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Soundings

Steven Malanga
The Least Free State
Unless reform comes to Albany, restrictive New York will continue to suffer.
Spring 2009

A new study by the Mercatus Center at George Mason University, Freedom in the 50 States, is the most comprehensive effort to date to rank the states on how their public policies influence “individual freedom in the economic, social and personal spheres.” It includes dozens of variables, from social and personal freedoms (such as parents’ right to educate their own children) to regulatory freedom (such as the degree of occupational licensing requirements) to fiscal liberty (as measured, for instance, by states’ debt burdens, which represent a constraint on future generations). Finishing dead last in the study’s freedom index is New York State.

New York earns that dubious distinction “by a wide margin,” the study reports. Businesses operating in the state won’t be astonished to hear that its economic freedom is poor, thanks to a tentacular bureaucratic regulatory regime, a civil justice system that favors plaintiffs over defendants, and high taxes and crushing per-capita government debt. But New York’s citizens, who like to consider themselves enlightened and socially permissive, might be surprised at how low their state ranks on the study’s index of personal freedom—third from the bottom. That’s because in New York, personal freedoms are often narrowly defined as liberties that Albany politicians deem suitable for citizens to enjoy. Otherwise, state policy is extremely restrictive. The study notes, for instance, that while New York has liberal gambling laws, regulations on home schooling are extensive, eminent-domain laws are confiscatory, and mandates on health insurance limit New Yorkers’ choices.

What are the consequences of New Yorkers’ lack of freedom? The best way to judge is to look at the collective condition of the states with the worst rankings. Joining New York at the bottom of the index is New Jersey, in 49th place, followed by Rhode Island and California. Together, New York, New Jersey, and California face some $65 billion in budget deficits in 2009, amounting to more than two-thirds of the budget gaps faced by all 50 states. These states’ stratospheric spending and taxes have stifled economic growth and left them scarily unprepared for the economic downturn.

Job growth has been lousy, too. New Jersey has just completed a decade of virtually no private-sector job gains, even during the boom years that preceded today’s steep recession. Meantime, Rhode Island’s unemployment rate is the third-highest in the country, followed by California’s. The bottom-ranking states have also gained reputations as the places that citizens most want to flee. California, New Jersey, and New York (and Rhode Island, too, relative to its small population) have among the highest levels in the country of domestic out-migration—that is, leaving one state for another.

What a contrast with the study’s freest states: New Hampshire, Colorado, South Dakota, Idaho, and Texas. All have unemployment rates at or below the national average (New Hampshire’s is 5.1 percent, or 3 points below the nation’s, according to February’s Labor Department statistics). Every one of these states is also a net winner in terms of domestic migration, with far more U.S. citizens entering than leaving.

The Mercatus study makes clear that what ails New York cannot be boiled down to any one of its curbs on freedom, whether it’s a high income-tax rate, restrictions on development, or a bureaucratic licensing regime. Rather, New York suffers from the vise grip that Albany’s politicians have on life in general. Reform, therefore, won’t be as simple as cutting a tax or eliminating a regulation. New York needs fundamental change that makes the state democratic again, and it needs reform candidates willing to push for that change.

Such candidates would battle to remove the right of legislative redistricting from state lawmakers—who protect themselves when they draw voting districts so that 98 percent of them get reelected—and give it to a nonpartisan commission, charged with redrawing districts to make them competitive again, as states like Iowa and Arizona have done. A reform agenda might also include instituting term limits to eliminate Albany’s lifetime sinecures, as well as adding greater transparency to state and local government operations by making expenditures and contracts available in greater detail online, so that citizens can see firsthand how their tax dollars get spent.

Undemocratic and unfree countries often restrict the flow of their businesses to other, more appealing, places. Since New York State doesn’t have that option, its long decline will continue—unless it has a new birth of freedom.

Steven Malanga is the senior editor of City Journal and a senior fellow at the Manhattan Institute. He is the author of The New New Left.

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