Economic Freedom of the Cities: Socioeconomic Benefits of Freedom at the Local Level Association of Private Enterprise Education April 2015 www.antonydavies.org 1
Economic Freedom of North America Economic Freedom of the World Size of government Government consumption Transfers and subsidies Social Security payments Takings and discriminatory taxes Tax revenue Top marginal income tax rate and threshold Other tax revenues Labor market freedom Minimum wage Public sector employment Union density www.antonydavies.org 2
For each year, divide the states into two groups 25 least free 25 most free www.antonydavies.org 3
Economic Freedom of North America (1985 2009) Least Free Most Free www.antonydavies.org 4
Income www.antonydavies.org 5
Economic Freedom of North America (all levels of government) 1985 $22,000 $24,000 Data source: U.S. Census Bureau, Historical Income Tables: Households, Table H-8; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 6
Economic Freedom of North America (all levels of government) Less free: $35,300 More free: $38,000 Median household income averaged 7.6% higher in the more free states. Data source: U.S. Census Bureau, Historical Income Tables: Households, Table H-8; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 7
Counterargument Household income measures mask two-worker households. $30,000 $30,000 $50,000 www.antonydavies.org 8
Per-Capita Personal Income www.antonydavies.org 9
Economic Freedom of North America (all levels of government) Less free: $23,300 More free: $25,000 Per-capita income averaged over 7.3% higher in the more free states. Data source: U.S. Census Bureau, Historical Income Tables: Households, Table H-8; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 10
Counterargument Higher incomes can mask the effects of unemployment. www.antonydavies.org 11
Unemployment www.antonydavies.org 12
Economic Freedom of North America (all levels of government) Less free: 5.8% More free: 5.2% The difference in unemployment rates = 1 million jobs. Data Source: Census Bureau, Statistical Abstract of the United States; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 13
Counterargument Unemployment data ignore the chronically jobless. www.antonydavies.org 14
Poverty www.antonydavies.org 15
Economic Freedom of North America (all levels of government) Less free: 13.6% More free: 11.9% The difference in poverty rates = 5 million people living in poverty. Data source: Bureau of Economic Analysis, GDP and Personal Income Regional Data; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 16
Counterargument Low poverty rates can mask large inequalities. www.antonydavies.org 17
Outcome Inequality www.antonydavies.org 18
Economic Freedom of North America (all levels of government) Less outcome inequality in more free states. Data source: Census Bureau, American Community Survey, B19083; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 19
Migration www.antonydavies.org 20
Economic Freedom of North America (all levels of government) People move from less free states to more free states. Data source: Census Bureau, American Community Survey, B19083; Ashby, Bueno, and McMahon, Economic Freedom of North America 2011, Fraser Institute www.antonydavies.org 21
Counterargument Perhaps there is something strange about Americans. www.antonydavies.org 22
Poverty www.antonydavies.org 23
Economic Freedom of the World (79 countries, 2000-2010) Less free: 59% More free: 17% Data source: World Bank, Economic Freedom of the World, Fraser Institute www.antonydavies.org 24
Counterargument Rich country effect. www.antonydavies.org 25
Economic Freedom of the World (25 poorest quartile countries, 2000-2010) Less free: 81% More free: 64% Data source: World Bank, Economic Freedom of the World, Fraser Institute www.antonydavies.org 26
Outcome Inequality www.antonydavies.org 27
Economic Freedom of the World (123 countries, 1995-2009) Less free: 43 More free: 35 Data source: CIA World Factbook, Economic Freedom of the World, Fraser Institute www.antonydavies.org 28
Child Labor www.antonydavies.org 29
Economic Freedom of the World (75 reporting countries, 2000-2009) Less free: 28% More free: 13% Data source: Childinfo.org, Economic Freedom of the World, Fraser Institute www.antonydavies.org 30
Counterargument Rich countries export child labor to poor countries. www.antonydavies.org 31
Economic Freedom of the World (26 poorest quartile countries, 2000-2009) Less free: 41% More free: 27% Data source: Childinfo.org, Economic Freedom of the World, Fraser Institute www.antonydavies.org 32
Environment www.antonydavies.org 33
Economic Freedom of the World (85 countries, 2007) Less free: 85 More free: 30 Data source: World Health Organization, Economic Freedom of the World, Fraser Institute www.antonydavies.org 34
Economic Freedom of the World (136 countries, 1990-2005) Less free: 7% More free: +7% Data source: Mongabay.com, Economic Freedom of the World, Fraser Institute www.antonydavies.org 35
Counterargument Rich countries export environmental exploitation. www.antonydavies.org 36
Economic Freedom of the World (29 poorest quartile countries, 1990-2005) Less free: 13% More free: 7% Data source: Mongabay.com, Economic Freedom of the World, Fraser Institute www.antonydavies.org 37
Peace www.antonydavies.org 38
Global Peace Index (inverse scale) Economic Freedom of the World (133 countries, 2009) Countries that are more free are also more peaceful. Data source: Institute for Economics and Peace, Economic Freedom of the World, Fraser Institute www.antonydavies.org 39
Counterargument Aggregation may be hiding important information. www.antonydavies.org 40
Economic Freedom of US Cities (first vs third quartiles, 2009) Less free: 7.6% More free: 5.5% Data source: Stansel (2013), Census Bureau www.antonydavies.org 41
Economic Freedom of US Cities (first vs third quartiles, 2009) Less free: $49,700 More free: $52,600 Data source: Stansel (2013), Census Bureau www.antonydavies.org 42
Economic Freedom of US Cities (first vs third quartiles, 2009) Less free: 17.1% More free: 15.2% Data source: Stansel (2013), Census Bureau www.antonydavies.org 43
Conclusion www.antonydavies.org 44
Across countries, states, cities, and time, societies with more economic freedom have Less unemployment Higher incomes Less poverty Less outcome inequality Less child labor Better environments More peace www.antonydavies.org 45
Economic Freedom of the Cities: Socioeconomic Benefits of Freedom at the Local Level Association of Private Enterprise Education April 2015 www.antonydavies.org 46