How Free are We?

Quality of Life
February 15, 2017

Are South Carolinians able to freely participate in the marketplace, take risk and test the limits of the ingenuity? Time and again it has been proven that the free-enterprise system is the greatest program for lifting humans out of poverty the world has ever seen, thus the answer to the question is important to the health of South Carolina.

That’s why Palmetto Promise Institute was proud to partner with The Fraser Institute and 27 other state-based research institutions to co-publish a new report: Economic Freedom of North America 2016.

So how does South Carolina rank in economic freedom? It depends on the entities the Palmetto State is compared to. When comparing South Carolina to all fifty states, all of the provinces of Canada, and the states of Mexico, South Carolina is tied for 4th place in economic freedom.

On a subnational level though – comparing South Carolina to only U.S. states – South Carolina is tied for 32nd place with New Hampshire in the lead.

South Carolina’s tie for 32nd place among the U.S. States is due to a confluence of rankings on three specific aspects: government spending, taxes, and labor market freedom. The research reflects the findings of 2014 data which is the most recent data available.

Though weighed down by a relatively poor showing on the government spending metric, a relatively low union density in this right-to-work state and lower taxes than some of the larger states such as New York and California buoy the Palmetto State closer to the middle of the pack.

For a quick look at how South Carolina ranked in regards to the three main aspects of the report, click here.

Impetus to strive toward more economic freedom:

Since 2004, the average score for U.S. states has fallen from 8.26 to 7.70 out of 10 in 2014, driven largely by changes at the federal level.

In the most-free states, the average per capita income in 2014 was 4.7 per cent above the national average compared to roughly 3.3 per cent below the national average in the least-free states.

“The link between economic freedom and prosperity is clear—people who live in states that support low taxation, limited government and flexible labor markets have higher living standards and greater economic opportunity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.

Dean Stansel, economics professor at Southern Methodist University and co-author of the report adds, “Americans have been voting with their feet against the ‘big government’ approach of New York and California. Florida and Texas have experienced more than two-and-a-half times faster population growth in recent years, and they’re among the freest states in the country.”

If the Palmetto State wants to be competitive in an increasingly globalized world, this Economic Freedom in North America report is an excellent barometer to diagnose the strengths and pitfalls of economic freedom in South Carolina, and can serve as a launch pad for more free-enterprise solutions in the years to come.

We hope you will take a look!

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