If you have never heard of the Cato Institute, you might find their annual report on “Freedom in the 50 States” insightful. Over the last 20 years (2000 to 2019), Cato has captured data on how public policy affects individual freedom economically, socially, and personally. It is the only index of its kind that measures freedom at a state level. Interesting to note that the recent report does not yet include the effects of Covid (2020 to 2021) on our freedom though some inferences are made as to the impact on freedom that Federal Government mandates had on all the states.
Founded in 1977, the Cato Institute “stands for and stands up for the principles enshrined in the Constitution: individual freedom, limited government, free markets and peace.” Cato believes we are at a critical point in our nation’s nearly 250-year history. The trend toward centralized, federal policy mandating state policy is seen as a dangerous trend for individual freedom going forward. In Cato’s view, it reduces the ability of federalism (states’ power and rights) to check federal government overreach (and ultimately tyranny) and harder for citizens to find freedom by voting with their feet (migrating from state to state).
Most Free & Least Free States
Over the past 20 years, Cato argues that freedom for the average American has declined due to federal encroachment on policies that states control. Cato’s Index of Freedom looks at three dimensions including fiscal, regulatory, and personal; with fiscal and regulatory combined sizing up economic freedom. At the same time, the freest states in the country significantly outpace their peers. There are several states that generally fall in the top ten for overall freedom including the current top three New Hampshire, Florida and Nevada and states that always do well Tennessee, South Dakota, Indiana, and Arizona. New York is the least free state as it has been every year since 2000. Others in the bottom five include Hawaii, California, New Jersey, and Oregon.
Looking at the most improved and worsened states in level of freedom reflect changes in state policy. For the 2018 to 2019 period, the most improved states were South Dakota, Florida, Missouri, and Michigan. Noteworthy is Florida which is the biggest gainer from 2000 to 2019 due to their fiscal policies with stats showing decreases in government taxation, spending and employment as a share of the private economy. Michigan jumped from 18th position in 2000 to 8th in 2019. Overall, most state fiscal policy scores have improved with declining tax burdens and spending cuts and personal freedom has improved with gun rights, educational freedom, eminent domain reform, right-to-work laws, online gambling, legalized marijuana, and gay marriage/civil unions.
The five biggest losers in 2018 to 2019 are Oregon, New Mexico, Massachusetts, Rhode Island, and New Jersey. When you look at the outcome on standard of living in states losing their level of individual freedom, you find increased tax burden, tougher regulations on land, labor, insurance, and per capital income growth falling behind the rest of the country. Over the last 20-years, states have not sustained gains in regulatory policy and when Obamacare is included as it wipes out all gains at the state level.
Impact of Pandemic on Freedom
The pandemic generated some extreme Covid-19 policies which deserve a legitimate debate, and the extent to which emergency powers were delegated to executives. Some states avoided mandatory lock downs in 2020 (Arkansas, Iowa, Nebraska, North and South Dakota, Utah and Wyoming) while other states continued lock downs long after they were needed (New York, California, New Mexico). Only seven states never imposed a mask mandate (Arizona, Florida, Georgia, Idaho, Missouri, Nebraska, Oklahoma, South Carolina, South Dakota, and Tennessee). A number of anti-freedom policies were enacted during the pandemic such as vaccination requirements by governments and private institutions. And there were pro-freedom trends, prompted by the pandemic, in education, health care licensing and alcohol takeout and delivery.
Pro-freedom trends in the states are occurring with school choice, criminal justice and policing, gambling laws and tax policy. Anti-freedom trends are visible in labor law, land-use, and occupational licensing. Red states continue to adjust their gun laws in a pro-freedom direction. Fiscal and regulatory freedom look like important economic drivers of interstate migration more so than personal freedom. And migration between neighboring states is greater than between distant states. Economic freedom is positively associated with subsequent income growth. A good economic policy regime promotes economic growth which, in turn, attracts investments and workers.
The effect of institutions, both positive and negative, on government spending and policy change is reflected in the size and professionalism of a legislature, gubernatorial power, fiscal decentralization, term limits, initiatives, and referendums. And finally, the role of political entrepreneurs and individual activists can have like Jerry Kopel, a Colorado legislator and activist, who authored legislation for occupational licensing that contributed to Colorado having the highest rank for occupational freedom.
Our individual freedom calls for vigilance and knowledge of the trends going on each day that can have both positive and negative consequences in how we live our lives. I encourage you to take the time to review the report especially the analysis provided for your state. Cato Institute does a great job making it easy to see what your state is doing to preserve freedom and what they are putting in place that undermines your freedom. I sent the report to my State Senator and State Representative to make sure they are looking at this information and taking the Cato Institute’s policy recommendations into serious consideration.