PELA seminar focuses on U.S., Kansas rankings in providing economic freedom

Economic freedom and how to keep it, both in the U.S. and in Kansas, were the subjects of the latest session of the Pearson-Eby Liberty Academy (PELA) presented by Dr. Russ McCullough, Director of the Gwartney Institute on the campus of Ottawa University.

PELA is dedicated to educating and equipping the next generation of leaders on the values associated with freedom. The sessions are free of charge.

Dr. McCullough began by defining economic freedom:

“Individuals have economic freedom when property they acquire without the use of force, fraud, or theft, is protected from physical invasions by them, and they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. In order to achieve a high economic freedom rating, a country must keep government spending and taxes low,  provide access to sound money, protect property rights and enforce contracts evenhandedly. It must also refrain from imposing trade barriers and regulations that undermine voluntary exchange.”

He explained there are five factors determining a country’s economic freedom:

*Size of Government (Spending, Taxation)

*Legal System and Protection of Property Rights

*Access to Sound Money (Manageable Money Supply and  Inflation)

*Freedom to Trade Internationally (No Tariffs)

*Regulation of Capital, Labor and Business

He emphasized the critical role of property rights as an integral component of economic freedom:

“So, you have property that you acquired in a fair way of some sort. So, you’re able to do that, and it’s protected from physical invasion by others. You’re free to use it, exchange it, give it, throw it away, trash it, as long as whatever you do with it does not violate the identical rights of others.”

He offered a macroeconomic review of economic freedom worldwide, citing the website freetheworld.com. The U.S. is listed as the fifth freest country relating to the five factors:

Most of the same criteria can be applied to states to measure their economic freedom in a microeconomic analysis:

*Government Spending

*Taxation

*Labor Market Freedom

By these measures, Kansas comes in at #14:

“We always have this border rivalry, so I thought this would be fun. Missouri is 22, and Kansas is 14. Overall, in government spending, Kansas is above in that category; in taxes, Missouri is higher, which means Missouri’s taxes are lower, but have you guys driven on the roads in Missouri? So, anyway, there’s a balancing to it. This isn’t a perfect thing, but at least it allows you some outside comparisons with the data. And the labor market freedom was higher in Kansas, and I think that’s because of some of the minimum wage stuff that Missouri started.”

Interestingly, of the nine states that do not levy an income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, only Alaska is listed among the least free states economically in the U.S.

Dr. McCullough summarized his presentation, with a recommendation for Kansas policymakers:

“I’ll conclude here with how the index could be used to look at based on trouble spots in Kansas where they’re falling. So we’ve seen government spending increase. The recommendation from Russ McCullough, that probably won’t be listened to, is let’s not do it more than where we are. Let’s not increase it. Maybe there are some good reasons not to decrease it, but that (increasing spending) would tend to take away economic freedom. Since I’m a believer in that, that’s kind of the direction I have. So again, don’t look towards income taxes as a way to  balance a budget, because we might have some of those negative consequences that come along with decreasing economic freedom.”

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