This question should be nagging at you: why are Detroit, Baltimore, and New Orleans no better than cities in 3rd World Countries?
Last time I was in New Orleans, I was told that it was “quaint”. That’s not the word that comes to mind.
And one thing that each of these 3rd World Cities have in common: they are run by Democrats with progressive policies.
Throughout the United States, I frequently come across what I call “third world cities in first world countries” – whether it is Detroit, Baltimore, or even my beloved New Orleans. These third world cities all have one thing in common: an absence of free and open markets.
There is a wide consensus amongst economists that economic freedom largely determines the wealth of nations and metropolitan areas are no exception to this rule. As Economist Dean Stansel, in his paper, “An Economic Freedom Index for U.S. Metropolitan Areas,” states, “higher levels of local economic freedom are found to be correlated with positive economic outcomes.”
One of the most profound insights from Stansel’s paper is that moving from the 5th (least free) to the 4th quintile causes a drop in unemployment by 0.9%. Stansel’s index ranks Detroit number 345, Baltimore number 102, and New Orleans number 262 out of the 384 metropolitan areas examined.
Both Baltimore and Detroit make it into the top 5 cities with the highest tax burdens, according to the Office of Revenue Analysis. As for New Orleans, Louisianans face the third highest combined state and local sales taxes, as well as excessive levels of deficit spending. These three cities are also plagued by excessive and even bizarre occupational licensing laws. Louisiana licenses florists, Detroit licenses hair-braiders, and Maryland counties license fortune tellers. If only Maryland’s licensed fortune tellers could have predicted that big government would cause businesses to flee these cities.
As if these regulations and taxes weren’t enough, labor market restrictions have leftjob-seekers in Detroit and Maryland crippled. Both cities have unionization rates higher than the national average (10.7%), alongside minimum wages exceeding the federal $7.25 level.