Every governor likes to claim that his or her state is the best. This is especially true for governors who aspire to become president.So, in his second inaugural address, Governor Ron DeSantis said “Florida leads the nation“In net migration (when more people move in than out), economic growth, new business formation, tourism and economic freedom.
He may start with economic freedom. After all, many of the other achievements he touts depend on it. What is economic freedom? How is it measured? Does DeSantis have the right to be proud of it?
In short, people have economic freedom when they can voluntarily choose to exchange with anyone on any terms, provided their actions do not violate the freedom of others.
For many people, perhaps most of us, this freedom is intuitively and philosophically appealing. But economists have long emphasized that it has another benefit: Economically free people tend to be well-off. This debate has been around for a long time. A Chinese contemporary of Confucius, Lao Tzu, stated in 600 BC: “The more restraints there are, the poorer the man is.” Similarly, Adam Smith, the father of modern economics, wrote in 1755: “To make a nation To proceed from the minimum of barbarism to the highest of opulence, all that is needed is peace, easy taxation, and tolerable justice; all the rest will be brought about by the natural course of things.”
Although these thinkers and others offered plenty of reasons to believe that free men would prosper, it was only in recent decades that economists were able to test this hypothesis.
The Fraser Institute in Canada first released its Index of Economic Freedom in the World in 1996 after a series of meetings with leading economists, including three Nobel laureates. Updated annually, the index uses publicly available data to measure economic freedom in 165 jurisdictions around the world.
It has been cited in more than 1,300 peer-reviewed papers and included in more than 800 scholarly studies. Most of these studies find that economic freedom is indeed associated with higher levels of prosperity, as Lao Tzu suggested.
The Fraser Institute also publishes a local version of the index, called North American Economic Freedom, which measures economic freedom in the United States, Mexican states and Canadian provinces by measuring government spending, taxation and regulation. In both the Global and North American indices, the Institute also estimates rankings using historical data prior to our initial publication in 1996. In the latest North American report, Florida did rank first among US states, thanks to its low tax rate and mid-sized public sector.
Furthermore, two-thirds of the 155 research papers using the Place Index found that countries with economic freedom were more likely to have a “good” outcome. For example, citizens of states with more economic freedom enjoy higher wages, greater income mobility, more net immigration, more entrepreneurial activity, higher gross state product per capita, and the top and bottom of the income distribution faster growth. They are also less likely to experience homelessness or unemployment. The researchers also found that economic freedom is associated with good noneconomic outcomes, such as greater tolerance, fewer recidivists, and greater happiness. People can really go from barbarism to prosperity if set free.
Despite DeSantis’ eagerness to take Florida’s No. 1 status to himself, Floridians have enjoyed a high degree of economic freedom for decades. In fact, the state first ranked first in the United States for economic freedom in 1994, when Democrat Lawton Chiles was governor. If politicians everywhere took economic freedom more seriously, they would have more to brag about.
Matthew D. Mitchell is a Senior Fellow at the Fraser Institute’s Center for Economic Freedom and a Senior Affiliated Scholar at the Mercatus Center at George Mason University.