As Ambassador Terry Miller writes in the Index’s opening chapter, “Countries that reduced government spending had economic growth rates almost two percentage points higher in 2009 than countries whose govern¬ment spending scores worsened, and countries with the highest rates of government spending had gross domestic product (GDP) growth rates 4.5 percentage points lower on average than countries where government spending was best contained.” Less federal spending would mean less intervention in the economy and thus more economic freedom. That would, in turn, encourage entrepreneurs to innovate and create jobs. And the time for action is now, since the rest of the world is quickly learning the importance of economic freedom.
“Despite the challenging global economic environment, the forces of economic freedom around the world have been resilient and even increasing,” the editors write. “In fact, economic freedom has taken an upturn in the majority of the economies that are assessed in the 2011 Index.”
Meanwhile, big government spending sprees haven’t worked here or abroad.
“Relying on government spending in the form of various stimulus packages not only has failed to promote growth and employment, but also has seemed to prolong the crisis by hampering private-sector investment,” the Index editors note. “Bloated government debt has turned the economic slowdown into a fiscal crisis in many countries, with economic stagnation fueling a long-term employment crisis.”
We’ve already seen economic catastrophe strike in Greece and Ireland, and several other European nations (Portugal, Spain, Italy) may not be far behind.
For our part, American policymakers will soon have a chance to show they’re serious about reducing federal spending and debt. Some time in the next three months, the government will have borrowed more than $14.3 trillion, the maximum it’s currently allowed to owe. Lawmakers should refuse to increase this “debt ceiling.”
Instead they should reduce current spending to remain below the limit, just as a family that’s maxed out its credit cards would need to do. Congress should also start reforming massive spending programs such as Social Security, Medicare and, yes, ObamaCare, to reduce our government’s long term obligations.
As it has every year since 1995, the Index of Economic Freedom charts a course governments can follow toward national success. In the wake of the 2010 midterms, Tea Partiers should pressure our leaders to -- finally -- follow that course.