U.S. Falls to 17th in Economic Freedom

U.S. Falls to 17th in Economic Freedom

The Cato Institute has released its latest annual report on the "Economic Freedom of the World," and it shows that the United States ranks only at No. 17 among 152 nations surveyed. According to Cato,

"The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter and compete in markets, and protection of persons and their property from aggression by others. Economic freedom is present when individuals are permitted to choose for themselves and engage in voluntary transactions as long as they do not harm the person or property of others."

To compile its report, Cato assesses the economic freedom within a nation based on five areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation.  From 1980 to 2000, the United States was generally rated the third freest economy, behind only Hong Kong and Singapore, and in 2000 it was ranked second. But the rating dropped to No. 8 in 2005, to No. 16 in 2010, and to No. 17 in 2011, the most recent year for which sufficient data is available.  "The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade," Cato observed.

Hong Kong earns the top spot in the new report, followed by Singapore, New Zealand, Switzerland, United Arab Emirates, Mauritius, Finland, Bahrain, Canada, and Australia.  Among large economies, the United Kingdom is at No. 12, ahead of Germany (19), Japan (33), France (40), Russia (101), Brazil (102), India (111), and China (123). The 10 lowest-rated countries among the 152 entities studied are Algeria, Democratic Republic of Congo, Burundi, Central African Republic, Angola, Chad, Zimbabwe, Republic of Congo, Myanmar, and in last place, Venezuela. Nations in the top quartile on economic freedom had an average per-capita GDP of $36,446 in 2011, compared to $4,382 for nations in the bottom quartile, according to Cato.

Life expectancy is 79.2 years in nations in the top quartile compared to 60.2 years in the bottom quartile. The poorest 10 percent of the population in nations in the bottom quartile had an average yearly income of just $932 in 2011.