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Ramirez Cartoon: China IP Theft

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July 29, 2021 • 10:02 AM

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U.S. Plummets to Lowest Ranking Ever in Annual Index of Economic Freedom Print
By Timothy H. Lee
Thursday, March 11 2021
One need only compare the five freest nations (Singapore, New Zealand, Australia, Switzerland and Ireland) to the five most repressed nations (Zimbabwe, Sudan, Cuba, Venezuela and North Korea) to understand the obvious correlation between freedom and prosperity.

The United States’ economic freedom score is 74.8, making its economy the 20th freest in the 2021 Index.  Its overall score has decreased by 1.8 points, primarily because of a decline in fiscal health.  The United States is ranked 3rd among 32 countries in the Americas region, and its overall score is above the regional and world averages.  The United States received its lowest score and lowest ranking ever in the Index, although it remains “mostly free.”  The major obstacles to greater economic freedom in the United States continue to be excessive government spending, unsustainable levels of debt, and intrusive regulation of the health care and financial sectors.  

That’s the alarming takeaway from the release of this year’s annual Heritage Foundation Index of Economic Freedom.  

Ronald Reagan famously warned that, “Freedom is never more than one generation away from extinction.”  

Under the new Biden Administration and Pelosi-Schumer Congress, however, extinction may be a matter of one presidential administration, not one generation.  

For nearly three decades now, Heritage has published the Index to measure economic freedom both worldwide and within individual nations, and to quantify the statistical correlation between a nation’s economic freedom and its prosperity.  

To assemble the Index, they measure 12 foundational freedoms grouped within 4 broader categories:  (1) Rule of Law (Property Rights, Government Integrity and Judicial Effectiveness);  (2)  Government Size (Government Spending, Tax Burdens and Fiscal Health);  (3)  Regulatory Efficiency (Business Freedom, Labor Freedom and Monetary Freedom);  and (4)  Open Markets (Trade Freedom, Investment Freedom and Financial Freedom).  The Index then assigns a grade between 0 and 100 on each of those 12 categories, and nations’ composite scores are determined by averaging them with equal numerical weight to each category.  

This year, the Index measured 178 countries, with 5 countries placing in the “Free” category (Singapore, New Zealand, Australia, Switzerland and Ireland), 33 countries placing in the “Mostly Free” category, 59 nations qualifying as “Moderately Free,” 63 countries falling within the “Mostly Unfree” category and 18 nations placing in the “Repressed” category.  

After measuring each nation’s economic freedom level, the Index proceeds to statistically demonstrate the correlation between a nation’s economic freedom and its health and prosperity.  More economically free nations demonstrably claim healthier societies, cleaner environments, greater incomes, less poverty, more democracy and broader human development.   

In terms of income, for instance, nations qualifying as “Free” average $71,576 per capita, while “Mostly Free” nations average $47,706.  “Moderately Free” nations, however, claim average incomes of just $22,005, “Mostly Unfree” nations average just $6,834 and “Repressed” nations $7,163.  Thus, “Free” and “Mostly Free” countries generate incomes more than twice as high as other nations’ averages, and over six times as high as incomes in “Repressed” nations.  

Additionally, as the Index highlights, nations advancing in their economic freedom scores claim economic growth rates approximately 50% higher than nations receding in economic freedom throughout the past 25 years.  

One need only compare the five freest nations (Singapore, New Zealand, Australia, Switzerland and Ireland) to the five most repressed nations (Zimbabwe, Sudan, Cuba, Venezuela and North Korea) to understand the obvious correlation between freedom and prosperity.  

The Index also establishes a positive statistical correlation between a nation’s economic freedom and its environmental cleanliness, as well as its human development (defined as higher levels of life expectancy, literacy and education, in addition to incomes).  

Here in the U.S., as noted above, the downward trend should terrify as we enter the Biden era.  As the Index specifically notes, wasteful spending, debt and overregulation have driven the U.S. to its lowest ranking ever.  

That’s a depressing and sharp reversal from just 2019, when the Index highlighted America’s ascent in the wake of tax cuts and deregulation:  

According to the Heritage Foundation’s 2019 Index of Economic Freedom, America’s economic freedom has seen a dramatic boost – from 18th place in the world to 12th place in the span of just one year.  America’s score ticked up by more than a full point from last year, reaching the highest level in eight years…  The vibrant growth we’re feeling has been unleashed by several key policy changes over the past two years, the most important being the 2017 tax cuts and deregulation.  Real gross domestic product grew by upward of 3 percent over the last four quarters – unlike anything seen in the last 13 years.  

That reversed the endless economic malaise under Barack Obama, when the U.S. suffered eight consecutive years of decline.  

The message is obvious.  If Americans wish to avoid the depressing byproducts of lower economic freedom, we must stop the Biden-Pelosi-Schumer drive toward higher taxes, more regulation and unfathomable levels of wasteful spending.  Hopefully, we won’t have to learn that lesson the hard way.  

Quiz Question   
In what year did the Fidel Castro-led revolution overthrow the Cuban government of President Fulgencio Batista?
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