Freedom brings prosperity for all, especially the middle class. That’s shown in a new study, “The Liberators: U.S. States that Increased Their Economic Freedom in the 21st Century,” by the Fraser Institute of Vancouver, Canada. It found the top “liberator” states enjoyed the highest economic growth.
The study ranked states by an average of three factors: government spending, taxes and labor-market freedom, meaning such things as minimum wage laws. The top three “liberator” states by this measure were Idaho, North Carolina and North Dakota. They scored highest because “states that increased their economic freedom the most tended to experience the greatest growth in real personal income.”
The reverse is true. Decreases in economic freedom slowed growth. The bottom four states were Delaware, New Jersey, Maryland and California. “These states are the economic freedom repressors.” But the study also noted California was an anomaly, with higher growth than other “repressor” states because of “other factors like climate, geography, access to ports, culture and history.” Gotta love that balmy weather.
We asked study author Matthew Mitchell, a senior fellow in the institute’s Center for Human Freedom, about the importance of the Silicon Valley and San Francisco tech companies, now again surging as they lead the global AI revolution.
“I do think Silicon Valley is a factor,” he said. “It’s clear the Valley pulls up the state average.” For example, in 2023 median household income was $231,139 in Cupertino, headquarters of Apple Inc., compared with $88,354 in Santa Ana. Statewide, it was $89,870.
The point is, while Silicon Valley lifts up California’s economic averages, few of us are high-paid computer engineers. The study also noted, for consistency, it used per-capita personal income as a measure, which “overstates the standard of living in high-cost, high-tax areas like California and New York.” An August Public Policy Institute of California study found in 2023, a scandalous 34.8% of Californians “were poor or near poor.” California has long had higher poverty rates than the rest of the country when cost-of-living is factored in.
Mitchell also previewed for us Fraser’s “2025 Economic Freedom of North America” study, due out Dec. 2. It found, as a share of state residents’ income, California spends more than most, which is no surprise to anyone who reads these pages. The state of California spends hundreds of billions of dollars per year, yet manages to dig itself bigger fiscal holes while solving few problems. That’s definite not due to a lack of revenue or revenue sources. The state’s top effective marginal income tax rate is the highest in the nation, at 14.4%. Other taxes are the 16th highest.
The study also found economic freedom correlates with population growth. Since 2000, the three states with the lowest relative population growth have been New York, the worst, followed by Alaska and California. The four states with the highest relative population growth were New Hampshire, South Dakota, Texas and Florida – each with no state income tax.
The key issue in the 2026 gubernatorial race ought to be why, with this state’s bountiful benefits, we are weighed down by the anchor of way too much government.