Statistical Estimates of the Future Impact of the Free State Project

In a recent series of posts (finale here), I estimated the size of the liberty constituency in each state by conducting a principal components analysis of four variables: per capita donors to the Ron Paul campaign, unexplained Ron Paul primary vote share, mean Libertarian Party presidential vote share 1996-2004, and Libertarian Party presidential vote share in 2008. Then, I regressed estimates of individual freedom from the Ruger-Sorens Index on the estimate of liberty constituency size, finding that states with larger liberty constituencies have more freedom.

Some conversations have raised the possibility of using these regression results to predict the effect of the Free State Project (see an exchange with Patri Friedman here). The idea is that I could plug in hypothetical values for New Hampshire on all the four variables above, assuming that they get 2,000, 5,000, or 10,000 more libertarian activists. In other words, given my estimate of the effect of the size of the liberty constituency on freedom, what would be expected to happen to freedom in NH if the liberty constituency in that state grew?

To do this, I first added 2000 Ron Paul donors and Libertarian Party voters to the state, along with 4000 Ron Paul voters. (Why? Because elsewhere I’ve found that each additional Free Stater in a New Hampshire town generated two additional votes for Ron Paul. Now, of course, there probably won’t be another Ron Paul campaign, but there will be other ways in which libertarian constituencies evince themselves – remember, I’m just trying to get a reliable measure of the size of the liberty bloc; the inputs as such don’t matter.) Then I figured out how that would change the estimate of the size of the libertarian bloc in New Hampshire. The aggressive assumption behind this move is worth noting. In particular, I’m assuming that the overall ideological distribution in NH on the libertarian-populist dimension shifts as a result of these activists. In other words, the overall relationship behind number of activists and size of liberty constituency remains constant – the liberty activists don’t just become an ideological ghetto. Presumably, it will take some time for activists moving into the state to have an effect on the mindset of the people already there, so the estimates I’m giving here are for a fairly optimistic, long-run-ish view of what the FSP can accomplish. (On the other hand, I’m assuming that the state remains fairly liberal on the left-right spectrum, which might be a pessimistic assumption.)

Now that I have a hypothetical value for New Hampshire’s future liberty constituency, I can plug that into the regression equation to see what value of freedom pops out, assuming that New Hampshire remains the same on every other variable. I do this by running 1000 simulations of the freedom regression, so that I can pull out a margin of error. When I do this, I find that New Hampshire’s expected freedom value increases by 0.37 on 0-1 scale, with a 95% confidence interval of 0.017-0.685. OK, what do those numbers mean? Well, that’s roughly the difference between New Hampshire and Nebraska today, or between Nebraska and New Jersey. That’s still pretty abstract, though.

To get a more concrete sense of what that means, I played around with the state policy data to see what changes would correspond to that kind of increase in freedom. I cut state and local spending by 3% of personal income (from 17.3%) and state and local taxes by 1.5% of personal income, from 8.4% (these don’t match up, because federal grants cover roughly half of state spending). Then I cut government employment by 2% of the workforce, from 10.8%. Then I gave New Hampshire Alaska’s gun laws (concealed carry without a permit and removal of some other minor regulations). Then I completely privatized wine and liquor and cut beer taxes to zero. Then I completely legalized marijuana possession, legalized cultivation and sale of medical marijuana, and decriminalized cultivation and sale for recreational use. (No state is actually this good.) Then I completely deregulated homeschooling: no testing, recordkeeping, or even notice required. (No state is actually this good.) Finally, I gave New Hampshire same-sex marriage, because, well, it already has that – but it got it after our data came out. That got New Hampshire up to the expected level of freedom after having had 2000 activists move in.

