Economic Growth

U.S. Falls Back Down the Economic Freedom Ranking

U.S. Economic Freedom Falls say Heritage Foundation Index of Economic Freedom 2016



Every year a conservative think tank, the Heritage Foundation, issues its Index of Economic Freedom, in which it ranks countries based on how well they respect property rights, levels of government spending, regulatory efficiency, and trade freedom. In the latest report the U.S. falls into the category of "mostly free." The Heritage Foundation researchers note in the supplement on Economic Freedom in the United States:

Global economic freedom has reached record levels, but America is moving in the opposite direction. With losses of economic freedom in eight of the past nine years, the U.S. in 2016 has tied its worst score ever in the Index of Economic Freedom, wiping out a decade of progress that had seen the U.S. rise as high as fourth place in the annual rankings for 2007.

In 2016, U.S. ratings for labor freedom, business freedom, and fiscal free- dom have flagged notably, and the regulatory burden is increasingly costly. Worse, government favoritism toward entrenched interests has hurt innova- tion and contributed to a lackluster recovery and sub-par income growth.


As a result, the United States is only the 11th freest economy in the 2016 Index, trailing comparable advanced economies such as Australia, Switzerland, New Zealand, Canada, and even the United Kingdom. The U.S. remains mired in the ranks of the "mostly free," the second-tier economic freedom status into which it dropped in 2010.


The U.S. is the only country to have recorded such a sustained loss of eco- nomic freedom in recent years, and the causes of the decline are clear. The overall U.S. score decline over the past decade is 5.8 points on the Index's 100- point scale.

Substantial expansion in the size and scope of government under the Obama Administration, including through new and costly regulations in areas like finance, health care, and the environment, has hit wide swaths of the econ- omy, affecting almost every American in some way and reducing opportunities for non-governmental production and investment. The growth of government has been accompanied by increasing cronyism that has undermined the rule of law and perceptions of fairness.

Here's hoping (faintly) that Election 2016 might improve the scores in the future.