January, 2014 Economic Crises Update, Part 4: Less Economic Freedom, More Government Regulations, More Pessimis About The Future

We were only going to do three posts this month on the economic crises facing the United States but three pieces of information have popped up over the past couple of days that should be included in what we have been discussing, namely that the nation’s economic situation, for the vast majority of Americans, is not good and is generally trending negatively: 

• There are a record number of Americans, over 20 million, that are either unemployed or under employed.
• There are a record number of Americans that are receiving food assistance from the Federal government, almost 50% than when Obama took office.
• Over half of the recent college graduating classes could either not find a job or could not find a job in their area of interest.
• A very high percentage of jobs created over the past few years have been only part time or temporary jobs.
• Household income has dropped steadily over the past five years despite the fact that the recession ended well over three years ago.
• Until recently, official national unemployment levels (U3) had been at record highs for record lengths of time.
• Increased costs of health insurance as a result of Obama Care will likely result in less disposable household income available in the coming years to expand the economy.
• The national debt has jumped to about $17 TRILLION, up over six TRILLION dollars since Obama took office in 2009.
• Monthly trade balance deficits with other countries continue at very high rates.

The first set of new/recent information comes from the latest release of the annual Economic Freedom Index analyses. This index on economic freedom has been done every year by the Heritage Foundation in an attempt to quantify what countries’ citizens live in the freest economies of the world. Over time, there has been a very strong correlation between economic freedom and economic growth and wealth creation, something that is good for the citizens of a nation.

The criteria used to measure economic freedom in the index includes the follwoing parameters:

1. Rule of Law which includes the subcategories of property rights and freedom from corruption
2. Limited Government which includes the subcategories of fiscal freedom and government spending
3. Regulatory Efficiency which includes the subcategories of business freedom, labor freedom, and monetary freedom
4. Open Markets which includes the subcategories of trade freedom, investment freedom, and financial freedom

The website that coontains the details of the entire analysis and which allow you to personally play with and graph different aspects of the data can be found at:

http://www.heritage.org/index/country/United States

For years, the United States Was in the top five of economically free countries int he world, a category that the Heritage Foundation calls "Free." Unfortunately, we have been n a freedom slide for a number of years now, currently residing in the "Mostley Free" category. Highlights and low lights of recent less than stellar performance in this area include the follwing depressing details:

• Since 2006, the United States has seen a substantial drop off in economic freedom, suffering a dramatic decline of almost 6 points, from a an index value of over 81 o the current level of 75.5.
• The main drivers of this declining level of economic freedom have been the especially large losses in property rights, freedom from corruption, and out of control of government spending.
• We are the only country in the world to have recorded a loss of economic freedom in each of the past seven years. 
• The overall U.S. score decline from 1995 to 2014 is 1.2 points, the fourth worst drop among advanced economies.
• According to the Heritage analysis: “Substantial expansion in the size and scope of government, including through new and costly regulations in areas like finance and health care, has contributed significantly to the erosion of U.S. economic freedom. The growth of government has been accompanied by increasing cronyism that has undermined the rule of law and perceptions of fairness.”
• From a top five ranking just several years ago, we now rank number 12.
• We now embarrassingly trail such “economic powerhouses” as Chile, Estonia, and Mauritius.

A pathetic performance that is getting worse, in all likelihood with of declining economic freedom contributing to record high unemployment, declining household income, and other economic maladies. 

But our economic condition should not surprise Heritage. With the Obama administration adding a TRILLION or so to the national debt every year, with taxpayer wealth being wasted on dozens of crony run and ill fated alternative energy companies of Obama, (e.g. Solyndra), the multitude of new taxes and the resulting depression of consumer spending and economic activity because of Obama Care, etc., it is no surprise that the current administration has driven down our economic freedom while driving up our economic pessimism and negative condition.

How pessimistic are we? Consider some recent Gallup poll findings from their periodic “Mood Of The Nation” poll: 

• The poll asks a representative sample of America adults if they are financially better off or worse off than they were a year ago.
• In the latest round of polling, 42% of the respondents said they were financially worse off than they were a year ago while only 35% said they were financially better off.
• The 42% worse off finding was up from 39% in the previous round and up from 34% in the round of polling before that, i.e. financially pessimism seems to be growing.
• The 35% better off finding was down from 40% in the previous round of polling and down from 38% in the round before that, I.e. fewer Americans think they are better off financially than the year before compared to the past two rounds of polling.
• The 42% worse off financially is substantially above the historic average level of worse off financially, about eight percentage points.
• The 35% better off financially is below the historic average level by three percentage points.
• Looking forward to the year ahead, only 55% expect 2014 to be financially better for them, down from 57% in the previous round of polling and down from 63% in the round of polling before that, I.e. optimism of the future is trending downwards
• Looking forward to the year ahead, 42% expect their financial situation to stay the same or get worse, up from 39% in the previous round of polling and 23% in the round of polling before that, I.e. pessimism about the future is growing. 

Economic realities are bad today and our view of our financial status over the past year and one year into the future is not good either.

One last depressing economic fact before we wrap up this four part discussion. In 2013, the Obama administration introduced over 3,500 Federal regulations into our lives. This comes out to almost ten new regulations EVERY DAY for the year 2013. The Federal Registry which tracks government regulations is now over 79,000 pages long.

I contend three things about this atrocious regulation situation:

• 79,000 pages of regulations force businesses and business owners to spend inordinate amounts of time understanding and complying with regulations, taking time and energy away from them improving and expanding their businesses, thus, increasing the job market and the economy.
• The Federal government has gotten so large that probably the vast majority of these regulations are not about protecting the health and interests of Americans but are about creating work and self importance to protect bureaucrats’ jobs and positions.
• The Federal government has been around for hundreds of years. It is highly doubtful that up until this time all previous Presidential administrations were blind and ignorant to the need of having an additional 3,500 regulations put into play in just the past year.

Businesses distracted doing stupid stuff for unnecessary regulations that exist only to justify the existence of highly paid bureaucrats in Washington. More regulations mean less economic freedom, less economic freedom means less economic growth, less economic growth means more pessimism about the financial future, and that is how we get chronically high unemployment, meager job creation, and over 20 million Americans unemployed or under employed. See how it all ties together.

And the saddest  part of all, those in the White House and Congress just do not get it or see how it all ties together. Because if they did, they would not have gotten us into this mess, killing off our optimism about the future, stifling our economic freedom, and killing off growth and initiative with stifling regulations.

The worse thing about their economic ineptness is that where there is no economic freedom, there is not political freedom. And when there is no political freedom, we cease to be a free people enjoying the virtues and benefits of liberty.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w