Since he took office some two years ago, President Barack Obama has spoken frequently about the importance of creating jobs. As well he should. Throughout his tenure our nation’s unemployment rate has remained stubbornly high, leaving too many Americans looking for work.
There’s a potential cure, if our leaders would be willing to embrace it. Economic freedom.
“Countries that have stayed true to the principles of economic freedom are reaping the rewards: rapid recovery and renewed growth,” reports the 2011 Index of Economic Freedom, published by The Heritage Foundation (I was a senior writer at Heritage until 2010) and the Wall Street Journal. “In fact, average incomes in countries that gained economic freedom this year are projected to grow more than 4 percent.”
The Index has a simple definition of economic freedom, calling it “the fundamental right of every human to control his or her own labor and property.” The editors examine ten economic components to create a total economic freedom score. As in high school, the higher the score, the better.
Unfortunately, instead of embracing economic freedom, the United States is backsliding.
This year our country has dropped to ninth worldwide in economic freedom, and our economy is ranked only “mostly free.” To be fair, only six economies (Hong Kong, Singapore, Australia, New Zealand, Switzerland and Canada) made the ranks of “free” economies. But there’s no question that the U.S. should be working to rejoin that elite group.
Instead, the major reason economic freedom is slipping here is because of massive increases in federal government spending.
“In the most recent year, total government expenditures, including consumption and transfer payments, equaled 38.9 percent of GDP,” the Index editors write. “Spending increases totaled well over $1 trillion in 2009 alone, an increase of more than 20 percent over 2008. Stimulus spending has hurt the fiscal balance and placed federal debt on an unsustainable trajectory. Gross government debt exceeded 90 percent of GDP in 2010.”
In fact, the “government spending” category of the Index is really the only category where the U.S. does poorly. But with a total score of 54.6 in that category it looks more like a corrupt African nation (Niger earned a total economic freedom score of 54.3) than a bastion of freedom.