Say the word “America” and a few other words immediately come to mind: Freedom, liberty and prosperity.
You might be shocked to know that our nation, which has long-represented those values more so than all others, is nowhere near the pinnacle anymore. As a matter of fact, we’re only eighth-best in the world.
For a decade now the Heritage Foundation and the Wall Street Journal have worked together to produce something called the Index of Economic Freedom. It analyzes 10 factors that affect all participants of a nation’s economy — businesses, workers and consumers alike — such as property rights, government spending, freedom from corruption and the seven freedoms of business, monetary, labor, trade, investment, fiscal and financial freedom. The Index analysts assign a zero to 100 grade to each of those factors. The average of those 10 items is then identified as the country’s final grade that is used to compare it against 182 other nations.
In the recently-released 2010 report, the United States posted a score of 78, which ranks us eighth overall. Thanks to a one-year drop in score that was the greatest among the world’s 20 largest economies, we fell two slots. The nations who now have more freedom than we do, are, in order, Hong Kong, Singapore, Australia, New Zealand, Ireland, Switzerland and Canada.
Think about that: We here along the border joke incessantly about Canada being a quasi-socialist nation, yet, truth be told, it’s we who are less free economically than they are.
How did we earn such a low grade? We’ve historically had a grade in the low 80s that can be attributed to administrations and congresses both Republican and Democrat that have spent heavily and restricted our abilities with as much vigor. We’re no better off than we were in 1995 (the earliest date available in the study) and we’re significantly less-free than we were just last year. That sudden decline to our already-low grade (at least one that’s low in comparison to where we think America should be) is a result of eight factors dropping in value and five of them that are at a grade of 75 or below.
Investment freedom is the highest among those five, at 75. The low grade is a result of restrictions that are placed on foreign investment in significant portions of our economy like banking, mining, shipping, communications and aviation, to name a few. In a global economy that is a major detriment to development that could come to our shores from outside. In the future we cannot rely solely on American money to take us forward.
Freedom from corruption comes in at 73 and shows some substantial risk for the future based on the lack of accountability and transparency by the public and private entities that is inherent to TARP and other bailout programs.
Financial freedom received only a 70. This category took a significant hit since the recession began with all of the private and federal adjustments made to correct what went wrong with the sub-prime mortgage crisis. As numerous banking and financial firms have failed (thus limiting the choices for businesses and average people) others have been propped up by the federal government, but with strings attached, tempering true liberty and the access to money.
Fiscal freedom chimes in at paltry 67.5. The report cites tax rates at the federal/state/local level that are among the highest in the developed world. That’s your money being taken away from your company or your home and being used by others elsewhere. This leads into the lowest of our grades, the root cause of our fiscal woes, a 58 bestowed on government spending. Once again we are worse than the world average in this category, the result of total government spending that was 37.4 percent of GDP. The report noted year-to-year growth of federal spending that exceeded 20 percent.
It’s disconcerting that we really aren’t the cream of the crop when it comes to economic freedom. We’re America … we’re supposed to be Number One! Where will we be in 20 years? Could we slip further? If we do, then how quickly could China overtake us as the world’s largest economy?
The grades contained within this and future studies should serve as a discussion piece, a motivator for elected officials, concerned citizens and voters. We need to work together to better our ranking. Doing so requires an attention to the barriers and burdens that impact our day-to-day lives. Prosperity comes from freedom and we need both now more than ever.
Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.
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CONFER: An America less free
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