Freedom Took a Hit During the Coronavirus Pandemic. Will It Recover?

Government Policies Hastened the Flight to Freer States

The Cato Institute recently released its 2022 Human Freedom Index. The news is not good, revealing a broad decline in freedom worldwide in 2020.

“Most areas of freedom fell, including significant declines in the rule of law and freedom of movement, expression, association and assembly, and freedom to trade. Based on that coverage, 94.3 percent of the world’s population lives in jurisdictions that saw a fall in human freedom from 2019 to 2020,” the report concluded.

The “precipitous descent in 2020 affected every region of the world, including rich and poor countries and democracies and nondemocracies, setting global freedom to a level far below what it was in 2000, previously the lowest point in the past two decades,” it continued.

The significant decline is attributed to government policies enacted in response to the coronavirus pandemic.

“There can be no doubt that the coronavirus pandemic was calamitous for overall human freedom,” the report asserted. “The key question in future years is whether governments will fully reverse COVID-19 related restrictions on freedom as the pandemic moderates or whether some will continue to exert the additional control and spending power they have appropriated to themselves during the pandemic.”

The Fraser Institute’s Economic Freedom of North America and Economic Freedom of the World reports similarly revealed that government COVID-19 policies had led to a significant decline in freedom, as I noted in a recent column for The Hill.

“The policy responses to the coronavirus pandemic, including massive increases in government spending; monetary expansion; travel restrictions; regulatory mandates on businesses related to masks, hours and capacity; and outright lockdowns undoubtedly contributed to an erosion of economic freedom for most people,” the report found.

The Economic Freedom of North America report, as the title suggests, is more narrowly focused on economic freedom but allows us to drill down to the state level. Florida ranked the most economically free state, followed by New Hampshire, South Dakota, Texas, and Tennessee. Following a similar pattern to many other analyses (and interstate migration patterns), California ranked 49th, ahead of only New York.

As I noted in the column for The Hill,

These findings are hardly news for California. Numerous surveys and reports analyzing a variety of economic indicators have consistently placed California at or near the very bottom of all states in terms of economic freedom and business climate. The state ranked 48th in the Tax Foundation’s 2023 State Business Tax Climate Index, has been dubbed one of the nation’s biggest “Judicial Hellholes” by the American Tort Reform Foundation for encouraging frivolous and abusive lawsuits, received a grade of “F” in Thumbtack’s most recent Small Business Friendliness Survey and placed dead last—again—in Chief Executive Magazine’s annual Best and Worst States for Business survey of CEOs across the country (Texas, Florida and Tennessee dominate the top of the rankings—stop me if this sounds familiar).

It is no wonder, then, that “California has been a net exporter of businesses for at least three decades,” according to Claremont McKenna College’s Kosmont-Rose Institute 2022 Cost of Doing Business Survey. The study found that, from 1990 to 2019, 44 percent more businesses left California than moved there from other states, resulting in a net loss of nearly 20,000 businesses.

Because there are so many studies and surveys illustrating California’s poor record when it comes to interventionism and restrictions on freedom, I did not have space to mention the recent Hoover Institution working paper which noted that 352 companies had relocated their headquarters out of the state from 2018 through 2021, including Fortune 500 companies McKesson, Tesla, Oracle, Hewlett Packard and Charles Schwab (all of whom moved to Texas, incidentally).

Nor did I have room to highlight the Cato Institute’s 2021 Freedom in the 50 States report. One might think that with such a liberal and supposedly tolerant government, California might make up for its poor economic freedom with strong protections of personal freedoms but, while not as bad as its economic performance, the state is only mediocre on personal freedoms. In the Freedom in the 50 States report, California not only predictably performed poorly on pocketbook issues (48th in economic freedom and 50th in regulatory policy) but also managed just a middling rank of 26th for personal freedoms.

There is a mountain of economic literature illustrating the connection between greater freedom and greater wealth, health, and other improvements to the quality of life, but what is perhaps most telling is where people choose to live. There had already been a trend of people moving from restrictive, interventionist states to those offering greater personal and economic freedom. This pattern only accelerated as many states imposed arbitrary and ineffective lockdowns and various other mandates during the coronavirus pandemic. It remains to be seen whether policymakers will learn anything from this lesson or if the freedom divide will continue to grow among the states.

Adam Summers is a Research Fellow with the Center on Entrepreneurial Innovation at the Independent Institute.
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