The Fraser Institute

The Fraser Institute
Mercatus Center

Mercatus Center

April 16, 2015 06:35 ET

The Fraser Institute: Declining Economic Freedom Eroding Entrepreneurship, Slowing U.S. Economic Recovery

ARLINGTON, VIRGINIA--(Marketwired - April 16, 2015) - Why did the U.S. economy recover so slowly from the 2008 recession? What lessons have economists learned that can encourage economic growth in the future?

A new book jointly published today by the Fraser Institute and Mercatus Center at George Mason University offers the answers.

"The United States was once considered the land of opportunity, where entrepreneurs such as Henry Ford, Ray Kroc and Steve Jobs improved standards of living by providing new products and services at prices people were willing and able to pay," said Donald J. Boudreaux, senior fellow at both the Fraser Institute and the Mercatus Center, and editor of What America's Decline in Economic Freedom Means for Entrepreneurship and Prosperity.

Comprised of five essays by U.S. economists, the book connects the dots between entrepreneurship, economic freedom, and economic growth, detailing their interrelated roles in America's sluggish economic recovery. A video explaining the issue is also available on YouTube.

Liya Palagashvili of New York University and George Mason University begins by detailing how entrepreneurship is central for both economic growth and long-run prosperity.

Russell Sobel of The Citidel builds on Palagashvili's chapter, providing further details on the relationship between entrepreneurship, high levels of economic freedom, and growth. As Sobel explains: "More economic freedom results in higher prosperity precisely because it results in higher levels of entrepreneurial activity."

Robert Lawson of Southern Methodist University examines the current situation in the United States. According to the Fraser Institute's annual Economic Freedom of the World report (co-written by Lawson), economic freedom in the U.S. has dramatically fallen from its global rank of second in 2000 to 12th today.

This is more than three times the average decline in economic freedom among Organization for Economic Co-operation and Development nations, discouraging innovation and risk-taking among American entrepreneurs. Writes Lawson: "To a large degree, the United States has experienced a significant move away from rule of law and toward a highly regulated, politicized, and heavily policed state."

Robert Meiners of the University of Texas at Arlington and Andrew P. Morriss examine the roles of the U.S. legal system and how special interests corrupt the legal and economic framework. They also explain how market competition is impacted by regulation.

Clyde Wayne Crews, Jr. of the Competitive Enterprise Institute captures the extent to which U.S. regulation has reached absurd levels, writing: "Such examples scale down to the Consumer Product Safety Commission's proposed window blinds regulation to FDA's regulation of a serving size of breath mints."

Donald Boudreaux of the Fraser Institute and Mercatus Center at George Mason University concludes by noting that although American entrepreneurship is in decline, it is possible to reverse the trend.

"For generations, American entrepreneurs and small business owners have played a vital role in our economy. But today that role is being diminished. The results can be seen in the lagging economic recovery since 2008," Boudreaux said.

"The warning signs are all about us but it's not too late to reverse course. Start with a simpler, understandable tax code, fewer regulations, greater enforceability of contracts - in short, put an end to government stifling of entrepreneurs and small businesses."

The Fraser Institute is an Independent Canadian public policy research and educational organization. The Mercatus Center at George Mason University is the world's leading university source for market-oriented ideas.

What America's Decline in Economic Freedom Means for Entrepreneurship and Prosperity, can be downloaded as a free PDF at www.fraserinstitute.org

Watch the video for the book on YouTube.

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

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