As the Dow plummets today, it is worth taking a moment to look at the bigger picture. While today's crisis is related to the situation in Europe and the inept management of the Federal Reserve, the real problems in our economy go much deeper. Our real problems are not due to a lack of stimulus or over-taxation. They are due to over-regulation.
The Economic Freedom Network released its most recent annual report ranking the economic freedom of 141 countries around the world for 2009. As any business owner likely knows, the regulations in the U.S. are increasing (raising both the cost and uncertainty of doing business), and, as a direct result, our economic freedom is decreasing. At the same time, economic freedom in other parts of the world, especially the Far East, is increasing.
Overall, the U.S. is ranked as the 10th most economically free nation, but we are quickly losing ground. The previous year, we were ranked 6th, and as recently as 2000, we were ranked 3rd. Perhaps even more disturbing is that we are now in the “pack.” In other words, if we lose the same amount of economic freedom in 2010 as we did in 2009, we will find ourselves in 40th place! This is totally unacceptable and unnecessary.
The report offered even more shocking details. Not surprisingly, the soundness of our money was downgraded, and the size of our government grew. But perhaps what is most troubling is that our credit markets are now among the most heavily regulated in the world, ranking 116th out of 141. The U.S. should not be among the MOST REGULATED economies in the world.
And remember, these rankings are for 2009; many new regulations have been added since, including the onerous Dodd-Frank Wall Street Reform bill.
Clearly some regulations are necessary. No one wants to see our environment destroyed. We also need to protect human rights and intellectual property rights. But the level of regulation can be greatly reduced without harming these elements.
America has always been exceptional because America has always offered an unparalleled amount of freedom. If we regulate away our freedoms, we will lose our competitive advantage and continue to see our standard of living decline.