Every year the Fraser Institute and the Heritage Foundation publish their global freedom indices. These studies hope to shed some statistical light on the state of the world in terms of economic freedom. Gathering data from over 150 countries, they use rigorous data analysis to rank each country from most- to least-free.
As one would suspect, America typically performs fairly well when compared to the rest of the world. While still outperforming the majority of nations, America is showcasing a downward trend—contrary to what most Americans would hope.
Currently the U.S. is ranked 17th in the Heritage Index and 16th in the Fraser Index. And since the Obama administration began, we have consistently been dropping in the rankings. Peaking with a score of 81 in the Heritage Index from 2006-2008, along with the moniker of “free,” the United States has since dropped to a score of 75.1 and the title “mostly free.”
Why is this important for Americans? After all, money isn’t everything. In addition to higher per capita incomes, economic freedom also correlates strongly with social justice, environmental health, less political corruption, life expectancy, and overall life satisfaction.
Countries that are the freest see a slightly larger income share given to the poorest 10%, and the overall income of that same group is exponentially larger (jumping from about $4,000 in the 2nd quartile of free countries to almost $10,000 in the first quartile). Economic freedom is a cause which should be bipartisan. It accomplishes the goals of both conservative and liberal voters. Not only do the least of these receive a larger share of the pie, which liberals want, the pie itself is substantially larger, which conservatives want.
Thankfully, the world has made great strides in economic freedom. The Fraser Institute reports that the average chain-linked ranking has increased from 6.9 in 1985 to 7.7 in 2014, with even larger gains being made in developing countries. America, on the other hand, has not been contributing to this advance in recent times. The United States is one of 19 countries with advanced economies to record declining freedom in 2017 according to the Heritage Institute.
This gives the Trump administration room to make a positive change in the everyday lives of Americans, an opportunity which it appears at first blush to acknowledge. President Trump’s call for deregulation offer a hopeful view towards the future of economic freedom in America. And the markets have clearly given their animated response.
Because regulatory agencies themselves will be choosing which regulations to cut, there is a greater chance of weeding out the most obstructive regulations while keeping the successful ones.
As with any new President, time will tell what Trump’s economic legacy will be, but his stated commitment to deregulation certainly grants optimism for the future.