We deserve economic freedom

Published 11:00 pm Wednesday, October 17, 2012

This year’s Economic Freedom of the World: 2012 Annual Report should alarm every Alabamian. According to the new report, the United States has plunged from 2nd to 18th over the last decade.

The severe decline in economic freedom at the national level stands to further slow Alabama’s anemic economic recovery. The push toward more government and less individual freedom stifles economic growth and job creation; and places a tremendous burden on taxpayers.

The study, published by the Fraser Institute, measures how free people in 144 countries are from government restrictions such as taxes, regulation and other obstacles to economic growth.

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Years of data collection and analysis show a strong correlation between a country’s level of economic freedom and different measures of prosperity including economic growth, job creation and higher income levels. Yet, federal government overspending and over-regulation are squelching economic freedom and prosperity.

Unrestrained government spending has resulted in an accumulated debt burden of more than $16 trillion dollars. Repayment of this debt falls on the shoulders of taxpayers. In order to balance the budget today, every Alabamian — man, woman, and child — would need to write a check to the IRS in the amount of $51,000 just to pay off our nation’s debt.

Instead of saving what they have earned, investing in a new home or even launching a new business, working Alabamians are forced to fork over a large chunk of what they earn to Uncle Sam — and this amount due will only increase as government spending continues.

Money spent paying off debt doesn’t grow the economy or increase prosperity; it just works to pull us out of the hole in which unrestrained spending has placed us.

Big government also rears its head in the form of regulations, which often pose formidable obstacles for businesses. According to the Small Business Administration, regulations cost the economy about $1.75 trillion dollars every year — enough to pay 34 million median-wage employees.

Ragland felt the brunt of excessive regulation first-hand when the Environmental Protection Agency’s “Cement MACT” blocked construction of a $350 million cement production facility late last year. The regulation intends to protect public health by setting emission limits, but the benefits of these standards are far below the high cost: more than 1,500 temporary and permanent jobs. With an 8.3 percent unemployment rate, Alabama cannot afford to regulate away jobs.

Alabama has also borne the weight of Leviathan with falling income levels and rising poverty rates. As the Fraser Institute report shows, the U.S. decline in economic freedom over the past decade coincides with falling income levels across the country and Alabama has not been exempt. According to the U.S. Census Bureau, Alabama currently ranks 46th in the U.S. for average income and 47th in its poverty ranking.

Over the past 16 years of data collection and analysis, a clear trend has surfaced: more economic freedom leads to greater prosperity for all members of society. In fact, people in the most free countries earn seven times more per year than people in the least free. And, the poorest in the freest countries earn about ten times as much as the poorest in the least free countries. Surely, it is time to give Alabamians back their economic freedom so that they may prosper.

The new report should be a red flag for all Americans. But, our country can make a U-turn by shifting toward more responsible policy and remembering what has made America great: the robust growth our nation has enjoyed in the past 200 years would not be possible without economic freedom.

Improving our standing as a country means balancing budgets, eliminating excessive regulations and restoring economic freedom.

Scott Beaulier is executive director of the Manuel H. Johnson Center for Political Economy at Troy University. Email: sbeaulier@troy.edu