6.8 million will be lifted out of poverty after the implementation. there are lots of statistics. just for a minimum-wage worker, the increase could pay for seven months of groceries, six months of rent, or 1600 gallons of gas per year. that's a real difference. they're calling on us to do this. the pressure will build. can we get something done like this in an election year? may be better this year than any other. in 1996.at happen we both worked on it then. the republicans had the house and the senate. but we got that through then because the pressure built. republicans did not want to be

at the end of the line saying no. i think that will build this year and i believe that we can get this done. i'm very optimistic about it. it's going to take a lot of hard work. i'm glad we are all together on it now. we have the data to back it up. turn it over.to when i announced my retirement, i said you had good people like miller here. they should stay around. we're going to miss george miller and we are going to miss his leadership greatly. [applause] you very much.

thank you for those nice comments. i did not want to miss you so i thought i would go with you. it's a little bit like the fairytale. he's got much more meat on him. miss the congress and all of the people you are here that are stalwart in progressive politics. thank you to epi to get this together and pulling the economists together. still stuck in a time of 15-20 years ago when they were able to see that an increase in the minimum wage was a hostile act and i think these economists are longer that it is no borne out. it's rhetoric. ity are clinging to desperately.

jason, thank you so much for pulling us together and the support of the white house. by the the announcement president that he wants to get directly involved in discussions in this country and the economic basis of this country is really, really important. i think it sets the stage for broader consideration by the american public of what exactly we are talking about with an increase in the minimum wage. you have looked at the studies and it comes pretty clear. getting this to the president's desk for his signature that the scars of the last recession have changed a lot of thinking in the american public. workinge people who are

at $15-$20 per hour and those working to make $90,000 per year and a look at someone making the minimum wage and they don't know how in the hell they can even exist. i hear it all the time in my district. you cannot live on this. they cannot contribute to the economy of their community. ift is why they are thinking i'm going to have a vibrant community in my city or state, i want economic growth and somehow we have to get more and more money on main street. they don't put a lot of money into main street and i think people not recognize that the minimum wage is one of the tools that we have to use. idea that you still need to

upon 1950wage based wages, that this is your business plan? in 2014, your business land is to continue to pay 1950 wages. is to paysiness plan 1950 wages. you are creating problems for there is workers -- for those workers, and their children. .t becomes imperative he shows the combination of the youfits and the wages and don't get above the poverty line. oppose the people who the minimum wage also opposed to benefits. that is why they are not here today. wagedon't want to give a to those who go to work every

day, bust their tails to provide services, products, whatever to the community. they don't want to help lift them up with additional benefits but they won't help them with the wages. talk about adding people in a trip box here. they get up every morning and do that job and a lot of times when you're walking in your community you will soee people doing that job and think, thank god i don't have that job. that is a tough, difficult, dirty job. get her is some suggestion by the opponents of increasing the minimum wage that those people must remain at 1950 wages? , 1968on pointed out wages is sufficient for your son or daughter? your spouse? i don't think so. that is why i think people not recognize because they're wage isn't a great wage today.

you have a combination of those who will not help them out with government assistance to keep them above poverty and you have those in the corporate world, some of the largest corporations in the world who just decided they were going to take more. they are just going to take more for themselves, for the shareholders, for the founders, however they do the it up-- however they divide it up. they are allowing this people to get rich through their hard work. they have assembled enough for workers to make themselves rich. this is not just an economic argument. this is an opportunity. i think what is happening -- i see the debate taking place in the many places in california and in the state, you see the debate in the community, a recognition that this is really about our community.

this is about where the resources are going to be. what are the services that people are going to buy? wage indid the minimum 2000 seven, walmart supported it and said customers did not have enough money to buy the necessities. they don't know. you see there are competitors in the same business saying we want because we're interested in worker retention. when you come in to the store, you get services, answers to your questions, and it will make you a better consumer. the end all of america -- making a better consumer. [laughter] also with the dramatic showing of the underlying data that this is not

, this is in fact a reinforcement of the american ideal that you work hard and you get a livable wage. at ability to start out cannot allow a permanent sub minimum wage and it cannot be the hallmark of the american economy. to bring our sub- the minimum wage workers to the effort. this cannot be the right answer for a dynamic american economy. i want to think of the epi, my senate sponsors, and i wish to thank him again. i think this is a critical bout

that needs to be engaged in on a daily basis if we are going to get this country right shied up -- right side up so families can thrive and not simply exist. thank you. [applause] >> thank you very much for that. everyone has referred to this letter which i failed to mention at the beginning. today some ofng the top line names of a letter written by economists to the congress and the president minimum wage.0 ofs letter got the support seven nobel laureates in economics, eight former presidents of the american .conomic association

[laughter] i solicited these names along harvard whoatz from helped organize the dan dpi circulated the names as did the center for economic policy research. i think them very much. judyo want to shout out to at the national employment data block project which helps take the lead in coordinating advocacy on behalf of of minimum wage. read and all to go of the economists watching live on the internet. it's remarkable. in the late 1980 path i recall

the editorial board being against the higher minimum wage. think, manyended to were notll, that they that enthusiastic about the minimum wage but there has been a sea change in views. i approach the nobel laureates and one said i don't really signed statements, but for this i will make an exception. that's pretty unusual. it was not a labor market economist but someone who does other types of research but he wanted to express his support and lend his authority to this effort. we went to now open it up for some questions from the media. first journalists and then other questions. how do we want to do this, christian?

ok. anyone from the press he wants to ask a question yo? i will start off with a question to warm it up. this is for our friends from congress here. people have noted that the house of representatives leadership may not be so friendly to this. at the same time, we recall after the gingrich revolution there was a rise in the house and a rise under president george w. bush. address whate to the path forward is for $10.10? that is what inquiring minds want to know. >> the path forward is to get to a place where you can get a vote.

it may mean more than one vote. we've had some experience with this but i think between now and the end of this session there will be a majority of members of the house, both parties, that will support the minimum wage. leadership may struggle to keep them from recording that vote or technology that fact by theenting it coming to floor but i don't think that's a sustainable strategy. we had a motion to recommit. all the democrats supported and and all the republicans opposed. -- all the democrats supported it. some have said that if there was a vote that they would supported. i think that's part of the process. the senate is struggling with trying to get a vote in the next few weeks. hopefully they will. i don't know if it will be successful or not but at the end of the day, i don't think you will ask your caucus to take in that election the killing of the

minimum wage in this economic situation that people have. of thehe impact recession, a lot of families have minimum wage workers in them that also have college degrees and different aspirations and never thought they would the there. they come home at night and explain what it means to work for minimum wage and the family starts to see that. if you want to continue to burn your brand, stay opposed to the minimum wage. you will burn that across a big section of middle america that now understand this issue in a fashion they have not understood in the last 25-30 years because of the general downward pressure on wages, the experiences of families that don't quite meet where they thought they were going to be. thisl take the politics on side. >> senator reed has agreed -- reid has agreed this week we are

doing the omnibus, which is interesting. we are trying to get unemployment compensation through this week also. then a break. soon those are taken care of and the intention is to bring up a minimum wage bill sometime soon after we get back from next week's break. whether or not we get to 60 votes or not, i don't know, but we will try. if we don't get in on the first round, we will go back and try it again. there will be more than one opportunity for republicans in the senate to change their minds. when i hear the discussion about the minimum wage, some people disparage it as only affecting a small group of people.

