GHEI: Staying prosperous

America needs to re-embrace founding principles to restore economic health

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The world’s becoming a more prosperous place. That’s good news for many countries — just not the United States. According to the Legatum Institute’s 2012 Prosperity Index, America is no longer listed among the top-10 countries when it comes to economic success. Our neighbors to the north, Canada, and the Scandinavian nations of Norway, Denmark and Sweden all outshined the Land of the Free.

According to the London-based group, the U.S. plight can be blamed on an erosion of personal freedom and the entrepreneurial spirit. “This is due to a decline in citizens’ perception that working hard gets you ahead, a decline in high-tech and telecommunication exports, and an increase in levels of unemployment,” the report explained. Instead of serving as a beacon of liberty and free markets, we’ve slid down to No. 12 on the list. The Legatum findings demonstrate the urgent need to return to our founding principles.

Legatum’s index uses 89 indictors to provide a broad measurement of well-being that encompasses not only income, but also intangibles like the stability of political institutions and the strength of civil society. These categories build upon one another. Generally speaking, a strong civil society, where social networks function well, allows for less (but more effective) government regulation. Political and social institutions provide fertile territory for entrepreneurship, the key ingredient for a dynamic economy. A literate and physically healthy populace is not only happier, but also more productive.

The United States does well in a number of categories, scoring the No. 2 position for health, and No. 5 for education. Canada’s socialized medicine ranks a relatively low 15 for health. Canada tops the chart on personal freedom, and is in the top 10 for governance, personal freedom and social cohesion. It also beats the United States on education, coming in at No. 3. America’s ranking for social cohesion is 10, but we have dropped four places in personal freedom, to 14. We’re down to an embarrassing No. 27 for safety and security.

Entrepreneurship, innovation and economic growth are inextricably linked. When the “tax the rich” class-warfare message prevailed on Election Day, it meant politicians would continue to vilify successful job creators. By increasing their taxes, especially those that apply to small enterprises, there will be less money around to hire employees or conduct research and development. That means less innovation and less prosperity for all.

America is headed down the same path as France, with heavy and ineffective regulation. To avoid a continued erosion of prosperity, we need to start thinking now about repairing the fraying fabric of civil society, rather than going with the easy but ultimately ineffective path of assuming greater government intervention and red tape can fix the economy. Entrepreneurs are the critical ingredient for a prosperous society, and by allowing them to enjoy the fruits of their labor, they helped create the largest single economy in the world. We stand to lose it all if we abandon the American dream that made it happen.

Nita Ghei is a contributing Opinion writer for The Washington Times.

 

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