Be thankful for our amazing abundance

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As Americans and Granite Staters, we have so much to be thankful for that keeping track of it all can be difficult. Where does one begin? 

Family and friends, health and happiness, clean air and water, mountains and maple syrup, having a buffer of at least three states between us and New Jersey. 

Gratitude often comes from perspective. Surviving documents from the settlers who enjoyed the first Thanksgiving in Massachusetts Bay offer a great dose of it. 

Edward Winslow wrote that the men went hunting and fowling, bringing back “as much fowle, as with a little helpe beside, served the company almost a weeke,” and that natives presented five deer to the company for the feast. 

“And although it be not always so plentifull, as it was at this time with us, yet by the goodness of God, we are so farre from want, that we often wish you partakers of our plentie,” he wrote.

The food was so plentiful that year that it inspired settlers to send home letters so unbelievable that Gov. William Bradford felt the need to remark that they “were not fained, but true reports.” The food was all gathered, hunted or fished. There was no Market Basket; the Demoulas family hadn’t arrived yet. 

Here’s your perspective: Imagine living in a world in which enduring the hardships of a colonial settler’s life improved your living standards.

For the Pilgrims, living in the undeveloped Massachusetts frontier was an economic step up. Their idea of abundance was a good harvest (provided by providence) and enough wild game to live on for a week. Even with help from the native inhabitants, the first settlers struggled to produce a subsistence-level supply of food.

Before the Enlightenment unleashed the flood of human ingenuity that created modernity, life was like that for pretty much everyone.

As Enlightenment ideas eroded rigid social hierarchies and unleashed the brainpower of the lower classes (and created a large middle class), an explosion of innovation led to historically unprecedented gains in food productivity.

In 1600, 20 years before the Mayflower landed, the United Kingdom produced enough food to supply its population with 1,877 calories per person per day, according to the data website Our World In Data. That figure was 1,381 in the year 1,300. So over nearly 300 years, the UK gained about 500 calories per person per day.

By 1700, the UK produced 2,229 calories per person per day, for an increase of 352 calories in just 100 years, a huge improvement. 

But in the next 318 years, the UK’s food productivity exploded. By 2018, the country produced a 3,344 calories per person per day, a stunning 50% increase in just over 300 years. 

The United States produced 2,952 calories per person per day in 1800, the year Thomas Jefferson beat John Adams for the presidency. That was about 500 more than the UK, 700 more than Germany and 1,100 more than France. And the industrial revolution hadn’t taken off yet. 

By 2018, the United States was producing a world-leading 3,782 calories per person per day. 

“Almost all that ordinary people used and consumed in the 17th century would have been very familiar to people living a thousand or even a couple of thousand years earlier,” Max Roser explains. “Average incomes (as measured by GDP per capita) in England between the year 1270 and 1650 were £1,051 when measured in today’s prices.”

Then came the Enlightenment, and the great enrichment that followed. 

As Roser puts it, “an average person in the UK today has a higher income in two weeks than an average person in the past had in an entire year. Since the total sum of incomes is the total sum of production this also means that the production of the average person in two weeks today is equivalent to the production of the average person in an entire year in the past. There is just one truly important event in the economic history of the world, the onset of economic growth. This is the one transformation that changed everything.”

This is why the Josiah Bartlett Center for Public Policy puts such a high priority on economic growth. Without it, the world as we know it would not exist. Neglect or smother it, and our descendants will live worse, not better, lives than we do. 

Freedom creates opportunity, which creates abundance, which leads to statistics like this: In the United States today, there are two job openings for every unemployed person. In New Hampshire, there are three job openings for every unemployed person. 

Four hundred years ago, we were in a desperate, daily search for enough calories to survive the next few days. Now, we’re in a desperate, daily search for ways to convince people to stop eating so much.

In the United States, and much of the rest of the world today, prosperity and abundance are so common that they’ve become the default expectation for the vast majority of the population. For that, we will be forever grateful. 

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Florida passes New Hampshire as most economically free state

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New Hampshire has lost its title as the most economically free state in the union. The top spot this year goes to Florida, by a hair, according to the 2022 Economic Freedom of North America report released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

Florida scored 7.94 out of 10 in this year’s report (up from 7.78 last year), beating out second-place New Hampshire (7.84).

Economic freedom—the ability of individuals to make their own economic decisions about what to buy, where to work and whether to start a business—is fundamental to prosperity.

