​In episode 80 of This Week's Economy, I discuss the SALT tax deduction problems, California’s social media law concerns, nuclear power race with China, VP debate challenges, presidential candidates miss pro-growth policies, and Texas can eliminate property taxes. 

Watch the episode, or listen to it on Apple Podcast or Spotify, and visit my website vanceginn.com or newsletter vanceginn.substack.com for more information.

Originally published at AIER. ​

The Federal Reserve’s recent decision to cut the federal funds rate by 50 basis points to a range of 4.75 percent to 5 percent, despite inflation still exceeding its 2 percent target, bears alarming similarities to the monetary policy missteps of the late 1970s. Back then, under pressure to stimulate economic activity, the Fed loosened monetary policy too soon. 

What was the result? Inflation soared as high as, if not higher, depending on the inflation measure. This culminated in Fed Chairman Paul Volcker reining in the money supply, which drove interest rates even higher. The result was necessary though painful double-dip recession before inflation persisted at a lower rate and the economy expanded during what’s been called the “Great Moderation.”

The recent Fed decision comes when inflation, though moderating, remains elevated. According to the latest Consumer Price Index (CPI) data, inflation increased by 2.5 percent year-over-year in August, with core inflation (less food and energy) rising by 3.2 percent. The Personal Consumption Expenditures (PCE) price index, the preferred core inflation measure for the Fed, showed a 2.6 percent year-over-year increase in July, further confirming that inflation is well above the 2-percent average inflation rate target (FAIT). 

The risk is clear: repeating the premature rate cuts of the 1970s could ignite inflation once more, forcing even harsher corrective measures later.

The Fed’s Balance Sheet Problem
The Federal Reserve’s balance sheet expanded dramatically during the COVID-19 pandemic, nearly doubling from $4 trillion in February 2020 to nearly $9 trillion in April 2022. While the Fed has made some progress in reducing its balance sheet, which now stands at $7.1 trillion, this figure remains 75 percent higher than its pre-pandemic level, with potentially risky assets. This massive increase in the money supply has distorted the economy, contributing to inflationary pressures by artificially boosting demand as supply hasn’t kept up.

Rather than relying on interest rate cuts, the Fed should be focused on aggressively reducing its balance sheet. Milton Friedman’s insights remain as relevant today as ever: inflation is “always and everywhere a monetary phenomenon.” The rapid expansion of the Fed’s balance sheet and the excessive money printing during the pandemic era are key contributors to the inflation we are battling now. Shrinking the balance sheet would help reduce the excess liquidity in the system, curbing inflation more effectively than rate cuts alone.

Distortive Power of Government Spending and Policy
While monetary policy is one part of the equation, we cannot overlook the role of fiscal policy in the current inflationary environment. Government spending has exploded since 2020 during the pandemic lockdowns, with the gross national debt soaring by nearly $13 trillion since 2019 to $35.3 trillion. The House of Representatives, rather than addressing this spending crisis, is set to pass another spending bill ahead of the September 30 deadline. As currently designed, this bill includes little in the way of meaningful spending restraint. Kicking the can down the road without addressing the structural imbalance in government finances only weakens the economy.

When the government spends recklessly by redistributing productive private resources to fund politically determined provisions, this contracts the potential supply of goods and services. And with the Fed printing so much money over the last few years, we have a clear explanation for the persistent general price inflation that reached a high of 9 percent in June 2022. But the inflationary pressures remain in the economy. This creates a vicious cycle, where excessive government borrowing leads to higher interest payments, necessitating further borrowing and money printing by the Fed to keep interest rates near its target. The only way to break this cycle is through fiscal discipline — capping government spending, reducing the deficit, and removing unnecessary programs — and more economic growth.

The government’s heavy-handed interventions in the form of taxes, regulations, and excessive spending distort market signals, stifle entrepreneurship, and create inefficiencies. These interventions raise business costs, leading to higher consumer prices and reduced economic growth. Rather than focusing on rate cuts and temporary relief, policymakers should aim for long-term solutions addressing inflation’s root cause: excessive money printing.

The Fed’s Mixed MessagesThe Federal Open Market Committee’s (FOMC) latest statement signals an optimistic view that inflation is making “further progress” toward the 2 percent target. The Committee also highlights that it has “gained greater confidence that inflation is moving sustainably” toward its goal. However, this confidence is misplaced, given the persistent inflationary pressures evident in the data. The energy index has declined 4 percent over the past 12 months, but core inflation remains stubbornly high, and key services sectors continue to experience rising prices.

Cutting rates under these conditions risks reigniting inflation, just as the Fed’s premature monetary policy, including rate cuts, in the late 1970s exacerbated inflation and led to economic instability. The FOMC’s decision to reduce the target range for the federal funds rate while signaling its commitment to further rate cuts, if “appropriate,” creates uncertainty in the markets. This mixed messaging signals that the Fed is willing to sacrifice long-term price stability for short-term gains, which could lead to more aggressive corrective actions. Given the double-dip recession in the early 1980s, there is reason for concern.

