The Republic of Mauritius stands as a shining example of the power of economic freedom. In recent years, its government has promoted open-market policies, empowered individuals to easily start businesses and created a transparent legal system that reinforces and supports the rule of law.
Ten years ago, Mauritius ranked 72nd on the Heritage Foundation's Index of Economic Freedom. This year, it ranks eighth and its economy is a shining star in Sub-Saharan Africa. Despite limited natural resources, its 1.3 million people have a growing economy based increasingly on information and communication technologies, and financial and business services.
We point this out to contrast it with the United States, which supposedly is a beacon for freedom but which continues to slide on the same economic index, which was released this week. Mauritius now ranks ahead of the United States in terms of economic freedom. The United States now is 10th, down from fifth in 2008. Its economy is categorized only as "mostly free."
The quick analysis would be to blame the recession for this drop-off. But the recession didn't make the U.S. economy less free; government did. The editors make this clear. The enormous growth in public spending now has reached the point where it is greater than one-third of all domestic output. Along with this, the federal government has increased the regulatory burden on businesses and banks and is on the verge of a new bureaucracy-laden health care regime.
"Fading confidence in the government's determination to promote or even sustain open markets has discouraged entrepreneurship and dynamic investment within the private sector," the report says.
This is the 18th year the Heritage Foundation has published the index. It scores each nation in categories concerning open markets, government regulations, taxation and the rule of law. The premise is that economic freedom is a predictor of personal wealth and other freedoms.
The correlation isn't always perfect. Singapore ranks second on the list (Hong Kong is first), and yet some have criticized it as having a government that is too authoritarian and harsh. But the top 10 countries are a collection of generally pleasant places to live, and they contrast sharply with the bottom of the list, led by North Korea, Zimbabwe and Cuba.
Unfortunately, it was not a good year for economic freedom worldwide. The economic downturn led many to mistrust free enterprise and led governments to assert more control over their economies. Not surprisingly, Europe has been dragged down by Greece, which fell from 80th on the index four years ago to 119th.
In a foreword to the study, Wall Street Journal Editorial Page Editor Paul Gigot argues that the economic future of the United States depends greatly on this November's election.
"The stakes for free markets are as high as they've been at any time since the late 1970s, when Margaret Thatcher and Ronald Reagan rose to the challenges of the day...," he writes. "We need similar leaders to emerge today."
He may well have added that the nation needs a voting public that understands and appreciates how tiny Mauritius moved into the ranks of the world's best economies. Its growth is a reminder that the United States doesn't have to continue its downward trend.
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