Growing up in the United States was a privilege. I have distinct boyhood memories of the old Soviet menace, but also of the sense that Americans were relatively safe and wealthy and that America was a beacon of hope for the oppressed. I also remember, later, the Soviet Union being dissolved, its flag with hammer and sickle lowered at the Kremlin and a new Russian flag being raised on Christmas Day, 1991. Talk about symbolism!
That moment gave me hope. Now that two large nations had less to fight about, I imagined, perhaps the United States could reform itself in ways that raised freedom’s flag higher. That moment has yet to be fully realized.
Economically, we’re not as free today as we were in 1991. Progress has been made and lost by at least one objective measure. There is some good news, though. There has been an overall march toward greater economic freedom around the world.
The Fraser Institute in Canada has been objectively measuring economic freedom among nations since the early 1990s. The approach the institute uses has been adapted to regions of the world, states, provinces and even Metropolitan Statistical Areas within the United States. Fraser scholars collect data across five major areas, such as the size of government, regulations and property rights. They use these data to inform an objective distribution of scores from zero to 10, with 10 being most free.
In 1990, the United States ranked second freest, with a score of 8.6. By 1996, we were ranked fourth-freest in the world, behind Hong Kong, New Zealand and Singapore. Last September, Fraser published its most recent report, and the United States rank is even lower. We’re in seventh place with a score of nearly 8.0 — just one spot higher than our all-time low in 2009.
The spot a nation earns in the index is more than a casual ranking. Nations with the highest scores also tend to have better outcomes on a wide variety of subjects that matter to people and policymakers. Fraser’s dataset has been used in hundreds of academic studies that have overwhelmingly found positive associations. These include such things as economic freedom and prosperity, income growth, immigration and tourism, investments and improved human rights. While America’s freedom fortune has fallen, the global march of economic freedom has accelerated since 2000.
The Fraser Institute has built a similar index that measures economic freedom among U.S. and Mexican states as well as Canadian provinces. The institute’s 2022 index was just released last month and contains data through 2020. Most U.S. states do particularly well when compared to Canada and Mexico. Only four states perform worse than any Canadian province and none worse than Mexican states.
Florida was once again the state with the highest freedom score in the U.S. state-specific index, followed by New Hampshire, South Dakota, Texas and Tennessee. The worst score went to New York, followed by California, Hawaii, Vermont and Oregon. As with the freedom of the world index, where states end up matters. States in the highest quartile repeatedly outperform states in the lower quartiles. Fraser data have been used by academic scholars to find that greater economic freedom at the state level is positively associated with interstate migration, wages and employment growth and more.
That means a lighter tax, spending and regulatory touch from state governments also contributes to more good outcomes. A heavier one pushes states down the rankings and arguably reduces economic well being and quality of life around the country.
The connection between freedom and good outcomes should be obvious, but shifting opinion and political winds often force those who argue in favor of freedom to take a step back.
“In some ways, it is surprising the debate [over economic policy choices] still rages because the evidence and theory favoring economic freedom match intuition,” the authors of the study write. “It makes sense that the drive and ingenuity of individuals will produce better outcomes.”
In many ways America’s past should be its present. With the right policy changes we can be the freest nation on earth again, and hopefully by a wide margin.
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