Australia is the eighth and New Zealand is the third on CATO Institute's annual index of the world's freest economies, behind only Hong Kong and Singapore, according to its report. It has documented that "global economic freedom fell slightly in this year's report, and it remains well below its peak level of 6.92 in 2007."

The average score fell to 6.84 in 2012. In the 2014 list, Hong Kong has the highest rating for economic freedom, with 8.98 out of 10.

Amazingly, the U.S. has slipped into the 12th place, below Hong Kong, Singapore, New Zealand, Switzerland, Mauritius, the United Arab Emirates, Canada, Australia, Jordan, Chile and Finland. "Even Mauritius and Jordan are kicking our ass," exclaims Michael Hausam, referring to the U.S. position in ijreview.com.

Read more in the Economic Freedom of the World, 2014 report. Fourteen years ago, the U.S. was number 2, but has fallen fast. The CATO Institute has based its ranks on the country's government, the legal structure, sound money practices, free trade, and regulation. Once considered "a bastion of economic freedom," the U.S. ties with the United Kingdom at 7.81.

Its slip in the list is mainly due to the weak laws, increase in regulation, and the impact of war on terrorism and drugs. Its Sound Money position is now in the 38th place, though it was the topmost in 2005. Its government size is the 46th, smaller than some European governments, but bigger than Brazil and Mexico. In Free trade, it occupies the 29th place.

The countries in the bottom 10 are Republican of the Congo, Zimbabwe, Argentina, Algeria, Iran, Chad, Burundi, the Democratic Republic of the Congo, and Myanmar. "But don't worry, guys. We're kicking Burundi's ass!" exclaimed Hausam in ijreview.com.

CATO's conclusions seem to be borne out by the theories of Adam Smith, who had said 200 years ago that economic freedom leads to more productivity and higher incomes. Assessing the economies is based on surveys by the Economic Freedom Network, which is a group of research institutes in 47 countries, including the CATO Institute in the United States. Their theory is based on the strength of economic freedom. If it declines, the growth of per capita GDP also comes down, according to CATO Institute. But a free economy leads to automatically high growth, as the index takes into account economic structures and policies.