Economic Freedom– Engine That Drives Prosperity: Global Economic Freedom Continues to Rise Except for U.S…

Index of Economic Freedom (Index) is an annual index and ranking created by Heritage Foundation and Wall Street Journal in 1995 to measure the degree of economic freedom in the world’s nations…

The definition of ‘economic freedom’ is– the fundamental right of every human to control his or her own labor and property. In economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond extent necessary to protect and maintain liberty itself…

The creators of the index took an approach similar to Adam Smith’s in The Wealth of Nationsbasic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society… The Index measures the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions…

According to Justin Katz; the Index is naked punditry masquerading as economic analysis and undermines real efforts towards passing legislation that will help to reform the business climate and contain the ever-growing power of the corporatist state… in actual fact the Index does not measure the economic freedoms of families, but the economic freedoms of corporations and 1%-ers…

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2014 Index of Economic Freedom measures country’s commitment  to free enterprise on a scale of 0 to 100 by evaluating 10 categories based on 50 measurements including; property rights, freedom from corruption, government spending, business freedom, fiscal freedom, labor freedom, monetary freedom, trade freedom, investment freedom, financial freedom… where a score of 100 is ‘most free’, 0 is ‘least free’… In 2014, out of 186 countries, the top six countries are Hong Kong, Singapore, Australia, Switzerland, New Zealand, and Canada. These six scored above 80 to merit the description ‘free’. Canada’s economic freedom returned to ‘free’ this year, having been only ‘mostly free’ for the past two years, but changes in the U.S. score is more discouraging.

The U. S. is the only nation to have declined in economic freedom for each of the past seven years dropping nearly 6 points to this year’s score of 75.5, which is the ‘mostly free’ category… In contrast, global average economic freedom score improved 0.7 points this year to 60.3, which is the highest average in the index’s 20-year history… Based on an aggregate score, each of 186 countries graded in the 2014 Index is classified as ‘free’ (i.e. combined scores of 80 or higher); ‘mostly free’ (70-79.9); ‘moderately free’ (60-69.9); ‘mostly unfree’ (50-59.9); or ‘repressed (under 50)…

The Index also studies economic freedom on a regional basis. In the 2014 Index, economic freedom levels rose in all but two regions; North America and Middle-East/North Africa… South and Central America/Caribbean, Europe, and Sub-Saharan Africa charted regional improvements, and the Asia-Pacific region dominates both top and bottom of the 2014 Index rankings. Long-established free-market institutions in many European countries help the region score above the world averages in most categories of economic freedom…

On balance, Europe is doing well, according to the 2014 Index… North America continues to be the world’s freest region, though Canada was the only economy that improved its Index score over the last year. It’s also the region’s only ‘free’ economy. The U. S. is ‘mostly free’ economy and Mexico is ‘moderately free’… According to the editors; the ‘substantial growth in the size and scope of government’ in the U.S. contributed heavily to it losing its spot among 10 freest economies, as well as, its second-lowest score in 20-year history of the Index. The 29 countries of South and Central America Caribbean region show ‘mixed progress’, according to the editors...

Most of the 15 countries graded in the Middle East/North Africa region are mired in the ‘moderately free’ or ‘mostly unfree’ categories… Sub-Saharan Africa’s overall level of economic freedom remains weak, yet no other region has made greater strides toward economic freedom over the past two years, according to the Index editors. A majority of its economies are either ‘mostly unfree’ or ‘repressed’, yet all but 12 of the 46 economies scored in the Index posted improved scores.

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In the article 2014 Index of Economic Freedom: Five Points You Should Know by Anthony B. Kim writes: The 20th anniversary edition of the Index of Economic Freedom, published jointly by Heritage Foundation and Wall Street Journal, was released on January 14, 2014 in Hong Kong and Washington, DC. Here are five key points you should take away:

  • The 2014 Index shows economic freedom once again on the rise: Much of the momentum lost during the past five years has been regained. The global average economic freedom reached the highest level in the 20-year history of the Index. 114 countries, majority of which are less developed, contributed to growth in economic freedom over the past year; 43 countries including; Colombia, Poland, Cape Verde, and Turkey, achieved their highest economic freedom scores ever in the 2014 Index.
  • Competition for the top spot in the Index rankings has intensified: Hong Kong maintained its status as the world’s freest economy, a remarkable distinction that it has achieved for 20 consecutive years. Singapore, the second-freest economy, has closed the gap between itself and Hong Kong to the second narrowest difference in their competition over the past two decades.
  • A notable realignment of European countries continues to be underway in terms of advancing economic freedom: Eighteen, including; Sweden, Lithuania, Georgia, Austria, Czech Republic, Norway, Macedonia, Latvia, Poland, Bulgaria, and Romania, recorded their highest economic freedom scores ever in the 2014 Index. By contrast, five others (Greece, Italy, France, Cyprus, and United Kingdom) registered scores lower than those they first received nearly two decades ago when the Index began recording economic freedom.
  • The U.S. continues to lose ground to its competitors in the global race to advance economic freedom and prosperity: Registering a decline in economic freedom for      the seventh year in a row, the U.S. tumbled from ranks of the top 10 freest economies, falling to 12th place in the global economic freedom rankings.
  • The link between freedom and human progress has never been clearer: The 20 years of Index data attest unequivocally that economies achieving or sustaining higher levels of economic freedom measurably outperform others in long-term prosperity and greater progress in many dimensions of socioeconomic development.

