Americans need to brace themselves for a declining standard of living—or, at best, very slow improvements funded by drawing off wealth accumulated in the past. That’s the warning from two economic researchers who point to the country’s slump in measures of economic freedom. Since the ability to buy, sell, use property, and gain wealth without government interference is inextricably linked to economic growth, those sliding rankings—especially when compared to improvements in much of the rest of the world—suggest a long period of economic doldrums in the years to come, so long as the U.S. continues to piss away its legacy of economic freedom.
The warning appears at Investors Business Daily, courtesy of W. Michael Cox and Richard Alm, director and writer-in-residence, respectively, at the William J. O’Neil Center for Global Markets and Freedom at the Southern Methodist University Cox School of Business. Drawing from annual Economic Freedom of the World reports compiled by international researchers and published by Canada’s Fraser Institute, Cox and Alm point out that much of the planet is less hobbled each year than the one before by bureaucrats and red tape, but that the U.S. peaked in the late 1990s, slid for over a decade, and has been stuck for several years.
That’s bad news for Americans’ living standards. It’s also, as we’ll see below, a lousy omen for those with the fewest means and for liberty in other areas of life.
“High and rising economic freedom spurs the creation of capital in all its forms, planting the seeds for rising living standards,” they write. “Where economic freedom falters, capital will be scarce, misused and poorly maintained. Over time, people will become poorer.”
Cox and Alm even calculate how much consumption you should expect in the future for several countries, assuming they maintain their current economic freedom rankings. Residents of China are consuming 56.3 percent less than you’d expect given the level of economic freedom. Indians consume 29.3 percent less. People in those countries can probably expect life to get cushier.
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