Mercatus Center raves about Oklahoma’s dramatic move toward economic liberty
Published: March 28th, 2013
OKLAHOMA CITY Oklahoma is now the fifth freest state in America. That’s the conclusion from the Mercatus Center at George Mason University in Virginia, based on detailed analysis of regulatory policy, fiscal policy and personal freedom.
“Freedom in the 50 States: An Index of Personal and Economic Freedom: 2013 edition” was released early on the morning of March 28.
Authors of the report concluded, “North Dakota is the freest state, followed at a modest distance by South Dakota and Tennessee. New Hampshire and Oklahoma round out the top five.” It was the first time the Dakotas have led the Mercatus freedom rankings.
The bottom five? They are (from 50th on up) New York, California, New Jersey, Hawaii and Rhode Island. The only comfort for Rhode Island is that the analysts say the gap between the First State and the Fiftieth State is considerable, in terms of liberty.
Co-authors William P. Ruger and Jason Sorens examine what they consider “dimensions of freedom,” rating Oklahoma positively in two of the three broad areas (regulatory and fiscal) and negatively in only one (personal).
In describing the Sooner State as the fifth freest of the 50 states, the analysts say the state “does especially well on fiscal policy (ranking fourth), but slips, like many southern states, on personal freedom.” The two men conclude that over the past decade, the Sooner State improved more than any other state except for North Dakota.
Oklahoma governance is credited for low taxes and debt, yet mildly criticized on spending – at 13 percent of personal income it is “a full standard deviation worse than average.” In the Mercatus view, our state and local governments “have bloated payrolls amounting to 16.5 percent of the private workforce.”
The best ratings are given for fiscal policy in Oklahoma, where the state moved from 12th in 2001 to third in 2011.
While giving Oklahoma a mixed rating on regulatory policy issues, the study note an improvement from 34th place in 2001 to 17th place in 2011.
As for personal freedom, the authors contend the state improved a bit, from 43rd best in 2001. Like many other analyses of Oklahoma policy and practice, the writers conclude that some of the state’s criminal sentences are draconian,” and that arrests for victimless crimes “are well above the national average, significantly dragging down the state’s personal freedom score.”
The authors include these policy recommendations for Oklahoma:
* cut spending and the size of the government workforce until they are at the national average;
* more vigorously protect individual property rights; and
* reform sentencing for nonviolent crimes to reduce the crime-adjusted incarceration rate to the national average.
Despite the sweeping reach of their new study, the writers admit the dated nature of such analysis, which encompasses January 2001 to January 2011: “Most of the legislatures responsible for these policies were in power in 2009 and 2010.”
In an interview, state Secretary of Finance and Revenue Preston L. Doerflinger told CapitolBeatOK he was not surprised by the news: “Freedom is the best friend an economy can have. As Oklahoma’s laws have grown more free, our markets and economy have expanded. This is no coincidence.
The purity of our fiscal policy is the biggest reason we rank so high in this index. We balance our budget every year, as required by the state Constitution. Our tax burdens and debt levels are low, and we’re making them even lower. Our financial transactions are incredibly transparent. We spend modestly, although we would benefit from more performance-based budgeting at the state level. While there is room to improve, Oklahoma’s fiscal policy is more pure, free and respectful of liberty than most of our 49 peers.”
Doerflinger predicted the good news will get even better, because the data analysis in the study extends only through Jan. 1, 2011 – a few days before his boss, Gov. Mary Fallin, took office.
Since then, a .25 percent top income tax rate reduction enacted as part of a phased reduction in taxes, has gone into effect. Then, in November 2012, two significant ballot propositions gained easy approval.
One of those constitutional measures limited annual property tax increases to no more than 3 percent.
The second proposition reversed a state Supreme Court decision – as a result, “intangible” property cannot be taxed in Oklahoma.
Doerflinger noted the Mercatus analysis, which he praised, “does not reflect all the efficiency Gov. Fallin has achieved through government consolidation and modernization efforts, nor does it reflect all the tax reforms that have taken place under her administration. More modernization, tax reform and reduction and pension liability reform is underway. Our fiscal scores will be even stronger in this index once these accomplishments are reflected.
Oklahoma’s government is not one with heavy hands. Frankly, we’re trying to be hands off. We have the right model in Oklahoma. The folks in D.C. should take note, because our results far exceed theirs, without question. We’re never going to apologize for advancing free markets and individual liberties.
For our first hundred years, Oklahoma was run mostly by one party. Status quo developed under this single-party rule. Government and market systems were set up a certain way, and then little thought was ever given to if there was a better way. As conservatives, we’re proving every day that there is a better way. The results of the past decade, as our freedom index indicates, validate that point.”
News of the high ranking in the Mercatus study may provide fresh impetus for another incremental personal income tax rate reduction, and encourage renewed efforts to “right-size” state government.
Authors of the analysis excluded some areas from their statistical weighting, including abortion policy and the death penalty. However, they included information on both areas online at www.statepolicyindex.com, so that other analysts can examine their assumptions.
In the introduction to their study, Ruger and Sorens write: “Our index will have intrinsic interest for classical liberals and libertarians. However, non-libertarian social scientists will also benefit from the index because it is an open question how individual liberty relates to phenomena such as economic growth, migration, and partisan politics in the American states.
In the same way, while political scientists may value democracy for its own sake, they can also research empirically what causes democracy and how democracy affects other phenomena.”
Information about the 223-page book, “Freedom in the 50 States,” is available from Mercatus here.
To link directly to a section of the Mercatus site dedicated to the study, go here.