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Utah's declining economic freedom

Published February 13, 2012 11:20 pm

This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

By Randy Simmons

and Diana Thomas

In 1886, Judge Gideon J. Tucker told a widow that her attorney had given her bad advice about her husband's will because the advice did not reflect changes to inheritance law that were passed during the previous legislative session. The judge concluded, "No man's life, liberty, or property is safe while the Legislature is in session."

The Utah Legislature is now in session and we citizens need to heed Tucker's warning. One measure of how safe are our lives, liberty and property is the Economic Freedom of North America Index, in which Utah's economic freedom score dropped, pushing us from fourth last year to seventh this year compared with the other states.

Economists know that long-term economic growth depends on economic freedom. That growth suffers whenever governments intervene in labor markets, when they raise taxes and when they increase spending.

In fact, Utah was one of the biggest losers in terms of economic freedom as we experienced the ninth-sharpest decline in the United States.

For Utah, the fall in the ranking was mostly caused by factors related to the recession and thus cannot be blamed solely on our state legislators.

We hasten to note that Utah remains in the index's top 10. Nevertheless, we should urge our legislators to pay attention to Utah's economic freedom and work hard to keep the state more firmly on track.

A recent study shows a significant positive impact on a state's level of economic growth when its level of economic freedom, as reflected in the Index, increases .

One path our state legislators could pursue to return Utah to higher levels of economic freedom would be to heed the advice of the Privatization Policy Board and privatize many public services. Specifically, they would be well-advised to put all public services to the "Yellow Pages Test" — if you can find a service advertised in the Yellow Pages, government should not try to do it itself.

In Idaho, the city of Idaho Falls used the Yellow Pages test a few years ago and hired private contractors for as many services as they could find. Among other things, they privatized snow removal and street, water and sewer repair. It turns out that Idaho Falls spent half of what nearby Pocatello spent for public works with the same number of miles of roads and water and sewer lines in each city.

Why not put each piece of proposed legislation through the Yellow Pages test?

Such a test will stop any further sliding on the economic freedom scale. More importantly, it will ultimately lead to greater economic growth.

Randy Simmons is the Charles G. Koch Professor of Political Economy in the Department of Economics and Finance at Utah State University; Diana Thomas is assistant professor of economics at USU.