Where Has Our Economic Freedom Gone?

             The liberty principle for this Freedom Friday concerns economic freedom. The Heritage Foundation released its annual Index of Economic Freedom in February. The United States dropped to 25^th place, which is the lowest ranking for the U.S. in the history of the index. Senator Mike Lee (R-UT) has an explanation for the decline for America: economic freedom declined along with other freedoms during the pandemic. 

Anytime you see other freedoms infringed, I think economic freedoms are deteriorating at the same time, because of government action….

You saw people being told that they couldn’t go to church because they couldn’t do all sorts of things, that they had to wear a mask in public, that they had to have a procedure they may or may not want, or may or may not need based on their own medical history, and natural immunity…. Anytime you see those things happening, you see a corresponding diminution of economic liberty.

Economic freedom was diminished as government churned out trillions of dollars that it didn’t have, just printing it off, as regulations affected businesses, told businesses they would have to fire anyone who didn’t defer to a presidential medical orthodoxy as it relates to the vaccine mandates…. So, these are all examples of how economic freedom has diminished with a particular pace over the last two years.

            The Biden administration and the Democrat-controlled Congress have weakened our economic freedom with their bad policies. By spending trillions of dollars that our nation did not have and increasing regulations, they contributed to the 7% national inflation and further weakened the economy.

Economic Freedom

            The liberty principle for this Freedom Friday is the simple fact that any nation can increase their economic freedom by obedience to the applicable rules. The latest example is Egypt, a nation that faced “economic stress and political turmoil” for years.

            According to Christine Lagarde,managing director of the International Monetary Fund, “Egypt is at a turning point in its economic structure and is signaling to investors it is serious about comprehensively reforming its economic system.” 

            There are some solid ways that Egypt has improved its economic system. The Heritage Foundation’s 2018 Index of Economic Freedom shows that Egypt’s general economic freedom increased because it made “improvements in financial freedom, investment freedom and, and business freedom.”

            An article written by Anthony B. Kim and Patrick Tyrrell at The Daily Signal says that Egypt made some impressive improvements in order to increase its economic freedom. 

Reform of fuel and electricity subsidies has been a notable achievement, and market forces now determine the exchange rate. A recently enacted investment law aims to reduce bureaucracy and promote greater foreign investment. And, earlier this year, Egypt’s parliament passed the country’s fir bankruptcy law, which should help viable companies return to business success more quickly.

            The article states that the “reforms are paying off.” It also says that tourism is “rebounding” with “hotel occupancy rates at their highest since 2010.”

            Why should the economy in Egypt be of interest to Americans? The authors quote Jim Phillips of The Heritage Foundation as saying: “Egypt is a heavyweight Arab power that can serve as an effective partner in advancing regional efforts to fight terrorism, contain Iran, and stabilize the explosive Middle East.”

            I believe that any intelligent person will recognize that Phillips gives three very good reasons why Americans should rejoice at the improving economic freedom in Egypt. The economic situation for Americans has improved under the policies of President Donald Trump. We should gratefully acknowledge the efforts of Egypt to do the same for her people.

Economic Freedom

            The liberty principle for this Freedom Friday is that something must be done in order to change the economic freedom of any nation. The 2018 Index of Economic Freedom was recently published by The Heritage Foundation. The Index is an annual study that compares economic freedom in 180 countries with 6 nations not ranked at all. The top ten nations this year include the following: (1) Hong Kong, (2) Singapore, (3) New Zealand, (4) Switzerland, (5) Australia, (6) Ireland, (7) Estonia, (8) United Kingdom, (9) Canada, and (10) United Arab Emirates. The United States ranked 18^th.

            Hong Kong, Singapore, and New Zealand are considered economically “free” nations. The next seven nations listed are “mostly free” and are joined by the following nations:

(11) Iceland, (12) Denmark, (13) Taiwan, (14) Luxembourg, (15) Sweden, (16) Georgia,

(17) Netherlands, (18) United States, (19) Lithuania, and (20) Chile.

            The United States has steadily dropped in the index over the past decade. The good news is that it might have stopped dropping. Patrick Tyrrell and Anthony B. Kim posted an article at The Daily Signal titled “5 Takeaways from the 2018 Index of Economic Freedom.” They note that the index “compares countries’ entrepreneurial environments.” Their statement continues with the following explanation.

