Freedom Ranked in the 50 States

William P. Ruger and Jason Sorens have published Freedom in the 50 States: An Index of Personal and Economic Freedom through the Mercatus Center of George Mason University, dated February 2009. This is an interesting document. William Ruger is an assistant professor in the Department of Political Science at Texas State University, who is currently on military leave and serving with the Navy in Afghanistan. Jason Sorens is an assistant professor of Political Science at the University at Buffalo, State University of New York.

From the Executive Summary:

This paper presents the first-ever comprehensive ranking of the American states on their public policies affecting individual freedoms in the economic, social, and personal spheres. We develop and justify our ratings and aggregation procedure on explicitly normative criteria, defining individual freedom as the ability to dispose of one’s own life, liberty, and justly acquired property however one sees fit, so long as one does not coercively infringe on another individual’s ability to do the same.

This study improves on prior attempts to score economic freedom for American states in three primary ways: (1) it includes measures of social and personal freedoms such as peaceable citizens’ rights to educate their own children, own and carry firearms, and be free from unreasonable search and seizure; (2) it includes far more variables, even on economic policies alone, than prior studies, and there are no missing data on any variable; and (3) it uses new, more accurate measurements of key variables, particularly state fiscal policies.

They compare their study to the Fraser Institute's Economic Freedom of North America 2006 Annual Report which omits "such interventions as gun control, homeschooling regulations, and marijuana laws." They also compare it to the Pacific Research Institute's U.S. Economic Freedom Index: 2004, which puts gun control and seatbelt laws under Regulatory Sector with occupational licensing, recycling programs, and labor regulations, while ignoring other personal freedom issues. They make a good case that their methodology for weighing the variables makes more sense and that they consider more significant issues pertaining to our individual freedom. The report is based upon the laws of the states and local governments as of the end of 2006 and on arrest data through 2006. They say that the other freedom measurement studies have similar lags from policy to evaluation.

The database covers fiscal policy, gun control, alcohol regulation, marijuana policies, tobacco and smoking laws, automobile regulations, law enforcement data, education policies, land-use and environmental laws, labor market regulations, health insurance policies, utilities deregulation, occupational licensing, asset forfeiture rules, eminent domain reform, court systems, marriage and domestic partnership regulations, campaign finance laws, and sundry mala prohibita.

Table I gives the state ranking for Fiscal Policy, Table II that for Regulatory Policy, and Table III gives the ranking for Economic Freedom based upon the sum of the quantifiers for Fiscal Policy and Regulatory Policy. One of the important improvements in the study is that the fiscal policy measurements are made with respect to the size of the state economy. This corrects for too much credit being given to low cost of living states. The results of the Economic Freedom Ranking are:

Table III: Economic Freedom Ranking
State Economic Freedom index

1. South Dakota 0.385
2. New Hampshire 0.345
3. Colorado 0.337
4. North Dakota 0.315
5. Idaho 0.257
6. Georgia 0.253
7. Texas 0.225
8. Tennessee 0.225
9. Missouri 0.210
10. Alabama 0.200
11. Arizona 0.190
12. Iowa 0.177
13. Virginia 0.175
14. Utah 0.164
15. Michigan 0.161
16. Indiana 0.159
17. Oklahoma 0.144
18. Kansas 0.126
19. Pennsylvania 0.120
20. Wyoming 0.098
21. Montana 0.096
22. South Carolina 0.062
23. Nevada 0.058
24. Delaware 0.052
25. Florida 0.047
26. North Carolina 0.041
27. Nebraska 0.036
28. Louisiana -0.012
29. Illinois -0.025
30. Mississippi -0.032
31. Minnesota -0.075
32. Ohio -0.081
33. Kentucky -0.086
34. Maryland -0.110
35. Wisconsin -0.111
36. Oregon -0.113
37. Massachusetts -0.133
38. Connecticut -0.142
39. Arkansas -0.148
40. West Virginia -0.177
41. Washington -0.219
42. Rhode Island -0.267
43. New Mexico -0.288
44. Hawaii -0.295
45. Vermont -0.310
46. New Jersey -0.337
47. Alaska -0.343
48. California -0.351
49. Maine -0.406
50. New York -0.596

