When You'd Rather Not Look in the Mirror
By Fergus Hodgson
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The sorry state of freedom
in the United States
Sometimes the truth hurts, and there's
no way to hide it. The latest Economic
Freedom of the World Report, which ranks 144 nations, constitutes such a
moment for those of us who cherish freedom in the United States.
After achieving a ranking of
second in 2000, behind only Hong Kong, the United States has plummeted to 18th
in the latest report (based on 2010 data, which is the most recent available).
In just ten years, supposedly over-governed European welfare states such as
Denmark, Finland, and even the United Kingdom have surpassed the United States.
So too have Canada, Ireland, and the former Soviet state of Estonia.
According to the authors of the Fraser Institute report, "The
United States has now reached a point where even small additional decreases in
the rating will cause large ranking changes because there are so many more
countries clustered in this range of the index." In fact, on the
trajectory since 2005, the United States will most likely fall out of the top
30 nations when the data for 2012 becomes available.
At what point does the "land of the free" line no longer apply?
You're no doubt asking, "What
goes into this ranking and is it reputable?" I was curious to know,
particularly since my home country of New Zealand came in third -- and New
Zealand is hardly ideal from a free market perspective. Unfortunately for the
United States, a lot goes into the 322-page report, and in a careful, rigorous
The brainchild of Milton
Friedman, the index dates back to 1996 and has been the subject of continuous
refinement. All data is from international sources, as opposed to government
statistics bureaus, and not subject to value judgments of any of the authors.
The entire data set is publicly available, well-explained, and 42 distinct
variables measure these categories:
- Size of government;
- Legal system and property rights;
- Sound money;
- Freedom to trade internationally;
Surprisingly, the sound money
category is the only one of the five to hold steady for the United States. However,
anyone following the Federal Reserve's expansionary activities can see that even
this category is hanging by a thread.
Regarding the other categories,
the more one looks, the more one sees, and it isn't pretty. Who would believe,
for example, that the United States could be 73rd in the world for size of government?
That is a measure of government consumption, transfers and subsidies,
government ownership, and the top marginal tax rates. Further, the report
identifies a host of troubling trends: increased use of eminent domain, higher
costs and delays associated with international trade, violations of the rule of
law, and more burdensome regulations.
One thing has become clear from
the index over the years: "countries with institutions and policies more
consistent with economic freedom have higher investment rates, more rapid
economic growth, higher income levels, and more rapid reduction in poverty
rates." Life expectancy, for example, is 80 years in the top quartile of
countries but only 62 years in the bottom quartile.
In terms of long-term gross
domestic product, a one-point decline along the 10-point scale is associated
with a 1.0 to 1.5 percentage point reduction annually. That means, "unless
policies undermining economic freedom are reversed, the future annual growth of
the US economy will be half its historic average of 3 percent."
obligations grew by $11 trillion in just one year. Forget the $16 trillion "official"
total. Learn how with this interview with
Laurence Kotlikoff of Boston University.
- A host
of pro-liberty events took place last week, most notably a debate between John Stossel and Howard Dean on the proper role of government in a free
society. It is worth watching, and I particularly enjoyed Stossel's explanation
of why he would not run for elected office (44:00).
- Why are The Daily Show and The Colbert Report the best places to get your
news? Hear from Doug Casey, a libertarian and investment guru. He gave insightful thoughts this month on the state of journalism and how to wade
- Do you
know any individuals interested in exploring the philosophy of and political
movement towards liberty? If so, please let them know that Students for Liberty
will be hosting a regional conference in Chapel Hill on November 3, 2012. These conferences highlight
the wave of articulate and passionate young liberty advocates and are for both
students and non-students alike.
October 5, the $10 Million a Minute Tour is coming to Chapel Hill to quantify
the nation's debt problem. Sponsored by the North Carolina Association of Certified Public Accountants, it will
explain how accounting tricks conceal the depth of the problem, and you can get more details here.
Click here for the Fiscal
Monday, Oct. 1st, 2012 at 12:00 PM
Shaftesbury Society Luncheon
with our special guest John Hood
The Carolina Campaign: How America Won Its Revolution
Wednesday, Oct. 24th, 2012 at 12:00 p.m.
A Headliner Luncheon
with our special guest Dr. Charles Murray
Coming Apart at the Seams: America's New Cultural Divide