Now, there is a good bit of uncertainty about this estimate. It could be that these 2000 activists will have a much bigger or much smaller effect on freedom. The bottom end of the 95% confidence interval corresponds to just same-sex marriage, the gun law change, and medical marijuana. Not a huge deal. The upper end corresponds to everything mentioned, plus adding right-to-work, adopting the best existing occupational licensing regime in the country (Indiana’s, just 20% of the workforce licensed, compared to NH’s 23%), reducing victimless crime arrests by about 50%, to Hawaii’s levels, repealing all smoking bans on private property, abolishing cigarette taxes, legalizing prostitution, abolishing all campaign finance regulations, and cutting state and local debt burden by about a half. By that point, New Hampshire starts to look like a mix of Amsterdam and Alaska on personal freedoms and Hong Kong on economic freedom.

What about if 10,000 activists move to NH? Well, the freedom regression model doesn’t build in diminishing returns, so the simulations yield a predicted change in freedom of 1.46, roughly five times that predicted for 2,000 activists, unsurprisingly. At that point, we’re talking about cutting government to the bone, including tax and spending reductions of 50% or more and abolishing all of the remaining petty, paternalistic restrictions on freedom that we code, from gambling laws to sobriety checkpoints, legalizing assisted suicide, and completely deregulating education, complete with a strong tax credit-based school choice program, in addition to everything previously mentioned.

But at this point we are so far outside the range of observed politics that I strongly caution against taking these inferences all that seriously. It is possible to push a regression model much further than it can bear. I simply wish to get a sense of the orders of magnitude of change that might be possible with the FSP’s success.

In conclusion, it appears that with 2,000 activists who are smart about educating the general voting public and do not isolate themselves, the long-term gains to freedom in New Hampshire could be fairly extensive, though not approaching what anyone would describe as a “libertarian utopia.” It’s at about 4,000 effective libertarian activists that we could reasonably expect NH to start to look like the Amsterdam/Alaska/Hong Kong hybrid.

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24 thoughts on “Statistical Estimates of the Future Impact of the Free State Project

  1. Jason, out of curiosity: with prostitution legalized, and marijuana consumption, growth, and sales legalized, how is it that victimless crime falls only 50%? What’s left to keep the other half up?

  2. Hard drugs don’t factor in here, so those arrests would still be a factor, as well as a few other things like gambling offenses. But your broader point is well taken – arrests for victimless crimes should probably fall by more than 50% if those things were done.

  3. Jason- great stuff! While statistical analysis and human psychology are tricky to combine (those who can do it make a fortune in the markets), it’s always nice to see attempts at a scientific understanding of the FSP and its influence.

    The key variable/assumption is the marginal effect each mover has on the populace. All the more reason to be a great neighbor, engage in frequent and well-crafted discussion, and be smart about confrontation on those issues with which some have been so indoctrinated.

    Thanks again!
    -Erik

  4. i want an amsterdam SWITZERLAND hong kong model.

    I am playing an online empire game now that is persistent over years… I act like Switzerland on foreign policy against hundreds of aggressive players. And it works, it kicks ass.

  5. Interesting idea. ‘Course, states don’t have their own foreign policies. Switzerland is good on a lot of things, though. It’s more economically free than the U.S., has fairly lax gun laws, is more decentralized than the U.S., and has tried harm reduction strategies for hard drugs.

  6. 1. What is the name of the empire game? Sounds fun.

    2. At what point would it be possible to calculate the correlation between increasing freedom and libertarian immigration? I would imagine that if the changes described at the 2000 mover level occurred, the rate of sign ups would increase greatly.

    And what of network effects? The more participants there are, the more people the participants know and tell about the FSP. Has there been a steady increase in the rate of sign ups?

  7. Jason, I’ve been playing around with a little math myself, and looking at some numbers (probably no where near the level that you are at) and using population growth curve models based on the current graphs and rate of growth and I’ve made an estimation of 2016 for the year in which the FSP acquires it’s 20,000 signatories of the statement of intent…

    Do you think my claim holds any water…? Do you think we will likely see these massive changes in NH by 2011 as the 20,000 make the move?

  8. Vijay – Good questions. I can point to a few changes that FSP movers & native allies have made in the last few years: relaxing certain homeschool regulations, opting out of REAL ID, and legalizing knife carry were probably directly attributable to FSP-generated activism, as was the first defeat of the smoking ban (which ended up only delaying it by a year). More details here. My impression is that the signup rate has increased over the last 2 years, but I’m not privy to the details anymore. Certainly, the move-in rate has increased, which is perhaps more important.

