is Venezuela. One of the wealthiest countries in South America before socialist dictator Hugo Chávez took control, Venezuela is now racked with hyperinflation, starvation, and political chaos.

But you can see the same impact in the U.S. as well.

The editorial concludes:

And the benefits of this growth are widespread. The unemployment rate was just 3.9% at the end of the year. The job market is so vibrant right now that it’s pulling people off the sidelines to look for work. In fact, the number of people who aren’t in the labor force actually declined last year. That hasn’t happened since 1996 — which was in the middle of the Clinton boom. Wage growth is accelerating, and median household incomes are at record highs.

The freedom index is a powerful reminder that while redistributionist policies — like those currently in favor among Democrats — might be emotionally satisfying, they won’t grow the economy or boost prosperity.

It will be interesting where our rating is next year in view of the fact that the Democrats now control the House of Representatives.