2006Economic Freedom

The Key to Economic Success

Distribution of Economic Freedom

Economic Freedom & PC Income

What is the correlation between freedom & wealth?

What happens to your economy when you increase freedom?

Economic freedom index of India—Note the last 5 years!

Economic freedom index of China. Notice the slow but steady change in the last 12 years.

Predict how their economy has performed in the years of increasing economic freedom.

How are they doing now?

Study Economic Freedom in

Lithuania: Remember Lithuania was a Soviet State until 1991!

GDP Growth 1991 to 2003

What is the correlation between increasing economic freedom and GDP Growth rate in Lithuania?

So what does this index say about the USA? (Tied 9th)

•Trade Policy2 •Fiscal Burden3.9 •Government Intervention2.0 •Monetary Policy1 •Foreign Investment2.0 •Banking and Finance1.0 •Wages and Prices2.0 •Property Rights1.0 •Regulation2.0 •Informal Market1.5

2006 data

•1 is best, 5 is worst•What areas are best & worst in the US?

Historically, the U.S. Constitution has provided strong protections for private property and economic liberties. Since World War II, the United States has generally taken a strong leadership position in expanding global trade through lower tariff barriers. Subsequent moves to deregulate, cut tax rates, follow stable monetary policy, and protect intellectual property rights have engendered strong growth. Regrettably, some recent trends have raised questions about such traditions. The U.S. Supreme Court's June 23, 2005, Kelo v. City of New London ruling on eminent domain exposes many Americans' property to arbitrary seizure; and while countries in Eastern Europe are adopting flat taxes, deregulating, and privatizing, the U.S. may be drifting toward bigger government. The U.S. has continued a leadership role in free trade with eight ratified free trade agreements, another signed agreement, and ongoing negotiations with other countries. However, continued use of the "anti-dumping" Byrd Amendment, combined with anti-China rhetoric, indicates an ongoing protectionist mindset. Moreover, legislated government spending under such laws as the massive farm subsidies of 2002, the massive Medicare prescription entitlement of 2003, and the massive transportation bill of 2005 has expanded without constraints, and Sarbanes–Oxley and other regulatory laws have raised compliance costs. The United States' trade policy score is 0.5 point better this year, and its fiscal burden of government score is 0.1 point better. As a result, the United States' overall score is 0.06 point better this year.

Economic Freedom scores all countries

Click on country for details

What is the criteria for the Economic Freedom Index?

http://www.heritage.org/research/features/index/countries.cfm