U.S. Economic Freedom Slips to All-Time Low

America’s international ranking on economic freedom slipped to its lowest level ever in the two decades that The Heritage Foundation has been tracking the data, according to a report released Wednesday by the conservative think tank.

The 2017 report ranks the United States 17th out of 180 countries, putting it among the world’s “mostly free” nations. That is one notch below five countries rated “free.”

“The declining trend has been expanding under the previous administration.”

Since Heritage issued its first report in 1995, America’s overall ranking of 75.1 out of 100 is the lowest ever. It tumbled out of the top tier in 2010 and dropped six of the eight years of former President Obama’s tenure in office.

“The decline has been a trend since 2008,” said Anthony Kim, a senior policy analyst at the think tank’s Center for Free Markets and Regulatory Reform. “The declining trend has been expanding under the previous administration.”

Heritage devises its rankings by rating each nation on a scale of 1 to 100 in four major areas — rule of law, government size, regulatory efficiency, and open markets. It then averages those categories together, producing rankings from the most free country — Hong Kong, at 89.8 out of 100 — to the most repressed. North Korea claimed that dishonor, scoring just 4.9 out of 100 overall.

The size of government and spending drags down U.S. rankings, according to the Heritage report. The tax burden rating is 65.3 out of 100, down from last year. For fiscal health, high debt results in a rating of 53.3 out of 100. The United States also lost ground on business freedom and labor freedom.

[lz_table title=”Freest Nations” source=”Heritage Foundation”]World’s Freest Economies
|Country,Score
1. Hong Kong,89.8%
2. Singapore,88.6%
3. New Zealand,83.7%
4. Switzerland,81.5%
5. Australia,81%
6. Estonia,79.1%
7. Canada,78.5%
8. United Arab Emirates,76.9%
9. Ireland,76.6%
17. United States,75.1%
[/lz_table]

“We’ve been killing ourselves with a lot of regulation,” Kim said.

President Donald Trump has made several significant proposals in areas likely to improve the U.S. position if he is successful. One is regulation, where the president signed an executive order requiring the repeal of two existing rules that impose costs on businesses for every new one.

Trump also has promised soon to release a tax overhaul package, focusing on business and personal income tax cuts.

Kim said only time will tell if Trump’s ideas lead to better future rankings on the economic freedom index.

[lz_table title=”U.S. Economic Freedom Eroding” source=”Heritage Foundation”]Overall Economic Freedom Score
|Year,Score
2008,81%
2009,80.7%
2010,78%
2011,77.8%
2012,76.3%
2013,76%
2014,75.5%
2015,76.2%
2016,75.4%
2017,75.1%
[/lz_table]

“Quite frankly, we’ll have to really wait and see,” he said. “I think direction he is trying to chart is probably different.”

The Heritage study is in line with a scorecard developed by the libertarian Cato Institute, which has been ranking countries based on their freedom even longer than Heritage — all the way back to 1970. In the most recent Human Freedom Index, released last year, Cato ranks the United States 16th out of 159 countries on economic freedom.

“The United States has been on a long-term downward trend,” said Ian Vasquez, director of the think tank’s Center for Global Liberty and Prosperity.

Vasquez said the United States consistently ranked in the top two or three until about 2000, when it started to slip.

“Sometime in the last 10 years, it became less free than Canada,” he said. “It really fell far after the financial crisis.”

Kim agreed that the United States hurt its position with a mass of new financial regulations imposed after the economic collapse. In addition to tackling overregulation, Canada also has cut back the size and reach of government, he said. America’s neighbor to the north passed it in Heritage’s 2010 rankings.

“They did their homework as far as reforming taxes and reducing government spending … They don’t have any overregulation,” Kim said.

It may come as a surprise to many Americans that they are less free, economically, than Canada, which has a single-payer, government-run health system and a reputation for more of a socialist philosophy. But Vasquez said Canada has less “crony capitalism” and intervention into the free market. He pointed to Obama’s auto industry bailout, which picked winners and loses and voided contracts to give favorable treatment to certain companies and unions.

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“This has the effect of weakening the rule of law,” he said.

But Canada is not the only English-speaking country that has lapped America. In addition to Canada (ranked 7th on the Heritage index), America trails New Zealand (No. 3), Australia (No. 5), Ireland (No. 9) and Great Britain (No. 12).

“We’ve just been sitting there, and other countries are moving forward,” Kim said.

Denmark, hailed as a socialist paradise by Sen. Bernie Sanders (I-Vt.) during his presidential bid, comes in just one spot behind the United States. Kim said Denmark has high taxation and heavy government spending.

“But in Denmark, surprisingly, the regulatory environment is very transparent and very flexible,” he said.

Looking ahead, Vasquez said Trump’s tax and regulatory proposals could improve economic freedom. But he said policies on trade and government spending could go in the opposite direction. “It’s going to be a mixed bag,” he said.

Kim expressed more optimism.

“It will take some time … It will take policy details,” he said.