Why Economic Freedom Matters to National Growth and Personal Prosperity
While economic freedom and personal prosperity are actually improving in most of the world … America, the quintessential “shining city on a hill” of entrepreneurship and free enterprise, has fallen to 12th in the 2014 Index of Economic Freedom. It is a 15-year low for the United States, and we are the only country that has lost ground each of the past seven years. This telltale index measures a nation’s commitment to a free economy through an examination of open markets, regulatory efficiency, limited government, and rule of law.
There is a strong and compelling correlation between economic freedom and economic growth as nations with the highest index scores enjoy more robust national employment figures, greater prosperity, and a surge in social mobility.
Economic freedom is that lofty ideal that produces some of the most industrious immigrants and ambitious dreamers in a quest for opportunity. It is very much tied to “life, liberty and the pursuit of happiness” as first penned by Jefferson in his original draft of the Declaration of Independence.
It’s astonishing to think that the country that set the benchmark for liberty and self-determination almost 238 years ago has been surpassed in the exercise of fiscal freedom. There are now eleven other countries with purported greater opportunities for advancement, wealth, and trade than the United States.
Topping the list is Hong Kong, Singapore and Australia. All have been deemed “economically free” based upon their ease of free trade, protection of property rights, low marginal tax rates, and limited size and scope of government. At the bottom of the list is Venezuela and Argentina, both Socialist-Imperialist governments, mired in a fiscal crisis fueled by soaring inflation, rising interest rates, loss of purchasing power, and mass currency devaluation.
Nations that are more economically free consistently exhibit less government intervention, carefully managed debt, lower deficits, controlled spending, and an uninhibited free enterprise system. Unfortunately the United States is moving in a very different direction as key aspects of the American Dream have been lost to reckless federal policies. In a Gallup poll taken late last year, just 52 percent of Americans feel that the US still provides the opportunity to get ahead. That is the lowest percentage ever.
Our former “Land of Opportunity” has been rattled by rising marginal tax rates, a skyrocketing national debt, costly energy regulations, new health care requirements, and stringent business and finance controls. Add a complicated, punishing, and onerous tax system and “of the people, by the people and for the people” becomes a lost ideal of a faded past.
As a result, our personal prosperity may very well depend upon our ability to hold money, accrue wealth, and acquire investments that are independent of any central acts of policy or controlling mandates of government.
Investors would be wise to consider a store of value with enduring market appeal and one that will retain its purchasing power over time and despite the ramifications of our collective loss of economic freedom and our subsequent lull in economic growth.