The Cato/Fraser Institute annual report on economic freedom in the world is just out, and it contains the unsurprising but still infuriating news that the United States has slipped from the ranks of the top ten freest economies in the world. Another achievement President Obama will no doubt celebrate. In the latest rankings, the U.S. dropped to 18th place, after ranking around third for most of the two decades between 1980 and 2000. The authors of this year’s report, James Gwartney, Robert Lawson, and Joshua Hall comment:
The United States, long considered a bastion of economic freedom, has become less free during the past decade. This decline is across the board. Increases in government spending, record deficits, violation of property rights, more onerous regulation of business, and wars on terrorism and drugs have all contributed to the erosion of economic freedom in America. . .
During the past decade, the U.S. rating fell nearly a full point on our 0-to-10 point scale, from 8.65 in 2000 to 7.70 in 2010. While it is difficult to pinpoint all the reasons for this decline, the increased use of eminent domain, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the bailout of automobile companies have all clearly weakened private property and the rule of law tradition of the United States. . .
There are real consequences to this decline:
Our empirical work indicates that a one-point change in a country’s EFW rating is associated with a 1.0 to 1.5 percentage point change in the long-term annual growth rate, all else equal. It is worth noting that U.S. growth averaged 2.3 percent in the 1980s and 2.2 percent during the 1990s, but it fell to an annual rate of only 0.7 percent during 2000-2010. Without a reversal of undermining economic freedom, the future economic growth of the United States will be weak for many years to come.
So if Obama is re-elected, we better get used to more of this:
Oh what the heck, while we’re at it: