OPINION: Tennessee ranked in top five states in the country for economic freedom

Clint Cooper, Chattanooga Times Free Press, Tenn.
·4 min read

Mar. 20—If you follow Washington politics, you know the Biden administration and congressional Democrats are in somewhat of a hurry.

With the passage of the pork-infested COVID relief bill behind them, they're ready to load up an otherwise needed infrastructure bill with more goodies for their denizens. They also are pushing bills on gun control, on weakening voting restrictions and on codifying more illegal immigrants.

They're in a hurry because they're worried they could lose control of both the House and the Senate in the 2022 midterm elections. But they know something else. They know the 2020 census is likely to weaken their majority in the House by taking at least one seat each from Democrat-controlled California and New York, and giving three to Texas and one to Florida, both of which lean Republican.

States lose seats in the House when residents flee those states. And that's what has been happening in California and New York, both of which have high taxes (California's nation-leading 62.5 cents a gallon gas tax being one example), authoritarian Democratic governors and increasingly less freedom.

New York had a net loss of 203,567 residents, according to the Census Bureau's state-to-state migration estimates through mid-2018, while California's net loss was 190,122.

Indeed, the states are two of the least free in the U.S. in Fraser Institute's annual Economic Freedom in North America index.

The good news, according to the 2020 index's objective measures of government spending, taxation and labor market freedom, is that Tennessee is one of the most free states.

And, according to data, people increasingly are moving to the states considered more free. According to the index, a net 788,381 people moved to the top five "freest" states on the list — Florida, New Hampshire, Tennessee, Texas and Virginia — over the course of a year.

In fact, the Times Free Press reported in January that Tennessee in 2020 saw the largest net gain of U-Haul trucks crossing its border, making it the top U-Haul growth state (the net number of one-way U-Haul trucks entering the state versus those leaving it) for the first time.

Not surprisingly, California — by a wide margin — had the highest net loss of trucks.

"I'm seeing a lot of people from California move (to Tennessee) because they're attracted to our lifestyle," Jeff Porter, U-Haul Company of Nashville president, said in a statement. "Tennessee has no income tax and is very business-friendly. There are plenty of jobs. People and companies are taking note."

Tennessee ranks fifth on the new economic freedom list. Since the list began in 1981, the state has been as high as No. 1 in the country — in 1992 and 1995 — and as low as 11th in 2005.

In the measures that go into determining the ranking, the Volunteer State ranked 17th in lowest per-capita government spending, No. 1 in lowest taxation burden and sixth in labor market freedom.

Since the index began, Tennessee, with Republican or relatively conservative Democratic governors, has been ranked as high as second in lowest per-capita government spending in 1984 and 1989 and as high as 29th in 2006.

In lowest taxation burden, it has been ranked No. 1 18 times — 1987, 1989-1992, 1994-2001, 2004, 2009, 2012, 2014 and 2018. Its high mark in taxes came in 1993 when it rose to 10th.

Regarding labor market freedom, Tennessee has been as high as sixth, from 2015 through 2018, and as low as No. 30 in 1986.

"Economic freedom at the subnational level," the Fraser Institute report says, referring in the U.S. to states, "has generally been found to be positively associated with a variety of measures of the per-capita size of the economy and the growth of the economy as well as various measures of entrepreneurial activity."

In other words, the more economic freedom a state has, the healthier its economy is.

"The vast majority of the results [of studies using Economic Freedom in North America index data]," the report goes on, "correlate higher levels of economic freedom with positive outcomes, such as economic growth, lower unemployment, reduced poverty, and so on."

Because of Tennessee's healthy economy, it has survived COVID-19 shutdowns and subsequent job losses and has retained a better unemployment rate than most states.

But to the in-a-hurry Democrats, that means one thing. The state deserves less than its proportional share of stimulus money from the COVID relief bill.

Gov. Bill Lee took the slap in stride.

"We didn't need it," he said during last week's Millennial Debt Foundation summit. He later added, "We will be happy to take the money and determine how to spend it wisely."

Of course, with more people moving here because of the state's economic freedom, that pie will need to be cut in more pieces. But that's a good kind of problem for a state to have.