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Lack of economic freedom burdens Kentuckians

(Bowling Green, Kentucky) – If not for West Virginia, Kentucky would rank dead last among its surrounding states in vital economic freedoms, according to a report released today.

The annual Economic Freedom of North America report, released jointly by the National Center for Policy Analysis and Canada’s Fraser Institute, ranks Kentucky 33rd among American states and Canadian provinces. The findings are based on such factors as the amount of goods and services consumed by government, burdensome taxation and restrictive labor policy.

The report finds that more economic freedom corresponds to increased growth and greater prosperity in states. The report states: “An increase of one point in economic freedom in a US state will increase that state’s per-capita income by $5,907.”

This middle-of-the-pack ranking places Kentucky in a precarious position. Six of seven surrounding states fared better than the commonwealth on the all-government rankings. Only West Virginia fared worse in 53rd place. Indiana, Tennessee and Virginia tied for 10th place.

The vital importance of economic freedom becomes crystal clear when examining its effects. The U.S. Census Bureau found that 146,000 more people chose to call Tennessee home between 1995 and 2000. Virginia gained nearly 76,000 new residents and poorly-ranked West Virginia lost almost 11,000. Kentucky gained only about 34,000 during the same time frame.

“People simply prefer to live and work in states with more open, freer economies,” said Aaron Morris, a fiscal policy analyst for the Bluegrass Institute, Kentucky’s free-market think tank. “Less regulation, lower taxes and more personal freedom encourages new business startups, job creation and the pursuit of more education. At every socioeconomic level of a state’s economy, more freedom yields greater opportunities.”

Sound policy decisions in the coming months could mean improved prospects for Kentuckians while poor decisions could drag the commonwealth further down the list.

Passing right-to-work legislation would expand job opportunities, eliminating the new Alternative Minimum Calculation (AMC) would increase business startups and forbidding eminent domain for economic development are all examples of actions that would enhance Kentucky’s economic-freedom ranking and the fortunes of its residents.

  The Bluegrass Institute is a free market think tank in Kentucky.

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