A slightly off-center perspective on monetary problems.
In an earlier post I discussed the amazing number of categories in which Denmark led the world.
1. Most liberal (or idealistic) values
2. Most free market economy
3. Most equal income distribution
That raises the question of whether there is a “Denmark of America.” Probably not, but there is one state that comes pretty close.
Let’s start with the fact that by most measures the Nordic countries have the most liberal cultures in the world. So Denmark is representative of the entire region. In the US one good indicator of liberal values is attitudes toward gay marriage. Of the 6 states that have legalized it, or are in the process of doing so, 5 are in New England. Only heavily catholic Rhode Island has held back. Let’s say New England is the most Nordic-like part of the U.S., at least in cultural terms.
Even by Nordic standards, however, Denmark has an unusually free market economy. Is there any New England state that stands out in this regard with respect to the US? George Mason University just published a ranking of Freedom by States, in which New Hampshire came in number one overall, and number two in the subcategory of economic freedom. Here is where the Denmark comparison breaks down a bit. Denmark is number one only if one averages the 8 (out of 10) Heritage Institute economic freedom categories that exclude size of government, whereas New Hampshire receives its high ranking in large part because of its very low overall tax burden.
So does this mean the comparison is silly? Is Denmark a left-wing egalitarian paradise, and is New Hampshire is a stingy, right-wing state full of savage inequalities? Not quite, it turns out that New Hampshire is one of the most egalitarian states, trailing only Utah and Wyoming in terms of state gini coefficient. However the gini coefficient is not the best way to measure egalitarianism. As John Rawls pointed out, increased inequality would certainly be acceptable if it improved the well-being of the worst off. So how do the worst off do in New Hampshire? It turns out that if we define the worst off as the bottom 20% (the only data I could find) then New Hampshire has the “richest poor” of any state in the union. Thus all income groups in New Hampshire are better off than in Utah and Wyoming, indeed quite a bit better off.
At this point one might ask if state comparisons are fair, after all New Hampshire has less ethnic diversity than most other states. But of course the same is true of the Nordic countries, and that doesn’t stop left-wingers from touting their egalitarianism. On closer examination I think that Denmark and New Hampshire both look pretty equal, even taking ethnicity into account. There are quite a few countries with relatively homogeneous populations, and yet none are as equal as Denmark. And there are quite a few states with demographics similar to New Hampshire, and yet none seem to have reduced poverty as effectively.
Once you start messing around with cross sectional data, it’s hard to stop. I was disappointed to see that New Hampshire came in only 13th in state happiness rankings. So the Denmark comparison breaks down there. But before big government liberals get too excited about New Hampshire’s so-so happiness ranking, note that the two happiest states are Utah and Wyoming (I guess Dick Cheney must not be typical.)
[Utah was number one, while Wyoming actually trailed Hawaii by a tad for the number two spot. But given the weather differential in January between Maui and Laramie, I put in a mental "weather dummy" and bumped Wyoming up one spot. It just didn't seem fair otherwise.]
Of course these happiness rankings are self-reported, based on polls, and thus any state claiming to be happiest must expect a bit of teasing. Will Wilkinson supplies some here. But at least Will had the good taste not to bring up this embarrassing correlation.
Even in the dark days of this economic crisis, I hold out hope that some sort of “third way” can be found between the statist Democratic Party and the rapidly imploding Republican Party. Brink Lindsey’s liberaltarianism is one such possible path. If we choose to go that way, there will be one state that got there first. The only problem would be fitting a left/right hybrid philosophy onto their license plate. “Adopt the egalitarian neoliberal economic model or die?” How about something more inspiring like “ liberaltarianism!” Now I am beginning to see why there are so few pragmatic libertarians—it’s not the most inspiring ideology.
The other way to go is to just give up on producing neat, tidy, prosperous societies like Denmark and New Hampshire, and go for excitement:
“In Italy for thirty years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance; in Switzerland, they had brotherly love, they had five hundred years of democracy and peace, and what did they produce? The cuckoo clock.”–Harry Lime (played by Orson Welles in The Third Man.)"