Report: America is the land of the mostly free


Americans love to be No. 1 and we pride ourselves on our freedom. That’s why it’s doubly disappointing that the United States is not ranked No. 1 on the 2004 Index of Economic Freedom, just released by the Heritage Foundation.

Worse, as Heritage President Edwin J. Feulner Jr. said, the country has fallen in the past year, to No. 10 on the index from No. 6 in 2003. As recently as 2000, we were ranked No. 4.

The index ranks countries by such factors as free trade, the cost of government, government intervention, monetary policy (stable currency), property rights and regulation. Countries are ranked on a scale of 1 to 5, with a lower score being better.

Hong Kong again is at the top with an index score of 1.34, improved from 1.44 in 2003. It’s praised for its low taxes, free trade and minimal government (despite some encroachments by Beijing since it united with the People’s Republic of China in 1997).

At the bottom of the list are such tyrannies as North Korea, with an index rating of 5, Libya at 4.55 and Zimbabwe at 4.54.

The index isn’t simply an academic exercise. Copious graphs and charts clearly show that the more freedom a country has, the faster its economy grows. Feulner pointed out the U.S. index score improved slightly last year, to 1.85 from 1.86. But we’re down from the 1.78 score of 2001. That reflects the Janus face of Bush economic policies. The 2003 tax cuts were excellent and are impelling today’s economic growth. But the exploding budget deficit — expected to be more than $500 billion this year — was a palpable hit against U.S. economic freedom. All that borrowing has to be paid for through future expenditures.

U.S. free trade policy also wasn’t the best, although late last year President Bush finally removed steel tariffs he imposed in 2002.

Feulner expressed surprise, and dismay, that the United States now is surpassed in economic freedom by Estonia, ranked No. 6 with a 1.76 score; just 13 years ago, Estonia was a captive nation of the socialist Soviet Union. Even Britain under Labor Prime Minister Tony Blair ranked higher than its former colonies, at No. 7, with a 1.79 score.

Another surprise was the high score for Sweden, ranked at No. 12 with a 1.90 score. That’s greatly improved from the 2.63 score of 1995. Long derided as the worst example of a sclerotic social welfare state, Sweden has cut taxes and boosted economic growth.

Getting to be No. 1 on the Index of Economic Freedom would mean more than bragging rights for the United States. It would mean that we had lowered the burden of government, which, in a global economy, means higher economic growth and robust creation of jobs. This is the economic issue that should dominate this year’s presidential race.


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