Economics 101 & Public Square & Theology 101

Rich States, Poor States, and the State of Flourishing in Your Community

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This past weekend I had the pleasure of attending the Free Market Forum, hosted by Hillsdale College. The last in a series of excellent panels of speakers, one addressing the finances of American cities, stood out to me in light of some recent data upon which I have been reflecting.

Rick Baker, the former mayor of St. Petersburg, Florida, recounted his experiences turning around a city formerly divided by various socioeconomic factors. He listed qualities that are important when determining what good stewardship looks like for a city, including public safety, schools, economic development, quality of life, and government services.

Though, as an economist, my ultimate vision for the role of institutions like government and business differs from his as a politician, the qualities he listed are important ones to consider.

While Baker’s entire list is essential, I would like to focus briefly on the importance of economic development and freedom.

Rich States, Poor States

The American Legislative Exchange Council, in conjunction with economist Arthur Laffer and others, recently published their yearly Rich States, Poor States report, chronicling the current relative economic freedom of the fifty states and the potential for economic freedom going forward. What they report has implications for the flourishing of our communities. First, here are the key findings of the report:

  • Rich States, Poor States rates states’ economic outlook based on fifteen economic factors that are directly influenced by state policy makers. The states with the highest-ranking economic outlook include Utah, South Dakota, Indiana, North Dakota, and Idaho. The bottom five includes New York, Vermont, Illinois, California, and Minnesota.
  • Texas, Utah, Wyoming, North Dakota, and Montana received the highest rankings for economic performance based on state GDP, absolute domestic migration, and non-farm payroll employment.
  • Economic concentration is migrating to the south and west. The states that gained the most from people moving to them include Texas, Florida, North Carolina, Arizona, and Georgia.
  • States that have lost the most people to migration include New York, California, Illinois, Michigan, and New Jersey.
  • States’ tax policy is becoming polarized; North Carolina, Indiana, Missouri, Ohio, Kansas, Colorado, and Illinois all experienced growth through major tax cuts, while Oklahoma, Nebraska, Michigan, Tennessee, Minnesota, and Virginia all experienced setbacks.

We often talk about the importance of economic freedom in very abstract terms. Terms like GDP and trade restrictions and the Heckscher-Ohlin model can be confusing, and often we zone out when the topic comes up in conversation. But have you ever thought about how your community’s economic freedom affects the ability of your community to flourish?

What Economic Freedom Means for Stewardship and Flourishing

The concept of stewardship is often applied only to discussions about material resources. The parable of the talents is sometimes applied to how well we handle money on an individual basis. This is certainly true, but the ability of one to be a good steward of his or her gifts may depend on the quality of the stewardship of their community.

Poor stewardship in any one aspect of the list of qualities Baker listed harms the potential for success in cultivating the rest, and if citizens are discouraged from developing their resources in one way or the other, they will choose to leave the community in search of another.

ALEC’s report shows us the effects of good and poor stewardship in instances of financial and policy management. The states that allow greater economic freedom attract more business and foster prosperity. This is a self-perpetuating cycle, because it strengthens the effects of the other efforts, and it attracts individuals who also desire to pursue prosperity.

What are ways in which we can help our states, communities, and workplaces flourish?

Leave your comments here

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