Economic freedom in the US has declined significantly, new ranking shows

The United States is significantly less free economically than it was a year ago, according to the Canada-based think tank Fraser Institute.

Each year, the Fraser Institute releases a report entitled “Economic Freedom of the World,” a ranking of countries around the world by economic freedom. This year’s ranking uses data from 2020 to order countries from most free to least free. The ranking is calculated using numerous factors, including size of government, respect for property rights, freedom to trade, monetary policy, and regulation.

“When you talk about economic freedom, you’re talking about people being free to trade with others, compete in markets, and keep what they earn,” said Florida State University economics professor James Gwartney, who co-authored the report. “Economic freedom is about people being free to mold and shape their own lives.”

The United States slots in at 7^th place, down one spot from last year. But the U.S.’s score dropped more significantly, down from 8.25 to 7.97 on the index’s 10-point scale. The reason why America lost only one spot in the rankings is because economic freedom around the world fell in 2020, according to the Fraser Institute. The report shows that the average economic freedom rating fell to 6.84 in 2020, down from 7.00 in 2019, "erasing about a decade’s worth of improvement in economic freedom in the world,” the report states. However, average economic freedom is still up compared to 2000.

“While the U.S. ranking has remained in the same area the past several years, maybe the most important thing to come out of this year’s report is the decline in the U.S. rating between 2019 and 2020,” said Gwartney. “While this decline doesn’t look like that much, the 7.97 rating in 2019 would have placed the U.S. at No. 20 globally. Moreover, the 2020 rating of the U.S. is the lowest in four decades.”

Hong Kong and Singapore led the rankings, positions the two have held for years. Switzerland, New Zealand, Denmark, Australia, the United States, Estonia, Mauritius, and Ireland round out the top 10. The bottom of the list includes Iran, Libya, Argentina, Syria, Zimbabwe, Sudan, and Venezuela.