Last week, the Heritage Foundation released the 2010 Index of Economic Freedom (find it here). For the first time, the United States fell from the “free” category to “mostly free”, with the index score dropping 2.7 points. The culprit? Increased regulation and burdensome spending. According to the Heritage Foundation website:
Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.
The numbers don’t lie. With decreased scores for investment, monetary and financial freedom (to name a few), plus an increase in government expenditures, its no wonder that we are economically worse off.
Increased spending doesn’t make us more prosperous. The freedom to enter into contracts and start businesses does. The private sector is more of an economic stimulant than any regulation ever could be, but it can only do so much when burdened by excessive legislation. As the 2010 Index of Economic Freedom makes clear, economic freedom and prosperity are intertwined. Members of Congress would do well to read it, so that they might learn this lesson for themselves.