I got two reports the other day, and they fit nicely together. The first says that Pennsylvania ranks at the bottom of the pile when it comes to economic freedom, and the other shows that Pennsylvania ranks at the top of the pile when it comes to how much we pay our state legislators, and they want more.
The first report, “U.S. Economic Freedom Index: 2004 Report,” says that only five states are worse than Pennsylvania, economically speaking, when it comes to the burden of fiscal and regulatory obstacles imposed on residents and businesses.
To rank the states, the study’s co-authors, Lawrence J. McQuillan, Ph.D., of the Pacific Research Institute, and Robert E. McCormick, Ph.D., and Ying Huang of Clemson University, measured and compared more than 100 variables, including tax rates, occupational licensing barriers, tort law reforms, environmental rules, income redistribution systems, labor regulations, the number of government agencies, and the overall level of state spending.
The bottom line of the report states that there’s a direct correlation between economic freedom and migration, and between economic freedom and income growth. Simply stated, jobs and people are moving to the states that are the most hospitable in terms of business climate. New investment, new jobs and faster income growth, in short, are the direct result of limited government, restraints of regulatory and lawsuit abuse, and a reasonable level of taxation.
The report’s conclusion: “Statistical results show that more economic freedom yields higher personal income across the United States.” More specifically, a better place to start a business attracts more investment, creates more jobs, generates more demand for labor and produces greater income growth.
“Cities and regions that attract smart people will have a leg up,” writes Forbes publisher Rich Karlgaard in the foreword to the study. “But cities also need to be competitive on costs, taxes and regulations, and not be seen as havens for frivolous litigation. Entrepreneurs risk big as it is. They must be given a chance to grow their enterprises without excessive hurdles, worries and uncertainties.”
As a political footnote, the six states that bring up the rear in the 2004 Economic Freedom Index — Pennsylvania, Illinois, Rhode Island, Connecticut, California, and New York — all went for John Kerry in the presidential election. On the other end, all six of the states scoring highest in economic freedom — Colorado, Virginia, Kansas, Idaho, Utah, and Oklahoma — ended up firmly in the George W. Bush column on election night.
The end result for Pennsylvania? “Despite — or perhaps because of — Pennsylvania politicians’ attempts to generate economic prosperity through taxpayer subsidies and government intervention in the marketplace, the commonwealth ranks 45th among the 50 states in economic freedom,” says Grant R. Gulibon, senior policy analyst at the Harrisburg-based Commonwealth Foundation. “And that lack of freedom is shrinking Pennsylvanians’ paychecks. The link between economic freedom and financial prosperity is clear.”
Similarly, from Matthew Brouillette, president of the Commonwealth Foundation: “This report’s analysis of economic freedom confirms what many of us have been saying for years — Pennsylvanians are the victims of state government’s fiscal neglect, regulatory overload, and bad economic policy.”
The other bad news is that the same Pennsylvania legislators who’ve mismanaged their state into this bottom of the pile status are now looking for a healthy hike in pay. Already, at $66,204 per year, they’re the fourth highest paid state legislators in the nation, without a raise. Add the annual $13,000 tab for their health insurance, plus $650 per month in car lease reimbursements, and $126 per day in travel expenses for 100 days, and these guys are costing taxpayers $99,604 per year, excluding bribes, plus whatever price Pennsylvanians are paying for living in a place where these legislators have essentially squeezed the life out of the economy.
What they’re batting around now, if they can slip it through without stirring up too much attention from the taxpayers, is voting themselves a boost in base pay that’ll take them from $66,204 to $79,000. Add the aforementioned fringes and that’s $112, 400, or about $100,000 more than they’re worth, grabbed straight out of taxpayer wallets by just the raise of a hand in what is, in essence, an act of collective pickpocketing. If there was any justice left, given that they’re all repeat offenders, the whole bunch of them would be doing six to ten in orange jumpsuits.
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