South Dakota holds the honor of being the economically freest state, though New Hampshire, Colorado, and North Dakota are not far behind. Then there is a gap in index and Idaho and Georgia follow. The next group is led by Texas and Tennessee with Missouri, Alabama, and Arizona on their heels. Iowa and Virginia lead the next group which includes Utah, Michigan, Indiana, Oklahoma, Kansas, and Pennsylvania. Pennsylvania is the second highest ranked Northeastern State at position 19. Delaware follows in position 24, then Maryland at 34, Massachusetts at 37 and Connecticut at 38. Maine and New York are 49 and 50, respectively, and they are far outliers. These are two states no economic freedom-lover could choose to live in. They scream out for domestic out-migration. The average ranking of the Northeastern States is 35 including number 2 New Hampshire. Without New Hampshire, the others average a ranking of 38.4. Outside of the awful Northeast, California (48), Alaska (47), Hawaii (44), New Mexico (43), Washington (41), West Virginia (40), Arkansas (39), Oregon (36), and Wisconsin (35) all deserve very dishonorable mention. Thus, the Pacific States including Hawaii and Alaska, average a particularly dishonorable ranking of 43.2, which is even worse than that of the Northeastern States.

The Personal Freedom ranking and index is given in Table IV:

Table IV: Personal Freedom Ranking
State Personal Freedom index

1. Alaska 0.272
2. Maine 0.193
3. New Mexico 0.138
4. Arkansas 0.125
5. Texas 0.121
6. Missouri 0.110
7. Oregon 0.104
8. Idaho 0.100
9. Virginia 0.100
10. Wyoming 0.095
11. Vermont 0.093
12. Arizona 0.089
13. New Hampshire 0.087
14. Utah 0.086
15. Kansas 0.085
16. Colorado 0.084
17. West Virginia 0.080
18. Tennessee 0.059
19. Indiana 0.049
20. Michigan 0.045
21. Montana 0.029
22. Mississippi 0.027
23. Florida 0.022
24. South Dakota 0.007
25. Iowa 0.006
26. Kentucky 0.003
27. Oklahoma -0.002
28. Hawaii -0.009
29. Pennsylvania -0.018
30. North Carolina -0.022
31. Minnesota -0.036
32. Nevada -0.045
33. North Dakota -0.047
34. Nebraska -0.055
35. Washington -0.055
36. Delaware -0.060
37. California -0.063
38. Connecticut -0.082
39. Wisconsin -0.089
40. Louisiana -0.098
41. South Carolina -0.102
42. Georgia -0.106
43. Alabama -0.107
44. Massachusetts -0.109
45. New Jersey -0.120
46. Ohio -0.124
47. Rhode Island -0.163
48. New York -0.188
49. Illinois -0.213
50. Maryland -0.294

Alaska is far ahead of the pack in personal freedom or freedom from state paternalism. Maine, while far behind, is also separated well ahead of the pack. New Mexico, Arkansas, and Texas are the next grouping. All of these leaders except Texas were bad performers in the Economic Freedom index. Texas was ranked 7th in that index, while it is 5th in the Personal Freedom index. Missouri, Oregon, Idaho, and Virginia are next in Personal Freedom. Of these, all but Oregon did well in Economic Freedom. The so-called Free State of Maryland distinguishes itself as the very worst Personal Freedom state. It is really separated from the pack too. The next worst is Illinois, which also is separated from the pack, though no where near to the extent of Maryland. New York and Rhode Island are also uniquely bad.

