Friday, January 13, 2012

Economic Freedom on Decline in US

The Heritage Foundation released its most recent ranking of nations on their level of economic freedom. The US has dropped to 10th worldwide. The top five countries are Hong Kong, Singapore, Australia, New Zealand, and Switzerland.
The United States’ economic freedom score of 76.3 drops it to 10th place in the 2012 Index. Its score is 1.5 points lower than last year, reflecting deteriorating scores for government spending, freedom from corruption, and investment freedom. The U.S. is ranked 2nd out of three countries in the North America region, and its overall score remains well above the world and regional averages.

The U.S. economy faces enormous challenges. Although the foundations of economic freedom remain strong, recent government interventions have eroded limits on government, and public spending by all levels of government now exceeds one-third of total domestic output. The regulatory burden on business continues to increase rapidly, and heightened uncertainty further increases regulations’ negative impact. Fading confidence in the government’s determination to promote or even sustain open markets has discouraged entrepreneurship and dynamic investment within the private sector.
Recent declines are due to President Obama's spending and regulatory policies.
The U.S. economy, the world’s largest, has not recovered fully from the 2008 financial crisis and ensuing recession. Under Democratic President Barack Obama, the federal system of government, designed to reserve significant powers to the state and local levels, has been strained by the national government’s rapid expansion. Spending at the national level rose to over 25 percent of GDP in 2010, and gross public debt surpassed 100 percent of GDP in 2011. A 2010 health care bill that greatly expanded the central government’s reach has been under challenge in the courts, and the Dodd–Frank financial overhaul bill has roiled credit markets. Although the election of a Republican Party majority in the House of Representatives in late 2010 slowed spending growth, divided government has left U.S. economic policy in flux.
While done in the name of fairness, redistributionist policies ultimately shrink the size of the economic pie and makes society overall worse off. Of course, mismanagement isn't limited to the Obama Administration; it's only accelerated process. Financial and monetary mismanagement hammer the middle class first and foremost. Poverty and mistreatment of the environment are a couple of the conseqeunces of the loss of economic freedom and growth.

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