This commentary originally appeared in The Examiner on January 19, 2014.
Alexis de Tocqueville warned that the threat to American democracy wasn’t tyranny. Rather, it was the soft tyranny of good intentions. He wrote in “Democracy in America” about “a network of small complicated rules” acting to reduce citizens to sheep with the government their “shepherd.”
We can see this soft tyranny at the federal level where every year 137,000 highly educated regulators write tens of thousands of pages of rules.
In 1979 there were about 30,000 rules in the Code of Federal Regulations. This was the same year that the late Sen. Eugene McCarthy, D-Minn. observed, “The only thing that saves us from the bureaucracy is inefficiency. An efficient bureaucracy is the greatest threat to liberty.” Today, the federal government has more than 180,000 rules.
But, Sen. McCarthy’s fear of an efficient bureaucracy has become a reality as Tocqueville’s regime of “small complicated rules” has been made possible by information technology.
For every $1 in goods and services produced in 1960 today’s workers produce $3.08. This increase in productivity has not bypassed the bureaucracy.
The corps of federal regulators has multiplied 3-1/2 times since 1960. But accounting for productivity, federal rules makers are 11 times more potent than in 1960. By some estimates, federal rules cost the economy more than individual and corporate income taxes combined.
Soft tyranny at the federal level can be measured by considering together tax rates, the amount of federal spending as a share of the economy, the publication of new federal regulations and the number of federal regulators as adjusted for productivity. Together, these factors make up the U.S. soft tyranny index. Historically, the soft tyranny index hit a high in 1980, retreated from 1981 to 1988, then bounced around until 2007, when a new Congress with ideas for larger government pushed the index higher. The soft tyranny index has been scoring new highs since 2009.
Much of what can be measured at the federal level can also be measured at the state level to create a state soft tyranny index. This state soft tyranny index combines the number of regulatory bureaucrats per capita, state and local spending as a share of a state’s private economy, the state’s highest income tax rate and the total amount of state and local spending as a share of income.
Applying these four metrics we see that the states with the worst soft tyranny are, from bad to less so: New York, California, Vermont, New Jersey, Hawaii, Maine, Rhode Island, West Virginia, Wisconsin, and Mississippi. At the other end of the spectrum are the states with the most liberty led by Texas, then South Dakota, Nevada, New Hampshire, Tennessee, Louisiana, Delaware, Arizona, Indiana and Virginia.
Texas is only first in one of the four categories, however: it ties with eight states that don’t tax ordinary personal income. The first prize in a slim regulatory workforce goes to Indiana where former Governor Mitch Daniels made reducing bureaucratic overhead a priority of his administration. Texas is second. Texas is also second to Delaware in holding the line on state and local spending as a share of the private economy. Lastly, in terms of state and local taxes, five states are less demanding of their residents’ money than is Texas: Alaska, South Dakota, Tennessee, Louisiana, and Wyoming.
Liberty is its own reward. But how are the top ten and bottom ten states doing from an economic standpoint? The ten states with the most liberty generated an average of 22.5 percent growth in real private GDP from 2002 to 2012.
The U.S. private economy grew 18 percent.
But the bottom ten states mired in the greatest soft tyranny averaged only 13.7 percent growth in 10 years.
That means that private-sector economic growth in the freest 10 states bested that in the bottom 10 by a whopping 64 percent.
Paring soft tyranny would be a powerful tonic for American prosperity and competitiveness. It would also return more liberty to the American people.
DeVore is vice president of policy at the Texas Public Policy Foundation and served in the California Legislature from 2004 to 2010. He is the author of “The Texas Model: Prosperity in the Lone Star State and Lessons for America – 2014 Edition.”