The report also provides an overal freedom ranking and index produced by adding the Economic Freedom index and the Personal Freedom index for each state. The result is:

Table V: Overall Freedom Ranking
State Overall Freedom index

1. New Hampshire 0.432
2. Colorado 0.421
3. South Dakota 0.392
4. Idaho 0.356
5. Texas 0.346
6. Missouri 0.320
7. Tennessee 0.284
8. Arizona 0.279
9. Virginia 0.275
10. North Dakota 0.268
11. Utah 0.250
12. Kansas 0.210
13. Indiana 0.208
14. Michigan 0.206
15. Wyoming 0.193
16. Iowa 0.183
17. Georgia 0.146
18. Oklahoma 0.143
19. Montana 0.125
20. Pennsylvania 0.102
21. Alabama 0.092
22. Florida 0.068
23. North Carolina 0.019
24. Nevada 0.013
25. Mississippi -0.004
26. Delaware -0.008
27. Oregon -0.009
28. Nebraska -0.018
29. Arkansas -0.023
30. South Carolina -0.040
31. Alaska -0.071
32. Kentucky -0.082
33. West Virginia -0.097
34. Louisiana -0.110
35. Minnesota -0.111
36. New Mexico -0.150
37. Wisconsin -0.199
38. Ohio -0.205
39. Maine -0.214
40. Vermont -0.217
41. Connecticut -0.225
42. Illinois -0.238
43. Massachusetts -0.242
44. Washington -0.275
45. Hawaii -0.304
46. Maryland -0.405
47. California -0.413
48. Rhode Island -0.430
49. New Jersey -0.457
50. New York -0.784

New Hampshire and Colorado are the winners. The next grouping of good states includes South Dakota, Idaho, Texas, and Missouri. The third grouping is Tennessee, Arizona, Virginia, North Dakota, and Utah. The next is Kansas, Indiana, Michigan, Wyoming, and Iowa. And which states are the bad actors? New York is the very most awful state with an overall freedom index which is abysmally negative and lies far below that of the runner up awful states of New Jersey, Rhode Island, California, and Maryland. The next bad group is Hawaii, Washington, Massachusetts, Illinois, Connecticut, Vermont, Maine, Ohio, and Wisconsin. The states ranked 35 through 50 have tended to be controlled by the Democrat Party in recent years. Ohio at a 38 ranking is the closest to a swing state.

As noted, my state of Maryland is an awful state for a freedom-lover at a ranking of 46. One of my sisters lives in the relatively good state of Kansas with a ranking of 12, though she is often upset by the pressure for the teaching of Intelligent Design in Kansas schools and attitudes towards a woman's right to abortion. A larger portion of my family lives in Oklahoma with a fairly respectable ranking of 18. Then there is an Anderson Clan contingent also in North Carolina with a ranking of 23. So, only the Maryland branch of the Anderson Clan lives in a state fully committed to the infringement of our freedom. Shame, shame on Maryland and on its voters.

Slavery in the Free State

Maryland was once called the Free State, mostly due to its long ago history of relative religious tolerance. Maryland also had the distinction of providing some of the best units of Washington's Continental Army. These units fought bravely under General Washington and then fought equally well under Major General Greene in the very important Southern Campaign that ended at Yorktown. Of course, one then had to turn a blind eye to Maryland also being a Slave State, so even then Maryland should have been ashamed to call itself the Free State. Maryland practices a different form of slavery now.

What is the situation now in Maryland? Marta Mossburg writing in the Washington Examiner has given us an update. State and local government employees grew by 20% from 1997 to 2007. I have looked up the overall population growth of the state in that time for comparison and find it to be only 10.3%. Now the amount of mischief that government's can do is likely to go up as the fraction of the population working for government goes up. We would be very lucky if it only went up in strict proportion, but these government workers are actually very "productive" in two tasks: increasing their power through spending and their own benefits!

Unfortunately, Mossburg only gives us the state budget for 2010, when what we need to find is the growth in the sum of the state and local government expenditures in Maryland to compare to the population growth rate and to the government employee growth rates. After some searching (Do the governments want these figures to be hard to find?), the sum of the state and local government expenditures in FY 2000 was $27,446,000 and it is $57,600,000 in FY 2009. This is a growth in government expenditures in Maryland of 210%. Seems the burden of government is getting worse in Maryland at about a rate of 20.4 times faster than the population to bear the expense is growing! Thus, Marylanders are working ever longer hours to pay this burden, which is the equivalent of spending many more hours as slaves to the state and local governments.

