As recently as 2001, the United States was ranked the 3rd-freest economy in the world. Cato Institute’s Dan Mitchell delivers the shocking news that the U.S., thanks to Bush-Obama statism, has plummeted to number 17 in the rating.
I think it would be good if China became more like Hong Kong and that this led to much higher living standards. Heck, I’d be happy if China became more like Taiwan or South Korea, both of which have become relatively rich nations by moving substantially in the direction of free markets and small government.
But I don’t think this will happen. In one of my speeches, I posed a series of questions, followed by some less-than-optimistic answers.
Is the financial system weak? (because of too much state control over capital flows and investment)
Is there too much cronyism? (with friends and relatives getting favorable access to business)
Will China’s demographics be a problem? (the one-child policy is not just tyrannical, but it also means China’s population is aging)
Is rapid growth sustainable? (in the absence of reforms to boost economic freedom)
Have stimulus plans led to malinvestment? (such as ghost cities and other boondoggles)
Since economists are lousy when they make predictions, it’s quite possible that I’m wrong and my pessimism is unwarranted. For the sake of the Chinese people, let’s hope so.
And what about Hong Kong? I suspect they’ll remain the freest economy in the world. After all, why wreck a good thing?
Then again, the United States was the world’s 3rd-freest economy as recently as 2001. Now, thanks to Bush-Obama statism, we’ve plummeted to 17 in the ranking.