from the Cato Policy Report Nov/Dec 2008
U.S. Falls to 8th in Economic Freedom Annual Report
Economic freedom remains on the rise around the world but has declined notably in the United States since the year 2000. That’s the blockbuster finding of the 2008 edition of the Economic Freedom of the World, an annual report co-published in the United States by the Fraser Institute and the Cato Institute.
In 2000, the United States was the second- freest economy in the world according to the report, written by economists James Gwartney of Florida State University and Robert Lawson of Auburn University. This year the United States has fallen to eighth place, behind Hong Kong (the perennial first-place finisher), Singapore, New Zealand, Switzerland, the United Kingdom, Chile, and—you heard it here first—Canada.
More significant than the United States’ drop in the rankings is its fall in the freedom ratings: on a scale of 0–10, the U.S. fell from 8.55 in 2000 to 8.04. Only five countries have experienced a greater decline over the same time period: Zimbabwe, Argentina, Niger, Venezuela, and Guyana.
The annual peer-reviewed report uses 42 different measures to create an index ranking of 141 countries around the world based on polices that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. Economic freedom is measured in five different areas: (1) size of government; (2) legal structure and security of property rights; (3) access to sound money; (4) freedom to trade internationally; and (5) regulation of credit, labor, and business.
Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and even longer life spans.
You can order Economic Freedom of the World: 2008 Annual Report from the Cato bookstore at www.catostore.org or view it for free online at http://www.freetheworld.com/.