So while this decrease is certainly picking up some of the currency expansion of 2020, the high inflation we’re experiencing and continued money-printing in 2021 won’t be factored in until future years. The rapid expansion of the US currency started in 2020 but didn’t conclude until March 2022. This may seem like a small change, but readers should note that this score is for 2020- before massive inflation began. In 2020 the sound money score fell from 9.75 to 9.63. The fact that the US dollar is the world’s reserve currency should tell us something about its soundness. The US is historically very high on this measure. The authors measure money supply changes, inflation variables, and access to foreign currencies When government prevents access to solid currencies and engages in policies that cause the value of a national currency to fluctuate wildly, they are hampering access to sound money and impeding mutually beneficial exchange. The authors of the index recognize a key aspect of property rights is access to a currency that enables exchange. The score for the legal system fell slightly, from 7.64 to 7.56. So how did the US fare here? Over one year, the US didn’t have much change. The extent to which government can enforce property rights and contracts in an unbiased manner is key to economic freedom. The government increased in size significantly from 2019 to 2020 due, in part, to massive spending increases.Ĭentral to economic freedom is the ability of individuals to rely on courts for impartial decisions relating to property disputes. This is a decline of over half a point which is very significant for a 10-point scale. In this category, the US fell from a score of 7.32 to 6.79. A “1” would mean the government spends and taxes at very high levels. In other words, a “10” in the size of government category would mean you have a relatively small government. Getting a score of 10 means your country is the freest possible for that measure. The index measures each category from 1 to 10. In this category, the US declined in freedom. The category measures the size of government by looking at government taxes, spending, and the amount of industry controlled by government, among other things. The logic is straightforward-the more resources which are controlled by government, the less individuals can access resources freely. The first category is the size of government. (Readers interested in a detailed methodology can check out the Fraser website.) They do this by considering five categories. To understand why economic freedom is falling in the US, we need to consider how the index authors measure economic freedom. And while that fall represents only falling by one rank, the actual decline in economic freedom is quite large. The US fell in the rankings from the 6th freest country economically to the 7th. The report on the year 2020 is bad news for lovers of freedom in the United States. The index rates 165 jurisdictions in the most recent report. The index calculates the score every year since 2000, and in five-year intervals as far back as 1970. James Gwartney in the late 1980s and early 1990s as a way of measuring economic freedom in each country.Ĭountries are rated on the basis of several categories and are put in four groups (quartiles) ranging from “most free” to “least free.” The Fraser Institute’s 2022 Economic Freedom of the World Index report has been released.
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