The United States’ 2012 economic freedom score of 76.3 drops it from 9th to 10th place in the Heritage Foundation/Wall Street Journal’s 2012 Index. Its score is 1.5 points lower than last year, reflecting deteriorating scores for government spending, freedom from corruption, and investment freedom.
The Index is based on a composite score on a scale of 1 to 100 of ten criteria: Property Rights, Freedom from Corruption Government Spending. Fiscal Freedom. Business Freedom, Labor Freedom, Monetary Freedom, Trade Freedom, Investment Freedom, and Financial Freedom. The score is divided into five relative categories of Free (100-80), Mostly Free (79.9-70), Moderately Free (69.9-60), Mostly Unfree (59.9-50), and Repressed (<50).
Hong Kong, which is a special economic zone of China rather than a fully sovereign nation, remains steady in the No 1 slot. North Korea is last. No. 179. Singapore, Australia, New Zealand, and Switzerland are Nos. 2 – 5 in that order and make up all of the countries in the Free category. Five nations are not ranked. The U.S. in 2012 ranks No. 10; 2nd behind Canada out of three countries in the North America region. Its overall score remains well above the world and regional averages.
Although the foundations of economic freedom remain strong, in the United States, recent government interventions have eroded limits on government, and public spending by all levels of government now exceeds one-third of total domestic output. The regulatory burden on business continues to increase rapidly, and heightened uncertainty further increases regulations’ negative impact. Fading confidence in the government’s determination to promote or even sustain open markets has discouraged entrepreneurship and dynamic investment within the private sector.
Among other things, restoring the U.S to the status of a Free economy will require policy changes to reduce the size of government,reforming the tax system, and restructure entitlement programs.