“As we’ve pointed out for years, Florida, Tennessee, Texas and other states are serious about gaining a competitive advantage over New Hampshire,” said Andrew Cline, president of the Josiah Bartlett Center for Public Policy. “If we want to have a New Hampshire Advantage 20 years from now, we have to stay focused on expanding economic freedom for all Granite Staters. If we rest on our past accomplishments, we will be left behind.”

Enhancing government control over individuals’ economic choices takes us in the opposite direction. But just as importantly, failing to move quickly enough to enhance economic opportunity for Granite Staters can harm New Hampshire too, as more aggressive states pass us by.

“When governments allow markets to decide what’s produced, how it’s produced and how much is produced, citizens enjoy greater levels of economic freedom,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and co-author of this year’s Economic Freedom of North America report, which measures government spending, taxation and labor market restrictions using data from 2020, the latest year of available comparable data.

Rounding out the top five freest states are South Dakota (3rd), Texas and Tennessee (tied for 4th). At the other end of the index, New York is once again the least-free state (4.25) followed by California (49th), Hawaii (48th) and Vermont (47th). For the first time, the U.S. territory of Puerto Rico was included in the index—its score in this first preliminary effort was 2.04. The least-free state’s score was more than twice as high.

Across North America, the least-free quartile of jurisdictions (including Canada and Mexico) had an average per-capita income of just $2,160 compared to $54,927 for the most-free quartile.

“Hundreds of independent studies have produced overwhelming evidence that higher levels of economic freedom are associated with more opportunity, more prosperity, greater economic growth and more jobs,” said Dean Stansel, report co-author and economist at Southern Methodist University.

The Economic Freedom of North America report (also co-authored by José Torra, the head of research at the Mexico City-based Caminos de la Libertad, and Ángel Carrión-Tavárez, director of research and policy at the Instituto de Libertad Económica (ILE) in Puerto Rico) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.

The report can be read here: EFNA-2022-US-POST

Detailed tables for each country and subnational jurisdiction can be found at www.fraserinstitute.org.

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Granite Staters say they want more housing in their communities

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Granite Staters support building affordable housing in their communities, and even in their neighborhoods, a new poll from the Center for Ethics in Society at St. Anselm College has found.

The results upend the traditional view that residents don’t want new housing built close to them. That view has been used for decades to justify local regulations that limit the construction of homes and apartments. The new poll suggests that Granite Staters are much more open to change than previously assumed. 

Granite Staters expressed in the poll strong support for building affordable housing in people’s own communities, changing local regulations to allow more housing, and limiting local planning and zoning regulations.   

Among the findings:

BUILDING AFFORDABLE HOUSING 

  • By a 69%-29% margin, New Hampshire voters said “my community needs more affordable housing to be built.” This represents a 9% increase from last year’s survey. 
  • For the first time, the center asked a subset of voters about building affordable housing in their “neighborhood” instead of their “community.” While “community” might refer to a whole town or city, “neighborhood” sounds like a much smaller context to most people. Respondents still endorse building more affordable housing in their own neighborhood by a 7-point margin (50-43%). 

CHANGING LAWS AND REGULATIONS 

  • By a 52-40% margin, New Hampshire voters support changing town and city zoning regulations to allow more housing to be built.
  • By a 70-21% margin, respondents endorse setting a “hard limit” on how long local planning and zoning boards can take to review permits to build housing.
  • By a 38-35% margin, Granite State voters endorse the concept of a bill that failed this session, which would have allowed property owners to build up to four housing units on any residentially zoned lot served by municipal water and sewer.

REEXAMINING WHERE HOUSING IS BUILT

  • By a 61-37% margin, N.H. voters oppose the idea that multifamily housing should only be built in cities, not in suburbs and rural areas.
  • By a 53-42% margin, voters oppose the state “doing more to prevent housing development and keep the state the way it is.” The poll’s data shows young people under 35 and retirees are generally the most supportive of building more homes and changing state and local laws to allow that to happen. As expected, non-homeowners are more likely than homeowners to endorse building affordable and multifamily housing. It also shows that while conservatives are less likely to endorse the concept of affordable housing, they are more likely than liberals to endorse having the state set a hard limit on municipal permit review timelines. 

“Legislators have yet to address the acute housing shortage caused by local overregulation in this session, but these poll results show that Granite State voters don’t want to wait,” Jason Sorens, director of the Center for Ethics in Society, told the Josiah Bartlett Center. “They want their own towns to change the rules to allow more homes to be built, and they want state government to get involved by setting a hard limit on permit review times and maybe even directly preempting local zoning rules. Going full ostrich on the housing issue could hurt the legislative majority if the problem continues to go unaddressed.”

Though Gov. Chris Sununu championed housing reform at the start of the year, the Legislature killed most reform efforts. The biggest housing bill of the year (Senate Bill 400) passed the Senate, but stalled in the House over concerns about the political costs of limiting local governments’ ability to restrict new development.

The bill would have slightly curtailed the power of local boards to limit where residential housing is built, and it would have allocated more state funding to municipalities that allowed more housing. 

The House removed those provisions and amended others, severely weakening the bill. 

Last week, both chambers incorporated a watered down version of SB 400 into another bill, HB 1661. It requires local boards to include written, specific findings of fact when rejecting a housing application. It requires zoning boards to begin formal consideration of received applications within 90 days of receiving them, and planning boards within 65 days.

A requirement for municipalities to grant workforce housing the same regulatory allowances made for senior housing was changed from a “shall” to a “may.” And a provision forbidding local boards from putting age restrictions on workforce housing was removed. 

Legislators also killed a bill to allow duplexes, triplexes and quadplexes on any single-family lot, one to forbid minimum lot sizes of more than half an acre unless it’s to accommodate a septic system, another to forbid minimum lot sizes of more than 10,000 square feet (excluding those with septic systems), and one forbidding proscriptions on workforce housing. 

Legislators did pass a bill to create a commission to study barriers to housing construction.  

A report published by the Josiah Bartlett Center last October, and written by the Center for Ethics in Society’s Sorens, detailed how local land use regulations have reduced the state’s housing supply and driven up prices.

The study found that residential land use regulations are associated with growing socioeconomic segregation and slowing population growth.

As housing becomes more expensive, fewer people are moving to New Hampshire, especially to those towns that are most expensive. Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing. Costly housing in towns with better schools also limits families’ access to educational opportunity. Finally, the sprawl caused by anti-density policies such as minimum lot sizes increases drive times and road maintenance costs and worsens air and water quality.

 

 

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Legislators push student loan forgiveness for one industry

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As Republicans in Washington fight Democratic efforts to forgive federal student loans, GOP legislators in New Hampshire are promoting $1 million in tax-funded student loan forgiveness for graduates in one high-tech industry — human organ manufacturing.

In 2018, legislators passed a package of subsidies and tax breaks sought by the Advanced Regenerative Manufacturing Institute, a Manchester organization founded to develop synthetic human organs in partnership with other companies, including new local startups. 

That package, Senate Bill 564, granted companies engaged in advanced regenerative manufacturing a 10-year exemption from state business taxes. At the time, ARMI was the only organization that qualified for the tax exemption. The Department of Revenue Administration’s most recent annual tax expenditure report states that multiple companies have filed paperwork to be deemed eligible for the credit, but there are so few that disclosing details of the filings would violate their privacy under state tax information disclosure laws. 

Included in the law was a Regenerative Manufacturing Workforce Development Program, through which the state would finance the repayment or forgiveness of student loans for qualified graduates. To be eligible, the graduates would have to work for a qualifying manufacturer in New Hampshire for at least five years. 

In the four years since its authorization, the Regenerative Manufacturing Workforce Development Program has never been funded. Lawmakers tasked the New Hampshire Business Finance Authority (NHBFA) with designing and administering the program, but made no appropriation. 

Legislators learned of the program’s unfunded status earlier in the legislative session, and Republican leaders took steps to find money for it. A $1 million appropriation was attached to House Bill 1256, a bill dealing with the Department of Military Affairs and Veterans Services. 

In the HB 1256 conference committee last Wednesday, the funding drew bipartisan support, with legislators noting that the $1 million was a fraction of what had been intended for the program. 

“This is a test run to see how much they actually need for this,’ Rep. Al Baldasaro, R-Londonderry, said.

Need is an interesting choice of words. ARMI initially received an $80 million Department of Defense grant for its regenerative manufacturing work and $214 million in other investment, according to a DOD press release from 2016. It has attracted other companies to Manchester’s Millyard, where work on human tissue generation is expanding — without the student loan subsidy.

It is not known how much of an employee’s student loans the program would repay or forgive, as the program has been on hold pending funding. A draft proposal the NHBFA gave to legislators in 2019, assuming full funding, stated that employees would have their student loans entirely paid off over five years. 

In general, loan repayments are considered taxable income unless otherwise exempted from taxation by law (as is the case with many federal student loan repayment and forgiveness programs). The NHBFA’s draft proposal stated that under federal income tax laws as of 2019, the forgiveness “would result in taxable income” to the employee.

The local forgiveness for regenerative manufacturing employees is supposed to help keep the industry in New Hampshire and facilitate hiring. But such favoritism hurts other employers who compete for the same workforce, and it transfers wealth from some businesses to others, based purely on which ones are politically favored.

