The Fraser Institute has published new data showing how policy incentives shape states’ growth.
If economic freedom were a stock, analysts would call it boring — and then quietly recommend buying it anyway.
For decades, states that limit government growth, keep taxes low and predictable, and allow labor markets to adjust have outperformed their peers on jobs, incomes, and growth. This is not fashionable economics. It doesn’t promise quick fixes or dramatic announcements. It just works. And the latest Economic Freedom of North America (EFNA) data published by the Fraser Institute show that it still does.
The EFNA index evaluates states using the latest data (2023) across three simple but powerful dimensions: how much the government spends relative to income, how heavy and complex taxes are, and how flexible labor markets remain. Nothing exotic. No ideological scoring. Just the institutional rules under which people live. Those rules matter because they shape incentives.
When government grows faster than the economy, something else must shrink. When taxes are steep or complex, labor and capital shift from production to avoidance. When labor rules make it harder for employers and employees to contract, hiring slows and labor markets soften.
None of this shows up overnight. But it shows up reliably. You can see it in how states behave — and how people respond.
...read more at thedailyeconomy.org
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I like the simplicity of their scoring system.
Cato has a similar project, which I also like, but it tries to include everything separately, which ends up making the weights incredibly important.
Seems right
This makes me want to cry
It is easy to overlook how much the quiet fundamentals matter in driving long term prosperity. The Fraser Institute’s EFNA index is not telling an exciting new story. It is confirming a decades long pattern that stability in the rules of the game fosters growth. When states resist the temptation to expand government faster than the underlying economy they protect the space for private sector productivity. When they keep tax systems straightforward and rates reasonable they reduce the incentive for people and businesses to focus on avoidance rather than creation. And when labor markets remain flexible they allow for quicker adaptation to changing conditions which is essential in a dynamic economy.
I keep being given reasons to move to Florida and I've gotten to where I can't deny it any more.