they look at the people who are only earning that much now. in fact, you need to be looking at the number of people who would be affected by the $10.10 directly plus those above it. there's lots of good research that shows when you raise the minimum wage, people with the wages above that level get a bump also. mental -- 277 million would benefit from the proposal on the table right now and it's a small amount because many of the states are already at that level. especially with california passing a minimum wage increase, that is 10% of the workforce of the country benefiting from this . this is not a small boutique issue. this is something that matters to millions of workers and millions of families.

last call for any media representatives who want to,. and ask. come up here >> bloomberg. i wanted to ask about the vote coming up in a few weeks. senator alexander complained about that there would not be enough opportunity to offer amendments to the bill. i'm wondering what your response is to that. i also wanted to ask if there was room for negotiation on the democratic side? >> as i said, we are always willing to negotiate that we , inady have, as you know inms of the implementation the implementation of the for capitalite-offs equipment. we have already put that in

there. we said ok, fine. we cannot just keep going back and getting nickeled and dined on this. we have a package here. this is a 10-year phase in. it would determine 70% of the minimum wage and i don't think that's too much to ask for tip workers in our country. i was willing to look at offers that people have, but i can assure you that we will not be going back to the well and, as i said, nick a land time, brought down when you have something that still locks in a poverty wage. that just not going to happen. other media questions? last call. go ahead.

huffington post. senator, you said you were firm on the number $10.10. a similar question. i'm wondering if you are equally firm on the indexing piece of this. is that something your republican colleagues have considered dropping? is that something you would negotiate or not negotiate on? >> a couple republicans have offered an indexing clause. they want to index at nine dollars per hour. that locks in a poverty wage forever. to at that't want level. we have already gotten over the hurdle of indexing. they have already agreed with that concept. the question is at what level. we are firm that we will not lock it in at some poverty level. >> thank you.

>> i think you have one more. >> please come forward. >> my question is how exactly did you arrive at $10.10? was there any qualification it needed to meet? millerood friend george said if the question is asked he wanted to answer that question. [laughter] are trying to get above the historical level. that's what you had to do over a time with indexing and you had to stay there. droppingo point in everybody down because they cannot stay with the economy. $10.10 is the jumping off point for that historical level otherwise you end up where we were and now we have stopped once again. that's just not good for the economy.

>> the president endorsed this proposal and part of the reason why was looking at the graph we looked at before. if you take someone looking full-time, look at the wages and what they would get in terms of tax credit, does that place them above the poverty line and meet the basic promise that you should not have to raise your $10.10 doespoverty? achieve that promise. just discussing with economists, maybe some of us wanted to go to $10.75 which was the high point but as jason said, we wanted to get above the line that would be above the poverty line. we felt it was something that we could do. it is something that would be doable. too75 might be a little high so we were trying to think

about the votes and how they would come. ticket to above that line but it's not so high that businesses would revolt against it. i still think more and more businesses will come on board with this. add thatd just like to between 1968 and now, the productivity of the nation has doubled. we can afford that much more. in 1968, half of the low- wage workers did not have a high school degree and now it's around 20%. the workers at the bottom are far more educated, far more skilled, far more productive yet we areere struggling to get the wage back to what it was all the way back then. goal.s a very modest >> let me just say one more thing before we have to leave.

i don't think there's anyone here who does not support the earned income tax credit. it's a vital part. there are some who say we ought to put more into that rather than raising the minimum wage. keep two things in mind. the earned income tax credit is basically a child-support support system. it's for children. or for adults you have to have custody of children for the earned income tax credit. two, it only comes once a year. weeke have to live week to , month to month. while the earned income tax credit is a part of this, and i'm very supportive, it cannot be the whole thing for those two reasons. ask representative ellison for a question. he is not only my boss but he's

also won the board and a great champion at the minimum wage and a cochair of the congressional progressive caucus in the house of representatives. for youryou all excellent presentation. it's so important. my question is this. there are people who work for federal contractors right now who are making low where they dos not work for federal government but for the contractors who have contracts with the federal government. for ane the prospects executive order or some executive action to help these workers? they fire the chicken and cleanup that the reagan building, work at union station. they have been protesting and have been on strike even.

legislativede of action, what can the executive do to help these folks out? >> thank you for the question. that theo doubt biggest thing we could do is something legislative with the number. we estimate its 18 million direct and in the loo of 11 million indirect -- in lieu of indirectly affected. how do we advance and get to that goal? that's where we want to be ultimately, everyone having that andr, that poverty floor other things on top of it. that's the question we are asking ourselves. how can we benefit them in this effort? how do we make sure that there's no one in this country paid less

than $10.10 an hour? >> any questions from the audience? do you want to move to the microphone, please? maybe we can get a few people lined up. please state who you are and ask your question. executivewith intelligence review magazine. i would like to thank the two of you for your support on glass- .teagall the good news is we are getting a few more republicans on board but you two will be sorely missed. i want to pose a doubled advocate western to you. last 30onomy for the years has put a premium on financial services really at the expense of manufacturing in blue-collar jobs, what is the problem with the minimum wage and if it's not the allocating

of money if we believe it's more than moving money around? what if we don't have the quality of jobs and employment to make the system work? we can change the minimum wage i'll we want but if we do not have the critical mass of work, maybe this is just a squaring of the circle. i wanted to pose that as a devil's advocate. >>. mathis, community action partnership. thank you for a great question. former congressman jim jones was on c-span and he responded to the question about why so many members of congress were scapegoating and angry about the poor and his response -- he's with the lbj foundation now -- his response was so many have not walked in their shoes. i'm wondering if you think that

kind of mindset could a trait opponents? vocal >> your question, too. >> mark, great teaching llc. i would like to salute the members of congress here on behalf of educators and kids in school for how much they've done over their careers. gentlemen, thank you so very much. play devil's advocate. >> we have lots of advocate. where's the devil? >> outside. respond to the classical argument that raising the minimum wage, especially this much, will strap small businesses because they are going to pay too much in wages and therefore prices will go up, people will have to be laid off?

the unemployment level will be harmed rather than helped. you know it's coming. how do you respond? let's let jason take the last one. >> the compilation of the work you have put together since the letter. >> eight nobel prize winners and say it's not really a problem. >> i think the answer is in relation to the women's factor. help attract workers, retaine workers, workers, and that is a benefit. what a range of economic studies have found these roughly even out.

there is no evidence of an adverse impact on employment. we have a big diverse country, which has random trials all the time. alan krueger and david carr looked at two sets of counties. at people have looked seereds, and you don't employment growing more slowly. all of those productivity affects offset anything on the we choose the type of jobs we have in this country, and we could choose to go with productivity or

higher wage, higher productivity. is one our workers are educated enough for. we have more than enough infrastructure and equipment that we can support that choice. we just need to be making that choice. >> representative? pre-k's i would hope the goal of hopeongress -- >> i would the goal of congress and the country is to create better jobs and more of them. i think we have some opportunities, because of the change of energy in this country. we see direct foreign investment in manufacturing relating to and i think that's important. i think congress could do its

to have an investment portfolio for this nation is widely agreed upon but will not happen in this congress. think the national institute of health is still dramatically underfunded. with these people all the time. they are not going to do research that is 25 or 30 years away from the market unless you are google and have a lot of extra change. they will do it in partnership with universities and the federal government, but we are not investing human capital or the financial support for that kind of research. to engage in world trade and still are not ready for the next generation of container

ships so we can be in an efficient place to move a product and create jobs. finally, there is a lot of discussion about what small businesses need. the agenda against minimum wage comes up they throw the small businessman into the breach to stop the data from becoming public. at the height of the recession, if you look at survey after , they of small businesses business people kept saying we really need more customers. an increase of minimum wage but it's not only more customers by with moreer re resources who will be able to pay the bill on time. this is really about is whatening, and that

mayors and governors are looking at. you are not going to build this if you don't have well-paid people in the community to create that energy. one of the comparisons was in , and one community blossomed with a higher minimum wage than the other one. people came here looking for new jobs. different are in a dynamic. to repeat myself for the third time. on the issue of quality jobs, i was on the senate floor the other day. it, but ite missed was on the anniversary of the lyndon johnson speech. bridged about the

now is thed i said, time not to engage in austerity programs. now is the time for the federal government to be are owing money. interest rates are as low as we will ever see them. now is the time for the federal government to be borrowing money and putting it out there, to build the kind of infrastructure migrate grandchildren will need in the future. we heard ben bernanke just spoke , and he made an interesting statement. he said, a lot of people say we can't leave this debt to our children and grandchildren. he said, i don't know if we will be in debt or not. it depends on the economy. there is one thing we will definitely leave.