And such subsidies clearly aren’t needed in an industry that has proven capable of raising hundreds of millions of dollars in startup capital.

In Washington, Republicans are moving in the opposite direction. U.S. Senate Republicans in April introduced the “Stop Reckless Student Loans Action Act” to end the Biden administration’s pause on student loan repayments and block future loan forgiveness. 

One stated reason for opposing federal student loan forgiveness is that most Americans don’t have college degrees, and they would wind up subsidizing the degrees of the roughly one third of Americans who graduated from college.

In New Hampshire, 35.4% of men and 38.4% of women have a bachelor’s degree, according to a state report issued in 2019. 

For years, Republicans in Concord have been divided on the issue of student loan forgiveness.

Earlier in the session, legislators blocked a Sununu administration effort to create a larger-scale loan forgiveness program. The Joint Fiscal Committee tabled a proposal to use $17 million in federal American Rescue Plan funds to forgive the loans of students who agreed to work for at least four years in New Hampshire after graduating college. 

Gov. Sununu in 2019 proposed a $32 million student loan assistance program to be financed with revenue from the state’s 529 college savings program. Legislators rejected the idea in favor a smaller Graduate Retention Incentive Program. 

That program offers free job postings and marketing for companies that agree to give a $1,000 bonus or student debt payment to employees who agree to workin the state for four years.

New Hampshire has an established loan repayment program for medical professionals who agree to work in underserved areas of the state. It cost $766,783 in the current budget.

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Impeding the expansion of new telecom technologies would hurt New Hampshire

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A House bill considered in committee this week would deny much of New Hampshire access to the most advanced telecommunications technologies.

House Bill 1644 would require “telecommunications antennas” to be placed “at least 1,640 feet from residentially zoned areas, parks, playgrounds, hospitals, nursing homes, day care centers, and schools.”

The bill’s stated purpose is to protect people from the “significant public health risk associated with the cumulative effects of radio frequency radiation which is growing every day with the proliferation of cell tower transmitters.”

Some people who believe that cell phone radiation causes cancer think that 1,640 feet, or 500 meters, is the minimum safe distance from a cellular network antenna. 

But this fear is unfounded, according to hundreds of studies and numerous public health agencies and organizations: 

  • The Food and Drug Administration concluded in February of 2020 that “there is no consistent or credible scientific evidence of health problems caused by the exposure to radio frequency energy emitted by cell phones.” The FDA report noted that brain cancer cases have declined as mobile phone use has grown.
  • An Australian study published in March of 2021 reviewed 138 studies of radio frequency fields consistent with 5G networks. It found “no confirmed evidence that low-level RF fields above 6 GHz such as those used by the 5 G network are hazardous to human health.”  
  • The World Health Organization concluded in 2014 that “no adverse health effects have been established as being caused by mobile phone use.”
  • The Centers for Disease Control and Prevention has concluded that “we do not have the science to link health problems to cell phone use” at this time.
  • “At this time, there’s no strong evidence that exposure to RF waves from cell phone towers causes any noticeable health effects,” the American Cancer Society has concluded. 
  • The National Cancer Institute notes that cell phone radiofrequency “energy is too low to damage DNA” and that the “only consistently recognized biological effect of radiofrequency radiation absorption in humans that the general public might encounter is heating to the area of the body where a cell phone is held (e.g., the ear and head). However, that heating is not sufficient to measurably increase body temperature. There are no other clearly established dangerous health effects on the human body from radiofrequency radiation.”

Were legislators to pass the bill out of a misplaced sense of caution, the economic and quality of life effects would be substantial — and negative. The Town of Amherst shows how. 

Amherst’s zoning map shows that residential/rural zoning covers 62.7% of the town, and “Northern Rural” zoning, where single-family homes are allowed, covers another 24.43%. That leaves little room for new telecommunications antennas. The bill would shrink the remaining zones by 1,640 feet from any side that touches a residential zone, and it would create no-antenna zones around every park, playground, hospital, nursing home, day care center, and school.

Further, if “residentially zoned areas” means any zone that allows any residential use, then the areas where antennas would be allowed would shrink to a tiny fraction of available land in any given community.

Consider Charlestown, a community in dire need of economic development. A look at its zoning map shows that the vast majority of the town is zoned either “mixed use” or “residential/rural.” Residential dwellings are permitted in the mixed use zone. 

Residences are allowed in the “Town Center,” “North Main Street,” and “Business” zones as well. Residences are prohibited only in a tiny section of town zoned for industrial use, and at the Fort at No. 4 historic site. 

