America is the land of the free—but how free is it? The 2015 Economic Freedom of the World (EFW) Index downgrades the United States to 16th of the 157 countries surveyed for five major indicators of freedom, such as size of government, freedom to trade internationally, and regulation. This ranking is a steep decline from 2000, when the United States was second only to Hong Kong in the world rankings and had high scores in areas that create opportunity for all Americans. Today, even Canada and the United Kingdom outrank the United States.
The EFW is compiled annually by the Fraser Institute and American authors James Gwartney, Robert Lawson, and Joshua Hall, in coordination with dozens of economic research institutions around the world. The EFW’s key ingredients for economic freedom are personal choice, voluntary exchange, freedom to compete, and protection of persons and property. Nations with the most economic freedom have more prosperity, higher incomes (for rich and poor), longer life expectancies, better health, and more robust political and civil rights.
Since 2000, several government policies have led to a significant decline in the economic freedom of the United States. Expansion of military activity, federal spending, bank and auto bailouts, fewer private property protections, more cronyism, restrictive financial and trade policies, and administrative strangleholds on small businesses all contributed to major setbacks in each of the five areas measured by the Index.
At the same time, many developing nations have rapidly improved their economic environments. Most notable are three former Soviet Republics, or Soviet-Allied States. Compared to last year’s report, Georgia has increased its ranking from 16th to 11th, Romania has moved from 25th to 17th, and Latvia has moved from 44th to 35th.
These gains point to some good news: The world is significantly more economically free than it was three decades ago. Since 1980, overall world economic freedom has greatly improved, and it has increased again this year.
Still, the freedoms and economic growth America has previously enjoyed are by no means guaranteed in the future. America has the choice between restoring economic freedom and creating new opportunities for everyone or continuing down a path of declining economic freedom and quality of life.