that is the infrastructure of this country. what if we were to upgrade our electrical grid for the next two centuries? it's not a government job. you grid so weectric rid\ can go to a removable energy -- renewable energy. a 10 year project. that could be quality jobs. transportation, high-speed rail. we should have a goal as we did with the man on the moon in 10 years. high-speed rail from maine to miami and seattle to san diego. long-term quality jobs builds a platform of infrastructure for future generations. then there is the human infrastructure.

i believe a person qualified by learning to take care of children in their earliest stages of life and to provide early learning experiences for quality should the a job. headstart is one of those. we pay terrible wages. that should the a quality job for taking care of kids or taking care of elderly people. those are quality jobs that pay decent wages, that have good so there arestems, a lot of quality jobs we could do if we forget about this austerity thing. is education.

george mentioned biomedical research. -- the 1990's they funded it -- >> it makes no difference. >> it did. two mappingllion in and sequencing the human gene -- into mapping and sequencing the human gene. a private study shows in the last decade there has been over $170 billion of private economic activity that has taken place just a cousin of that. -- just because of that. are quality jobs we could do. we need to double the funding. nih.ubled the funding for

it is actually in worse shape now than it was. those are quality jobs. the attitude is probably tougher. i can remember when i was in , one book was called the affluent america. the other is called "the other america." them laterow both of a, but one book painted picture. this is one of the richest societies, but another said, there is another part of america. ingy are basically point

out this needs to shift. i have a letter about the war on poverty. it is very interesting. it is what harrington thought we needed to do. why do i mention that? getting back to austerity. we have got to fight. this idea that we are broke? how often do you hear from people in the senate, we cannot do unemployment compensation unless we take out the disabled payment. we cannot afford that. we are the richest country in the world. we are the richest country in the history of the world. if we are so rich, why are we so broke? why can't we afford to do these things? it is because there is a misallocation of capital, and talkhas to be reallocated.

radio show hosts should start broadcasting from project houses, from homeless shelters, and go out there and start getting those people on talk radio and let them start hearing what their lives are about. did any of you read that article times" aboutork that little homeless girl. people have to start understanding what is happening to poor people and how they struggle. i hate to pick on rubio, but why not? [laughter] said, one of the best things to get people out of poverty is not a government program. it is called marriage. did you read that story about the little girl in the new york

times? butparents were married, they were dysfunctional. they were dysfunctional parents. so what do we say? since they are dysfunctional, we should let the case go. that is not the kind of america i was brought up to believe in. we have got to start getting argumentsese esoteric -- let's get them down where the cow can eat the hay. we get those esoteric arguments that say we have got to start adding this in real human terms as to what is happening to people. the more we do this in our campaigns the more we can begin to shift these attitudes. i said the other day -- i have

been saying there is a harshness that has crept into our political debates. on people and especially hard on people who don't have any ng, hard on people on the bottom around. -- don't have anything, hard on people on the bottom rung. it is a harsh attitude, and i think most people in our country don't want to be harsh. they need society to respond in a way that helps them be a part of the american dream. >> thank you very much. thank you for coming. stay in touch.

[applause] moments, the heritage foundation discussion about the economy. an hour and a half it is in sa data programs. then the forearm on raising the minimum wage. the next washington journal, republican senator chuck grassley of iowa will discuss the 1.1 trillion dollar spending bill announced on monday and the nsa surveillance programs. we will continue our look at data collection with the california democrat who is a member of the house intelligence committee. that is part of our ongoing spotlight on magazine series. we will talk about his article on possible compromises.

>> by 1895, nine different railroads terminated. quite an economic raise. it was very terminal in the southeast, so all that employment. in hat money turning over provided economic stimulus to the growing city of chattanooga. even said there is an amazing , train afterants train after train loaded with grain.

there are still a lot of trainities that travel by , and they have to come through chattanooga. >> a look at the history and literary life of chattanooga, tennessee. >> silence any cell phone as a -- >> >> silence any cell phone as -- >> next, a discussion of the economy. >> good morning, everyone. it is my great leisure to welcome you here to the official release of the 2014 index of economic freedom. i want to recognize our friends on embassy row representing nations from around the globe, those from capitol hill and the

washington policy and research community, and let me recognize the press corps. we certainly appreciate all of you being here. thank you to our friends at "the wall street journal" for their involvement, including economist and editorial board member steve moore, who is with us today leading the fight for economic freedom in this country and around the world. also want to recognize the many scholars here at the heritage foundation who have worked so hard on this index this year and many years before. that includes the founding editor of the index of economic freedom, and also, he is a distinguished fellow with the foundation. thank you for your vision and leadership. thank you to the vice president of foreign and defense policies u.s. teamed with kim and been essential to the success of this index.

also want to thank ambassador terry miller, senior policy analyst, and so many others who have worked on this project. while it is the first such index that i have had the honor to introduce, we mark today a very good special occasion. this is the 20th anniversary of the index. back in the 1980's, nobel laureate milton friedman first suggested to me for an international metric of economic liberty, a measuring stick for future prosperity across the globe. as i look at this index and read through it, and i encourage you to look at the whole thing, it has a great look on economics, but i can't help but see the parallels between this index and economic freedom in general and some of the work i did in my previous life on quality management and quality training. some of you may not know, but in america years ago, edward deming

went to japan back in the 1960's and it actually was a key part of an economic revolution in making japan one of the power economic countries in the world. he did that through this concept of total quality management. it is not something that is talked about a lot in washington, for various reasons. but one of the things we used to say when we train companies to deal with quality is you can't improve what you don't measure. it is a key part of this next, it is a key part of creating quality at the company level. but deming health to change the focus of companies and the whole country of japan by not measuring inputs but measuring outputs, to look at the whole process of production in understanding all of the factors that create quality, but also at the same time he found that as you seek to improve quality, you lower price, you create efficiency, and actually improve morale. the secret of quality production

is pushing decision-making down to the people who are doing the production. the parallel between companies producing quality and countries is very obvious, and it is freedom itself that creates economic growth throughout the world. that is the whole point of economic freedom. it's not just economic freedom in itself, but what it does to improve the quality of life of people, to raise up economies all over the world. we have seen that since this index was being produced. in 1995, the heritage foundation published the first index, and it has remained one of the most influential things we produce or anything produced all around the world. it is interesting to see

companies and countries come here to the heritage foundation to advocate for things they are doing to move them up the economic index letter, because it is so important to their economic development and attracting businesses to locate. i want to thank "the wall street journal" for its partnership and the brilliant scholars here at heritage. it is our most important annual study. our enthusiasm for this landmark release is tempered with sobering implications that this index reveals. in the past few years, increased regulation in the financial and health-care sectors, the degradation of property rights, and massive growth in the size and scope of government have contributed to the united states' unfortunate but foreseeable slide in the freedom rating. of the 178 economies graded by

the index, ours is the only one to be rated less and less free for the past 7 consecutive years. it should stun everyone. the first time the u.s. has fallen outside of the top 10. we come in right behind estonia. we continue to be rated mostly free but we are not in the free category anymore. can you imagine if our secretary of defense announced that we were mostly strong or kind of strong as a nation? i don't think we would sit still for that as a nation and hopefully we won't in this economic freedom index. fortunately, despair will never be part of what we do here at the heritage foundation.