Were HB 1644 to become law, Charlestown likely would be carved out of the state-of-the-art 5G cellular network that soon will connect much of the planet to ultra high-speed wireless broadband service. 

This scenario would be repeated in town after town throughout New Hampshire. The bill would risk wiping chunks of New Hampshire off the 5G map, creating large gaps in coverage and exacerbating the digital divide that already holds rural areas back economically.   

If that weren’t bad enough, the bill violates the federal Telecommunications Act of 1996.

New Hampshire’s Commission to Study The Environmental and Health Effects of Evolving 5G Technology concluded in its final report that “this Act says, among many other things, that the siting of any antennae cannot be denied due to health concerns.”

HB 1644 explicitly attempts to deny siting of antennae due to health concerns. It plainly violates federal law. 

Remote parts of New Hampshire are already economically disadvantaged relative to places located closer to commercial and technological hubs. Impeding the expansion of advanced communications technologies to these areas would hurt them, not help them. 

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New Hampshire ranks first in freedom in new Cato report

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A week after New Hampshire placed first in the Fraser Institute’s Economic Freedom in North America report, the state scored a first place finish in another prestigious freedom ranking, the Cato Institute’s 2021 Freedom in the 50 States report. 

In Cato’s report (written by Will Ruger and Jason Sorens), New Hampshire ranked third in economic freedom, second in personal freedom, and first in overall freedom. 

In economic freedom, New Hampshire ranked in the top five in state tax burden, government consumption and lawsuit freedom, but was far behind in numerous other metrics, including local tax burden (43), land use freedom (40), labor market freedom (27), health insurance freedom (19), cable and telecommunications freedom (20), and state and local assets (43).

In overall regulatory freedom, New Hampshire placed near the middle of the states at 23rd, showing that the “Live free or die” state has areas where government imposes significant economic constraints on citizens. 

In personal freedom, New Hampshire performed better than in economic freedom, ranking second in gun rights, fifth in education freedom, and fourth in asset forfeiture. The state finished in the top ten in travel freedom, mala prohibita (acts that are crimes in statute but not common law, such as firework and raw milk bans), and incarcerations and arrests for victimless crimes. 

Low rankings in personal freedom included gambling freedom (41), tobacco freedom (21), alcohol freedom (38), and campaign finance (45). 

As in the Fraser Institute’s Economic Freedom in North America, New Hampshire holds its top ranking by a narrow margin. 

The top five states for overall freedom:

  1. New Hampshire
  2. Florida
  3. Nevada
  4. Tennessee
  5. South Dakota

The difference between New Hampshire’s and Florida’s scores was just four hundredths of a percentage point (0.592 vs 0.552). 

In the Fraser Institute report, New Hampshire held its top place by one one-hundredth of a point (7.83 vs. 7.82). 

The top fives states for economic freedom in Fraser’s rankings:

  1. New Hampshire
  2. Tennessee
  3. Florida
  4. Texas
  5. Virginia

The Cato report shows how rapidly other states have been gaining on New Hampshire. Since Cato’s last ranking for 2018-19, New Hampshire ranked No. 8 for growth in overall freedom, but many of the states with which it now competes for population growth and business location posted similar or larger gains. 

Tennessee and North Carolina ranked 11th and 13th in overall freedom growth since the last report, while Kentucky ranked sixth, Connecticut fifth, Michigan fourth, Florida second and South Dakota first. 

The data are more concerning for New Hampshire when looking back at the last 20 years. Since 2000, the top fives states for freedom growth were:

  1. Florida
  2. Michigan
  3. Wisconsin
  4. Oklahoma
  5. Georgia

New Hampshire ranked 29th, well behind states that have been aggressively cutting taxes and deregulating, such as North Carolina, West Virginia, Tennessee, Texas and Arizona. 

As a state that already ranked high on overall freedom, New Hampshire has set an example with policies that have been copied by other states. But as both reports show, there are areas where New Hampshire can make significant improvements to increase personal and economic freedom. 

Making those improvements would accomplish the primary goal of maximizing individual autonomy for Granite Staters, thus living up to New Hampshire’s promise of being the “Live free or die” state. It also would improve the conditions for economic growth, which would gradually raise New Hampshire’s standard of living. 

While these back-to-back reports give Granite Staters cause to boast about our relatively high level of economic and personal freedom, they also offer a warning that this position is threatened and will not be maintained without a continued effort to remove barriers to freedom that exist at the state and local levels. 

