- The Washington Times - Tuesday, January 26, 2010


The results are in: The Obama presidency and the Democratic Congress have made the United States less economically free. That means our prosperity is endangered.

According to the Index of Economic Freedom, America’s decline in economic freedom last year was greater than that of all but 11 other countries, most of them extremely troubled, Marxist-leaning places such as Libya, Uzbekistan, Venezuela and Ecuador. Many of the nations that experienced the greatest gains in economic freedom were in growing or stable economies of Eastern or Southeastern Europe such as Poland, Croatia and Macedonia.

As the index - published every year by the Heritage Foundation - explains, there always has been a direct correlation between economic freedom and prosperity: “Economies rated ‘free’ or ‘mostly free’ in the 2010 Index enjoy incomes that are more than three times the average levels in all other countries. … Not only are higher levels of economic freedom associated with higher per capita incomes and higher [gross domestic product] growth rates, but those higher growth rates seem to create a virtuous cycle, triggering faster poverty reduction and further improvements in economic freedom.”

The reverse is true, too. As national policies become less economically free, economies contract. The United States almost always ranks near the top. However, in the past year, America’s composite ranking on the index fell by 2.7 points, a greater slide than that of any of the world’s 20 largest economies and a fall big enough to drop our nation’s economy from being rated “free” to “mostly free.”

There’s not much mystery to what caused the United States to fall so fast in just one year. According to the index: “Total government expenditures, including consumption and transfer payments, are relatively high and rising rapidly. In the most recent year, government spending equaled 37.4 percent of GDP. Spending increases totaled well over $1 trillion in 2009 alone, an increase of more than 20 percent over 2008.”

On monetary freedom, the index reports, “Government interventions in housing, automotive and financial markets have substantially increased price distortions.” On property rights: “Government interventions in financial markets and the automotive sector have raised concerns about expropriation and violation of the contractual rights of shareholders and bondholders.”

That analysis comes from a set of objective indices used consistently year after year and cited as authoritative by experts ranging from former Federal Reserve Chairman Alan Greenspan to the Economist magazine to the Millennium Challenge Corp. The indices, which come from neutral sources such as the World Bank and the Department of Commerce, rate every country for which enough data is available (179 nations for this edition) on 10 criteria that measure economic freedom, ranging from government spending as a percent of GDP to property rights.

What is shown by the annual analysis should be worrisome to every American. In short, the policies of the Obama-Reid-Pelosi axis are directly reducing our freedom, thus causing a slower recovery from the recession and a bleaker long-term outlook. These are, according to the report, “pathways that historically have led to stagnation and societal decline.” They are pathways Americans should not follow.

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