U.S. Decline In Economic Freedom Threatens Prosperity

Economy: Another year, another step down on the ladder for America - on the Index of Economic Freedom, that is - as the U.S. continues to lose ground to other countries.

More than any other country, the U.S. can lay claim to being the home of economic freedom. Our giant economy was, to an extent greater than any other, built on free markets and free people, an inspiration to the world. It's a major reason we're the wealthiest nation on Earth.

Sadly, in recent years our freedom has waned.

Each year, the Heritage Foundation and the Wall Street Journal rank the world's nations based on their level of economic freedom. Countries are ranked on 10 measures that include rule of law, openness of markets, regulatory burden and size of government.

The ranking goes from 0 to 100, with anything above 80 considered free. That used to be us. But this year, the U.S. ranked 10th, its lowest ever, from ninth in 2010. As recently as 2006 we ranked fifth.

On the overall index, we slipped from an all-time high of 81.2 in 2007 to 76.3 last year - four years of decline, paralleling a similar slide in quasi-socialist Europe.

Now we're considered only mostly free, ranking just behind the island nations of Mauritius and Ireland, but just ahead of Denmark and Bahrain. Canada is now the freest economy in the Northern Hemisphere.

How did we get here? According to the compilers of the data, the U.S. is a lot less free in a number of areas - including monetary policy, finance, property rights and especially corruption and government spending.

In short, under President Barack Obama, we're heading in the wrong direction. And if you think this doesn't matter, think again.

Economic freedom, as measured by the index, correlates strongly with economic performance. As our economic freedom declines, we'll have a slower growing economy, fewer jobs, lower incomes and, in general, a reduced standard of living. It's already happening.

Can something be done about this decline? Of course.

"Restoring the U.S. economy to the status of a free economy," the report says, "will require significant policy changes to reduce the size of government, overhaul the tax system and transform costly entitlement programs," among a number of other things.

Unfortunately, none of this is likely to come from the White House's current occupant. Such sweeping change is something only an election can bring about.