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New Hampshire again rated most economically free state, but the gap is closing

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New Hampshire has once again retained its status as the most economically-free state in North America in this year’s Economic Freedom in North America report published by the Fraser Institute, an independent, non-partisan Canadian public policy think tank.

In both the continental and in-country rankings, New Hampshire finished first. Within the United States, Tennessee leapt past Florida to pull within a fraction of a point of the Granite State, showing how vulnerable New Hampshire’s position has become.

New Hampshire scored 7.83 out of 10 in this year’s report (down from 7.84 last year), beating out second-place Tennessee (7.82).

Economic freedom — the ability of individuals to make their own economic decisions about what to buy, where to work and whether to start a business — is fundamental to prosperity.

“When governments allow markets to decide what’s produced, how it’s produced and how much is produced, citizens enjoy greater levels of economic freedom,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and co-author of this year’s Economic Freedom of North America report, which measures government spending, taxation and labor market restrictions using data from 2019, the latest year of available comparable data.

“New Hampshire ranks as the freest state in the union again this year, but just barely,” Josiah Bartlett Center for Public Policy President Andrew Cline said. “As other states aggressively liberalize their economies, New Hampshire risks falling behind.”

Tennessee, ranked the 5th most economically free U.S. state in last year’s report, shot to within one one-hundredth of a point of tying New Hampshire for first place this year, Cline pointed out. The rankings are based on 2019 data. Tennessee’s interest and dividends tax was eliminated on Jan. 1 of this year, which will give it an advantage over New Hampshire in upcoming rankings, as our I&D tax lingers for five years until fully phased out.

Though New Hampshire leads all of its New England neighbors in economic freedom, Southern states are catching up by cutting taxes, spending and regulations. Rounding out the top five freest states are Florida (3rd), Texas (4th) and Virginia (5th).

At the other end of the index, New York (50th) is once again the least-free state followed by California (49th), Vermont (48th), West Virginia (47th) and New Mexico (46th). New York ranked last in the report for the seventh year in a row.

The other New England states are ranked as follows: Massachusetts (19th), Connecticut (21st), Rhode Island (41st), Maine (43rd), and Vermont (48th).

Across North America, the least-free quartile of jurisdictions had an average per- capita income 1.0 percent below the national average compared to 7.5 percent above the national average for the most-free quartile.

“Hundreds of independent studies have produced overwhelming evidence that higher levels of economic freedom are associated with more opportunity, more prosperity, greater economic growth, more investment and more jobs,” said Dean Stansel, report co-author and economist at Southern Methodist University.

The report measures the ability of individuals to act in the economic sphere free of undue restrictions by ranking states on 10 variables in three areas: 1. Government Spending; 2. Taxes; and 3. Labor Market Regulation.

The Economic Freedom of North America report (also co-authored by José Torra, the head of research at the Mexico City-based Caminos de la Libertad) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars, including three Nobel laureates.

Detailed tables for each country and subnational jurisdiction can be found at www.fraserinstitute.org.

Or you can read the full report here: EFNA-2021-US-POST

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Why New Hampshire’s smallest population growth in a century is bad news

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In the last decade, New Hampshire’s population grew at the slowest rate in a century, signaling that generations’ worth of astounding economic and cultural gains could be put at risk.

New Hampshire’s population grew by 4.5% from 2010-2020, the lowest growth rate since the state had 2.9% growth from 1910-1920. 

It marked the first time since 1920 that the state’s population growth rate has fallen below 5%.

The decline follows a 43% drop the previous decade and represents the fourth straight drop in population growth recorded by the Census. 

New Hampshire enjoyed double-digit population growth in each decade of the second half of the 20th century. But the rate began falling in the 1980s and has been in sharp decline since the 1990s.

2010-2020: 4.6%

2000-2010: 6.5%

1990-2000: 11.4%

1980-1990: 20.5%

1970-1980: 24.8%

1960-1970: 21.5%

1950-1960: 13.8%

Vermont’s population grew by just 2.8% in the last decade, down from 8.2% in the 1990s. New Hampshire is at risk of following Vermont’s path toward population stagnation. Both states already rely on immigration, rather than births, for population increase.

For decades, New Hampshire has prided itself on its pro-growth economic policies. Keeping taxes low and government small helped make our state the economic marvel of New England. Even without a large port or a cluster of elite research universities, we grew rapidly while states with better natural resources struggled. 

But New Hampshire’s focus on tax rates has left the economy vulnerable in other ares. As the state was chasing growth, local governments were trying to limit it.

Local governments have succeeded in choking off the state’s once robust population growth. That threatens the state’s economic future because the real secret to a vibrant economy is innovation, and innovation comes primarily through people sharing ideas.  

