The Bush/Obama years

The new Fraser/Cato Economic Freedom Index is out, and the US continues to slide lower:

Global economic freedom increased modestly in this year’s report, though it remains below its peak level of 6.92 in 2007. After a global average drop between 2007 and 2009, the average score rose to 6.87 in 2011, the most recent year for which data is available. In this year’s index, Hong Kong retains the highest rating for economic freedom, 8.97 out of 10. The rest of this year’s top scores are Singapore, 8.73; New Zealand, 8.49; Switzerland, 8.30; United Arab Emirates, 8.07; Mauritius, 8.01; Finland, 7.98; Bahrain, 7.93; Canada, 7.93; and Australia, 7.88.

The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade. From 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. After increasing steadily during the period from 1980 to 2000, the chain linked EFW rating of the United States fell from 8.65 in 2000 to 8.21 in 2005 and 7.74 in 2011. The chain-linked ranking of the United States has fallen precipitously from second in 2000 to eighth in 2005 to 19th in 2011 (unadjusted rating of 17th).

The rankings (and scores) of other large economies in this year’s index are the United Kingdom, 12th (7.85); Germany, 19th (7.68); Japan, 33rd (7.50); France, 40th (7.38); Italy, 83rd (6.85); Mexico, 94th (6.64); Russia, 101st (6.55); Brazil, 102nd (6.51); India, 111th (6.34); and China, 123rd (6.22).

I’m getting nostalgic for the Reagan/Clinton years.

On another topic, the radical Republicans have taken over North Carolina.  With almost complete control of the state government, they have enacted an agenda that is the worst nightmare of liberals:

The big hope: The new economic activity will compensate for the estimated $2.4 billion revenue loss over the next five years as a result of the reforms.

But the overhaul — which represents a scaled back version of earlier proposals — has been heavily criticized by many, mostly liberals. They contend its tax cuts will disproportionately benefit the rich and the revenue loss will cut into government services.

Starting in 2014, the individual income tax rate will be 5.8%, and then it will fall to 5.75% in 2015. Those rates are down from the 6%, 7% and 7.75% rates currently in effect.

The standard deduction, meanwhile, will more than double — to $7,500 for singles, from $3,000; and to $15,000 for married couples filing jointly, from $6,000.

That’s right, an income tax almost identical to that of Massachusetts, except more progressive.  That’s what passes for “far right” these days. Why not even lower income tax rates?  Because they were unable to do meaningful sales tax reform:

The state’s biggest opportunity for more revenue would be to apply its sales tax to services, Groseclose said. But the new reforms still leave most of them exempt.

Indeed, he noted, only about 25 or 30 services are subject to tax — such as dry cleaning. But another 165 to 175 could be — such as CPA services.

Let me guess, CPAs in North Carolina vote Republican.

PS.  I notice that both the Fraser/Cato and Heritage surveys have Denmark scoring higher than the US in “economic freedom.”  How do you think Jim DeMint and the gang at Heritage would react if the House GOP suggested replacing the US economic model with the Danish model?  It’s kind of comical that the Heritage keeps putting out a survey developed in the days when they were still a reasonable right wing organization, not the loony Tea Party outfit they have become.  Maybe this blog post will cause them to shut it down.  That would be too bad, as it’s slightly less inaccurate than the Cato survey, which has Spain nearly tied with the Netherlands.



17 Responses to “The Bush/Obama years”

  1. Gravatar of Morgan Warstler Morgan Warstler
    28. September 2013 at 20:51

    “How do you think Jim DeMint and the gang at Heritage would react if Market Monetarist economists wrote articles for the WSJ and Bloomberg explaining NGDPLT makes it politically A LOT easier to defund government and default on the debt?”

    I fixed that one for you.

    Where is Larry Kudlow on this?

    If you care enough to waste time typing words into this void complaining about those idiots, why not just type the words neutralize them?

    Are you a masochist?

  2. Gravatar of Morgan Warstler Morgan Warstler
    28. September 2013 at 21:02

    I’m getting nostalgic for the Reagan/Clinton years.

    So is the the new Heritage Foundation, tonight they whipped votes to get you another one of these:

    “The speech was the last State of the Union address of President Clinton’s first term. This speech occurred shortly after the federal government shutdown of 1995 and 1996 which had resulted from disagreements on the 1996 United States federal budget.

    President Clinton discussed the economy and declared that “the era of big government is over,” and continued, “but we cannot go back to the time when our citizens were left to fend for themselves. We must go forward as one America, one nation working together, to meet the challenges we face together. Self-reliance and teamwork are not opposing virtues — we must have both.”[1] The president discussed welfare reform…”

  3. Gravatar of Benjamin Cole Benjamin Cole
    28. September 2013 at 22:43

    Mainland China at 123rd on the economic freedom list? And booming?
    So who needs freedom?
    And the USA economy boomed in the 1960s, with a 90 percent top tax rate, unionized labor, Big Steel, Reg Q and little foreign trade…
    Dang it! I wish economies would make sense…
    PS Monetary policy is king. Explains the inexplicable.

