February 8, 2015

Click here to view and here to listen to Dr. Terry Stoops discussing the new First in Freedom Index.

RALEIGH — North Carolina ranks No. 23 among the 50 states, and No. 5 among Southeastern states, in freedom. That’s according to the John Locke Foundation’s newly released First in Freedom Index.

JLF unveiled FFI in connection with its 25th anniversary celebration Feb. 7 in Research Triangle Park. “Using our research and data-driven analysis, the John Locke Foundation will guide lawmakers to policies that will make North Carolina more free and more prosperous,” according to the index’s executive summary. “Our mission is to create a North Carolina that is truly First in Freedom.”

Florida ranks No. 1 on the FFI list, followed by Arizona, Indiana, South Dakota, and Georgia. New York is the least-free state, followed by New Jersey, California, West Virginia, and Kentucky. In addition to Florida and Georgia, North Carolina trails Louisiana (No. 6) and Virginia (No. 16) among Southeastern states.

Twenty-five years of peer-reviewed academic research studies show a strong connection between freedom and economic growth, according to the report.

“If North Carolina policymakers want to maximize job creation, income growth, and economic opportunity for its citizens over the coming years and decades, they should place a higher priority on reducing the size and scope of government, promoting choice and competition in services such as health care and education, and protecting personal freedom from encroachment.”

Building upon three existing indexes from the Canada-based Fraser Institute, the Mercatus Center at George Mason University, and the Tax Foundation, JLF has added more data and ranked each state in four categories: fiscal, educational, regulatory, and health care freedom. The index will help N.C. decision makers identify states with policies that should serve as examples for future action here.

North Carolina fares best in the fiscal freedom ranking at No. 16 nationally and No. 3 in the Southeast, trailing only Florida and Virginia.

“Here is a case where recent legislation has made a big difference,” according to the report. “Before the state’s 2013 tax reform, North Carolina ranked among the worst states in the nation in tax climate. If the tax reform bill hadn’t passed, it is likely that North Carolina’s total ranking on fiscal freedom would have been close to the national average, at best, and among the worst in our region.”

New Hampshire, with the No. 7 tax climate and the No. 9 overall FFI ranking, offers instructive lessons for North Carolina as policymakers pursue further fiscal reforms.

The Tar Heel State ranks No. 18 nationally and No. 5 in the Southeast in educational freedom, thanks largely to strong protections for homeschooling (No. 2 nationally) and the passage of the Opportunity Scholarship Program. That program boosted North Carolina to No. 16 in private-school choice.

“But North Carolina ranks below the national average in public school choice,” the report explains. “One reason is that most other states give families more ability to choose from among public schools in both their home and neighboring districts.”

FFI points to Colorado as a model for North Carolina to emulate in public school choice. Matching Colorado’s policies would boost North Carolina’s educational freedom ranking from No. 18 to No. 13. The Tar Heel State’s overall ranking would jump from No. 23 to No. 15.

North Carolina ranks below the national average at No. 36 in regulatory freedom, despite positive factors such as a right-to-work law, the absence of a state-level minimum wage, and recent tort reforms.

“When it comes to regulatory freedom, North Carolina has plenty of room for improvement,” the report states. “Our state has relatively weak protections against eminent domain abuse and other encroachments on property rights, along with relatively strict occupational-licensing laws. We also rank poorly in regulatory policy regarding auto insurance and homeowners insurance.”

The index points toward positive regulatory policies in one of our neighboring states. “Adopting the strong land-use and property-rights protections of South Carolina would raise North Carolina’s regulatory freedom ranking from No. 36 to No. 16 and our overall FFI ranking to No. 19.”

This state fares worst in health care freedom, ranking No. 46 nationally and “dead last” in the Southeast. “The main culprits are our poor rankings on certificate-of-need laws, which restrict choice and competition among hospitals and other medical providers, and state benefit mandates on private health plans, which limit consumer choice and drive up insurance premiums.”

Abolishing CON regulations would have a major impact on North Carolina’s FFI ranking, according to the report. The health care freedom ranking would jump from No. 46 to No. 25, and the overall ranking would rise from No. 23 to No. 16. Thirteen other states already have scrapped certificate-of-need laws.

Nationally, seven of 10 states with the highest FFI rankings are “deeply Red,” using the now fashionable tool of splitting states based on their voters’ partisan preferences. Seven of the 10 states with the lowest FFI rankings are “either true Blue or lean Democratic.”

That doesn’t mean North Carolina should look only to states with Republican governors and legislatures for good policies. “True Blue” Delaware ranks just above North Carolina at No. 22 on the FFI list, with enviable fiscal freedom (No. 13) and health care freedom (No. 7) rankings. In regulatory freedom, Vermont (No. 5) and Rhode Island (No. 12) offer useful examples for reform.

The FFI report suggests that North Carolina leaders could pursue “intermediate goals” on the way toward a long-term objective of No. 1 on the overall list. For example, the Tar Heel State might push toward joining the top 10 states in fiscal and educational freedom. “Having these intermediate goals in mind could serve to sharpen the debate about the state’s policies and priorities.”

The John Locke Foundation’s 25th anniversary served as an appropriate setting for the launch of the First in Freedom Index. “What we seek as an organization is a better balance between the public sector and private institutions of family, faith, community, and enterprise,” the report states. “Over the past four years, conservative leaders have sought to restore that balance.”

“Now, as JLF enters its next quarter century of work, we hope to inspire future and current leaders of our state to go farther, to go bolder,” the report continues. “We believe the long-term goal should be to make North Carolina the freest state in America.”

“We have a long way to go. The journey won’t be an easy one. There will be challenging obstacles and obstinate opponents. But the destination will be worth it.”

The John Locke Foundation’s “First in Freedom Index: Lighting the path toward a more free North Carolina” is available at the JLF website. For more information, please contact Dr. Terry Stoops at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].