To simplify, it’s not the size of the population itself that matters as much as the size of the market. New Hampshire’s slower population growth is a problem because it is constraining the growth of the state’s economic marketplace.  

You just have to look at the help wanted signs posted everywhere to see the severity of the problem. 

“Larger markets induce more research and faster growth,” as economist Paul Romer put it.

New Hampshire has done a tremendous job stimulating increased market activity by focusing on pro-growth economic policies. But low taxes cannot be the sum of our pro-growth agenda. When creating the conditions for a vibrant marketplace, low taxes are just one factor. 

A vibrant market needs policies that allow innovation and investment, but it also needs people to do the innovating and investing. 

Local regulations that severely restrict the construction of new housing are not the only factor contributing to the state’s lower population growth, but they have played a significant role.  

Using U.S. Census data, we calculated the growth in housing units in New Hampshire in each decade going back to 1940. You can see the huge drop starting in the 1990s. 

2010-2020: 3.9%

2000-2010: 12.4%

1990-2000: 8.6%

1980-1990: 30.4%

1970-1980: 37.5%

1960-1970: 25.2%

1950-1960: 17.7%

1940-1950: 20.5%

Until the 1990s, the growth in the number of housing units was larger than the state’s population growth. In two of the last three decades, the population growth has been larger than the growth in home construction. 

That has produced a huge shortage of housing. The housing shortage is not only driving up home prices and rents. It’s constraining population growth. 

This housing shortage is reducing the supply of available workers, which is hurting the very businesses that legislators have worked so hard to help. (See all the help wanted signs.)

It’s also constraining the growth of the state’s economic market. It doesn’t do much good to help a business create a new job if, with the other hand, you make sure there’s no one around to fill the job.  

In the long run, the local regulations that have created a de facto cap on population growth will work against the tax cuts and regulatory reforms that brought us the tremendous growth of the last 70 years. 

Policymakers need to understand that creating a vibrant, innovative marketplace requires more than just keeping taxes and spending low. Artificially limiting the number of market participants shrinks the market and hurts the whole state.  

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While the market drives up wages, government prevents it from providing more housing

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There are two sides of the affordable housing equation: incomes and housing prices. While the market pushes New Hampshire incomes higher, the government prevents it from lowering home prices. 

Casual news readers can get only one side of this picture because reports on wages and housing costs often focus on the wage side and ignore or downplay the home supply side.

For example, a recent report by the New Hampshire Low Income Housing Coalition cites the state’s minimum wage and shows various wage rates that would be needed to afford various types of apartments in the state. 

But as we pointed out in May, it’s almost certain that no one in New Hampshire earns the $7.25 minimum wage. Market competition has driven wages much higher.

With labor scarce (the state tabulated more than 34,500 job openings in the state in May and June), the market has been pushing up compensation for years. The average weekly wage of workers covered by unemployment insurance in New Hampshire rose by 18.5% from the fourth quarter of 2019 to the fourth quarter of 2020, state data show. 

The average weekly wage in the Manchester-Nashua metropolitan area was $1,565 in the fourth quarter of 2020, up $255 from the same quarter the year before. 

Employment website indeed.com pegs the average laborer pay in New Hampshire at $16.29 an hour. 

In short, a highly competitive labor market is taking care of the income side of the housing equation. But the opposite is happening on the home price side. 

As we noted last week, a severe shortage of housing is sending rents and home prices to record highs. 

Rents for a two-bedroom apartment have risen 24% in the last five years, reaching a median of $1,498 this year. The median home price statewide passed $400,000 this spring. In Rockingham County, it passed $500,000. 

In a free market, developers would quickly build more supply to meet the huge demand. After all, there are huge profits to be made right now selling homes. But local governments have prevented the housing market from functioning properly. 

Record price increases are not a post-pandemic phenomenon. Prices have been surging for years because local government regulations have prevented developers from meeting the housing market’s sky-high demand. 

Developers aren’t refusing to build. Towns and cities are refusing to let them. 

Local planning and zoning restrictions have made the construction of new units both difficult and expensive. That’s true of both single-family homes and multi-family housing. 

Estimates vary, but the state’s housing shortage generally is pegged at approximately 20,000 housing units. The newly formed New Hampshire Council on Housing Affordability identified a critical need for 13,500 housing units by 2024.

Eliminating this shortage will be extremely difficult, if not impossible, until local governments remove some of the unnecessary obstacles that are causing it. 

Local elected officials would be more likely to remove housing obstacles if they understood that vocal anti-housing activists are not representative of most residents. 

