CATO Ranks California 48th in Personal and Economic Freedoms in U.S.

“California is one of the least free states in the country, largely because of its long-standing poor performance on economic freedom,” the CATO Institute explains in its latest ranking of the 50 states. California, once known as “The Golden State,” used to be at the top of the list specifically for personal and economic freedoms.

CATO scores all 50 states on their overall respect for individual freedom, and also on their respect for three dimensions of freedom considered separately: fiscal policy, regulatory policy, and personal freedom.

The CATO study ranked California #41 in Fiscal Freedoms, #26 in Personal Freedoms, #50 in Regulatory Freedoms, #48 in Education, #37 in Lawsuits, #47 in Land use, #1 (tie) Marriage freedoms, #48 in Occupational freedoms, #5 in Victimless, #47 in Health Insurance, #50 in Labor, #6 in Alcohol, #9 in Asset Forfeiture, #28 Gambling, #45 in Tobacco, #49 in Guns, #1 in Cannabis, #31 in Cable, #17 in Incarceration, #5 in Travel, and #38 in Campaign Finance.

Compare that with Florida which comes in at #2 in overall freedoms, #1 in Fiscal Freedoms, #12 in Personal Freedoms, and #21 in Regulatory Freedoms.

The CATO study ranks the American states “according to how their public policies affect individual freedoms in the economic, social, and personal spheres.”

“Freedom” is a moral concept, CATO explains, and is the ability to pursue one’s ends without unjust interference from others.

The Top 5 States excelling in freedoms are:

1. New Hampshire ±0

2. Florida ±0

3. Nevada ±0

4. Tennessee +1

5. South Dakota -1

The Bottom 5 States lacking in freedom are:

46. Oregon -6

47. New Jersey ±0

48. California ±0

49. Hawaii ±0

50. New York ±0

California remained static from last year as did New Jersey, Hawaii and New York in their bottom of the list rankings. Oregon dropped -6 points this year.

Pennsylvania improved +9 points, Wyoming improved +10, and Oklahoma improved +8.

Alaska dropped -10 points, Massachusetts dropped -9, Kansas dropped -9, and Louisiana dropped -7 points.

CATO says California’s economic freedom has improved since the late 2000’s and so has its economic performance. “California has long suffered from a wide disparity between its economic freedom and personal freedom ranking, but it is not as if the state is a top performer in the latter dimension. Indeed, it is quite mediocre on personal freedom.”

As for fiscal freedom in California, CATO says despite Proposition 13, California is one of the highest-taxed states in the country – “California’s combined state and local tax collections were 10.9 percent of adjusted personal income in 2020.” They note that #1 New Hampshire’s overall tax burden is well below the national average at 8.1 percent.

Where CATO really examines California is in regulatory policy. They say this is more of a problem for the state than fiscal policy.

Here is their analysis:

• California is one of the worst states on land-use freedom. Some cities have rent control, new housing supply is tightly restricted in the coastal areas despite high demand, and eminent domain reform has been nugatory. The state even mandates speech protections in privately owned shopping malls.
• Labor law is anti-employment, with no right-to-work law, high minimum wages, strict workers’ compensation mandates, mandated short-term disability insurance, stricter-than-federal anti-discrimination law, and prohibitions on consensual noncompete agreements.
• Occupational licensing is extensive and strict, especially in construction trades. The state is tied for worst in nursing practice freedom. The state’s mandatory cancer labeling law (Proposition 65) has significant economic costs.
• California is one of the worst states for consumers’ freedom of choice in homeowner’s and automobile insurance.

The entire study is worth the read, where you can download the PDF written version.