This week, the Heritage Foundation and The Wall Street Journal released the 2011 edition of their Index of Economic Freedom.
Once again, the facts speak for themselves: Economic freedom means not only more prosperity, but also greater overall wellbeing. In calculating economic freedom and ranking the world’s economies, the Index examines 10 criteria: business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. The correlation between economic freedom and living standards is once again made clear:
Despite varying degrees of economic freedom across the regions, the relationship between economic freedom and prosperity remains constant within the regions. Per capita incomes are much higher in countries that are economically free. Not surprisingly, overall human development also thrives in an environment that is economically free… Higher economic freedom induces greater overall human development as measured by the United Nations Human Development Index, which assesses the combined progress of life expectancy, literacy, education, and the standard of living.”
The good news is that 117 of the world’s economies improved over the past year, whereas only 58 declined. For Americans, the bad news is that we fell from 8th to 9th. On that front, note the Index’s comments about the importance of reducing government spending:
Countries that reduced government spending had economic growth rates almost two percentage points higher in 2009 than countries whose government spending scores worsened, and countries with the highest rates of government spending had gross domestic product (GDP) growth rates 4.5 percentage points lower on average than countries where government spending was best contained.”
Will the new 112th Congress help reverse that decline? As we approach the 2012 elections, that will prove a critical question.
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