In the article Economic Freedom Index: U.S. Falls From Top 10 by Michelle Smith writes: The 2014 index shows global economic freedom continues to rise, reaching record average score of 60.3. While the U. S. ranks higher, its score of 75.5 is half a point lower than it was last year and puts it in 12th place… The U.S. decline is primarily due to deterioration in property rights, fiscal freedom and business freedom, the report states. The U.S. has seen– substantial expansion in size and scope of government and cronyism increased with that expansion…

Finance and healthcare regulations are also contributing to the nation’s erosion of economic freedom… But this isn’t the first time U.S. has lost ground. Since 2006, the country has seen a ‘dramatic decline’, losing nearly 6 points due to issues such as declining property rights and its weakening grasp on corruption and government spending…

The U.S. is the only country to have recorded a loss of economic freedom for seven straight years… Increasing economic freedom elsewhere makes it inexcusable that a country like the U.S. pursues policies antithetical to its growth while wielding its influence to encourage other countries to chart the same disastrous course…

According to Derrick Morgan; the 2014 Index of Economic Freedom rankings should act as a wake-up call to U.S. policymakers and citizens alike. Freedom leads to prosperity, and our founders put us on that path of freedom. As we fight for just government, we must also fight for a government that lives within its means and does not spend the next generation’s money...

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In the article Debunking the Index of Economic Freedom by John Miller writes: I must be confused: I somehow thought that an Economic Freedom Index would showcase countries that are reducing the democratic deficits of global economy by giving people more control over their economic lives and the institutions that govern them… Upon examination, this Index turns out to be a poor barometer of either freedom more broadly construed or of prosperity…

The Index does not even pretend that its definition of economic freedom has anything to do with political freedom. Take the two city-states; Hong Kong and Singapore, which top the Index’s list of free countries: Both are only ‘partially free’ according to the ‘Freedom in the World’ Index… Hong Kong is without direct elections for its legislature or its chief executive, and proposed internal security law threatens both press and academic freedom, as well as political dissent. In Singapore, freedom of the press and the right to demonstrate are limited; films, TV, and other media are censored; preventive detention is legal; and you can do jail time for littering…

An Economic Freedom Index that tells us little about economic growth or political freedom is a slipshod measure that would seem to have no other purpose other than to sell the neo-liberal policies that stand in the way of most people gaining control over their economic lives and obtaining genuine economic freedom in today’s global economy…

For well over a hundred years, the economic world has been engaged in a great intellectual debate. On one side of this debate are those philosophers and economists who advocate an economic system based on private property and free markets– or what one might call economic freedom… Adam Smith was one of the first economists to argue for a version of economic freedom…

According to Robert A. Lawson; key ingredients of economic freedom are; personal choice, voluntary exchange, freedom to compete in markets, and protection of person and property… On the other side of this debate are people who instead argue for an economic system characterized by centralized economic planning and state control of the means of production… These scholars argue that free markets lead to– monopolies, chronic economic crises, income inequality, increasing degradation of the poor… and that centralized political control of people’s economic lives avoids problems of the marketplace.

According to Robert Lawson; big question is: Do countries that exhibit greater degrees of economic freedom perform better than those that do not? Much scholarly research has been and continues to be done to see if the index of economic freedom correlates with various measures of the good society, which means: Higher income, economic growth, income equality, gender equality, life expectancy, and so on. While there is scholarly debate about the exact nature of these relationships, the results are uniformly positive.

Economic freedom is the key to greater opportunity and improved quality of life. It’s the freedom to choose how to produce, sell, and use your own resources, while respecting others’ rights to do the same. While a simple concept, economic freedom is an engine that drives prosperity in the world and is the difference between why some societies thrive while others do not…

Economic freedom affects every aspect of an individual’s life. Living in a society with high levels of economic freedom leads to higher income, lower poverty, less unemployment, longer life expectancy, cleaner environments, among a host of other benefits. More economic freedom improves business and leads to a higher quality of life…