Where would you rather live: North Korea or South Korea? East Germany or West Germany before the Berlin Wall fell? If you’re like most people, you’d likely choose the place with greater freedom and higher standards of living.
It’s no coincidence that freedom is strongly linked to prosperity and human well-being. Drawing on decades of research, the Charles Koch Foundation has the philanthropic mission of understanding and explaining the sources of well-being, of which economic freedom is a key driver.
Worldwide, the data indicate that when economic freedom increases, so do life expectancy, employment, literacy and the protection of civil rights. The poor become better off, the environment becomes cleaner, and people report higher levels of happiness. The same holds true within the United States, where states that pursue economic freedom deliver greater prosperity and opportunity.
A 2008 study showed, for example, that when a state increases its economic freedom, the poor gain in income. And the data show similar results across the world: When a country makes freedom-based reforms, people rise of out poverty at remarkable rates, choosing entrepreneurship, jobs and a better life.
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Just take the outcome of China’s move toward market-based reforms starting in the late 1970s. A June article in the Economist detailed China’s recent progress in lifting 680 million people out of extreme poverty. These reforms did far more than the government’s previous five-year plans to help the poor.
Economic freedom has allowed us to become a most desirable nation. Even American families in poverty and struggling to make ends meet often find ways to get by with the help of family, friends, charities and hard work. Economic freedom has demonstrated more potential than any other means to help them, and the poor around the world, win their struggle to escape poverty.
Our uncommon levels of human well-being and social mobility in the United States are no accident. They are direct results of our nation’s historic commitment to economic freedom – the freedom to turn a dream into reality, to determine how to spend your time and hard-earned money, to shape your life the way you choose so long as you don’t infringe on other people’s rights to do the same.
Unfortunately, that commitment is now waning, and the U.S. has dropped from third place to 16th in the Economic Freedom of the World Index. And the average income of low-income households is now declining. Since 2000, when our economic freedom score began to decline, income for the poorest in our country has fallen 15 percent, according to Census Bureau data. Government debt, cronyism and rampant regulatory burdens are eroding our freedom and our future.
This trend isn’t a partisan problem either. Indeed, both major political parties are to blame for the explosion in government spending. Under President Bush, our national debt increased by $5 trillion, and during President Obama’s tenure it has grown by another $6 trillion. To ensure a better America tomorrow, we must reverse our decline in economic freedom.