Do You Go With The George Michael Song Or The Janis Joplin Song For Your Post Title?

Terry Miller at The Wall Street Journal:

The United States is losing ground to its major competitors in the global marketplace, according to the 2010 Index of Economic Freedom released today by the Heritage Foundation and The Wall Street Journal. This year, of the world’s 20 largest economies, the U.S. suffered the largest drop in overall economic freedom. Its score declined to 78 from 80.7 on the 0 to 100 Index scale.

The U.S. lost ground on many fronts. Scores declined in seven of the 10 categories of economic freedom. Losses were particularly significant in the areas of financial and monetary freedom and property rights. Driving it all were the federal government’s interventionist responses to the financial and economic crises of the last two years, which have included politically influenced regulatory changes, protectionist trade restrictions, massive stimulus spending and bailouts of financial and automotive firms deemed “too big to fail.” These policies have resulted in job losses, discouraged entrepreneurship, and saddled America with unprecedented government deficits.

In the world-wide rankings of economic freedom, the U.S. fell to eighth from sixth place. Canada now ranks higher and boasts North America’s freest economy. More worrisome, for the first time in the Index’s 16-year history, the U.S. has fallen out of the elite group of countries identified as “economically free” by the objective measures of the Index. Four Asia-Pacific economies now sit atop the global rankings. Hong Kong stands in first place for the 16th consecutive year, followed by Singapore, Australia and New Zealand. Every region of the world maintains at least one country among those deemed “free” or “mostly free” by the Index.

Michael Franc at Heritage Foundation:

The drop in rankings is notable as it comes in the same week that marks the one-year anniversary of President Barack Obama’s inauguration. By any standard, over the last year Americans’ overall wealth and prosperity has continued to decline. Americans, in fact, are more likely than ever to believe that their children and grandchildren will be worse off than the current generation. They believe future generations will live in a less prosperous and less economically mobile America. The traditional American faith in upward economic mobility – widely understood to be the American Dream – seems more elusive now than ever.

One recent poll by the Pew Research Center found that 55% of Americans believe their children will be worse off when they grow up, while only 36% see a better future for them. Similarly, a December 2009 Gallup study found that Americans are more pessimistic about our future now than at any time since the late 1970s.

Sadly, this bleak view of the future is understandable – after all, unemployment has skyrocketed and shows no signs of abating, government spending and debt are at unprecedented levels during peacetime, and our elected officials seem determined not only to ignore these alarm bells but to pursue policies – expensive new entitlement programs; debilitating new taxes on wealth creation, savings, and investments; and new government regulations that have created a climate of such uncertainty – that will cause entrepreneurs to stay on the sidelines rather than take the risks that have led the United States out of previous recessions. Studies indicate that this is indeed the case. “The largest force driving unemployment [in the U.S.],” Heritage’s James Sherk argues, “is the sharp drop in private-sector job creation” rather than job losses incurred through lay-offs.

In a nutshell, there is a growing sense that, in economic terms, America is less free and is destined to remain that way.

Adam Pasick at The Atlantic:

Seeing Hong Kong in the #1 spot, where it has presided since the index was created in 1995, may be jarring for those who have followed the Google – China saga. And to be certain the Heritage Foundation doesn’t look kindly on mainland China, ranking it at #140, sandwiched between Djibouti and Haiti.

So why does the Index favor Hong Kong when it is ultimately answerable to the same rulers who demand censorship from Internet companies? The short answer: Low taxes, tariffs, and government spending.

Critics of the Index have long complained that it rewards and punishes countries on the basis of conservative economic doctrine, without providing any helpful predictions about when more freedom — as defined by the Heritage Foundation — will result in higher economic growth. (One obvious example: #140 China’s GDP growth puts 139 “freer” countries to shame.)

Arnold Kling

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