Since 1995, the index has measured a nation’s commitment to limited government and free enterprise on a scale of 9 to 100 by evaluating four critical policy pillars, including rule of law and regulatory efficiency.

These commitments are powerful forces that help societies grow in economic freedom. Countries that achieve higher levels of economic freedom consistently outperform others in economic growth, long-term prosperity, and social progress. Those with lower economic freedom, on the other hand, risk economic stagnation, high unemployment, and deteriorating social conditions.

            After reading their explanation for ranking, we can better understand why the United States kept dropping in the index. Apparently, our national leaders took the necessary steps to stop the free fall. The Daily Signal article lists the five points that we need to understand.

1. The world economy overall is rated “moderately free….”

2. Six economies … have achieved very high scores of 80 or more, putting them in the category of economically “free.” [I see only three with that score.] …

3. Economies rated “free” or “mostly free” in the 2018 index enjoy incomes that are more than twice the average levels in all other countries….

4. Economically freer countries that open their societies to new ideas, products, and innovations have largely achieved high levels of social progress….

5. The United States, ranked “mostly free,” had not been performing well in the index over the last decade. That precipitous slide has now fortunately come to a halt, with signs of renewed economic growth reinforced by major regulatory and tax reforms that elevate business confidence and investment….

            So, the figures show that our economy is doing better. The people feel that the economy is doing better. The Trump policies must be doing some good!

Economic Freedom

            The liberty principle for this Freedom Friday concerns economic freedom. The economy in the United States crashed eight years ago, and it has not fully recovered. Long-time Democrat voters switched parties and put Donald Trump in the White House. Since the night of the election, we have heard nothing good about Trump and the so-called “idiots” that support him.

            All we hear from media is that Trump is a rotten President who has not accomplished anything good in his first 100 days. Liberals are absolutely crazy with hate for Trump and his supporters. I am grateful for alternative news sources that bring the truth to us. Recently I read an article praising Trump, and I rejoiced to see something positive about him.

            Jeffrey Tucker, Director of Content for the Foundation for Economic Education, posted an article titled “Trump’s Tax Plan is Brilliant Politics and Even Better Economics.” I had to read the article just because it is mostly positive! Tucker explains that under Trump’s tax plan, the following tax rates drop: corporate profits (35% to 15%), capital gains (23.8% to 20%), and individual rates (drop to 10%, 25%, and 35% with the standard deduction being doubled). Deductions for charitable giving and mortgage interest are kept while estate taxes and alternative minimum tax are dropped. He says that the best part is the dramatic reduction on corporate profits.

            Tucker explains that the U.S. “government has tried to mastermind an economic recovery,” but it has not worked. After explaining how the government failed, he says:

Economic growth must come from the private sector. It must come from investment in private capital. The owners of this capital who are doing well and earn profits should be allowed to keep them and invest them. This creates new job opportunities. It allows for more complex production strategies. It expands the division of labor.

The crucial institution here is capital. Sorry, anti-capitalists. It’s just true. Capital can be defined as the produced goods for production, not consumption. It is making things for the purpose of making other things. Think about it. Without capital, you can still have markets, creativity, hard work, enterprise. But so long as you have an absence of capital, you are forever floundering around just working to make and sell things for consumption. This is called living hand to mouth.

Without capital, and the private ownership of capital, and security over your property rights, you can’t have economic growth. You can’t have complex production. You can’t raise wages. You can’t live a better life. Every tax on capital, capital formation, capital accumulation, and business profit reduces the security of property rights over capital. This is a sure way to attack economic growth at its source.

And this is precisely what American policy has done. The rest of the world has been wising up about this, reducing taxes on capital for the last 15 years. But the US has languished in the mythology of the past, regarding capital not as a font of prosperity but rather a fund of stagnant resources to be pillaged by planners in government. It is not surprising that this strategy results in slow growth and even permanent recession.

            Tucker continues with his explanation of how this tax cut will “unleash” the masses of “pent-up energy in this country.” He further explains that he thinks – because of “experience and intuition” that the following will happen: “If this tax plan goes through, the entire class of entrepreneurs, investors, and merchants will [receive] a loud signal: this country is safe for you to realize your dreams and make the dreams of others come true. … It prepares the entire country to weather [the next recession or financial crisis] better than we otherwise would.”

            Tucker’s article has much more information in it, and it deserves to be studied. I like the sound of positive comments. I also like the idea of an improving economy. If Trump’s tax plan sounds so good to an economist, it must be good for our nation. I hope it is.

