Lutgert College of Business in the News
This is the text of a story from the Atlanta Journal-Constitution of June 2, 2013.
Freedom proves its worth
But the perennial question with many of these lists and rankings is: Do they tell us anything truly valuable? So I was intrigued recently when I saw the first attempt at ranking America's metropolitan areas by their degree of economic freedom. Such rankings have long existed for countries and states. But no one had compiled one for U.S. cities until Dean Stansel, economics professor at Florida Gulf Coast University, tried his hand at it last year. The good news: Stansel found metro Atlanta ranked 60th out of the nation's 384 metropolitan statistical areas, as determined by the Census Bureau. The bad news, part 1: Due to data limitations, those rankings reflect the situation in 2002, the last time the Census Bureau reported figures that are central to Stansel's index.
But fear not. There is more value in knowing which cities had more economic freedom back in 2002 than you might think. For one thing, 2002 was toward the beginning of the last complete business cycle. Economists like to observe and compare how economies performed from one peak to another. The U.S. economy peaked in March 2001 before entering a brief recession, and then again in December 2007 before entering the Great Recession. So, how did the cities with more economic freedom, according to Stansel, perform between those peaks? Far, far better than those with less. Looking at one key metric, employment growth, we see a vast advantage for the freer metro areas. (I limited my comparison to the 51 that have populations of at least 1 million, which seems more useful than contrasting Chicago with metropolitan Valdosta.) Total employment in the top 17 (one-third) of those metro areas between March 2001 and December 2007 grew by 9.3 percent. In the middle 17, it grew by just 3.2 percent. In the bottom 17, it grew by a paltry 1.2 percent.
The average ranking for the 384 metro areas whose job growth outpaced the national average --- places like Houston and Nashville --- was 113. The average for those which experienced sub-par growth --- places like Birmingham and Denver --- was 217. The average for those that lost jobs during an economic expansion --- places like Detroit and San Francisco --- was 277. However I sorted the data, the freest cities on the index performed best in those years. Now the bad news, part 2: While Atlanta was one of the freest metros, job growth was near the bottom of the cohort. Why did that happen? That's a question I'll examine in the weeks to come.
Kyle Wingfield, an Opinion Columnist, appears on Thursdays. Reach him at email@example.com.