The Decline in US Economic Freedom

Since 1995 the Heritage Foundation and the Wall Street Journal have monitored the economic freedoms of countries around the world and have published their results in the 2010 Index of Economic Freedom. Ideas like "economic freedom" are a little subjective, but I like the stated view of the publication. According to the editors, economic freedom is defined as "the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself."

As far as methodology, the editors "measure ten components of economic freedom, assigning a grade in each using a scale from 0 to 100, where 100 represents the maximum freedom. The ten component scores are then averaged to give an overall economic freedom score for each country. The ten components of economic freedom are: business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and Labor Freedom."

We Americans like to believe that we live in the "land of the free and the home of the brave." Yet, most Americans note that our country is in decline. The top ten list of the 183 considered in the survey, gives you an idea of how bad it has become.

The US does not appear in the top five. Using school standards and 90 plus is an "A," no country on the list meets that criteria. With that, number 1 goes to Hong Kong at 89.7, declining 0.3 percent from 2009. The country reached this high status because of its "competitive tax regime, respect for property rights, and flexible labor market, coupled with an educated and highly motivated workforce, have stimulated an innovative, prosperous economy. Hong Kong is one of the world’s leading financial and business centers, and its legal and regulatory framework for the financial sector is transparent and efficient. Business regulation is straightforward. Despite the global economic slowdown, Hong Kong has maintained its status as Asia’s second-largest destination for foreign direct investment, attracting over $60 billion in 2008."

The other countries in the top four are Singapore (number 2 at 86.1 percent, down .1 percent), Australia (number 3 at 82.6 percent, with no change), New Zealand (number 4 at 82.1 percent, up.1 percent), and Ireland (number 5 at 81.3 percent, down .9 percent). New Zealand is only one of two countries in the top ten list to go up. According to the editors, "New Zealand continues to be a global leader in economic freedom, performing well on most of the components measured in the Index. The economy has an impressive record of market reforms and benefits from its openness to global trade and investment. The banking sector is characterized by sound regulations and prudent lending practices, and well-implemented structural reforms have allowed the New Zealand economy to weather the recent global financial and economic crisis relatively unscathed."

Countries six and seven round up the top tier of economic freedom (those with a "B"). The US fails to show up again. Switzerland (number 6 at 81.1 percent, up 1.7 percent) and Canada (number 7 at 80.4 percent, down 0.1 percent) occupy those spots. Switzerland is the other in the top ten to actually go up over the last year.

The United States (number 8 at 78.0 percent, down 2.7 percent) is one of three countries that rounds up the top ten with Denmark (number 9 at 77.9 percent, down 1.7 percent) and Chile (number 10 at 77.2 percent, down 1.1 percent). These countries did not even make it to the top tier, being below 80 percent and the United States had the dubious distinction of seeing the biggest decline in the past year (2.7 percent) among the top ten. In the arena of economic freedom, the US has a low score of "C+" at 78.0 percent.

The study notes that the "U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index." It also states that "Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by 'Buy American' provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights."

Imagine, the US is a "second tier country" on the fast track of decline after only one year of one of the most anti-free market Administrations in US history. It will be interesting to see if the US is still in the top ten after the Obama presidency comes to an end.

Should You Read This or Visit Internet Addicts Anonymous?

Many readers of this post are addicts. They are Internet addicts, according to Medill Reports from Northwest University. Today we have all grown some what dependent on the Internet. It is one of our primary communication sources via email, it tells us what movies are on at our local theaters and whether or not they are worth viewing, and it communicates information we want to convey about our business or gives the information about businesses we are interested in. but it is more, so much more.

According go the Medill Reports: "Kimberly Young, clinical director of the Center for Internet Addiction Recovery and author of the book 'Caught in the Net,' said that about 5 percent to 10 percent of Americans --15 to 30 million people -- may suffer from Internet addiction. And the problem may be even greater elsewhere. Young said 18 to 30 percent of the populations of China, Korea and Taiwan, where the Internet is even more popular than in the U.S., may be addicted."

Addiction, according to the study is defined as "online-related compulsive behavior that interferes with normal living and causes severe stress on family, friends, loved ones and work -- is a psychological and behavioral problem." Smart phones have made the feeding of this addiction even easier to maintain. We should be talking business over lunch, but we are reading email. We should be watching our child's soccer game and instead are looking at our up coming schedule. Instead of being "there," wherever that is suppose to be, people are roaming around the World Wide Web.

What do these addicts find themselves doing? According to the report, "the main types of Internet addiction are cybersex, online affairs, online gambling, online gaming, compulsive surfing and even eBay addiction, Young added." The situation has gotten so bad, people spend 30 to 90 days at recovery centers to seek help about the Web.

The Internet is tougher than some more commonly known addictions to break. First of all, the Internet itself is completely culturally acceptable. Virtually everyone does it. That leads to the next problem, complete abandonment is very difficult because most of us need it to function in the modern world of business. But how does one go from 10 or more hours a day to a mere one or two? I'm sure someone will develop a web site to help people with such. Oh, the irony of it all!

To find out if you are an Internet Addict, visit the Center for Internet Addiction Recovery.

Would you like to get a periodical email of the best of Kevin Price's political and economic content? Subscribe to the Houston Business Review at Info@HoustonBusinessShow.com.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.