Yesterday the Heritage Foundation released the 2016 Index of Economic Freedom. This annual publication is produced by the Heritage Foundation in conjunction with the Wall Street Journal. In addition to the 2016 Index the foundation also published Economic Freedom in America, a supplement outlining trends in economic freedom in the United States.
Figure 1 illustrates the overall composite freedom score of the United States from the inception date of the index in 1995 to the latest figures which cover through the midpoint of 2015.
As you can see, the 1995 and the 2016 indices for the United States are almost the same. However, there is a disturbing trend in the data. For approximately 10 years prior to the Great Recession and Barack Obama’s administration, the United States was becoming more economically free. As illustrated in Figure 2, over the last eight years economic freedom as measured by the index has been in a virtual free fall falling by nearly 7%.
While the 7% decline in economic freedom as measured by the index might not seem extraordinarily large, there is no other nation that has experienced change this rapid over this time period.
Why is economic freedom important? While there are several reasons, the correlation of wealth creation to economic freedom should be important to Christians. Greater economic freedom is correlated with better economic performance. A strong and vibrant US economy is very important for the development of the overall global economy and the continuation of the diminution of absolute poverty in developing nations.
What can be done? With the completion of the Iowa caucuses last night, we are full bore into this election season. The reason the US has regressed with respect to economic freedom is:
- The expansion in the size and scope of our federal government.
- Our tax code is burdensome particularly at the corporate level when compared with other more developed nations.
- “Since early 2009, more than 180 new major federal regulations have been imposed on business operations…” (Economic Freedom in America).
- The measure of property rights included in the index has declined by more than 10% over the span of the Obama presidency.
- The larger the government the larger the possibility for corruption and cronyism.
What can be done? During this election cycle Christians should include the economic policy prescriptions of the candidates when choosing a candidate.