Our poll in June found that a majority of New Hampshire voters (51%-29%) supported relaxing some local government regulations to allow more rental housing, and a plurality (45%-34%) supported relaxing some local regulations to allow for more single-family housing. 

Allowing the construction of much-needed housing is not unpopular. In fact, opponents of new construction are in the minority in New Hampshire. Unfortunately, they make up majorities of many local boards and of the crowds who turn up to their meetings. 

That’s a major reason why the market solution we’ve seen on the income side of the housing equation has not happened on the supply side. 

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Freedom and the New Hampshire Advantage

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New Hampshire’s six-year run of business tax cuts should have made the state’s corporate income tax rate the second-lowest in New England. But a funny thing happened along the way. New Hampshire was joined by an unexpected rival. 

When the succession of cuts began in 2015, New Hampshire’s Business Profits Tax (BPT) rate was 8.5%, making it the third-highest corporate income tax in New England. Only Maine’s 8.93% rate and Connecticut’s 9% rate were higher. 

After the passage of the current state budget, New Hampshire’s BPT rate is down to 7.6%, a 10.5% cut in six years. (Legislators cut the Business Enterprise Tax by 27%.)

That makes New Hampshire’s rate lower than the top rate in Vermont (8.5%), Maine (8.93%) and Massachusetts (8%). 

But Connecticut, beset with fleeing businesses and a dwindling population, took measures to stop its own bleeding. It reduced its corporate income tax rate from 9% to 7.5%. 

Rhode Island’s rate has remained at 7% the entire time.

(Maine and Vermont have graduated corporate tax rates. Maine’s lowest corporate tax rate is 3.5%. Vermont’s is 6%.)

Because Connecticut lowered its corporate income tax rate by 1.5 percentage points, New Hampshire’s rate wound up moving down only one place, rather than two, among the New England states. 

This helps to illustrate an important point. States don’t act in a vacuum. 

Businesses aren’t trapped inside any jurisdiction’s borders. It’s a free country, and they can move if they find another location more hospitable. Which they sometimes do. Just ask California.

If each state could erect its own iron curtain, just imagine how high corporate and personal tax rates would be. 

But because it’s a free country, states sometimes find it in their best interest to lower rates to make themselves more attractive. 

That’s why Connecticut and New Hampshire weren’t the only places to lower corporate tax rates in the last six years. A few examples:

  • New York lowered its rate from 7.1% to 6.5%. 
  • Washington, D.C., dropped its rate from 9.4% to 8.25%. 
  • Florida cut its rate from 5.5% to 4.4%. 
  • Iowa slashed its rate from 12% to 9.8%. 
  • North Carolina cut its rate in half, from 5% to 2.5%. 

Some lawmakers prefer to ignore other states and pretend that corporate tax rates are simply a lever for raising revenue from existing businesses. Raise the lever, raise the revenue. Lower the lever, lower the revenue.

But people inside and outside a state’s borders react when those levers are raised or lowered. That’s a big reason why state tax rates change. 

This year, five states states have reduced business tax rates. Ten states have reduced individual income tax rates. The total number of states to reduce either business or individual income taxes is 11, not 15, though, as some states reduced both. 

Some notable examples:

  • Indiana decreased its corporate income tax rate from 5.25% to 4.9%
  • Idaho reduced its corporate income tax rate from 6.925% to 6.5%, retroactive to Jan. 1.

These follow numerous changes made last year, from Arkansas eliminating its top income tax bracket to Tennessee eliminating its tax on interest and dividends to New York eliminating and Illinois reducing its capital stock tax.

It’s true that some states raise rates. New Jersey added a new top corporate tax rate, going from 9% in 2015 to 11.5%. Of course, New Jersey also has earned the title of “Most Moved From State” for three years running (and it’s particularly good at losing higher-income people). In a free country, mistakes will be made. 

And in a free country, states compete for people, entrepreneurs and businesses. 

Freedom made New Hampshire an economic marvel. Recognizing that people are free to live wherever they want, state policymakers for decades have focused on making the Granite State as attractive as possible.

It has worked beautifully. New Hampshire’s economic growth has surpassed every other New England state’s, and the national average, since the late 1970s.

With a booming economy came a growing population, which has enhanced the state’s quality of life and kept New Hampshire from becoming Vermont — a dying state that pays people to move there. 

When people are free, there’s a limit to how bossy a state can be. And there are rewards for offering people more personal, political and economic autonomy. 

New Hampshire has figured this out. Other states are catching on, just as technology has made Americans more mobile than ever before.

The competition is not over. It’s just beginning. 

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