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Economic freedom? Look north

| Saturday, Sept. 22, 2012, 9:17 p.m.

The wife and I are thinking over our career prospects and we're suddenly open to moving to Canada.

Ah, yes, you speak of the results of the Fraser Institute's recently released “Economic Freedom of the World: 2012 Annual Report.” It shows that Canada is the fifth freest economy, whereas America has plunged to the 18th spot.

That's right. It's a real bummer to see America fall so far so fast in the rankings.

To be sure. The report says that from 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. Between 2000 and 2010, we fell to the 10th spot. In just one year we plunged to the 18th spot!

What are we doing wrong to fall to 18th on the list?

Well, the Fraser Institute says that the “cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property.” It uses 42 variables to measure economic freedom in five key areas: the size of government, legal systems and property rights, sound money, freedom to trade internationally, and regulation. America has lost ground in all five.

But why have we lost ground so fast?

The Fraser report say it's difficult to point to the “specific causal factors of the decline,” but does offer a few possibilities, such as abuse of eminent domain, government bailouts, and restrictions brought about by the war on terror. In a nutshell, as the government does more and regulates more, the less free the economy becomes. And our government has grown massively in recent years.

It has?

Absolutely. Arthur Brooks, president of the American Enterprise Institute, wrote in The Wall Street Journal that America is no longer at risk of becoming a European-style big-government social democracy — because we already are one.

We are!

“From the progressivity of our tax code, to the percentage of GDP devoted to government, to the extent of the regulatory burden on business, most of Europe's got nothing on us,” he wrote. In 1938, the height of the Great Depression, total government spending — federal, state, local —was 15 percent of GDP. In 2010, it was 36 percent of GDP. And as the government grows, economic freedoms contract.

That's not good when you consider economic freedom is the key to greater prosperity for all Americans.

That is true, too. The Fraser Institute finds that nations that are economically free outperform nonfree nations in indicators of well-being. Per-capita GDP is higher, poverty is lower, life expectancy is higher and political and civil liberties are much greater. Look at the massive success America has had in its history across all of these measures. Look at how we are unable to pay our bills now.

That's why I'm keeping my eye on Canada.

The Canadians are doing very well. According to the National Post, they began to rise in the economic freedom rankings in 1995. They reined in government and dramatically reduced government spending under former Prime Minister Jean Chrétien, a Liberal. Their current Conservative prime minister has maintained the trend. The Canadian economy is doing well as the American economy continues to stumble.

Then what are we to do?

Get back to the drawing board and reform our tax system, entitlements and other government policies. Everyone agrees we need smarter regulations, but we also need to balance them against economic freedom. We need to restrain government spending and grow our way back to health, as Canada has done.

Our political leaders aren't getting along so well these days. What if they don't do it?

The wife and I will start thinking over our career prospects and we may be suddenly open to moving to Canada!

Tom Purcell, a freelance writer, lives in Library. Visit him on the web at E-mail him at:

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