Recently the Bluegrass Institute partnered with the Mercatus Center at George Mason University to host its Citizen Education Seminar at the Crowne Plaza Hotel in Lexington. The event included both Bluegrass Institute and Mercatus scholars discussing the most pertinent barriers standing in the way of Kentucky’s economic competitiveness.
Today, we present remarks from the Mercatus Center’s senior research fellow and adjunct professor of economics at George Mason University, Matthew Mitchell, Ph.D., in part 3 of our weekly series delivering exclusive video footage from the event.
Mitchell picks up where University of Kentucky’s John Garen, Ph.D., and Mercatus’ Maurice P. McTigue left off, discussing the importance of economic freedom in cultivating a business-friendly environment in the commonwealth. It’s this sort of environment which attracts capital investment and jobs to the states and would allow Kentucky to become economically competitive with our neighbors.
As Mitchell notes, economic freedom has been shown to bring a higher level of prosperity not only between countries, but also between the U.S. states. Statistically significant evidence shows that U.S. states with more economic freedom tend to enjoy higher economic growth and higher GDP-per-capita.
Unfortunately, instead of focusing on true economic growth through capital savings and investment, Kentucky all too often turns to special favors, regulations, and protectionism in a confused effort toward short-term gain.
And as Mitchell explains, if it weren’t for Kentucky’s inherent resources – a “beautiful environment and good people” – denizens of the commonwealth would be a whole lot worse off than we already are:
“Everybody has a friend who just eats terribly, doesn’t exercise, has all these terrible health habits but still looks pretty good, right? And it occurred to me as we were driving through these lush, green, beautiful hills that states are like that in a lot of ways as well.
“Some of the least economically free states are Hawaii, California, New York. These are states with a lot of natural resources that allow them to get away with bad diets and bad health habits. The genetics make up for it in some ways.
“So it occurred to me, maybe one of the reasons why Kentucky doesn’t stack up very well on a lot of these measures of competition is because the genetics are so good in terms of your beautiful environment and good people.”
At least we have that going for us. But economic competitiveness? Not so much.