The Path Forward: Fiscal and Monetary Solutions
The Fed’s dual mandate is to ensure price stability and maximum employment. With inflation still above target, its focus should be on controlling inflation–its balance sheet and inflation are the only two things it can control. This highlights the need to make it a single mandate to ensure price stability rather than trying to stimulate economic growth. History teaches us that premature rate cuts — like those in the 1970s — lead to higher inflation, more aggressive rate hikes, and economic contraction.

A more prudent approach would involve reducing the Fed’s balance sheet more aggressively, which would help soak up the excess liquidity, fueling inflationary pressures. Moreover, Congress must confront the spending crisis head-on. A balanced approach to fiscal policy, with spending limits tied to a maximum rate of population growth and inflation, would help stabilize government finances and reduce the deficit. Even better is Sen. Rand Paul’s Six Penny Plan, a “federal budget resolution that will balance on-budget outlays and revenues within five years by cutting six pennies off every dollar projected to be spent in the next five fiscal years.” Without these structural reforms, inflation will continue to threaten the purchasing power of Americans.

Furthermore, the government should remove barriers to productivity by cutting excessive regulations and taxes that stifle growth. Allowing the free market to operate efficiently without the distortive effects of heavy-handed government policies will promote sustainable, long-term growth.

Conclusion: A Critical Moment for the Economy
The Federal Reserve and Congress are at a critical juncture. The Fed’s decision to cut rates prematurely risks repeating the costly mistakes of the 1970s, where loose monetary policy fueled inflation, leading to severe economic instability. Simultaneously, Congress’s reluctance to tackle deficit spending driving the ballooning national debt only exacerbates the underlying issues plaguing the economy.

Now is not the time for short-term fixes. The Fed should focus on reducing its balance sheet and controlling inflation, while Congress must enact serious spending reforms to prevent further economic deterioration. If we fail to act now, we risk plunging into an inflationary spiral reminiscent of the 1970s — a government-induced failure the American economy cannot afford.

​Join me for Episode 115 of the Let People Prosper Show with Jessica Melugin as we discuss the high costs of regulations, the costs of regulating social media for minors instead of empowering parents to parent, and the next steps with AI from a free-market perspective. She is director of the Center for Technology & Innovation at the Competitive Enterprise Institute.

Subscribe, share, and rate the Let People Prosper Show, get show notes at vanceginn.substack.com, and visit vanceginn.com for more insights.

Originally published at Texans for Fiscal Responsibility and full testimony there. 

​The following piece is taken from Dr. Vance Ginn’s Testimony to the Texas House Select Committee on Sustainable Property Tax Relief:

Over the last decade, the Texas Legislature has made some progress in providing property tax relief, but the housing affordability crisis demands more action. Moreover, property taxes are not just a financial burden but are fundamentally immoral as they force Texans to perpetually rent from the government, functioning as unrealized capital gains and wealth taxes paid annually. This system makes it difficult for many families to build or pass on a legacy. As noted in the following three charts, property taxes have risen too fast for too long. 

Listen to my discussion with Mandy Connell. ​

And once again pass a giant Continuing Resolution to keep spending until the end of December. Do you really think they are going to craft and pass 12 spending bills before Christmas? No, they won't. That means either another Continuing Resolution or a giant pork filled Omnibus bill that allows everyone in Congress to hide the pork they are bringing back to their districts so they can keep getting re elected. I've got Former White House OMB Chief Economist, Vance Ginn, Ph.D., today at 2:30. We're talking about how Congress is pretending that there is not a spending crisis. It’s time to address the root issue — overspending. Excessive government spending and deficits lead to inflation, higher prices, and a weaker dollar. When the government runs deficits, the Federal Reserve prints more money by mostly buying Treasury securities to cover the deficit. Find Dr. Ginn's website and sign up for his newsletter here.

​Andrew McVeigh and Vance Ginn with Texas for Fiscal Responsibility to break down the Texas Budget and our path to property tax elimination.

Originally published at Discourse. 

​Last week, the U.S. Court of Appeals for the District of Columbia Circuit heard arguments on the legality of banning the social media platform TikTok. The debate over whether TikTok should be able to keep operating in the United States brings the issue of government control over digital platforms to the forefront. It’s the latest frontier in the age-old battle between freedom and security, and there are certainly vociferous defenders on both sides.

Given that it is partially owned by the Chinese company ByteDance, TikTok has long been at the center of national security concerns. Some lawmakers argue that the app's data collection practices pose a risk, as Chinese laws could force ByteDance to share sensitive information with the country’s government. Casey Blackburn, assistant director of national intelligence, noted in an affidavit in the case that the Chinese government could attempt to “coerce ByteDance or TikTok to covertly manipulate the information received by the millions of Americans that use the TikTok application every day, through censorship or manipulation of TikTok’s algorithm, in ways that benefit the PRC and harm the United States.”

TikTok users should understand that using the platform comes with risks and decide, based on those risks, whether to continue using it or not. However, a U.S. government ban on TikTok would set a dangerous precedent, infringing on free speech, economic freedom and the future of innovation.

Lawmakers Are Concerned, Americans Less So
Certainly, the primary justification for a TikTok ban is that the platform puts our national security at risk. Lawmakers fear that TikTok’s parent company, ByteDance, could be compelled by Chinese laws to share data such as users' locations and personal details with the Chinese government. 

Additionally, concerns have been raised that TikTok could be used to deliver misinformation by controlling the content seen by its American users, especially during politically sensitive times like the U.S. presidential election or the Israel-Hamas conflict. This is a growing worry, given that over half of American adults report that they get at least some of their news from social media. Platforms can easily pick favorites by adjusting their algorithms, content and sources to be shown to users.

Florida Sen. Marco Rubio has called TikTok “China’s digital Trojan Horse,” claiming the app poses an unprecedented risk due to the potential for data misuse. These fears have propelled many lawmakers to back efforts to ban TikTok, believing that the Chinese government could use the platform for surveillance or to sway American public opinion. According to the American intelligence community’s annual report, “TikTok accounts run by a PRC propaganda arm reportedly targeted candidates from both political parties during the U.S. midterm election cycle in 2022.”

Meanwhile, average Americans don’t seem to share many lawmakers’ worries. Pew Research Center polling from the summer found that 42% of Republicans and right-leaning independents supported the ban, while only 24% of Democratic and left-leaning independent voters felt the same. And this support has fallen over time: While 32% of Americans support a TikTok ban today, 50% did in March 2023. 

Concerns have also done nothing to curb the platform's popularity globally and in the U.S. TikTok boasts 1.5 billion monthly active users and is now the fifth-most-popular social media platform in the world. Most of its users come from the U.S., with 148 million monthly unique users in this country. If Americans are concerned about the security risks posed by TikTok’s connection with China, they’re not letting it affect their behavior.

A Dangerous Precedent
While lawmakers’ concerns may be legitimate, they’re shortsighted. Focusing solely on TikTok’s risks overlooks the broader issue of how all tech companies—not just those owned by foreign entities—handle user data and are influenced by government officials. While other social media outlets don’t have the same connection with their ownership as those operating in an adversarial foreign country, the influence that the U.S. federal government has on some platforms is concerning. In fact, Facebook came under fire this summer when CEO Mark Zuckerberg publicly stated that during the pandemic the Biden administration pressured the company to censor content related to COVID-19.

Facebook, Google and Instagram collect similarly vast amounts of data, yet they have not faced the same scrutiny. Singling out TikTok with legislation is likely more about political optics and national security concerns than creating meaningful data security reforms. Meanwhile, there has yet to be credible, publicly available evidence of Chinese government actions that would warrant a ban on TikTok in the U.S. Jennifer Huddleston of the Cato Institute argues that banning TikTok could lead to government overreach, setting a precedent for further restrictions on technology under the guise of national security.

A ban would also undermine America’s role as a defender of free speech and openness. If the government starts dictating which platforms Americans can use based on political calculations, it sets the stage for future administrations to limit access to other platforms, potentially leading to broader censorship and reduced competition in the tech ecosystem. Kentucky Sen. Rand Paul highlighted these concerns, noting, “The Supreme Court will ultimately rule it unconstitutional because it would violate the First Amendment rights of over 100 million Americans who use TikTok to express themselves.”

Free Speech and Economic Liberty at Risk
The First Amendment guarantees Americans the right to free expression, and social media platforms like TikTok have become vital tools for communication. Millions of users rely on these platforms to share ideas, create content and engage in discussions. The proposed ban would curb individual choice, as people would no longer be free to decide which platforms to use. Instead of trusting individuals to make informed decisions, the government would be a gatekeeper for what platforms Americans can access.

Virginia Sen. Mark Warner, an architect of the ban, has said, “This is not an effort to take your voice away. … This is not a ban of a service you appreciate. … At the end of the day, they've not seen what Congress has seen.” While Warner’s concerns about data privacy are valid, addressing them by removing individual freedom to choose digital platforms is a imprudent solution that overlooks the broader implications for free speech and innovation.

