The venerable Manhattan-based Forbes and the venerable San Francisco?based Pacific Research Institute have drummed up a "U.S. Economic Freedom Index," which rates the states according to dozens of variables, including taxation, legal exposure, and environmental regulations. The not-so-surprising outcome: New York is the least free state, and Kansas is top of the heap, ostensibly the best place to conduct business in this sweet land of liberty.
An invitation to an event promoting the index asked, "If you had to relocate your headquarters or start a new office, would you choose New York? Or would you consider Kansas?" Let me play Red State Socrates and respond: If you had to choose somewhere to live, would you really move to Jayhawk country if you could figure out any way, short of acting in porn, to stay in New York?
It's not a hypothetical concern for me. (Living in middle America, not the porn job.) Until a recent move to the Washington, D.C., area, I spent the last eight years where the land is plentiful, the houses cheap, and the taxes low–in other words, in a zone of relative economic freedom. From 1996 to 1998, I lived in Huntsville, Texas, a prison-and-college town (ain't they all) with a total population of about 30,000; from 1998 until last summer, I lived in small-town Ohio. My takeaway: Fewer tax and regulatory hassles and, most important, a tremendously lower cost of living are, in the end, probably not that important to people.
Living in Huntsville in particular taught me that the cost of living is far less important than the demand for living. In the mid-'90s, I looked at five-bedroom houses there priced at $100,000 that still weren't selling. If you can't move that much house at that low a price, there just isn't a lot of living going on. (As if to underscore the point, Huntsville is the site of the Lone Star State's death chamber.) Truth be told, there just wasn't that much to do, and not simply for the prisoners. Everything was a long drive away, the population was sparse, and so on. That's one reason it was cheap to live there. Much of the time, economic freedom's just another word for nothing else to do.
The simple fact is that many people–arguably most people, if population patterns are any indication–are ready, willing, and able to pay a steep premium to live in more densely populated places where things inevitably cost more money and take more time, where there are more regulations, higher taxes, bigger annoyances, you name it.
It's useful to think of any given area as making a deal with people who might live there: We'll throw off this much employment opportunity, this many diversions, this much action, at a given price –a figure that includes not only money but all the sorts of petty tyrannies that zoning and planning boards routinely generate. There are times and places where that deal isn't considered worth it. Witness the relative emptying of many American cities during the '60s, '70s, and '80s and the concurrent shift to the Sunbelt.
But even then, most people and businesses didn't hightail it to Kansas. Instead, they camped out near the old cities, sucking as much warmth out of the dying beasts as possible. Or they quickly turned the new low-cost utopias into versions of what they left behind. That's why Phoenix is the new Los Angeles, not the new Salina.
"Economic freedom"–or at least the range represented between Kansas and New York–is pretty far down the list of what drives decisions about location, whether for businesses or individuals. Yes, regulations are always and everywhere too high. New York would be better off if Albany's overlords taxed and spent less. Yet, most of us choose to live under the yoke of economic oppression. That's especially true in major cities, which typically have Third World?style kleptocracies in place to rip off the very people who keep the places flush in cash, commerce, and coolness.
But until I get an invite to the grand opening of the new Manhattan, Kansas, headquarters of Forbes and the Pacific Research Institute, I won't be thinking too much about their economic freedom index.?