Smaller government does not necessarily result in more economic freedom but it is interesting to note that the two nations at the top of the Index of Economic Freedom are Hong Kong and Singapore, nations that are nearly half the size of the U.S. Government. Yes, the United States placed 5th on the list (of 157 countries researched), but based on the report the U.S. is significantly behind Hong Kong and Singapore (by nearly 10 points, nearly 11%) in overall economic freedom. Here are some of the results:

  • 90.3 = Hong Kong (1)
  • 87.4 = Singapore (2)
  • 82.4 = Ireland (3)
  • 82.0 = Australia (4)
  • 80.6 = United States (5)
  • 79.5 = United Kingdom (10)
  • 72.5 = Japan (17)
  • 65.4 = France (48)

So how is it that the U.S. could be so far behind Hong Kong and Singapore? Based on the report “economic freedom is strongly related to good economic performance.” There are 10 economic freedoms: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom. These 10 freedoms “offer an empirical depiction of a country’s degree of economic freedom” and thereby it has been proven by research that “economic freedom is the key to creating an environment that allows a virtuous cycle of entrepreneurship, innovation, and sustained economic growth and development to flourish.” An interesting parameter in the index is fiscal freedom which to the average person refers to taxation. One of the U.S.’s two poorest ratings is listed in fiscal freedom (The U.S. received a 68.3). There are very few nations that rate above 99 in this category: Kuwait (99.9), United Arab Emirates (99.9), Qatar (99.8), Saudi Arabia (99.7), and Bahrain (99.7). It’s not hard to see the correlation of these nations…. Can we all say “oil” and “tax-free?” However do not be disuaded to believe that a tax-free environment will simply flourish, but rather one must remember it is a critical factor in the overall equation.

Now of course I must add a conservative spin to the results…. Remember this voting season that a vote for Clinton or Obama is a step closer to larger government, higher taxes, and ultimatey a socialist society…. factors that impede economic freedom. For more information on how the U.S. can get closer to economic freedom visit the Index of Economic Freedom website, hosted by Heritage.org.