Just one year after President Barack Obama took office, we released the 16th edition of the Index of Economic Freedom in both Hong Kong and Washington. Once again, it provides empirical evidence that economic freedom is the pathway to prosperity.
The good news is that despite the global economic crisis, the overall level of global economic freedom remained about the same. Some countries improved while others declined.
The bad news is that the United States is one of the economies that declined. For the first time since we began measuring economic freedom, the United States fell out of the top tier of free economies into a lower mostly free tier, now ranked with countries like Belgium, Botswana and Sweden. The United States loss of economic freedom was worst among among the 20 major economies of the world.
Why? The bailouts, massive stimulus spending, and other dangerous interventionist decisions in Washington since 2008 are hamstringing our economy and costing jobs85,000 jobs in December alone, and 3.4 million since this time last year.
Weve heard a lot of talk about the need for still more regulation and greater government spending, even about abandoning the free enterprise/capitalist system. The data in the Index and other studies clearly do not support that route. Thankfully, other countries are not buying it. Around the world, countries are still cutting taxes, strengthening property rights, deregulating, and reducing government spending, and theyre reaping the benefits, including an cushion that helped them survive the economic crisis.
Americans have been in this situation before, and we were able to turn things around. Theres no reason we cant do it again. Thats the compelling story in the pages of the Index: if you improve economic freedom and let the markets work, rising prosperity will follow. The choices Washington makes in the next few years will matter. They will determine whether we continue to decline in economic freedom or are able to continue calling America the land of opportunity and the land of the free.