How does your state stack up?
My favorite publication from the Canada-based Fraser Institute is Economic Freedom of the World, which ranks nations based on economic liberty.
The second-best report from the Fraser Institute is Economic Freedom of North America, which ranks economic liberty in all American states, Canadian provinces, and Mexican states. Here’s the headline data from the most-recent edition, with Canadian provinces highlighted in brown and Mexican states highlighted in green.
Both states rank near the top in various measures of economic liberty in the United States.
I’m also not surprised to see Mexican states clustered at the bottom.
What’s particularly interesting is to see how rankings have changed for the United States and Canada.
…economic freedom had been declining in all three countries until recently. From 2004 to 2013, the average score for all 92 jurisdictions fell from 7.64 to 7.09. Canadian provinces saw the smallest decline, only 0.08, whereas the decline in the United States was 0.59 and in Mexico, 0.63. However, economic freedom has increased in the United States and Mexico since 2013. In contrast, in Canada, after an increase in 2014, it has fallen back below its 2013 level. …on the all-government index the highest ranked jurisdiction is New Hampshire with a score of 8.13. After six straight years in first, Alberta fell to a tie for 6th last year, and fell further to a tie for 24th place at 7.94 in this year’s report. Florida is in 2nd with 8.07… The highest-rated Mexican state is Guanajuato at 61st with 6.49, behind all 50 US states and 10 Canadian provinces, and below 60th place by more than one full point.
Here’s a look at the biennial numbers for the three nations.
I’ve highlighted in green the two recent times Canada ranked about the United States (gee, thanks Obama) and highlighted in red the two recent times Canada ranked below the United States (gee, thanks Trudeau).
In my humble opinion, a key takeaway in the report is what happened to Alberta.
Here are some relevant excerpts.
Alberta, for seven years in a row up to 2015, was the top jurisdiction among the 92 jurisdictions in the index in the all-government index, as it was among Canadian prov-inces in the subnational index. However, in 2015, Alberta elected new political leaders who made changes in taxation, spending, and regulation that have had a significant negative effect on economic freedom. …Since 2015, Alberta has fallen from 1st to a tie for 24th place in the 2017 all-government index. It scored 8.31 in 2014 in this index, falling by 0.37 points in the 2017 index, the largest fall over that period of the 92 jurisdictions in the all-government index. Alberta’s decline in the subnational index, where of course provincial leader-ship has its greatest impact, was much larger, 1.42 points, between 2014 and 2017.
And here’s a table that shows what has happened over the past few years.
I actually warned about Alberta’s fiscal deterioration back in 2015, so I’ll be interested to see if the province can restore some budgetary sanity.
To be sure, Alberta is still the top-ranked province, but that’s more a reflection of bad policy elsewhere in Canada.
P.S. In general, Canada is a sensible, market-oriented nation. Indeed, the United States should copy its northern neighbor on issues such as spending restraint, welfare reform, corporate tax reform, bank bailouts, regulatory budgeting, the tax treatment of saving, school choice, and privatization of air traffic control.
by Dan Mitchell
Daniel J. Mitchell is a leading expert on fiscal policy issues such as tax reform, the economic impact of government spending, and supply-side tax policy. Mitchell is a strong advocate of a flat tax and international tax competition. Prior to joining Cato, Mitchell was a senior fellow with The Heritage Foundation, and an economist for Senator Bob Packwood and the Senate Finance Committee. He also served on the 1988 Bush/Quayle transition team and was Director of Tax and Budget Policy for Citizens for a Sound Economy. His articles can be found in such publications as the Wall Street Journal, New York Times, Investor’s Business Daily, and Washington Times. He is a frequent guest on radio and television and a popular speaker on the lecture circuit. Mitchell holds bachelor’s and master’s degrees in economics from the University of Georgia and a Ph.D. in economics from George Mason University. Original article can be viewed here.