we are continuing to work on those factors, those inputs that change the total output of economic growth. but we cannot help but notice the correlation between our economic freedom and the lack of economic opportunity, the growth of unemployment, the lack of participation in the workforce. this makes a very real difference, and we see that all over the world. but it is interesting to see those on capitol hill and in the white house talking about income inequality and unemployment and the need to create more opportunity while not recognizing the factors that make that happen. that is what we are here for. i have the great pleasure to introduce one of the, i think, greatest advocates for freedom in our country today. i endorsed him in the senate race that was somewhat controversial a few years ago, but i have to say it was one of the best decisions i've ever made, because rand paul is an advocate for those principles of freedom that are so important to

improve the quality of life of people here and around the world, and it is my great pleasure to introduce senator rand paul to you today. [applause] >> thank you. i wish we were here under better circumstances. you know, if you like your freedom, you can keep it. [laughter] or maybe not. this year the united states slips in ranking for economic freedom. why? economic freedom is inversely proportional to the size of your government and government continues to grow at an alarming pace. why is economic freedom important? is just an abstraction we want to debate in philosophical societies? no, it is important because 11 million people are out of work in our country. we have the highest corporate income tax in the world. we just raise the personal income tax. we tax our entire economy $3

trillion. regulatory costs is $2 trillion and we have added to it. we have regulations every year that cost the economy over $100 million each. to make matters worse, these regulations -- one can cost over $100 million -- we passed these regulations not by congress, not by a vote in the senate, not by a vote in the house, but these are largely written by unelected bureaucrats. the government takeover of health care is a significant loss to freedom. i would argue that obamacare involves the largest loss of freedom of choice in 50 years. not only are you prevented from keeping your doctor if you like them, you are also prevented from choosing your insurance plan. it may well be the biggest lie of the century that if you like your doctor, you can keep him or

her. this has never been just about an efficient distribution, or what is the most efficient distribution. it is about freedom of choice. you have given up your freedom, you have given up your freedom to choose your insurance company, your freedom to choose your doctor. all you have to do is get on the obamacare website and realized that poor choices now. it is not just about health care. it is light bulbs, it is toilets, it is you name it. your freedom of choice is gone. for a party that says they are the pro-choice party, this is the most anti-choice administration we have seen in a lifetime. in fact, with obamacare, i would say that government now is limiting your choices, your freedom, in about a sixth of the economy. limiting freedom also limits your prosperity. a smaller percentage of adults now works that have ever before been in our economy. if we want america to prosper again, we must consider why we continue to fall on the economic freedom index.

until we understand freedom and prosperity go hand-in-hand, our future remains cloudy. our kids will worry if we don't continue to be the land of the free and the economic engine of the world. i hope to come back next year under better circumstances, when we are going up on the freedom index and not down. thank you very much. [applause] >> thank you very much. i like to take the time to invite our panelists to come on stage. hosting the panel as the distinguished fellow at the institute of international studies here at the heritage foundation. he previously served as the vice

president for foreign and defense policy studies and director of the davis institute for international studies. the founding editor of the index of economic freedom from 2002 2005 serving in the george w. bush administration, as these to secretary of state or fish for international and organizational affairs, widely recognized as america's leading conservative voices international security policy. he is also the author of "rebound." >> thank you. good morning, everybody. welcome to the heritage foundation. i would like to thank the senators demint and paul for getting this off to a good

start. very glad that they could be. this is a special day for me. senator demint was here 25 years ago when we first started the index, and looking at all the covers, 1995 is in the top left corner. technology and design has improved over the past few years but certainly the content has become more sophisticated and better in the years past. there is an essay, by the way -- i think it is here on the front here an essay i have written about the 20 years history of the index that goes into why we founded it 20 years ago. there are a lot of people involved talking about creating an index. why we did it, what we were trying to achieve, how it has changed over the years. you might find it interesting if you take a look at that. my job here is essentially to say a few words about what is in the index but also to introduce our distinguished analysts and get the discussion going and hopefully we will have time for

you to ask questions. i would like to thank the coeditors of the index, who did most of the work, for a job well done. they sweat the details and do everything in a power to make sure they got the details right, and i greatly appreciate that, as i know my colleagues at heritage do. we thank the editing, production, and marketing staffs of heritage. they do an outstanding job not only producing the index but making sure that folks like you see it and get to know about it so that it is not lost in the back room somewhere. finally, i would like to thank, as senator demint did, thank "the wall street journal." they have been our partner for most of our years, i think 18 years total. we're certainly glad to have steve moore with us today. let me hit on some highlights. the most important finding of the index has already been alluded to, and that is the

united states has dropped out of the top 10 freest economies in the world. it is now 12th freest economy in the world, in the second-tier category, mostly free. it is not among the top 10 freest economies anymore. the reasons were mentioned both by senator demint and senator paul. i think the most disturbing thing about this year's score is that it is the seventh straight year in a row, and that means we are into a trend. this matters for couple of reasons. the most obvious one is that the things tthat were making america a great nation over the many decades -- in fact, many centuries -- as the best engine of economic growth, but also, frankly, the best way to ensure that all americans, whether they were rich or poor, get a higher standard of living -- that formula, that means is eroding. it is well-established and a trend.

america's declining score also is an indicator of something else. that is that all over the world, people around the world have gotten used to america as being a leader in economic freedom. in the 1990's, for those who follow foreign aid and other issues, there was something called the washington consensus, and this is when president clinton was resident. the washington consensus meant a dedication to free markets all over the world and a model for everyone else. they don't call it the washington consensus anymore, for very good reasons. the fact that -- this is particularly disturbing, because as u.s. score is going down, global economic freedom is going up. the global average score in 2014 is the highest average in the 20-year history of the index. this essentially showing that we are no longer the model, but

others are the model for what makes countries, economies, prosperous. we are, if you look at the index in detail, in the category of declining countries that includes greece, italy, spain, and others, and countries that are going up our countries like sweden, australia, singapore, germany. this is not a good trend to be in. this is not the best place for us to be. in terms of the overall findings, the world is doing better in some areas and worse in others. the world is doing best in investment freedom, which means measures of banking regulations and the ease and degree to which private investment both internally is made as well as across borders. worldwide, it is doing just a

little worse and protecting property rights, and generally the problem of the rule of law. this is a perennial problem, whether you are developing or a non-developing country, and that is the outcome of corruption and the rule of law is something that is still a problem across the globe. frankly, as you see the declining scores in the united states, it is a problem that is returning here, as we find that there are efforts by this administration to bend the rules law and enforce more regulations on the economy and this creates more opportunities for these rules to be bent and for the free market to be infringed upon. interestingly, asia and sub- saharan africa are doing well in economic freedom. in fact, economic freedom is on the rise all over the world except for 2 places, and that is 2 regions -- and one is north america, because the u.s. score

