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Who forced a 'fiscal cliff' deal? Try foreign investors.

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Economic freedom in the US has been falling and now ranks 10th – behind even the African country of Mauritius. It ranks fifth in the ease of doing business, according to the World Bank.

In 2012, the US fell from the top tier of a “global prosperity index,” which measures such nonmaterial factors as entrepreneurship, safety, education, and governance. It now ranks 12th.

Within two decades, China is expected to have as many college graduates as the entire workforce in the US. The number of Chinese universities in the world’s top 500 has risen from 12 to 22 in just eight years.

The US must compete much more aggressively for foreign investment even as the flow of those investments has declined. Last year, the US was no longer the No. 1 destination for foreign investments. China beat it out.

Policy disputes over entitlements and taxes are important, but resolving them is even more important if the US is to enjoy a healthy economy. Lawmakers who fight over how to divide up the economic pie must, at some point, collectively agree on how to expand the pie. Prolonged bickering doesn’t do that.

The rest of the world still looks to the US economy as one of the most stable, open, innovative, and competitive places to invest. The limited fiscal-cliff deal shows some political ability to build on those qualities. Investors, as much as voters, demand more – and, when it comes to dealmaking, they may even have more influence.

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