The Index of Economic Freedom is my favorite annual publication from the Heritage Foundation. It’s a rich source of information, using dozens of data sources, about economic liberty around the world.
I first wrote about the Index back in 2010 and shared the bad news that the U.S. score dropped dramatically in Obama’s first year.
Well, the new Index lets us see the net effect of Obama’s entire tenure. The worse news is that the U.S. score has dropped to 75.1 on a 0-100 scale. And the worst news is that this represents America’s lowest score in the twenty-plus years that the Index has been published.
The United States is ranked #17 in the latest Index. We’re only in the “Mostly Free” category, behind Luxembourg and the Netherlands and tied with Denmark.
The top-ranked jurisdiction, once again, is Hong Kong. And what’s really amazing is that Hong Kong actually increased its score. Indeed, all five nations in the “Free” category managed to increase overall economic freedom.
By the way, Cuba jumped 4.1 points last year, so maybe Fidel’s death is the beginning of some much-needed liberalization.
America’s best score is for “regulatory efficiency,” which helps to explain why the U.S. gets a top-10 score from the World Bank’s Doing Business.
Let’s close by comparing the United States with Hong Kong. This charts shows how our scores have changed over time, and also shows the average score for the entire world.
The biggest takeaway is that the U.S. basically is halfway between Hong Kong and the world average.
The great unknown, of course, is whether America’s score will go up or down under Trump.
Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute. Mitchell is a strong advocate of a flat tax and international tax competition.