Every year, the Fraser Institute does a survey of 141 countries worldwide in order to rank them according to economic freedom.
Unfortunately, we have been on the decline.
Interestingly enough, under presidents Nixon through Clinton, the U.S. saw great growth in economic freedom (according to the 42 criteria used by the Institute). Since Bush Jr. took office and through president Obama’s presidential tenure though, that freedom has been receding.
For a country that is dealing with a massive financial burden, it would not be in our best interest to allow such a decline to persist. The lower the U.S. sinks in the global rankings, the more enticing the freer countries become. If large amounts of individuals leave the U.S., less people are left to pay for the debt and the bills that the country has coming. In order to best tackle the debt burden, it would be best if we could attract more individuals to the country and create an environment for them to thrive as entrepreneurs and employees. But this outcome is unfeasible if the bipartisan spendthrifts in Washington continue leading us in the same manner they have been.
As the dollar declines, and the debt racks up, expect more labor to migrate to more free countries or countries with more fiscally responsible governments. It is already happening in Europe.
Hopefully the Obama administration will take the initiative to tackle the debt head on. Spending has to decrease. Austerity measures have to come. Monetizing the debt will lead to high inflation and default will lead to much higher interest rates and less future borrowing. At least one of these outcomes is inevitable.
What’s going to happen in the next 4 years under President Obama? Who knows..
What lies ahead are opportunities to act in favor of sound economic progress and opportunities to climb back up the freedom ranks. Long term growth depends on this. Many of these decisions will not be popular, but president Obama has the opportunity to move the country towards a more sustainable path in these next few years.