Economic Freedom

                The 2016 Economic Freedom Index was released this week.  The Index measures nations on ten key criteria:  (1) property rights, (2) freedom from corruption, (3) fiscal freedom,

(4) government spending, (5) business freedom, (6), labor freedom, (7) monetary freedom, (8) trade freedom,

(9) investment freedom, and (10) financial freedom.  I found it very interesting that the Index was “released on the same day the national debt topped $19 trillion for the first time in the nation’s history.”  

                The United States of America did not make the top ten countries with the most economic freedom.  According to this index the top ten economically free countries are:  (1) Hong Kong, (2) Singapore, (3) New Zealand, (4) Switzerland, (5) Australia, (6) Canada, (7) Chile, (8) Ireland, (9) Estonia, and (10) United Kingdom.  The USA is in 11^th place out of approximately 200 nations.  

                How could that happen in so few years?  The USA was in 6th place when Barack Obama took office.  How can any sane person claim we are better off today than we were seven years ago? 

                According to Representative Dave Brat (R-Va) one of the reasons that the United States ended the year at #11 is “because of slower than normal economic growth, citing trillions of dollars’ worth of unfunded liabilities and an annual federal budget deficit projected to reach $544 billion by the end of Fiscal Year 2016…. You cannot have economic growth without economic freedom.”

                I hope Americans think long and hard about the direction we are going in economic freedom.  Do you want to live in a nation that is economically free?  If so, are you going to vote for a presidential candidate that will act to change the direction we are heading?  If so, you must look carefully at what the candidates stand for and listen to their words.  Bernie Sanders openly states that he is a socialist, and Hilary Clinton praises the work of Mr. Obama.  That is your choice if you insist on showing your insanity by voting for a Democrat.  Some of the Republicans are much better than what the Democrat Party is offering but not all of them.  I believe we can trust Ted Cruz, but I am not sure about Donald Trump or Marco Rubio.  We need to be sure that we elect a President that we can trust to do what is right for our nation!

Economic Freedom

                The Heritage Foundation and The Wall Street Journal released their 2014 Index of Economic Freedom on Tuesday, January 14, 2014.  Terry Miller reported that this is the 20^th year this index has measured “a nation’s commitment to free enterprise on a scale of 0 to 100 by evaluating 10 categories, including fiscal soundness, government size and property rights.  These commitments have powerful effects:  Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity and social progress.

                “Those losing freedom, on the other hand, risk economic stagnation, high unemployment and deteriorating social conditions.  For instance, heavy-handed government intervention in Brazil’s economy continues to limit mobility and fuel a sense of injustice.”

                The ranking of the United States has declined for seven straight years; this year the U.S. dropped completely out of the top 10 most economically free countries.  According to the chart provided here, the United States is now #12, meaning that eleven other nations have more economic freedom than Americans have.  Those eleven nations are:  1) Hong Kong, 2) Singapore, 3) Australia, 4) Switzerland, 5) New Zealand, 6) Canada, 7) Chile, 8) Mauritius, 9) Ireland, 10) Denmark, and 11) Estonia.

                Miller’s report continued:  “It’s not hard to see why the U.S. is losing ground.  Even marginal tax rates exceeding 43% cannot finance runaway government spending, which has caused the national debt to skyrocket.  The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy.  The intervention impedes both personal freedom and national prosperity.

                “But as the U.S. economy languishes, many countries are leaping ahead, thanks to policies that enhance economic freedom – the same ones that made the U.S. economy the most powerful in the world.  Governments in 114 countries have taken steps in the past year to increase the economic freedom of their citizens.  Forty-three countries, from every part of the world, have now reached their highest economic freedom ranking in the index’s history.”

                Here is proof that we have not been imagining the deteriorating economy is our nation.  Mr. Obama and his cohorts are destroying our nation in front of our eyes.  We must do something in 2014 to stop them or we will lose our country.

Economic Freedom Index

                    The 2012 Index of Economic Freedom has been released.  Its opening page states:  "When institutions protect the liberty of individuals, greater prosperity results for all.  Economist Adam Smith formed this theory in his influential work, The Wealth of Nations, in 1776.  In 2012, his theory is measured - and proven - in the Index of Economic Freedom….

