The foundations of economic freedom are weakening around the world, according to the 2013 Index of Economic Freedom, published today by the Heritage Foundation and The Wall Street Journal. Particularly concerning are the rise of populist “democratic” movements that use the coercive power of government to redistribute income and control economic activity.
Why, wherever would something like that happen?
Harvard’s Robert Barro warns of advanced democracies engaging in redistributionist economics on behalf of electoral majorities. The resulting transfers of income and wealth tend to compromise property rights and reduce the incentives to work and invest. Policies that promote the rule of law and protect individuals from arbitrary government regulation, by contrast, ensure fairness—and, as documented in years of empirical data, promote higher incomes and faster growth.
Surprisingly, ailing Europe made the most progress last year, while the average economic-freedom score world-wide increased only a 10th of a point. The threat of imminent collapse in the euro zone has prompted some serious efforts to rein in government spending and taxation. Leading the way in Europe are those countries that know firsthand the ravages of socialism. Georgia, a former Soviet republic, showed the most improvement in the 2013 index, with Estonia and Poland not far behind. Even Sweden, the former poster child for democratic socialism, has adopted more market-oriented policies promoting economic freedom.
Still, almost all of the most advanced countries lost ground this year. Even top-ranked Hong Kong saw its score decline due to increased government spending and higher inflation. The United States, ranked only 10th most free in the world this year, joins Ireland as the only advanced economies to have lost economic freedom five years in a row.
It is no exaggeration to blame the recent slowdown in economic liberalization around the world on the lack of U.S. leadership. Trade flows—the engine of world growth—have declined as the U.S. economy has stagnated. Protectionism threatens consumers and businesses with higher costs and restrictions in supply. Ill-conceived banking regulations such as the Dodd-Frank law generate uncertainty and anxiety. And investment freedom declines in the face of higher costs and new legal and tax liabilities such as those introduced by ObamaCare. These misguided U.S. policies hurt Americans first, but others feel the harm as well.
First in war, first in peace, tenth in economic freedom. One day very soon, these will be the good ol’ days.
Virtually every policy promoted by President Obama works against economic freedom. “Populist ‘democratic’ movements that use the coercive power of government to redistribute income and control economic activity” are his middle names every bit as much as Hussein.
I’m getting less stunned every day that we reelected him. And more stunned that we ever elected George Bush, Ronald Reagan, and any Republican back to and including Abraham Lincoln.