Seven of the eight economies ranked most free in the Index of Economic Freedom were once British colonies or trade posts. It’s no coincidence. Political institutions developed by the British such as representative democracy and rule of law provide a vital base for economic freedom.
Yet the U.K. no longer has the distinction of being ranked in the top ten freest economies. Its economic freedom score has fallen significantly in recent years due to expensive welfare programs that have eroded economic freedom and slowed growth.
The U.K.’s predicament is an ominous warning to other top ranked economies in the Index. Heritage Foundation Senior Visiting Fellow Dr. Robin Harris affirms that “the blunt truth is that in crucial respects, Britain is now failing. The country’s palpable decline from prosperity and security of just two decades ago constitutes an awful, but if intelligently observed, timely and useful warning to America.” We must heed this warning and vigilantly safeguard against policies that endanger our economic freedom.
As for Britain, those political institutions that seem to have had such a positive impact historically on economic freedom have just given the country the opportunity for a fresh start, in the form of a newly-elected government proposing major policy changes. The new budget takes an aggressive stance against runaway spending by slashing and freezing overly generous welfare benefits. For a country accustomed to living in a nanny state, the measures seem harsh and are likely to be unpopular. However, like a diet for someone who has been eating junk food for years, this budget will be uncomfortable but necessary to restore health.
Renee Pirrong is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm