OPINION: Canada is slipping in terms of economic freedom
Canada, after decades as one of the top-10 economically freest places on earth, has fallen into the teens for two years running, according to the just-released 2021 Economic Freedom of the World report, raising concerns about a long-term trend away from freedom. Canada dropped to 14th in the new report based on 2019 data, the most recent available, down slightly from 13th the previous year. In all previous years, dating back to the first measurement in 1970, Canada was in the top 10. As recently as 2014, Canada ranked 6th.
Big-spending reduces economic freedom by limiting the space for free exchange and by increasing government economic control. The International Monetary Fund has produced comprehensive fiscal projections, which are scary and show huge increases in government spending, deficits, and debts around the globe, and for Canada. In 2019, government spending in Canada equaled 41% of the economy, rising to 52% in 2020, and falling to 48% in 2021, compared to an advanced economy average of 39% in 2019, 47% in 2020, and 46% in 2021. And Canada’s government has been getting bigger for years, according to the Economic Freedom of the World’s measure of Size of Government.
In 2014, Canada was 68th out of 165 jurisdictions dropping to 112th in 2019, with lower ranks indicating bigger government. The debt burden is also a big problem for Canada. As government spending increases, Canada and the world could be headed to a long-run slump in economic freedom and thus in economic growth and prosperity. Research has shown that happiness is driven even more by economic freedom than by the increased prosperity it generates.
Re-establishing economic freedom is vital for future growth, prosperity, and other good things. None of the parties in the recent election spoke of economic freedom or its shrinking role in Canada’s economy. For a brighter future, Canada needs to halt the long-term decline in the economic freedom of Canadians, something evident well before COVID-19.
Source: Toronto Sun