Mossburg points out that the state budget for the health insurance of state government employees is going up 17.4% from 2009 to 2010. The 2010 budget includes a 22.1% increase in money for teacher retirement benefits. This represents a 207% increase since 2001! Of course, Democrats are in control of the governorship and the state assembly in Maryland, so they have to pay off the teacher's unions for their critical political support and for indoctrinating Maryland children in the thesis that every problem has its solution in an additional government program.

Overall entitlement spending in Maryland is increasing rapidly also. In 2001 it was 16.2% of the budget, but in 2010 it is 20.8%. At this rate of growth, entitlements will be 40% of the budget by 2050. State retirees just received a 3.8% cost-of-living increase. Meanwhile, unemployment in Maryland is the highest it has been in 17 years.

What effect is this tax and government burden having on Maryland's population? For five years running, Maryland has suffered a net domestic out-migration. Marylanders are seeing other states as better places to live. Its overall population growth in each of the last two years was 0.3%, pretty similar to that of most of the states of the Northeast which also have oppressive government burdens. From 1 July 2007 to 30 June 2008, its growth rate was 44th lowest of the 50 states. In the earlier part of the last 10-year period, Maryland did somewhat better. Its growth rate since 1 April 2000 has been 6.4% compared to the U.S. growth rate of 8.0% in that time. This ranks it 24th among the states. Its position has worsened since a comparatively good Republican governor, Robert Erhlich, was replaced by the present governor, Martin O'Folley. The Democrat legislature is no longer somewhat frustrated and is instead being encouraged to cause mischief and harm. As we have seen, it and the local governments are very effective in this effort.

A Request for an Overview Discussion of the Financial Meltdown

I have received a request that I provide an overview discussion of what I believe caused the home mortgage and financial crisis we suffered. Robert G. Curry wrote:

I wonder if you have given some thought to the causes of the current financial meltdown. The history leading up to what happened this year, etc.

Have you covered any of this on your blog?

It would be informative to be able to get an overall picture of the actions from the Carter years to the present of who did what, and who's primarily to blame, both through actions or neglect of action, for the meltdown.

How did we get from the so called "Fair Housing Act," through the "No Red Lining," to the "NINJA" loans, to the packaging of junk mortgages as A rated bonds, to the insuring of those bonds by the people at AIG, to the bailouts?

My response to Robert was:

I have discussed it a number of times, but not as comprehensively as you are suggesting I do. Partly, this is because it is a complex history. Partly, because the time period from Sep through Dec is our busy season in my laboratory, though all of 2008 was very busy for me. But, there is also a very critical component to the housing and financial meltdown which is due to problems caused by local and state governments in addition to the unhealthy contributions to the problem made by the Federal government. This really complicates the issue. I have addressed some of the local problems in a few posts as well.

When you look at where the mortgage defaults have occurred, you find that they are very far from an even distribution across the country. Mostly, the problem spiked in those areas where local and state government have such restrictive policies on home-building that home prices have become inaffordable for most people who in other parts of the country could readily buy a home with their income. In California, the average home buyer is paying 8 times his income to buy a home, when paying more than about 2.5 times your annual income for a home makes you a sub-prime borrower. We can argue that the average home buyer in California has no business buying a home, but human nature being what it is, they still badly want a home. In large part, the fact that homes cost so much in California is because of local and state government policies. For the most part, this is the pattern of where mortgage defaults are occurring. In Nevada the problem is that the Federal government owns 84.5% of the state and land around Las Vegas is not available because it is penned in by Federal land. Florida is another area with a spike of failures, where apparently there is a lot of speculation in homes based on quick improvements and rolling over the homes. This may have other explanations, maybe just that a lot of baby boomers are retiring or will soon and home values may have been rising due to their plans to move there upon retirement and it became an easy money fad to buy homes in anticipation of an easy resale at a higher price. Ohio and Michigan have elevated mortgage failures due in part to the very bad business climate in those states, which is causing them to lose jobs badly.