    Johnson – Did you mean to post a link to your study? I’m not seeing it.

  9. Get rid of NH’s 8.5% ‘business profit tax’ and I’ll be there.

    8.5% is huge, that’s more anti-freedom than Mass. which charges a flat 5.3% income tax!

    No helmet laws and other BS are cute, but if you want NH to be attractive, lower taxes!

  10. I agree that the business taxes in NH are outrageous. They make up a small part of the total economy but are much higher than those in most other states.

  11. Forecasts for the future may be well and good under stable-like conditions. But what we’re going to witness in the next couple of years is increased instability. Jason mentions Ron Paul not likely running again. I beg to differ. Ron Paul will run again and this time it’s going to be a cataclysmic. Then you have to factor in the exponentially increasing awareness to the philosophy of anarcho-capitalism/agorism and civil disobedience.

    Couple this with radical social unrest and you’re set up perfectly for either a civil war or a paradigm shift and possibly both. If that happens then you can throw all of these charts right in the garbage.

  12. There are too many unpredictable and uncontrollable variables that I don’t think there can truly be a reliable estimate.

  13. Hi Jason,
    Interesting observations. Maybe you’ve said this elsewhere and I missed it, but do you personally have plans to move to New Hampshire? If so, is there something that will trigger you to move – i.e. the FSP meeting a milestone? When NH reaches a certain arbitrary level of freedom? Some other trigger?

  14. I think Jason will move after there are 20,000 signers. The FSP is currently about half way there. I think the liberty minded people are more useful where they are now, to bring more people to the FSP and reach the 20,000 signed mark faster anyway.

  15. Hi Stephanie (and Bazil) – I’d like to continue working in my field, doing research like this. I’d move to NH tomorrow if I could do that. 🙂

  16. I am interested in further development of models that will give us a real picture and more of a “Goal Setting” approach to the growth of the FSP and the libertarian, anarchist, anti-government moves to NH.

    Although I am interested in your thoughts regarding “If voting ever changed anything, it would be outlawed.”

    I think we should look at the cities and counties of NH, and see the local and state laws, levies, and tax issues, and the percentage of libertarians currently residing. At what level does their population influence the “regular voter” so that higher taxes, and “morality rules” get over-turned?

    It would seem that State policies would be easier to project as being defeated once we see localized improvements. It would still be interesting to track state-wide efforts.

    When FSP volunteers collect signatures on policies or candidates, or issues, what kinds of results do they see?

    It would also seem like the Business Tax is put there by big business to keep Small business from competing, so there needs to be a small business ground-swell against it. What is preventing this and how do you go about kicking out the log-jam?

    Finally, when will NH achieve the Allodial Title? It would seem in the Live Free or Die state, Private Property is the primary interest of a free state.

    By the way, thanks for forming the FSP and for getting the word out as you have, especially on LewRockwell.com, and educating me and many others. I have become active in the various forums and enjoy Free Talk Live and the various types of activism. I hope in a few years to make the move myself with my family.

    Mark W.
    libertymatters
    P.R. of Ohio

  17. Mark – Thanks for your questions, glad to hear you’re interested in the FSP. In many places voting is outlawed! Political competition and peaceful alternation in government constitute a key achievement of our civilization. That said, I’m not going to claim that voting has any moral sanction, merely that it can be an effective tool. More effective even than voting, however, is activism (lobbying, donating, working on a campaign, or even running for office). The FSP depends on its participants’ being activists, not just voters or hangers-on along for the ride.

    Looking at effects at the local level is a bit more difficult b/c local politics is unlike state or federal politics. It’s more about “should our town buy a snowplow this year?” rather than “should we legalize pot?.” It’s less ideological. A town trying to legalize victimless crimes would really be making a symbolic statement rather than doing anything effective.

    See my comment above for some info on FSP successes.

