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The Path Not Taken, Yet

The opinions expressed by columnists are their own and do not necessarily represent the views of

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.

This matters.

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.

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