  4. Gravatar of ChrisA ChrisA
    28. September 2013 at 23:17

    Ben – compare Chinese incomes with Hong Kong or Singapore ones to compare like for like, when comparing different political systems you have to also take into account “ethnicity””. Also of course China is growing from a very low base. We will see if their political system or economy wins as they get richer.

    The main surprise for me on this list, at least in the top twenty or so, is Mauritius. I don’t know very much about the country, but googling it seems to be doing very well for the area, mix of nationalities and heritage. If it is also true that it is one of the most free countries in the world, this would seem to be quite an endorsement of free market policies.

  5. Gravatar of F. Lynx Pardinus F. Lynx Pardinus
    29. September 2013 at 03:14

    According to the report, the US had its most precipitous drop in the “sound money” category, from #1 in the world in 2005 to #36 currently. I’ll ask you guys, the experts, is that a reasonable assessment?

  6. Gravatar of Negation of Ideology Negation of Ideology
    29. September 2013 at 04:26

    F. Lynx –

    Well, monetary policy was less tight 2005, measured by NGDPLT of course, but I have a feeling that’s not what they’re talking about.

  7. Gravatar of US Liberty Ranking Continues Downhill Slide | YouViewed/Editorial US Liberty Ranking Continues Downhill Slide | YouViewed/Editorial
    29. September 2013 at 05:24

    […] In US Liberty Wanes As Statism Grows […]

  8. Gravatar of ssumner ssumner
    29. September 2013 at 05:24

    Morgan, Yes, 1995-96 was a sort of golden age.

    Ben, China is probably too low on that list, I doubt they are less economically free than Vietnam.

    ChrisA, Good point.

    Lynx, Our policy did get much less sound, but probably for the opposite reason from what the Cato people assumed. It got much too tight.

  9. Gravatar of F. Lynx Pardinus F. Lynx Pardinus
    29. September 2013 at 05:50

    “Our policy did get much less sound, but probably for the opposite reason from what the Cato people assumed. It got much too tight.”

    So the US was too “economically free” in that sense? We should have gotten “less free” according to Cato’s rankings? I’m having trouble figuring out what they’re doing here.

  10. Gravatar of Benjamin Cole Benjamin Cole
    29. September 2013 at 06:44

    My point is that a growth-oriented monetary policy can overcome a host of sins…as in China and in the USA of the 1960s…

  11. Gravatar of happyjuggler0 happyjuggler0
    29. September 2013 at 07:48


    This is only a guess, but I suspect that by “economically free monetary policy” is simply a synonym for low to zero inflation.

    There are a lot of countries in the eurozone, so if their inflation rate fell below that of the US dollar, then the US would thus be “less free” relative to other countries, regardless of whether or not that monetary policy is effectively leading governments to make other policies that are less free than they otherwise would be doing.

  12. Gravatar of jknarr jknarr
    29. September 2013 at 08:30

    Looks broadly similar to corruption indexes.

  13. Gravatar of Libertyinfinite Libertyinfinite
    29. September 2013 at 14:05

    We need to call this the age of propaganda. You get crackpots on both sides who don’t care about anything but that they vote for the left or right, & no thing ever gets accomplished.

    & then you get horrifically bad people like Mark Levin who want to bury their heads in some time long ago, & take up a whole new way to fail. More laws, we need more laws he says. I think he must be on drugs. It’s all of the christianity that really kills America. The welfare mentality that jesus will do everything, people need not bother living or being free. The bible has been the most destructive force in America. Aside from complete loser whack jobs like Mark Levin. There really is no truth in the nation.

    It does not work to never do more than vote for a left wing or right wing despot. People just never rise above their morbidly bad medias.

  14. Gravatar of Bruno Aguiar Bruno Aguiar
    29. September 2013 at 16:27

    Excelent article.

    But the second link( is broken.

  15. Gravatar of TAX FREE STATES IN USA 2014 2014 Info TAX FREE STATES IN USA 2014 2014 Info
    29. September 2013 at 16:52

    […] TheMoneyIllusion » The Bush/Obama years […]

  16. Gravatar of John John
    29. September 2013 at 20:58

    Obama is so bad it makes me miss the Bush years. 1 word: healthcare. He passed to supposedly help the poor and uninsured and these people will have to figure out that is so complicated I don’t think there is a single person on earth that fully understands how it will work.

  17. Gravatar of ssumner ssumner
    30. September 2013 at 05:40

    Lynx, Three things you should not watch being made:

    1. Sausages.
    2. Laws
    3. Economic freedom rankings.

    Bruno, That’s odd, it works for me.

Leave a Reply