    I agree that the BET/BPT should be a top target for elimination. Taking all taxes together, NH has just about the lowest taxes in the country. Only TN might beat it. (You may have heard about AK, but when you add in mineral severance taxes, AK is a high-tax state.) So the problem is that you have to reduce spending further to get rid of any taxes. Right now cutting taxes isn’t on the table because the state is still dealing with a budget gap.

    I think allodial title’s overrated, personally. All it’s ever meant is that you can pay the present value of your lifetime expected stream of future property tax payments now & get yourself exempted from annual payments. Hard to see how that’s really a benefit, unless you expect long-term increases in inflation.

  18. Jason,

    Thanks for the reply. I guess my point about local politics is we need people in office who would stand up to the federal government- as we used to have before Lincoln. People who would tell the Supreme Court or the President or Congress where they can stick it. The snowblower is fine, just please close down the local Fusion Centers, and get rid of all the G20 military gear for police… For that matter stop writing revenue tickets, tracking us wherever we go- stop the federal government meddling- we do not want to be like Chicago.

    I definitely support elimination of all taxes- as the IRS is completely illegitimate, as are taxes as a whole.. taxation=theft. Eliminating as many burdens on business and individuals is crucial. For individuals, schools usually comprise most of the property tax and I am not a fan of vouchers for schools because of government control in private education that follows- the same way I oppose “faith based initiatives” -another word for voucher-like activities…

    I support activism and in this I am rather new- maybe my divorce a few years ago, has me finely tuned to issues of personal liberties. I am remarried now, but putting life back together again has seen a lot of changes in my life.

    I think it would be a great idea to promote an FSP job board filled with employers looking to hire relocating free staters.

    Regards,

    Mark W.
    libertymatters
    P.R. of Ohio

  19. Im just learning about all this FSP thing. and one question i cant seem to find the answer to is. where is the money for, roads, police, fire department, education, economic growth going to come from when the state stops receiving money from the gov? unless we all live under a rock we need to pay taxes in order to maintain. not to mention grow. realistically can NH do that? it doesn’t seem possible with the unemployment rates and how strongly people are against the idea of giving up money that they earn. has anyone worked the numbers? what are the details?

    1. A lot of things to unpack there. “State stops receiving money from the gov” – do you mean the federal government? The federal government doesn’t pay much for most of these things, which are handled by state and local governments. As for whether we need some taxes for basic programs, I would agree, so the FSP isn’t necessarily about abolishing all taxes (although some Free Staters think you could run a society without a government that taxes). I don’t understand your point about unemployment rates, or about how not wanting to give up money would make people more resistant to the FSP.

  20. i think taxation could be abolished by saying that a government owns title to all land within the territory and rents be negotiated by auction, letting the market choose the relative value of all property (and of course some sort of offset for building facilities on the land based on the cost of building), or something like that. if this was the primary source of revenue i’m sure that would amount to more than enough revenue to fund basic inter-citizen inter-state/national functions like the trade standards, transport, judiciary, police, parliament, militia and revenue. the state should not be permitted to borrow money either, so it always has a balanced budget; this is the primary route by which government expands, and this behaviour is of course beneficial to banking organisations who then leverage it to legalise practises like fractional reserve banking which further compounds the problem.

    anyway, and so on…

    i first heard about FSP years ago from a friend but it was only recently after getting tired of only reading boingboing and slashdot (i know, lol) i thought to have a look at prisonplanet again and it’s all just got so exciting lately with all sorts of evil stuff going on that i already didn’t like, and before i knew it i was reading mises and rothbard and discovering the cult of ron paul (i mean that in the nicest possible way) and now i just want to do whatever i can to advance the cause of liberty, which reminded me of FSP, i think i’d bumped into the odd mention here and there possibly via lew rockwell and so now i’m here.

    i finally got myself into a decent full time job after way too many years of under employment (the large bulk of my income aside from welfare payments in the last 10 years has been freelance work under the table) i am now squirrelling away 999 silver coins and with a clear objective in mind working towards joining the FSP in new hampshire.

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