The Index of Economic Freedom is an annual guide published by The Wall Street Journal and The Heritage Foundation since 1995. The Index covers 10 freedoms – from property rights to entrepreneurship – in 186 countries.
We measure economic freedom based on 10 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom:
Rule of Law (property rights, freedom from corruption);
Limited Government (fiscal freedom, government spending);
Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and
Open Markets (trade freedom, investment freedom, financial freedom).
The world economy is “moderately free,” with another rise in economic liberty leading to a fourth annual global increase. The world average score of 60.7 is the highest recorded in the 22-year history of the Index.
Five economies earned the Index’s designation of “free” (scores of 80 or above), while
the next 87 are classified as “mostly free” (70-79.9) or “moderately free” (60-69.9). Yet the
number of economically “unfree” economies remains high: 62 are considered “mostly unfree”
(50-59.9) and 24 are “repressed” (scores below 50).
Americans continue to lose economic freedom. Following declines in seven of the past eight years, the United States this year has equaled its worst score ever in the Index of Economic Freedom.
It is very instructive with respect to politics to point out when the US economy earned a designation of “free”, and when the US economy earned a designation of “mostly free”. In the 22-year history of the index the only reports that came out with the US economy designated as free appeared in January 2005 thru January 2009. This happened during Republican George W. Bush’s second term. While he never had a filibuster proof Republican majority in the Senate, it was a majority from January 2003 thru January 2007. During Democrat Bill Clinton’s second term and both of Barack Obama’s terms the US economy was designated as mostly free. The overall scores from January 2001 thru January 2004 were higher than the scores during the presidencies of Clinton and Obama, but they were just under the 80 threshold.
The top 10 countries for economic freedom
Hong Kong SAR
One really cool tool they provide is Graph the Data. You can compare how well countries perform overall and on each of the ten factors. The following images are graphs of Switzerland and the United States from 2006-2016.
The overall score can sometimes be misleading. Overall can make performing well on some of the 10 factors mask how awful the performance is for other individual factors. For example, the US is 11th overall, However there are more than 11 countries that perform better than the US with respect to property rights, fiscal freedom, monetary freedom, and investment freedom. The following tables show the US at the bottom of between 20 and 30 countries.
|Country Name||Property Rights||Freedom from Corruption|
|Hong Kong SAR||90.0|
|Country Name||Monetary Freedom|
|Hong Kong SAR||81.8|
|United Arab Emirates||81.3|
|Country Name||Investment Freedom||Trade Freedom|
|Hong Kong SAR||90|
|Country Name||Fiscal Freedom|
|United Arab Emirates||95.0|
|Hong Kong SAR||92.6|
The bottom line is that our country need not remain in the doldrums with respect to economic freedom. we had a strong and free economic freedom in 2006, and we can do it again once we remove the garbage we have in Washington DC.