is declining, but it is also in the middle east and north africa as well. hong kong remains number one. it is the 20th year in a row. freest economy in the world, really a remarkable achievement, given all that is happened in hong kong over the years. the freest economies are singapore, australia, switzerland, new zealand, and canada. the highest-ranking so-called developing economies on the index are chile, which is number seven, and the top 10. hopefully, by not being part of the so-called west, they can be a model for others to show that the formula of economic freedom knows no boundaries, knows no particular civilization or culture, knows no race. it is an idea that occurs when human beings are in charge of

their economy, a universal principle that applies across the world. another realm of action is in europe. there is a realignment in europe and people who follow the european economies know it very well but it is not widely known. economic freedom is advancing in 18 countries in europe. i won't mention all of them, it is a long number, but it includes germany, austria, the czech republic, and norway, just to mention a few. sadly, economic freedom is declining in europe as well. most particularly, it is declining in france and the united kingdom, which is particularly disturbing given the fact that there is supposed to be a free market government in charge in the united kingdom. finally, the so-called bric nations, including brazil, are moving backwards. brazil plunged 14 places to 114 and is now judged as being among the mostly unfree countries on the index.

those are the main findings. i wanted to hit the top ones. there was a lot in there. now i want to sort of moved to the discussion and get the reactions of our panelists. i am just going to introduce all three of them and get it over with and you will come one after the other. the first speaker will be derrick morgan, vice president for domestic and economic policy here at heritage. he was promoted to this post in 2012 after 2 years as chief of staff for the president of heritage. he was a policy expert on the republican policy committee in the u.s. senate and before that he worked for 4 years as a staff secretary to vice president richard b cheney. next is stephen moore, editorial board number and senior economics writer for "the wall

street journal." he was the founder and former president of the club for growth. over the years he has served as a senior economist on the rational joint economic committee but also many years ago he was a budget expert here at heritage and also at cato. glad to have you here, steve. finally, bryan riley is a senior research expert here at heritage working on trade issues. he is probably -- well, i know he is very well-versed in all of the details. we will get into the specific countries course and i'm sure he will be happy to answer questions. without further ado, i will ask derrick to come on up and we will get going. thank you very much.

[applause] >> thank you, kim, for that introduction. i want you all to imagine, if you go back in time to 1995. it was a heady time for economic freedom. the evil empire had just collapsed. now politically free, some of these formerly communist countries were eager for free economy as well. would you believe that just about 20 years later, estonia would rank ahead of the united states in economic freedom? that is not a knock on estonia at all. indeed, they are to be congratulated. unfortunately, estonia has surpassed the united states not only because they improve but because we have faltered. the index of economic freedom has for 20 years been a manual checkup of sorts for the united states and the more than 175 countries around the world. we get to compare ourselves to allies, competitors, and adversaries alike. we get to see their progress and

hours in the march for freedom. the 2014 index rankings should serve as a wake-up call to u.s. policymakers and to citizens alike. we all owe a debt of gratitude to "the wall street journal" and the primary authors at heritage. in fact, i think our president would be wise to review these findings prior to his state of the union address later this month. the report from this year's index is sobering indeed. we have dropped the score, as you heard, seven years in a row, the only country to do so. we are now out of the top 10. our fiscal freedom -- that is, our tax rates, tax competitiveness -- we are now ranked 154th in the world. our government spending is an abysmal 137th in the world. these 2 factors are really our achilles' heel. in the past year we have seen tax increases from the obamacare legislation and an expiration of some of the bush tax cuts as

part of the so-called fiscal cliff deal. these tax increases on everything from payrolls to debt, investment and marginal tax rates, make us less competitive internationally. it seems that some are not contented with these tax increases and are arguing for even more. we have also seen a failure in spending restraint. the so-called sequester was not a perfect policy by any means, but it was a way to force congress to restrain spending. with the recent budget agreement, it looks like congress is back to its old game of increasing spending in the short term with promises of cuts later on that never seemed to materialize. needless to say, this is not encouraging. the regulatory state is in full swing

and it appears that some are not content with these tax increases and are arguing for even more. we have seen a failure in spending restraint. the so-called sequester was not a perfect policy, but it was a way to force congress to restrain spending. with the recent budget agreement, it looks like congress is back to its old aim of increasing spending in the short term with promises of cuts later on that never seem to materialize. the regulatory state is also in full swing. since 2009 have seen nearly $70 billion in increased regulatory burdens. remember, it is not just the direct costs of regulation that we need to watch out for. the higher costs and excessive regulation is a way to shield competition which reduces prosperity. you should look to a heritage report later this spring. with this latest report, the index of economic freedom report, we have a pretty clear diagnosis. what is that cure? we're used to thinking of us as exceptional and not in a way that some think is exceptional. we think we are exceptional for worldwide economic freedom. it is not that we are the most powerful nation, highest gdp, most powerful army. this has not been true for all of our history. our history itself is what makes us exceptional. we were conceived in liberty.

our declaration of independence makes clear our rights come from a creator and it is the job of government to secure those rights. if rights come from government, they can be taken by government. the concept of law is key, originated in the enlightenment, but it was especially taking hold here in the united states. our constitution is the supreme law of the land. today officials in all three branches of government and every state government official must by oath or affirmation support the constitution, and so must our most recent americans, those who are naturalized. it is our constitution that binds our nation together. it is not special that we have a constitution. many nations around the globe have one. what is special is that we have historically had a respect for the rule of law and, as a result, a sense of trust about among the people that government

is fair and impartial. we seem to be losing that. we have gone from 73% trust in government or in the eisenhower era to just 19% today. putting aside for a minute your view of the underlying policies, think about what government is up to lately. the president's administration rewrote the affordable care act on an ongoing basis. it has eroded the trust in the rule of law. trust was also weakened when he decided not to enforce migration law with respect to hundreds of thousands of people. recently the president decided he would not enforce federal drug laws in states that legalize them. when congress refused to pass cap and trade legislation under democratic control, the president threatens to use executive power to do so. this administration is threatening states to impose cap and trade on his terms or see his epa impose it on his terms. ordinarily, these measures would

take an act of congress, but presidential overreach does not enhance the rule of law or fairness. instead, to restore trust in government we need to end special bailouts and special treatment, like union exceptions from obamacare. congress should end forever earmarks. these policies have at least the appearance of cronyism and favoritism. another example of special interest politics is the farm bill. we have made progress, cracking the unholy alliance between big- city democrats who want food stamps and rural republicans who want farm subsidies. passing these bills separately must lead to real reform like work requirements and real savings for taxpayers. real economies do not subsidize industries, even farming. our domestic agenda highlights the need for the elimination of fannie mae and freddie mac. a free country should not have

to deal with implicit masking of government. when government gives grants that manage one firm, that firm lobbies government to keep its privileged status, shutting out healthy competition. even worse, the firm could make a poor decision to cost taxpayers millions of dollars. in the area of regulatory efficiency, heritage would start with repeal of obamacare and unwanted parts of dodd-frank. that sounds too radical? we could pass something to make sure that officials in congress have to approve regulators instead bureaucrats. right to work from coast to coast would be a step forward for labor freedom, another example in the index of economic freedom. michigan has done so. another reform would allow

unionized employees to give bonuses based on performance without interference from union bosses. ideas like this need to be considered. finally, no reform agenda would be complete without discussing taxes and spending. a flat tax and a balanced budget would supercharge america's score on the index. no doubt of that. reforms such as making entitlement spending on to the budget makes a lot of sense. right now it is on autopilot to an unsustainable future. by the time my 4-year-old graduates high school, just three programs, medicare, medicaid, and social security, and interest on our debt will take 100% of projected government revenue. these measures make sense, and heritage will continue to advocate for them. we will battle the threat of regulating and taxing the internet, one of the freest areas in the world today, all the while we will keep an eye on the federal reserve.

