Free Markets

Canada Widens Economic Freedom Lead Over U.S. (But Everybody Loses Ground)


herberger / Foter / CC BY-NC-SA

In December, Canada's Fraser Institute released the latest edition of its Economic Freedom of North America report. Last year's edition noted that Canada had gained an advantage over the United States, with the highest-ranked state coming in third after two of our neighbor's provinces. In this year's edition, which includes Mexican states for the first time (and they don't score especially well), the Great White North expands its lead. But there's little room here for anybody to get smug. It's a race to the bottom, with the arctic chill apparently slightly slowing a continent-wide slide in economic freedom.

Economic Freedom of North America uses definitions familiar to Reason readers. The report specifies that "the freest economies operate with minimal government interference, relying upon personal choice and markets." Unshockingly, the authors link economic freedom to prosperity.

Fraser actually uses two related measures of economic freedom—one that compares local policies, and an "all-governments" index that includes the impact of national polices and regulations. The first is useful for comparing jurisdictions within countries, the second for apples-to-apples comparisons across borders. It's on the all-governments index that Canadian provinces have been creeping ahead of states—or, more accurately, dropping less rapidly.

Because everybody is circling the drain. "Historically, economic freedom has been declining in all three countries," note the report authors. "Since 2000, the average score for Canadian provinces on the all-governments index has fallen from 7.8 to 7.6; the number for US states was 8.2 to 7.5. We do not have data for the Mexican states prior to 2003, but the average score has fallen from 7.1 to 6.9 since 2003."

Oh, swell. 

The highest ranked Mexican state, by the way, is Coahuila, which scores a hair higher than U.S. states Mississippi, Maine, Rhode Island, Vermont, Kentucky, New Mexico, Hawaii, and West Virginia. That any place doesn't rank higher than Rhode Island is, to me, mildly surprising.

On the separate subnational index for the U.S., comparing states to one another, Texas and South Dakota come out on top, followed closely by North Dakota. Maine, Vermont, and Mississippi bring up the rear.

The gap between Canada and the United States has been noted elsewhere. The Heritage Foundation's independently compiled 2014 Index of Economic Freedom (the 2015 edition is due soon) puts Canada in sixth place, with a slightly improved score over the previous year. Mexico ranks at 55, down a tick from 2013. The United States comes in at 12, "half a point lower than last year, primarily due to deteriorations in property rights, fiscal freedom, and business freedom."

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  1. Is it skewed by heavily populated California?

  2. What do you expect with Barack Obama in the White House?

    Our federal government has become increasingly powerful, and our president is openly hostile to free market capitalism.

    We can hope the emperor will change his mind, but why would he do that?

    Anybody else see that, what, the day before yesterday, Barack Obama promised to veto legislation that would restore “full time” to 40 hours a week–instead of ObamaCare’s 30 hour week?…..1420573130

    Lots of formerly full time, 40 hour a week workers have had their hours cut to 30 hours a week because of ObamaCare–but Barack Obama doesn’t give a shit. He’d rather make people work two jobs or just learn to live on less–rather than admit he was wrong. He’s a sick human being.

    1. BUT S&P500!!!1

      1. It’s totally not a FED induced bubble this time. The recovery for everyone else is right around the corner.

        1. It really is incredible. Apparently everyone has forgotten about what was going on in 2007 and 2008.

          1. It’s different this time!


  4. WE’RE NUMBER 12!
    WE’RE NUMBER 12!

  5. The free market for poutine is strong in the north

  6. With Their Beady Little Eyes and Flapping Heads So Full of Lies!

  7. I mean this as a serious question and not as an opening line for comical responses (I know, here? On H’n’R?), but why is Mississippi so bad?

    1. I don’t know, its like a long time ago they determined to be the worst at everything and tried to make up for it with high school football.

    2. “why is Mississippi so bad?”

      Have you ever been to Mississippi?

      1. It even sucks to spell.

      2. Yes, it’s just that the rest of the South (except SC according to the quintile breakdown on the map) seems to be a lot freer economically. Their lagging, well, it’s so Yankee-like.

    3. Poorest state in the union
      worst education
      worst health

      consistently through out the 20th century.

      you could probably argue that everything rolls downhill from the “dirt fucking poor” part

      There are probably some exogenous factors like “the death of the shipbuilding industry”, etc, that hurt them, but overall its a structural poverty

      “Mississippi’s rank as one of the poorest states is related to its dependence on cotton agriculture before and after the Civil War, late development of its frontier bottomlands in the Mississippi Delta, repeated natural disasters of flooding in the late 19th and early 20th century requiring massive capital investment in levees, heavy capital investment to ditch and drain the bottomlands, and slow development of railroads to link bottomland towns and river cities.[80] In addition, when Democrats regained control, they passed the 1890 constitution that discouraged corporate industrial development in favor of rural agriculture, a legacy that would slow the state’s progress for years.[81]

      Also = so corrupt that it makes Louisiana politics look like the Age of Pericles.

      Trent Lott was their sugardaddy, bringing more federal money per capita than…. any other state?

      which i’d argue has probably been part of the problem in the late 20th century = they depend on so much government money they their economy is like one big dependency-machine.

  8. Think of your children pledging allegiance to the Maple Leaf, mayonnaise on everything, winter eleven months of the year. Ann Murray, all day, everyday.

    Suck it, hosers! We’re doing slightly better than you! To paraphrase Laurier, this century is Canada’s century! There’s no way we could possibly screwing this up by, say, electing some Obama-like moron….well shit.

    1. Laurier is gonna be right one of these centuries!

    2. “…well shit.”

      Yeah, Trudeau II is going to make Obama look like a genius and a model of statesmanship.

      1. …not that Harper is anything to boast about. (Harper is John Boehner without the sophistication.)

    3. Mayonnaise on everything is better than ranch sauce on everything

  9. Where are the P.M. links?

  10. They hate us for our poutine!

  11. America’s economic freedom is lagging, but the corporate interests can always buy favors. America also boasts a huge market and a consumers with all kinds of purchasing power. Which inevitably leads to bubbles, but fun times last longer here.

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