What America's Decline in Economic Freedom Means for Entrepreneurship and Prosperity

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The United States’s tepid recovery from the 2008 financial crisis is raising concerns about the future of the American economy. These concerns are justified. They reflect the sense that entrepreneurship—the great driver of widespread prosperity and economic growth—is on the wane. Small business start-ups are down, large corporations’ cash hoards are up, and innovation is threatened as a result.

Why? The most likely culprit is the decline, especially since 2008, of economic freedom in America. The US is today only the ninth freest nation in the developed world according to the Economic Freedom of the World Annual Report. If the US were a smaller and less iconic nation, this decline would be less troubling. But given America’s size and historical role in the global economy, the current outpouring from Washington of regulations, taxes, and fiscal and monetary irresponsibility throttle not only the US economy, but the world economy as well. Everyone is made poorer.

The essays in this volume explore this timely issue. The authors reveal the unmistakable link between economic freedom and entrepreneurship. That link is straightforward: more freedom generates more entrepreneurship. Another link that is equally unmistakable is the one that connects entrepreneurship with innovation and economic growth. Entrepreneurship in competitive markets is the engine of innovation and, hence, of growth. Any and all threats to economic freedom, therefore, are threats to entrepreneurship and to the growth that only it can create for the whole population.

Anyone concerned about the current economic malaise will find in these pages not only a compelling explanation for our troubles, but also guideposts for reinvigorating economic freedom and entrepreneurship in America and, by extension, the rest of the world.