Because of these local issues, many people have put more and more pressure on Congress for affordable housing. In effect, many present home owners in local areas were happy with the rising home values due to government restrictions and maybe did like less traffic on the roads, lower taxes due to having fewer public schools to build, and more parks, but others wanted housing they could afford and some of the home owners are probably feeling guilty for favoring restrictions that they must realize are causing homes to be unaffordable. Congress does nothing to address the local building restrictions, so they have done as much as they can to press the envelope on lowering the costs of home mortgages. Many of the problem programs you named resulted in good part in response to some very vicious local housing affordability issues.

Of course, this then becomes a good lesson in how excessive government meddling in economic matters and in matters of property, causes all sorts of problems, the attempted responses to which cause still more problems.

Robert has a grasp of much of the path taken at the national level to attempt to make housing more affordable. He understands that this process began long ago and has resulted in a major problem for the economy. I was on the verge some time ago of addressing this side of the problem more thoroughly, but upon looking into it, it became clear that it was even more complex even on the federal affordable housing side of the issue than I had thought. It was going to take some real effort to sort it all out. In the process of looking into that, I realized that a good part of the reason pressure was put on the federal government to make home mortgages more available and less expensive was due to problems already caused by local and state governments which made housing in some substantial parts of the country ridiculously expensive.

There is a push-pull problem here of massive proportions. Government creates a bad problem, then government responds to the screams of pain that result by appearing to address the problems at least in part. Only then it is found to have planted many dozen rattlesnakes into our prairie dog colony. We suffer a financial meltdown and Wall Street and the banks become beggars who are put on the dole. Meanwhile, many home buyers are still sub-prime borrowers and they now cannot get loans. The home building and real estate industries then suffer, but mostly in those areas where most homes are very expensive for most potential buyers.

Meanwhile, the local and state governments are still very happy to follow policies that greatly increase the cost of housing in many communities. There is little movement on their part to address the prime reason for the housing and, ultimately, the banking and financial institution problems. Zoning restrictions, green park policies, antiquated and expensive building codes, excessive federal land ownership, disallowing pre-assembled housing so more local tradesmen will be hired, requiring excessively large home lots, high-handed and unavailable county building inspectors, and many more policies that cause home prices to be much higher than they need to be remain very popular in many communities.

So, as incensed as I am about the many bad choices made by the federal government regarding their powers to influence and control the lending institutions and to put pressure on them to follow unwise and risky lending policies, I do not want us to lose focus on the most fundamental of the originating problems. We allow local and state governments, with some assistance from the federal government, to infringe upon our property rights and thereby to deny many of us the much improved housing that we, in our pursuit of happiness, could have otherwise attained.

Gasoline Taxes by State

The Democrats in Congress love to complain about the huge profits being made by the oil companies, who are making a profit of about 8% on their total revenues. This is not a particularly good rate of return for oil company investors. Many industries provide a better profit margin. But Barack Obama calls these windfall profits and wants to confiscate them and turn them over to people with low incomes to help pay for their home heating costs.

Now oil companies revenues come largely from the sale of oil, gasoline, and some organic chemical products, such as those that go into making plastics, waxes, paints and other products. If we assume that they make about the same profit on a gallon of gasoline as they do on all of their other products, then they make a profit of about $0.32 per gallon when gasoline is selling for $4.00 at the pump. In comparison, the sum of gasoline taxes taken by local, state, and federal government in July 2008 is shown by state in this map.

Some states and the federal government have a tax which is a fixed dollar amount per gallon of gasoline. Some states set the rate as a percentage of the cost of the gasoline sold at the pump or have a combination of fixed amount and percentage tax rates. Because Americans used less gasoline in the first half of this year, those states with fixed amount rates are crying in pain because they are raking in less gasoline taxes, so some of them have actually increased the gas tax this year! Those who tax as a percentage of the price are very happy with the gasoline tax money swamping them. Well, of course they are up to the task of spending any tax revenues and then some on top of that!

