Report: California Second Worst State for Economic Freedom

A new international report has found that due to the burden of regulatory overreach and the highest taxes in the nation, California ranks 49th out of all 50 U.S. states in economic freedom. Only New York is worse.

When Canada’s Fraser Institute published its 2017 “Economic Freedom of the World” survey in September, the index surprisingly found that the United States suffered the third-worst plunge in economic world freedom (EWF) between 2000 and 2015, by falling 7 places from number 4 to number 11.

The index measures individual components for 1) the size of government and tax rates; 2) impartiality of the legal system and protection of property rights; 3) sound money and inflation; 4) freedom to trade; and 5) regulatory reach and costs.

Co-author Fred McMahon commented, “The freest economies operate with comparatively less government interference, relying more on personal choice and markets to decide what’s produced, how it’s produced, and how much is produced.”

Researchers at the Fraser Institute teamed with the U.S.-based Independent Institute’s Center on Entrepreneurial Innovation to gain insight into how much of America’s dismal loss of competitive standing was caused by California’s two-decade lurch to the left.

What they found is that California is now the second-least economically free state, with a score of 5.8 out of 10. That is about 30 percent lower than New Hampshire — America’s most economically free state, with a score of 8.3. New York continued to capture the booby prize for the least economically free with a score of 5.3.

To give a sense of just how far California has fallen, the nation of Mexico has a score of 6.17, or about 6.4 percent higher than California.

Independent Institute Senior Fellow Dr. Lawrence J. McQuillan stated that California has become so toxic for economic opportunity that 10,000 businesses left the Golden State, reduced operations, or expanded elsewhere over the last 7 years. Census data reveal that 3.5 million residents left California for greener pastures from 2010 to 2015.

Breitbart News recently reported that California continues to lead America in poverty, with 20.4 percent of residents in poverty, according to data released by the Census Bureau. With about 46,686,000, or 14.7 percent, of U.S. residents living in poverty, California, with 7,946,000, accounts for about one in six U.S. residents living in poverty.

According to David J. Theroux, Founder and President of the Independent Institute, “The 2017 report shows the public, news media, and policymakers in Sacramento what changes need to be made to make California competitive in the future.”