                    "For over a decade, The Wall Street Journal and The Heritage Foundation, Washington's preeminent think tank, have tracked the march of economic freedom around the world with the influential Index of Economic Freedom.  Since 1995, the Index has brought Smith's theories about liberty, prosperity and economic freedom to life by creating 10 benchmarks that gauge the economic success of 184 countries around the world.  With its user-friendly format, readers can see how 18th century theories on prosperity and economic freedom are realities in the 21st century."

The Index has the United States dropping from ninth place in 2011 to tenth place in 2012.  "Sharp increases in government spending and more costly regulations contributed to another decline in the United States' ranking in the annual Index…."  The top ten nations in economic freedom are as follows:  1) Hong Kong, 2) Singapore, 3) Australia, 4) New Zealand, 5) Switzerland, 6) Canada, 7) Chile, 8) Mauritius, 9) Ireland, and 10) United States.  The top five nations are considered to be "free" economies while the next five are considered to be "mostly free."

                    The ten freedoms included in the Index are:  1) Business Freedom, 2) Trade Freedom, 3) Fiscal Freedom, 4) Government Spending, 5) Monetary Freedom, 6) Investment Freedom, 7) Financial Freedom, 8) Property Rights, 9) Freedom from Corruption, and 10) Labor Freedom.

                    A Press Release stated:  "Economic freedom declined worldwide in 2011 as many countries attempted - without success - to spend their way out of recess….

                    "The average economic freedom score for the 2012 Index stands at 59.5 (on a scale in which 100 represents the ideal), down two-tenths of a point from 2011.

                    "`The mounting burden of reckless government spending has overwhelmed gains in economic freedom in other policy areas,' write the Index editors.  `Tension between government control and the free market has heightened around the world, particularly in developed countries.'"

                    The Index site includes an excellent video entitled "The Role of Economic Freedom."  I recommend that you take the time to watch the video.

Free Market

The liberty principle for this Freedom Friday is that a minimum of government regulations and a free-market economy brings about the highest levels of prosperity. Our Founding Fathers first obtained independence and then they organized a government based on natural laws. They received some assistance in writing laws about the marketplace from a college professor in Scotland named Adam Smith. Smith wrote a five volume work called The Wealth of Nations, which came out in 1776. This brilliant work was just what the Founders needed. Thomas Jefferson wrote: "In political economy, I think Smith's Wealth of Nations the best book extant." (Bergh, Writings of Thomas Jefferson, 8:31.) The Founders structured the entire national economy of the new nation on the basis of natural law and Smith's ideas about a free-market economy.

According to W. Cleon Skousen, there are five parts to Smith's formula: 1) There is specialized production. 2) The government does not interfere in production, princes or wages. 3) The free-market operates on supply and demand with no government-imposed monopolies. 4) Competition based on supply and demand regulates prices. 5) Profits are an indication of whether the goods and services produced are worthwhile. 6) Competition improves quality and reduces prices.

Skousen also wrote that "there are four laws of economic freedom which a nation must maintain if its people are to prosper at the maximum level. These are: 1) The Freedom to try. 2) The Freedom to buy. 3) The Freedom to sell. 4) The Freedom to fail.

"By 1905 the United States had become the richest industrial nation in the world. With only five percent of the earth's continental land area and merely six percent of the world's population, the American people were producing over half of almost everything - clothes, food, houses, transportation, communications, even luxuries. It was a great tribute to Adam Smith." (See The Five Thousand Year Leap.)

Even though the United States was becoming the biggest and richest nation in the world, the system needed some adjustments. Many powerful leaders thought the system needed to be replaced. At the same time, the Founding Fathers and the Constitution were being criticized and the ideas of Adam Smith were considered old fashioned. The intellectual leaders were creating a vacuum in order to build a new system based on the teachings of Karl Marx. This new system was exactly what the Founders were trying to eliminate.

The colleges and universities in the 1920's stopped teaching anything about the heritage of our nation; therefore, there were no assignments to read The Federalist Papers or The Wealth of nations or anything similar. President Franklin Roosevelt did his best to trade the rights of the Republic - such as checks and balances, limited government, inalienable rights to liberty and property - for a centralized state and controls on industry.

The Founders wanted to "make the American dollar completely independent of any power or combination of powers outside of the American people" (Skousen). They gave exclusive responsibility to issue and control money to Congress because the people had control over who would represent them in Congress. All money was to be precious metal. This plan of the Founders never was completely implemented. First, the Bank of the United States was created to issue money, a task given to the Federal Reserve System today.

