Report: Florida Less Free than Canadian Provinces

The Fraser Institute, a conservative Canadian think-tank, has just published the 2012 edition of its annual "Economic Freedom of North America" report. The study grades the economic freedom of all 50 U.S. states and and each of Canada's 10 provinces on a scale from 1 through 10, and ranks these territories in comparison with each other.

The 60 territories received 17 distinct freedom scores, with Canada's Prince Edward Island receiving the lowest score of 5.9 and Alberta receiving an 8.1. New Mexico and West Virginia received the next-lowest scores of 6, while the second-highest score was awarded to Delaware at 7.5.

Florida doesn't rank particularly low, but not particularly high, either: the Sunshine State received the 11th highest score of 6.6, tying with Wisconsin, Missouri, and New Jersey.

Overall, Canadian provinces lead U.S. states in average economic freedom with provinces averaging a score of 6.8 out of 10 compared to 6.7 out of 10 for U.S. states.

Economic freedom is a key ingredient in creating prosperity. States with high levels of economic freedom provide families with higher standards of living, said Nathan Ashby, professor at the University of Texas at El Paso and co-author of "Economic Freedom of North America 2012," in a press release.The heavy-handed regulation and extensive overspending by Washington in responseto the domestic and European debt crises not only caused Americas global economic freedom level to drop, its now affecting economic freedom levels at the state level.

The report examines key indicators ofeconomic freedom in the U.S. states and Canadian provinces based on size of government, taxation, rule of law and property rights, and regulation using data from 2010 (most recent year available); a separate chapter compares the economic freedom levels of the Mexican states. Economic freedom represents the ability of individuals and families to make their own economic decisions, free from government interference.

Earlier this year, the United States saw its global economic freedom ranking drop to 16thout of 144 nations and territories, its lowest-ever showing and a sharp drop from the second overall position in held in 2000.

The 10 states with the highest levels of economic freedom are: Delaware, Texas, Nevada, Wyoming, Colorado, South Dakota, Illinois, Georgia, Nebraska, and Utah. The states with the least economic freedom are: New Mexico, West Virginia, Mississippi, Vermont, Kentucky, Maine, Montana, Arkansas, Rhode Island, and Hawaii. While the United States national decline in economic freedom is now being felt at the state level, Canadas 10 provinces have seen their economic freedom scores improve.

The link between economic freedom and prosperity is clear: States that support low taxation, limited government, and flexible labor markets benefit from greater economic growth, said Fred McMahon, Dr. Michael A. Walker research chair in economic freedom (Fraser Institute) and co-author of the report. In contrast, states with reduced levels of economic freedom see lower living standards for families and fewer economic opportunities.

The report notes that the average per-capita GDP in 2010 for the top 10 states was $51,737 compared to $44,889 for the remaining states.

The gap is more significant if only the bottom 10 states are examined, where average per capita GDP in 2010 was $38,017, compared to the $51,737 among the top 10 states -- a difference of $13,720.

Delaware, the most economically free state, ranked first among all states for having the smallest size of government and most flexible labor market, while Alaska, Delaware, and Texas impose the lightest tax burdens overall.

The states with low scores on these measures have corresponding low levels of economic freedom. New Mexico and West Virginia score worst for size of government; New Jersey and Rhode Island score worst for taxation; while West Virginia, Alaska, and Hawaii score worst for labor market freedom at the all-government (comprising federal, state/provincial, and municipal/local) level.