FEBRUARY 22, 2022 08:00 AM
BY
The United States and China, the two nations with the
largest gross domestic product, experienced dramatic declines in economic
freedom last year.
That's a key finding of the "Index of Economic Freedom
2022." The
Index has been published by the Heritage Foundation every year since
1995. It reports on how economically free or unfree any given country is and
can also be regarded as the "capitalism scale."
The study states: "Quite notable is the continuing
decline in the 'mostly free' category of the United States, which plummeted to
25th place, its lowest ranking ever in the 28-year history of the Index. The
major causative factor in the erosion of America’s economic freedom is
excessive government spending, which has resulted in mounting deficit and debt
burdens." The study’s authors also criticize President Joe Biden’s
policies, which they say are "aimed at fundamentally transforming both the
country and the economy."
The decline is even more dramatic in China, where the index
fell from 58.4 the previous year to just 48 points in this year’s ranking. Such
substantial declines are rare in the history of the index. The index for China
has not been this low since 1995, when China scored 52.0 points.
The fact that economic freedom is declining in the world’s
two leading economies is also bad news for the rest of the world. In the medium
term, a deterioration in economic freedom always leads to economic losses and
slower growth, or even a decline in prosperity.
China’s rise over the past 40 years was entirely a result of
the introduction of capitalist reforms pushing back the influence of the state.
In recent years, however, the trend has started to reverse. The renowned
Chinese economist Weiying Zhang recently warned that Beijing has focused more heavily on
government interventions. Zhang’s thesis: "If China attempts to achieve
common prosperity through de-marketization and government-dominated
redistribution policy instead of continuing marketization, the result can only
be the return to common poverty."
The "Index of Economic Freedom" clearly proves the
link between capitalism and prosperity. The GDP per capita in countries rated
as economically "free" is $73,973. In countries that are "mostly
free," it is $45,519. In "moderately free" countries, it is
$21,803. In "mostly unfree" countries, it is $9,917, and in
"repressed" countries, it is $7,096.
Why not bet more on freedom, then?
Rainer Zitelmann is a historian, sociologist, and author of
the book The Power of Capitalism. https://the-power-of-capitalism.com/
https://www.washingtonexaminer.com/restoring-america/faith-freedom-self-reliance/the-us-and-china-have-the-lowest-ratings-since-the-index-of-economic-freedom-began
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