Government Aid vs Prosperity

Not that I'm telling you anything you don't know, but I always love it when statistics generally bear out my crazy theories that the way to create a prosperous free economy is to have low government regulation and low taxes. For my unit on state and local government, I found this article on Variations in Government Aid Across the Nation that was put together by the New York Times. This report looks at welfare, unemployment, housing assistance, food stamps, health insurance for poor adults, and health insurance for poor children, and measures them from state to state.

The top states in terms of providing generous benefits to their citizens- in other words, those that take money from taxpayers and re-distribute that wealth to those who did not earn it are (in descending order): Vermont, Maine, Massachusetts, DC, Pennsylvania, West Virginia, Iowa, and Michigan.

Out of curiosity, I decided to pull up some information on GDP growth, and provided by the Department of Commerce. The results are interesting. Here are the GDP growth rates for those states, with numbers from 2006 and 2007: Vermont (2.8, 1.5) , Maine (1.9, 1.3), Massachusetts (2.9, 2.5), DC (4.1, 4.3), Pennsylvania (1.7, 1.6), West Virginia (0.6, 0.1), Iowa (2.6, 1.7), and Michigan (-0.5, -1.2).

Those states that let citizens keep their wealth and freely make their own decisions are: Colorado, Texas, Utah, Florida, Nevada, Arizona, Oklahoma, and Virginia.

Here are their GDP growth rates (2006, 2007): Colorado (4.3, 2.0), Texas (4.3, 4.1), Utah (7.2, 5.3), Florida (4.2, 0.0), Nevada (4.1, 0.6), Arizona (6.8, 1.8), Oklahoma (6.7, 4.0), and Virginia (3.2, 1.9).

As you can see, the results are pretty conclusive. States that redistribute wealth from the rich to the poor, divert money from taxpayers to nonworkers, subsidize poor quality housing, give people food, and provide government-paid healthcare are less prosperous, less successful, and less free.

Those states that follow these unsuccessful public polices have GDP growth rates significantly and consistently lower, and over several generations destroy the wealth and productivity of their citizens. If our whole nation were to adopt those same policies, our children and children's children- our posterity- would grow up less free, less happy, and less prosperous than we are today.

The conclusion, as demonstrated with this limited amount of research, is clear- our public policies should emphasize self-sufficiency, less public welfare, and lower unemployment benefits, and should keep the state out of building structures for people just because of their income status, and should teach a man to fish instead of giving him fish, and should not provide as a right of birth state-supported healthcare.

UPDATE: Today I saw a report from the Mercatus Center at Georgetown called Freedom in the 50 States: An Index of Personal and Economic Freedom. Earlier I pointed out that many of the states that provided the most social welfare services to its citizens also are less prosperous. Looking over this report, I notice that those states that provide healthcare to poor, housing subsidies, and food stamps also are less free. I guessed this fact (see above), but it's nice that my guess is now backed up in numbers that show that.

According to the rankings in the report (1 is most free, 50 is least), the least free states- the states with the most tyrrany and oppression by government- compare favorably with my list of states that had the highest social welfare.

Here are the states that provide the most social services and their rankings on freedom- Vermont (40), Maine (39), Massachusetts (43), DC (NR), Pennsylvania (20), West Virginia (33), Iowa (16), and Michigan (14). Here are the states that provide the least social services and their rankings on freedom- Colorado (2), Texas (5), Utah (11), Florida (22), Nevada (24), Arizona (8), Oklahoma (18), and Virginia (9).

There you go- states that encourage conservative values are more prosperous and more free. The data doesn't lie.