Thomas Jefferson stated, "If the American people ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs." (Quoted in Olive Cushing Dwinell, The Story of Our Money, p 84.)

Jefferson must have been looking at circumstances similar to our day when Fannie Mae and Freddie Mac own approximately 90 percent of all the home mortgages. I feel certain that the situation saddened Jefferson as it does many today. If we truly want to return to our First Principles, we must convince our political leaders to reform our economy to the point that Congress again has the exclusive responsibility to issue and control money.

Ideas and quotes for this post came from The Five Thousand Year Leap by W. Cleon Skousen, pp 131-139. There is much more information on this principle in this book.

American Dream

Is the American dream in jeopardy? The Morning Bell put out by The Heritage Foundation on April 19, 2011, said that the American dream is in jeopardy because large American corporations are "cutting back on their domestic workforces and increasing hiring overseas." This movement is a sign that America has a serious problem in economic freedom.
"Big government policies are setting us on a path away from a fundamental freedom we cherish - one the Founders strove to preserve. It's the freedom to pursue the American dream of `economic freedom' that, tragically, is in jeopardy."
The Morning Bell included the following quote by Kim R. Holmes, Ph.D. and Matthew Spalding, PhD., previously printed in The Heritage Foundation's "Understanding America" series: "America's founders knew that liberty is about more than just securing political freedoms. True liberty requires economic freedom - the ability to profit from our own ideas and labor, to work, produce, consume, own, trade, and invest according to our own choices. Thomas Jefferson underscored that point when he observed that `a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement.'"
The United States is no longer considered to be "free" economically but "mostly free." According to the 2011 Index of Economic Freedom, the United States fell from eighth place to ninth internationally. The lower ranking reflects deteriorating business freedom, trade freedom, government spending, and monetary freedom. Hong Kong is ranked as number one in the world in economic freedom and is followed by Singapore, Australia, New Zealand, Switzerland, Canada, Ireland, and Denmark. Bahrain is in the tenth spot.
According to the Index, "Economic freedom is 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."
The economic freedom in each nation is measured by ten components with each component receiving a grade. Then the ten component grades are average to obtain the overall economic freedom. 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.
Will the United States continue to fall in economic freedom? Can the American dream survive or will it simply continue to disintegrate?

Economic Freedom

The topic for this Freedom Friday is economic freedom. The Index of Economic Freedom - The Link Between Economic Opportunity and Prosperity has ranked the nations of the world on their economic freedom for the past sixteen years. The Index uses ten criteria to judge each nation: freedoms related to business, trade, fiscal matters, monetary matters, investment, finance, labor, government spending, property rights, and freedom from corruption.

The 2010 Index of Economic Freedom covers 183 countries but ranks only 179 across the 10 specific areas of freedom. The United States ranked sixth in 2009, but it dropped to number eight in 2010. The top ten nations in 2010 are: Hong Kong, Singapore, Australia, New Zealand, Ireland, Switzerland, Canada, United States, Denmark, and Chili. (Just for your information, the bottom ten are: North Korea, Zimbabwe, Cuba, Eritrea, Burma, Venezuela, Libya, Democratic Republic of Congo, Turkmenistan, and Solomon Islands.)

John Stossel pointed out that this Index covers the last six months of the Bush Administration as well as the first six months of the Obama Administration; therefore, the problem belongs to both Democrats and Republicans.

“The index demonstrates…: Economic freedom leads to prosperity. Also, the best places to live and the fastest growing economies are among the freest, and vice versa. A society will be materially well off to the extent its people have the liberty to acquire property, start businesses, and trade in a secure legal and political environment.”

Stossel quoted Bill Beach, director of the Heritage Foundations Center for Data Analysis, which compiles the index with The Wall Street Journal, as saying that the index defines “economic freedom” to mean: “You can follow your dreams, express yourself, create a business, do whatever job you want. Government doesn’t run labor markets, or plan what business you can open, or over-regulate you…. For the first time in 16 years, the United States fell from the `totally free’ group to the ‘mostly free’ group.”

It appears to me that Thomas Jefferson was correct once again when he said, “I think all the world would gain by setting commerce at perfect liberty.” Our government is spending too much money and hitting businesses with too many regulations. The figures from the index show that the United States must make government smaller and free businesses to do what the private sector does best – make money. If the oppression of businesses continues to increase, we can expect more companies to move to countries that offer them more freedoms. Economic freedom is a necessity if the United States is to move back to the “totally free” group of nations.