The value of a free economy

The annual index of the obvious has been published, only this time it seems laced with a warning.

We're talking about the Index of Economic Freedom, published each year by the Wall Street Journal and the conservative Heritage Foundation. It ranks 155 nations on 10 criteria ranging from their degree of internal regulations to areas dealing with trade policies. The warning is that, for the first time in the 11-year history of this publication, the United States has dropped out of the top 10.

That happened mainly because other nations of the world improved their scores by lowering governmental barriers and encouraging free trade. The U.S. economy still is classified as free. However, it clearly has not moved ahead as quickly as have other nations.

"Resting on its laurels," is how a co-editor put it. But some trouble spots are easy to see. For one, the U.S. corporate tax rate ranks 112th, with No. 1 being the lowest, and its top individual tax rate ranks 82nd. In addition, the huge national budget deficit seems to be spiraling out of control, and neither the White House nor the Republican-controlled Congress seems to give a serious thought as to how to make things balance.

The report is not necessarily a ranking of the most desirable places to live or of the best types of governments. Singapore, for example, is ranked as the second freest economy, and yet it is hardly democratic in any traditional sense. The government tightly controls the media, for instance.

But the premise of the list is that economic freedom leads to the empowerment of individuals. That, in turn, leads to more stable societies and eventually to other freedoms. It only takes a quick gander at the list from top to bottom to see that it also translates into a barometer for world trouble spots. The nations with the freest economies — Hong Kong (still classified separately from mainland China), Singapore, Luxembourg, Estonia, Ireland, New Zealand, the United Kingdom and Denmark — aren't likely to threaten the world with secret nuclear arsenals or with leaders who harbor grand delusions while keeping their citizens under strict control.

The nations at the bottom of the list — among them North Korea, Burma, Cuba and Iran — are quite a different story. There, leaders guard power jealously, and they tend to view the granting of economic freedom as a threat to their own control. Hence, they view the rest of the free world as threats, also.

The lessons are both clear and obvious. Americans should demand greater economic freedom at home and support ways to spread it abroad.