The list from the Heritage Foundation is here, and the story can be found here.

The United States has dropped for the first time from the top 10 nations in an annual “index of economic freedom” issued jointly by the Heritage Foundation and the Wall Street Journal.

I know I am talking about this rather late, but as I was pondering it a bit more, I figured if I had something to say, I better say it while it is at least semi-timely. I think the way this news was shaped is very sad. The story should not be “how the U.S. dropped from the top ten,” because the top ten is just a number, and one or two places in between doesn’t make a difference.

The question we need to ask is, “Why isn’t the U.S. number one?”

The information provided by the report, and posted on Free Republic, shows that the biggest problem is with taxes.

I agree. The best way to provide economic prosperity to a the citizens of a country is not to redistribute income, but to lower taxes and deregulate small business to a proper degree. Economic and political freedom go hand in hand, as Reagan said in September of 1981,

Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefitting from their success — only then can societies remain economically alive, dynamic, progressive, and free. Trust the people.

For additional interesting reading, the Pacific Research Institute has compiled data on the most economically free states in the U.S. Given that taxes are the major problem, maybe the reform would be easier to start on the state level.

On a final note though, I am glad to see that Chile has moved quickly up the list to number 11 (even ahead of the U.S.). They have a value-added tax of only 17%, compared to nearly double that on corporate earnings in the U.S. Even better, they add the tax into the price of the goods before purchase, so you don’t have to scramble for a few pesos when you reach the counter!

But maybe I’m biased since I lived there for several years.