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Utah is the place for free enterprise

It’s a common lament: Entrepreneurs in Utah face too many regulations, too many taxes and too much risk that they’ll be fined, sued or otherwise constrained.

They should consider themselves lucky they don’t live in California or New York.

By Lisa Carricaburu
The Salt Lake Tribune

http://www.sltrib.com/2004/May/05162004/business/166742.asp

The nation’s two most populous states rank 49th and 50th in the U.S. Economic Freedom Index 2004 Report published this past week to gauge the health of capitalism nationwide.

When compared with other states, Utah is a place where free enterprise rules.

The nonpartisan Pacific Research Institute (PRI) and Forbes magazine considered 143 variables that contribute to economic freedom, and found Utah fared well. The state ranked fifth on the index behind Kansas, Colorado, Virginia and Idaho. Other Intermountain states also fared well. Wyoming ranked ninth and Nevada, 12th.

"Utah finds itself in a pocket of some of the most economically free states in the nation," said Lawrence McQuillan of San Francisco-based PRI.

Variables considered included corporate and personal tax rates, state spending, occupational licensing, right-to-work and prevailing wage laws, environmental regulations, tort reform, income redistribution through social programs and data such as the number of bureaucrats as a percentage of total work force.

Researchers grouped the variables into five sectors — fiscal, regulatory, judicial, government size and social welfare. They then calculated a sector ranking for each state. To achieve the overall ranking, they weighted each sector, with fiscal, regulatory and welfare sectors counting equally and the judicial and government size sectors counting less.

Utah is economically free because it ranked high in the welfare (sixth) and regulatory (ninth) sectors. "It is a place where people are allowed to keep what they earn" rather than seeing it redistributed for social programs, McQuillan said. In addition, "entrepreneurs face relatively few hurdles in starting businesses."

The state ranked 13th in fiscal, 38th in government size and 44th in judicial sectors.

Utah’s 38th place ranking in government size seems to contradict its ninth place regulatory ranking, but "that may signal the state is hiring a lot of people to do nothing," he said.

The high rankings of Utah and its neighbors probably stem at least in part from the region’s homogeneity, McQuillan said. Large states tend to have more diverse populations and therefore more special interests that advocate for government intervention.

Certainly, government intervention impedes business, and that’s the point of the index. Nothing is ever that simple, though.

After all, isn’t there economic value in protecting the environment, treating workers fairly and making sure consumers are protected from unscrupulous businesses?

Few would answer "no."

lisac @sltrib.com

© Copyright 2004, The Salt Lake Tribune.
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