In July, in California governments raked in $0.749 per gallon of gasoline sold at the pump. Connecticut was nipping at CA's heels at $0.708/gal. total taxes. Let us make a list of the tax take by all levels of government by state for the most expensive states:

California $0.749
Connecticut $0.708
Illinois $0.666
New York $0.623
Michigan $0.607
Indiana $0.569
Washington $0.559
Florida $0.516
Wisconsin $0.513
Hawaii $0.51
Nevada $0.51
Pennsylvania $0.507
West Virginia $0.506
Rhode Island $0.494
North Carolina $0.486

Other state tax takings of interest to some friends and family are:

Ohio $0.464
Kansas $0.434
Minnesota $0.424
Maryland $0.419
Colorado $0.404
Texas $0.384
Oklahoma $0.354

Only South Carolina at $0.352, Wyoming at $0.324, and Alaska at $0.264 have lower gas tax rates than Oklahoma. Only in Alaska is the government gasoline tax taking less than the estimated $0.32/gal. of profit for the oil companies.

So, if you live in a state with a gasoline tax stated as a percentage of the gasoline price, you would have a much better claim for relief from the high cost of gasoline against your state than you would against the oil companies.

In any case, if we have a shortage of gasoline and that is causing the high gasoline prices we are paying, taking profits away from the oil companies will only encourage them to forget drilling for more oil and forget refining oil into gasoline, and perhaps encourage them to invest their money instead into photovoltaics and wind farms, while seeking government subsidies for those operations. Of course, these subsidies will be paid by you for many, many years. But, neither photovoltaics nor wind farms are going to power your car now or in the next few years, so any so-called windfall profits tax on oil companies will only drive the price of gasoline up more. This is exactly what Barack Obama and the Democrats want. They want gasoline to cost more and they want to try to reduce oil and gasoline use while forcing the oil companies to invest more into the development of alternative energy.

The net result for you will be more expensive fuel costs all around and higher taxes to pay for more subsidies. What a bargain. Oh well, you can feel good that you are doing your part to stop man-made global warming! Ah....., but there is no evidence that that is a problem, while there is clear evidence that high energy costs are a huge problem. What a bargain those Democrats are offering you! But, they can sell half the people Brooklyn Bridge, so we have to hand it to them that they are effective salesmen. Demagoguery is their specialty.

The Cost of Government

Doug Bandow's commentary in today's Washington Times compiled many measures of the cost of government. He points out that Tax Freedom Day this year was on 23 April, but that this is a poor measure of the cost of government. First of all, local, state, and federal government may all be running deficits. Secondly, they all have regulations with costs which they do not pay. What was not mentioned and may not be included at all are the requirements to contribute time and effort without charge to keeping tax and employment records and being an unpaid tax and information collector.

Americans for Tax Reform calculates the cost of government based on what they spend and on the cost of regulations. They calculated that 16 July was the day the average American stopped working for the governments. This was 4 days later than last year! Individuals worked 83.7 days this year for the federal government and 50.5 days for state and local governments. Government regulation costs each of us 62.6 days this year! If we nationalize health care or add a cap and trade bill to combat the mythical man-made global warming, these costs will go up dramatically. They are going to go up dramatically in any case because Baby Boomers are about to start retiring in large numbers, which will at once remove many high income earners from higher tax brackets and increase Social Security and Medicare costs.

Federal spending is up 11.4% more than the size of the economy since 2000. So despite the economy growing well over that period and federal taxes rising even faster than the economy did, Congress spent more money than the bonanza they were given in increased tax revenues. If the rate of government spending had been held to the rate of the growth of the economy, the federal deficit would have disappeared in 2006.

Regulation costs this year are 17.2% of the national income. These regulations hurt the economy and its growth in ways whose costs are not included in that figure. Reductions in output, jobs, lower wages, and slowed economic growth are estimated to cost as much as another $1.5 trillion per year.

State and local government expenditures have increased by 19.1% more than the national income since 1999. In Connecticut, the people will work until 31 July before they come even with the cost of government, while in New Jersey the date was 30 July, and in New York it was 29 July. On the other hand, if you lived in Alaska, you were free on 21 June, if in Mississippi on 30 June, and if in Montana and West Virginia on 1 July.

Bandow asks, "What kind of a supposedly free society forces its people to work well more than half the year for the government?"

I join him in that question and ask if the loss of your control over that huge part of your life was worth it in terms of the benefits government provided? For me, the answer is a clear and strong NO!