Growing up in the United States was a privilege. I have distinct childhood memories of the old Soviet threat, but also of the sense that Americans were relatively safe and wealthy and that America was a beacon of hope for the downtrodden. I also remember, later, that the Soviet Union dissolved, its hammer and sickle flag lowered in the Kremlin, and a new Russian flag raised on Christmas Day 1991. Talk about symbolism!
That moment gave me hope. Now that two great nations had less to fight over, I imagined, perhaps the United States could be reformed in a way that would raise the flag of freedom. That moment is not yet fully realized.
Economically, we are not as free today as we were in 1991. At least one objective measure has been advanced and lost. There is good news, though. There has been a general move towards 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 used by the institute has been adapted to regions of the world, states, provinces and even areas United States metropolitan statistics. Fraser scholars collect data from five main areas, including the size of government, regulations, and property rights. They use this data to report an objective distribution of scores from zero to 10, with 10 being the most free.
In 1990, the United States ranked second freest, with a score of 8.6. In 1996, we were ranked fourth free in the world, behind Hong Kong, New Zealand and Singapore. Last September, Fraser released its most recent report, and the U.S. ranking 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 place a nation earns in the index is more than a random ranking. Nations with the highest scores also tend to perform better on a wide variety of issues that are important to people and policymakers. Fraser’s dataset has been used in hundreds of academic studies that have overwhelmingly found positive associations. These include things like economic freedom and prosperity, income growth, immigration and tourism, investment and improved human rights. While the fortunes of American freedom have declined, the global march of economic freedom has accelerated since 2000.
The Fraser Institute has created a similar index that measures economic freedom among US states and Mexico, as well as Canadian provinces. The institute’s 2022 index was released last month and contains data through 2020. Most US states do particularly well 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 US state-specific index, followed by New Hampshire, South Dakota, Texas and Tennessee. The worst score was for New York, followed by California, Hawaii, Vermont and Oregon. As with the world freedom index, where states end up matters. States in the top quartile repeatedly outperform states in the bottom quartile. Scholars have used Fraser’s data to find that greater state-level economic freedom is positively associated with interstate migration, wage and employment growth, and more.
This means that a lighter fiscal, spending and regulatory touch by state governments also contributes to better outcomes. A heavier one pushes states down the rankings and undoubtedly reduces economic well-being and quality of life across the country.
The connection between freedom and good outcomes should be obvious, but changing minds and political winds often force those who defend freedom to take a step back.
“In a way, the debate is surprising [over economic policy choices] it’s still infuriating because the evidence and theory favoring economic freedom matches intuition,” the study authors write. “It makes sense that people’s drive and ingenuity will produce better results.”
The good news is that when we commit to economic freedom, we can fly the flag of freedom from a mountain of the best scholarship.
In many ways, America’s past should be its present. With the right political changes we can once again be the freest nation on earth, and hopefully by a wide margin.
Michael LaFaive is the senior director of fiscal policy at the Mackinac Center for Public Policy, a research and education institute in Midland, Michigan. Follow him on Twitter @kulatfive.