heritage defense freedom because freedom leads to prosperity. it is not like we love these ideas like art, although it is not wrong to appreciate what the founders accomplished in philadelphia. we love these ideas because they lead to a better life for more americans. we love these principles because the free enterprise system has done far more good for more people than any government program. the data on index over the years has shown this to be true. with economic freedom in severe decline, it is our responsibility to secure liberty for future generations. we must insist on the rule of law, not acquiesce to rule by exception. we will encourage competition, not become complacent with cronyism, and we will fight for government that lives within its means and does not spend the

next generation's inheritance. following these commonsense prescriptions, we can reverse our recent decline in freedom and restore america to its rightful place. thank you very much. [applause] >> good morning. it is a privilege to be here. kim, congratulations on 20 years. it was good to know that we are ranking still ahead of -- that is very good news. [applause] this is quite a sobering report. it sees that we have dropped out of the top 10 of economic freedom. "the wall street journal," the partner of this report, the thing of "the journal" for the last 75 years as been free minds, markets, and people. this report fits so well with that slogan of "the wall street journal." i wanted to connect the dots, what is going on today with some of the sobering results of this report, and let me start by talking about what is going on right now with the u.s. economy. you all know that this is actually the fifth year of the economic recovery.

it officially began in june 2009. this is 4 1/2 years into the recovery. this is but a recovery that for millions of americans, this has been no recovery at all. it has been at half pace. we have created half the number of jobs we normally get during the recovery time. the growth rate has been less than half of the normal pace. we saw the numbers coming out friday about the lousy job numbers. they were reinforcing this. also incomes have stagnated, which is unusual. we are in the fifth year of recovery, and the average middle-class family in america today has $2000 less purchasing power than they did when the recovery began. i am not talking about the incomes that people lost a recession.

i'm saying people have lost income even as the recovery has transpired. that is really terrible news. i call this a half-sized recovery, because that is essentially the pace of the recovery. the question is why are we not seeing anything in this recovery like we would normally expect and what the american people are demanding, and i would make the case that the answer is contained in the index, that if you look at what is happened in the last six or seven years -- this started under the bush administration and has accelerated under the obama administration, so i don't think any of us are making a partisan point here -- the policies have been universally in the wrong direction since the recession began. you can start with the bailouts

that derrick talked about, the giant debt increases, the massive increases of spending in debt. ideas have consequences, and those ideas, those wrongheaded ideas that move in the wrong direction have made america poor. i would simply make the case to you all that if you were -- as every american is wondering why is this american economy supercharged white it should be like it should be a massive recovery -- this report underscores why we're not performing like we should. looking at the job numbers that it came out on friday, there were 75,000 jobs, 70,000 range. in the reagan recovery we had months where the u.s. economy created one million jobs in one month. we're so far behind our potential where we should be. that is point number one. everything we have done in the last six years has been in the wrong direction. my colleague was asked about a year ago exactly when president obama was giving his state of the union for the start of the

second term, what advice would you give obama? he put it so well. he said, what i would advise obama to do is look at everything you did on the economy in the first term and do just exactly the opposite in the second term. there is a lot of truth to that. second point, i wanted to make clear how this report dovetails into the big goings-on now about inequality, poverty, and what we can do to move the 50 million americans that are poor today out of poverty, and we have seen horrendous increases in poverty. it is one of the great challenges we have as a nation now is, how do we get the people at the very bottom up? we have a president and many in congress who are promoting many policies that i would argue -- and i think my panelists here would agree -- these actually would move us in the opposite direction of economic freedom. let me go through some of these. we are having a debate now about

extending unemployment insurance. we should be asking the question, policymakers should be asked the question, will it make america more free or less free? if we extend unemployment insurance, that is moving again from it for you want to think about, minimum wage. everyone in this room and everyone on this panel, we want american workers to have the highest wages possible, no question about it. this is the route to a vibrant middle class, to have rising wages in this country. we want rising wages. raising the minimum wage destroys jobs. the evidence is clear about this. kim, i would make the case that this moves against economic freedom and makes america poor. expanding food stamps, another example, increasing welfare in a way that will not increase economic freedom, and the last one i will mention is the one that you mentioned, derrick, at

the start of this year we raised tax rates across the board, and we raised tax rates on capital, on labor, the capital gains tax, the dividend tax, the small business tax, and for the folks on the other side of the street here on capitol hill, i would ask them, how are you going to get more jobs if you tax the people that create the jobs? it does not make a lot of sense. they are exactly right. one of the reasons we have not had that growth this year that we would expect is because of those tax increases. the point i'm trying to make so is this, about the inequality issue -- one of the things i find in reading the report is if you look at poverty, the people at the very bottom, poverty is most severe in countries that do not have economic freedom. i would make the case that actually if we adopt all of these policies that are being debated right now, minimum wage,

unemployment insurance, tax increases, it will make the poor worse off. popular rates are substantially higher as countries become less free. we're going to make our poor worse off by moving against economic freedom. i would also make the case that inequality in this country will rise if we move away from economic freedom. i'm a believer in economic freedom being the great equalizer. it provides everyone with an economic opportunity. that is what we are tragically moving away from. it is not a coincidence in my opinion that if you look at the last 30 years or so, it is wrong that the middle class has been

on the treadmill. the 1980's and the 1990's, the big story was that we had upward at economic mobility in this country. people moved out of the lower class into the middle class, people moved from the middle class into the upper class. not everybody did, but the elevator was moving up for the vast majority of people. that has stalled out in the last four years. we have not seen mobility rising, and inequality has risen in the last four years. i would make the case that that is because the have moved away from economic freedom, we have dropped down the scale, and we made the poor poorer. i wanted to reinforce this point. i give lectures across the country, ivy league schools, even the junior colleges. i love to talk to kids, and i always present them with this question about the economy, and it is something that puzzled

them. they do not have a good answer, and we do have a good answer. the question is this -- why is america the richest country in the world? what made america the most prosperous place in the history of the planet? i'm struck by the answers i get. we have all these natural resources, we took money from other countries, we have better weather. [laughter] it is interesting that so few of them can come up with an answer. natural resources is not the reason america became rich. the richest, the most free country in the world in this index and one of the richest countries in the world is hong kong. in hong kong they have no natural resources. it is the last place you would expect to be rich and free, and yet it is. and you look at russia and china, russia and china are resource rich, and they are still well behind where we are. it is not natural resources, although we are greatly endowed as a nation with natural resources. the way i like to put it, economic freedom is the goose that lays the golden eggs. this is the enduring lesson of the last thousand years. we are risking that with moving

in the wrong direction, but i want to add on a positive note. i am at optimist, always an optimist, and i believe this is the furthest we have fallen, and i believe as you do, this report in years to come, i think the united states will get into the top 10 for couple reasons. i believe freedom and liberty i think the united states will get into the top 10 for couple reasons. i believe freedom and liberty are kind of in our dna as a nation. i really do. i do not think the american people will continue to tolerate the united states moving away from this. this is why you're seeing a rebellion against obamacare, because americans realize that there is a fundamental freedom that they are giving up with obamacare. i'm optimistic about the country. i think 2014, we will have a

good year. i think the economy will expand because a lot of these dumb ideas are going to be held back, and i think we will start moving in the right direction. the really most optimistic thing is the kinds of -- everything you said is so right about the formula for getting back on the right track, and it is so obvious. it is not like we have to think, what we do? we know what we have to do. we have to repeal obamacare. we have to get rid of these ridiculous financial regulations that are strangling the banking system. we have to fix the litigation system and all of these things. once we do that, the america will move in the top 10, if not in the top five, and you will see the biggest boom you have ever seen. thank you. [applause] >> i was asked to talk a little bit about economic freedom and particularly trade freedom and

the importance of free trade. before i do that, i want to make sure you all know that you can go to our website. you can look up specifics with respect to countries you may be interested in. you can download that for each of our 10 different factors that were measured. you can compare then, and i can say that for your benefit, and also for mine, because, kim, you forwarded me with a question, and i do not have all 186 countries memorized, but that data is therefore -- everybody has access in a transparent manner and see how we come up with the scores we used to grade various countries. with respect to trade freedom, it occurs that this is the 20th anniversary not just of the index of economic freedom at the heritage foundation, but it is the 20th anniversary of something called the north american free trade agreement. nafta.

