Government size matters

According to the Pacific Research Institute, two thirds of the Tri-State area does not rank well in terms of economic freedom.

On Tuesday, the PRI released its “U.S. Economic Freedom Index: 2008 Report,” which ranks “economic freedom” in the 50 states among 143 variables, including “regulatory and fiscal obstacles imposed on businesses and residents.”

The PRI is a nonprofit, non-partisan organization which, for the past 29 years, has “championed freedom, opportunity, and individual responsibility through free-market policy solutions.”

The PRI is based in left-leaning San Francisco, but we’ll give it the benefit of the doubt that it champions free markets.

What’s most interesting about the latest rankings is Texas’ drop, a precipitous 14-spot fall from previous rankings. Texas was 31st overall, while New Mexico was even worse at No. 41. Oklahoma led the Tri-State area at No. 7.

Texas, in particular, did not fare well in the categories of government size (49th) and regulatory (49th).

According to the Index’s appendix, the government size sector includes state and local expenditures as a percent of GSP; state and local revenue as a percent of GSP; legislators per million people; and the ratio of local to state education employees.

The institute’s regulatory sector includes licensing requirements for numerous non-health and health professions; continuing education requirements for selected professions; gun permits; and state legislation about environmental health.

New Mexico was dragged down by welfare spending (44th), while Oklahoma’s poorest ranking was government size (37th).

What doesn’t add up is that Texas has an economy that is, by far, one of the strongest in the nation, and certainly more vibrant than New Mexico or Oklahoma, and even most countries.

As the saying goes, things are bigger in Texas, but maybe it is worth keeping an eye on the size of state government and how it regulates everything from guns to gardeners.

In this case, the numbers indicate – by comparison – that bigger is not always better.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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