Rep. Cantor's Confused Definition Of "Economic Freedom"

January 26, 2011 2:27 pm ET — Matt Finkelstein

Rep. Eric Cantor

In his State of the Union address last night, President Obama called for new investments to foster innovation and boost our competitiveness in the global economy. "All these investments — in innovation, education, and infrastructure — will make America a better place to do business and create jobs," Obama said.

Republicans are rejecting Obama's appeal as "more spending" that will increase the debt and actually stifle innovation. Speaking at the Heritage Foundation this morning, House Majority Leader Eric Cantor (R-VA) alluded to the think tank's annual "Index of Economic Freedom" — which found that America has become less "economically free" under Obama — and warned that the U.S. could become like Europe where "entrepreneurship is frowned upon."

However, Cantor failed to mention that most of the countries beating the U.S. in "economic freedom" are places with higher taxes, socialized medicine, and other government programs that conservatives love to hate. Furthermore, Inc. magazine's Max Chafkin recently swatted down Cantor's claim about entrepreneurship across the pond:

Welcome to Norway, where business is radically transparent, militantly egalitarian, and, of course, heavily taxed. This is socialism, the sort of thing your average American CEO has nightmares about. [...]

Norway is also full of entrepreneurs. ... Rates of start-up creation here are among the highest in the developed world, and Norway has more entrepreneurs per capita than the United States, according to the latest report by the Global Entrepreneurship Monitor, a Boston-based research consortium. A 2010 study released by the U.S. Small Business Administration reported a similar result: Although America remains near the top of the world in terms of entrepreneurial aspirations — that is, the percentage of people who want to start new things — in terms of actual start-up activity, our country has fallen behind not just Norway but also Canada, Denmark, and Switzerland.

Chafkin observes that the Norwegian system, which provides free health care and education through graduate school, allows entrepreneurs to start companies without worrying about their health care costs or their children's college tuition. As Small Business Administration economist Zoltan J. Acs explains, "The three things we as Americans worry about — education, retirement, and medical expenses — are things that Norwegians don't worry about."

Of course, it's imperative to remember that President Obama is not proposing European-style socialism, despite the fantasies of certain right-wing politicians. Nonetheless, Cantor seems to be deeply confused about what it really means to be "economically free."