i do not know what you think of when you think of nafta. i think of ross perot and "the giant sucking sound." [laughter] whenever i read about nafta, i think about all the jobs we lost because of free trade. i went on the internet and i looked at how many jobs we had in united states 20 years ago and afterwards. we had about 97 million jobs in the private sector. i looked up how many jobs we have now. we have about 115 million jobs. i think to argue that we have lost jobs, your math skills have got to be highly suspicious, even by washington, d.c., standards. we have lost some jobs whenever we trade with other countries just as when we introduce new technologies, but the overall trend has been to have more jobs and better jobs. it is not just in the united states.

when we look at countries around the world, countries with the best trade freedom scores -- meaning low tariff barriers --, and just as a definition, a tariff is a tax on imports. the countries that remove those taxes to give freedom to trade, they have lower poverty rates. they have cleaner environments, all the things we hope to have in the united states. when nafta was being debated, james glassman at the time wrote it should be called the north american free-trade and cancer reduction agreement. i looked at that over the weekend and try to recall what he was talking about. and it was a big photograph of all the fresh fruits and vegetables that we have access to in the united states, whether from mexico or colombia or other countries. when you go to the grocery store in january, those strawberries were not produced in the united states.

one importer said we should be teaching our children that you can enjoy strawberries even though you are in the dead of winter because of nafta. those are the benefits we take for granted. in about a month, it is going to be valentine's day. most flowers in the united states come from colombia. as result of direct investment, free trade with colombia, go online or call 1-800-flowers, and within two days you can have fresh flowers delivered from the country of colombia. this was typically created by jobs in the united states that benefit americans because we have fresh, long-lasting and low-priced flowers, but let's

look at people in colombia. most of the flower producers are females. most of them are single heads of households. most of them we know, because we have asked them, used to be maids them live on subsistence farms hoping to have enough food to get from one month to the next. they have a quality of life and the result of international trade much better than they otherwise would have. the last story i wanted to tell relates to a woman named jasmine from bangladesh, which has really ramped up its reduction of textiles. jasmine would have been about 4 years old when we started producing the index of economic freedom. her older sister, to get married her family paid a dowry to another man to get him to marry the older sister. the family went into debt.

every month some of the would come around asking for money to collect the debt, and the younger sister, jasmine, eventually got frustrated and went to the city and got a job, and to do that or something for her family, paid off the debt, has a lifestyle that -- i would not trade places with her -- but it is much better than she had in the past. somebody like jasmine, multiply her times a billion, a billion people are how many people have been lifted out of poverty over the last 20 years according to recent reports from "the economist," based on world data. they're looking at the lowest levels of poverty. a billion people have been lifted out of party largely due to more international trade, war globalization, and more economic freedom. we have globally the highest

levels of economic freedom in history. a long way to go, but we need to make progress. world trade barriers have fallen by half, and trade volume has doubled. those are the kinds of things we need to adopt in united states to lift another billion people out of poverty over the next 20 years. we have plenty of time for questions. i will leave it to you. [applause] >> bryan? >> i believe we have people with microphones on both sides -- yeah, we do. over here and over here. if you have a question or a comment, just raise your hand. if you could identify yourself, that would be very helpful. who wants to go first? >> thank you.

in the beginning when senator demint and senator rand paul talked about rule of law issues and capitalism and the breakdown of the rule of law in our country, coming from apparently not just the administration, but elsewhere, this seems to be a cancer on our system. and for the economic situation to really improve in our country, it seems to me that rule of law needs to be enhanced and is constantly being eroded by incessant executive orders and regulations coming from the bureaucrats. could you address that, please? >> i will start us off on that. it is an incredibly important issue. in economy, we need to have confidence that we are part of a system that is fair and impartial. i think that is reflected in the

index. we have got a score for rule of law right in here. one of most important is private property rights, things that do not exist in places like north korea. we have seen that even in the communist world, when china did modernization there, it enhanced their freedom as well. in the united states we are not in danger of the mass confiscation of property, but every little but of our rule of law that has eroded is an incredible threat, and you see it in things like bailouts. even just the perception, when you have companies that are well connected that get treated specially, for example, when you think of the automakers and so forth. you think of someone here at heritage writing about the bailout of the auto companies and the workers in michigan that were left out. why? there is not a good or impartial reason for that. they did not have the political

strength. any time you have to jockey for political strength in order to protect your business or to grow your business, look at lobbying in the nation's capital. a huge growth industry. there is a reason why seven of the richest counties in the country are in the washington, d.c., area. everything is booming, and that is something that long term is not going to be healthy for our country. >> normally when we talk about what is happening with the rule of law and the executive orders and some of the breaking of the rules and precedents that we saw, like in the senate, the recess appointments controversy that will go to the supreme court, when we talk about the rule of law, i think we rightly do talk about the law and we rightly talk about the constitution, because that is where we should talk about.

there is a political and cultural back room. he is using. in that a political culture changing over the last five or six years we have be mindful of. you thatpeaking, it is the ends justify the means. it is a short-term political had.that can be it's considered to be acceptable. what has changed and it's happening from this worship of the spectrum. they normally consider themselves to be liberal. mindseta change in the that is not so much ideologically a change. how widespread it is and how with being accepted as normal. therefore, when we try to raise a question about it it's like, that is yesterday's news.

we have already crossed that boundary some now let's see what the next one is that we have to cross. you know we have crossed 10 or 15 and the whole political culture has changed in the process. >> next, over here. >> president of the national economists club. my question is for any one of the panelists. do you think the policies of the excessive lowe, interest rates, asset purchases, expansion of the monetary base are harming economic freedom and hampering the function of financial markets? >> i will take that one. >> will you repeat that? reserve perpetual

low interest rates, quantitative easing, what kind of threat is that to where economic freedom? we are in the midst of an experiment in the united states that we have never seen before. this is uncharted territory. $4 trillion in asset purchases by the fed. $1 trillion worth of nerdy year treasury bills. $2 trillion of toxic mortgages. first of all, in terms of the issue of the rule of law, you have to ask where the fed even has the authority to do these things. it's a very dangerous situation. as everyone in this room knows, it's easy for the fed to print money and to purchase assets with that money. it's not so easy, as we have learned, to put the genie back in the bottle and that is what keeps economists up at night, whether they will be able to pull this off. i'm nervous about it, as i think

everyone is. one of the principles of economic freedom is a strong and stable currency. if we have a run-up in inflation, in my opinion, that would cut against economic freedom and it would reduce -- it is just a form of taxation. it makes every dollar you have it in your pocket -- it's a good point to make and i'm very nervous about it erie it if you look at a chart of the money creation, it just go straight through. we've never seen anything like this. i pray that janet yellen can pull this off, but we will see. >> i have to say, in addition, we have to make it more

attractive to invest in the united states. the lack of investment seems to be there and that means you have to have confidence in the rule of law, confidence in tax rate, you are a medical company right now, a pharmaceutical company, owning hospitals, doctors product is, how will you plan when the rule to obamacare keep changing month by month? it's hard to plan and hard to invest. we need to fix some of those factors change that. my memory onto this. what we really want from our monetary authority, in my opinion, our rules. what are the rules he? not everyone is out there trying to guess what the fed is going to do next. if there were clear-cut rules, you create anwork environment of certainty.

