Alaska Plummets to 48th in Economic Freedom in the States

Alaska's economic freedom rating drops from 2oth in 2012 to 48th! How low can we go?

The 11th edition of the highly respected report Economic Freedom of North America has been released and it shows Alaska dropping in economic freedom.  In the index Alaska ranks 48th among the 50 States.  In the previous year’s edition Alaska ranked 2oth out of the 5o States.  Dropping like a 3# lead weight fishing for halibut.

The 2015 freedom index–this year’s data runs through 2013–attempts to measure the degree to which governments across Canada, the U.S. and Mexico restrict (or permit) economic liberty.  It is produced by the Fraser Institute, a Canadian research organization based in Vancouver, BC.

The top ranked State for economic freedom is New Hampshire, followed by South Dakota, Texas, Florida and Tennessee.  New York finished dead last.  The other least free States included California, Hawaii and New Mexico.

The authors of the index noted that per capita personal income in the most free States was seven percent above the national average compared to eight percent below in the least free State.  This is probably not a coincidence.

Economists have long investigated how and why some nations and people grow rich, using a number of valuable categories.  Their conclusions are usually mundane: property rights, the rule of law and an ability to engage in voluntary exchange often rank high on the list associated with national wealth.  So, economic freedom does matter and the Fraser Institute’s index is one way to measure economic liberty and compare States and nations.

The freedom index is built around data compiled on such things as the size of government, laws governing labor markets, and the level and types of taxation.  Within each of these major categories are ten subcategories.  For example, under the size of government the index uses data such as government expenditures as a percentage of personal income.  The authors rank these variables on a scale of one to ten and total the scores in each area.  The higher the score, the greater the economic freedom. Here is a short video explaining the concept:

The Walker Administration will surely ensure that Alaska drops to dead last in the index if all the proposed taxes, large government, and anti-Right To Work prevail.  The governor has proposed 6 new taxes including a 6% state income tax.  Plus he has proposed reducing the Permanent Fund Dividend to $1,000 which is in effect a 50% tax on individuals based on the last PFD of $2,072.  And he has proposed only  a 2.5% cut in government spending and very little in the way of right sizing the government payroll–which is now about 22,000 including the University system.

The authors have provided 100 percent transparency on their data sources.  These data are available on the Fraser Institute’s website, “Free the World” which hosts the entire study.

Where will Alaska rank in next year’s study of economic freedom?  If more and more taxes are levied on industries, businesses and individuals, State government is not right sized, and workers are forced to join a union to keep a job, then Alaska will be dead last.  You can count on it.