New York in Last Place

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

The Statue of Liberty may be a symbol of many things the world over – but its credentials as a beacon of economic freedom are in some doubt, at least in its own backyard.


The annual survey of economic liberty in the 50 states, conducted by the Pacific Research Institute in association with Forbes, discloses that New York state ranks last on the list. Employing a wide range of indicators, including fiscal responsibility, regulatory promiscuity, judicial activism, government size, and welfare spending, the report shows that while the Empire State is not saddled with the most collectivist judges, it does particularly badly in the profligacy of its public sector.


On the basis of the survey’s 2001 figures, there are 620 government employees for every 10,000 of population, at the cost of $4.58 billion a year in salaries and wages. In 2003, unemployment was 14.5% higher than in the rest of the United States. A heavy correlation obtains between the map of least free states, which are concentrated in the Northeast and the Great Lakes, and those that voted for Senator Kerry in the late presidential election.


How have we come to this low point? Statism has deep roots in New York’s public culture, predating even Governor Smith’s path breaking tenure of the 1920s. Some speculate that it owes much to the susceptibility of immigrant communities to European collectivist ideologies and the place that those doctrines continue to occupy in the hearts of their descendants. But there is also the longtime negative gridlock of the state’s political system, which pitted largely upstate Senate Republicans against largely urban Assembly Democrats. Instead of vetoing one another’s pet projects – highways and suburban schools in the case of the former, transit and welfare in the case of the latter – strong party chiefs have conspired to scratch each other’s backs.


Breaking this unvirtuous cycle has proven particularly hard in a state with little recourse to the popular referendum. Governor Pataki seemed to be making a fair start at reversing the trend after his victory over Governor Cuomo in 1994. Mr. Pataki was aware that the deepest state recessions of the postwar era, in the 1970s and 1990s, occurred after Albany forced through major tax hikes. The rate of growth in the state budget, which had been expanding by 7% a year during the latter phases of his predecessor’s governorship, soon fell to less than 1%. State enterprises that should long ago have been in the private sector, such as golf courses, were sold off. The income and sales tax cuts created 117,00 new jobs in relatively short order, just as cuts in municipal levies have created some 80,000 new jobs in the city since 1997.


But since then, Mr. Pataki has too often taken the path of least resistance. In 1998-99, spending went up 8%, or four times the rate of inflation, despite a few gubernatorial vetoes. Even his proposed cuts in the state payroll have verged on the minimalistic, before Albany Democrats and the unions set to work.


The Economic Development Corporation and the industrial and science parks promise sweetheart deals for adept lobbyists, rather than genuine enterprise. Mr. Pataki is said to be positioning himself for the next presidential race as a “moderate”- liberal socially but conservative on economic issues. Even with Mr. Pataki’s heroic veto efforts in the recent budget fights, it’s going to be a harder claim to press after this report. Mr. Pataki deserves to be ambushed ceaselessly with the Economic Freedom Index the minute he starts trudging through the snows of Iowa.


The New York Sun

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