>> let's go back over here. >> i have a question with regards to the regional findings. that in georgia, for instance, economic freedom was advancing and at the same time, there is a mention in the report that georgia is suffering from basically russian developments and economic freedom was in danger. i'm just wondering what your theghts on this are on region in general. thank you. >> when you talk about the eurasian region, you do mean russia. talking,a, as you were i was looking up on our sheet interestings very

that you have trends going in opposite directions, as you can see from the score. investment policies and banking regulations are improving the property rates are dropping significantly and usually when you see problems with that, you see problems with the rule of law being applied either arbitrarily for political purposes and the like but even though that's the case, the region is doing quite well and other areas. there may be 92 in the world but they are ranked 11th in the region. is what about russia. i would rather get into the details of it. russia is trying to do an experiment of having an authoritarian style capitalism which is highly regulated and controlled by the state through

both the public and private control by the kremlin and the various apparatus that president clinton has through his party and the government control. -- that president putin has. we are very careful whether we are talking about russia or china, when you see these mercantilist the or authoritarian control systems the you can get spurts in economy, particularly if there are large resources coming in from energy, as is the case of what sustains russia's economy. all of the problems you would come tohe economy would the floor and that is one thing that contributed to the union in the late 80's. systemthat support combined with the inefficiencies of the economy catching up with it. when you have the rising prices of energy, it covers for it.

that's not a formula for the future. that's not a formula for success. russia seems to get by on what's happening with the energy crisis. of me seeor the life how georgia or anyone else would see that as a model to follow not only because of the pervasiveness of political corruption and the model they have but because of how it's based on energy resources. george if it specifically was they opened their economy to investment and trade. high like to maintain trade barriers as a tool with which to negotiate and try to negotiate them down. georgia said if we lowered them we would have more access to raw materials and we would be able to better attract foreign investment and that something that's been beneficial. >> let's go to the metal right here.

>> for countries like georgia and macedonia in the middle, the european union is the other alternative. think that this option would affect the membership of the candidate countries. >> the european model as well as i'm acclaimed swedish model because sweden has been improving and economic freedom man normally sweden is not considered to be that kind of a model but that is in fact what they've been doing. one of the ways they do this is that they would have very low scores in certain categories of the economy, like trade, which is a free-trade zone of the european union and in some countries like germany and sweden, they would have pro- business and very stable labor

market policies. in some areas they can do very well but the bargain they are , you mentioned the goose that lays the golden eggs. this will produce enough growth so that we have really high taxes to fund the welfare state. we have high government spending so long as the economic growth is there and it's like a treadmill in the sense that at some point, you had the economy working against one another. can you imagine how well it would work if you did not have these opposite pressures you see like hong kong who do right across all of the 10 factors? to me, that's the lesson. thingsopeans do some really well and in some areas they don't. >> one thing europe has done over the last 15 years is most have gotten the corporate tax rate cut as a way to attract capital.

it's been a fairly effective strategy. i only mention it just as an economist. brainer thingne no- the u.s. could do right away to increase our economic freedom man make america a more attractive place? er that complete no brain we should cut them including state and local taxes. if we cut our corporate tax rate think you get so much more capital you would not lose any revenue. put itof all, let me like this. i call america's corporate income tax system a head start program for every other country we compete with because we are putting them at a 10% advantage. increase, if we got that right down to 25% or so, absolutely. >> ok, let's go back over there.

>> from the london daily telegraph. you mentioned the u.k. filing down the list. we consider ourselves competitive in the european free market so we're kind of upset to hear that. can you explain why and what's gone wrong? what needs to change? general, i had the opportunity to visit london for .he first time this summer a meeting had representatives from different countries around the eu and the same thing happened that happens when representatives from other countries visit here and we just talk about the index. in my experience, they are from the government and they talk about what a great job they are doing and how hard we are on them and how they will be implementing all of these great for puzzles and women to rank them higher. if they are from the private

sector, as this group was, they say, you have no idea how bad things are and that's true almost regardless of where you come from. in the u.k., lots of discussion with respect to the potential cost and benefit of the free- trade aspect of the eu. the cost of eu regulations has been harmful and it's something we are following closely here as or aok at a possible trade bigger agreement with the eu. we may have some lessons to learn from the u.k. cost experience. scoren though the dropped, it was by a very small measure. has a verythe u.k. strong ranking, 14th in the world. sometimes trying to capture these differences becomes quite marginal. looking at the score, there was in free demandrn

corruption and business freedom but overall the teat of categories where the u.k. scores the worst absolutely rather than the trend going one way or the other is taxes and government spending. >> let's go back over here. >> boys of america. can we talk of little bit about south and central america, what's working and not working in the region? chile andd specify in colombia, we are doing very well in venezuela not doing so great. >> two clear differences. the chilean approach, which has been to embrace the market economy, not just through what we would call conservative governance but more left wing governments, they have maintained the market policies for the most part that had been whereas in the past

countries like venezuela have moved in the opposite direction. that one reason why we produced the index is that they will look at what works and the hope is they will look at chile and big country like colombia will say, let's move in that direction or not move it in the direction of venezuela. we all want the same thing. we want utter lives for our kids. we want good educations. the question is how you get there. countries like colombia and to some extent mexico are moving in the direction of chile and other countries clearly are moving in the direction of cuba and it has not worked out so well. >> could i just add something? in general,a and after 20 years we have accumulated a lot of data and we have had a lot of economists,

surprisingly they look at the data into aggression analysis the scores licit gdp growth, per capita growth, and other ways of measuring growth over time. the findings have shown a statistical correlation between economic growth over time and the index scores are extremely high, almost like 98% in terms of the correlation. also, there are other indices like the one done by cato that comes up with similar results even though the methodology is different in the details. that i think we are onto something here. it's not just a matter of opinion. there is something going on in the behavior of people that we should pay attention to if we want to see economies grow over time.

>> you have to answer the voices of so many american reporters here. you mentioned in your speech that the washington conference is that really a model. the china model will be something in the new government moreina pledges to give freedom in economic terms. do you think china will enjoy more freedom in economic terms in the future? , whether hong kong's success has had something to do with china? >> the short answer to the last question about hong kong's success due to china is no. as a matter of fact, they were scored number one before they had any association with china and the reason they continue to score as they maintain the system they had before.

there's also a lesson there. 130 seventh.ed regionally, 29th. the score has remained remarkably unchanged over the 20 years, at least externally. internally, and the factors there have been some changes. they probably account for the economic dominance and of the economy. trade freedom has been proved -- improved by over 50 points. that shows in some areas they are liberalizing. of government spending, those numbers went in the opposite direction. you have these factors and you can see how they match up by andg some things this way china basically is a mixed bag. overall, where they