Banning TikTok would also severely disrupt the economic opportunities it provides for businesses, especially small businesses. TikTok has become an invaluable tool for many entrepreneurs and content creators who rely on the platform to reach new audiences and grow their customer base. Since the pandemic, TikTok has allowed businesses to market their products in creative ways that larger platforms, like Facebook or Instagram, have struggled to match. TikTok’s launch of TikTok Shop in 2023, for example, has attracted more than 500,000 U.S. sellers who use the platform as a key component of their e-commerce strategy. Shutting down TikTok stateside would disproportionately harm these small businesses, removing a vital marketing and sales tools. Such a ban would stifle innovation and damage the dynamic competitive spirit that fuels economic growth.

The potential TikTok ban also raises concerns about market distortion. TikTok operates in a crowded social media space alongside competitors like Instagram, Snapchat and YouTube. Despite their extensive data collection practices, none of these companies are facing bans. If TikTok were banned, it would grant these other platforms an unfair advantage, not through innovation or better service, but because of government intervention.

Companies should rise or fall in a free market based on their ability to innovate, provide value to consumers and compete on a level playing field. When the government intervenes by banning one company, it creates artificial winners and losers. The tech industry thrives on competition, and government overreach in the form of platform bans undermines this competition. Oregon Sen. Ron Wyden has raised similar concerns: “Banning TikTok opens the door for future censorship of apps and technologies deemed politically inconvenient.”

Unleashing the Future … and the Free Market
Social media, artificial intelligence and data-driven technologies are driving a real global transformation. Government bans, however, risk stifling this growth. Instead of restricting platforms and technologies out of fear, we should encourage innovation and competition to allow new technologies to flourish.

By banning TikTok, the U.S. would send a message that government action can stifle innovation. Entrepreneurs may hesitate to invest in new technologies because of concern that their platforms could be shut down based on political whims rather than market forces. If the U.S. wants to maintain its position as a global leader in technology, it must foster an environment that promotes innovation and technological advancement, not one that restricts it.

In a free market, individuals—not the government—should decide which platforms they use. The federal government can certainly provide information for transparency about potential risks, but it should be up to consumers to assess those risks and decide what is best for them. The TikTok ban represents a paternalistic approach to governance, where the government dictates what is safe or unsafe for people, limiting their freedom to make informed choices.

We must recognize that nothing is without risk. Every decision we make involves weighing costs and benefits, and it is not the government’s role to eliminate all potential risks by controlling our choices. Individuals should be trusted to decide whether to use TikTok—or any platform—rather than having the government impose blanket bans.

The question of a TikTok ban represents more than just a national security debate—it raises fundamental questions about the role of government in regulating technology, free speech and market competition. While national security and data privacy are important concerns, banning TikTok is not the answer. Such a ban sets a dangerous precedent that threatens individual liberty, economic freedom and innovation.

As Milton Friedman once said, “A society that puts freedom before equality will get a high degree of both.” The same is true for technology. We must allow the market to work, letting individuals decide how they engage with digital platforms. Banning TikTok risks not only the stifling of innovation but also the erosion of the freedoms that make America’s economy dynamic and competitive.

Originally posted at Kansas Policy Institute. ​

With the Federal Reserve recently cutting its federal funds rate target by 50 basis points to a range of 4.75% to 5%, Kansas must reassess its economic policies to prepare for the challenges ahead. Lower interest rates may offer short-term relief by reducing borrowing costs, but the continued risk of inflation demands long-term reforms. Kansas can withstand the economic uncertainty created by the Fed by state policymakers taking proactive steps to reform taxes, reduce spending, and deregulate to improve economic freedom and opportunity.

Economic Freedom Ranking and Implications

According to the Economic Freedom of North America 2023 report, Kansas, currently ranked 14th in economic freedom, lags behind neighbors like South Dakota (5th), Nebraska (13th), and Missouri (15th). Kansas’s ranking reflects areas needing improvement, including high taxes and government spending.

There is abundant evidence that people in countries and states with more economic freedom thrive while those with less don’t. A recent academic study considered information from 54 published articles on relationships between economic freedom and different measures of prosperity and found that “economic freedom is positively related to growth, income, and investment.” This applies with Kansas and other states with higher economic freedom have lower unemployment rates and faster job creation, underscoring the benefits of increasing economic freedom.

The following figure from the report shows the benefits between higher economic freedom and higher income per capita across North America.

Kansas’s tax and regulatory environment has prevented the state from achieving stronger economic outcomes despite its relatively low unemployment rate. To compete with neighboring states and others, Kansas must focus on policies that reduce taxes and remove obstacles to starting a business.

Tax Reform: The Key to Growth

Kansas has made strides in tax reduction, but its personal income tax and high property taxes still pose significant obstacles to business growth and household wealth. States like Texas and Tennessee, which have no personal income tax, consistently rank higher in economic freedom and experience faster population growth and job creation. Phasing out the personal income tax and reducing property taxes would help Kansas attract new businesses and residents. Lower taxes would give businesses more capital to reinvest in jobs and innovation, while making the state more competitive.

Targeted Regulatory Reforms for Small Businesses

Kansas also faces barriers in its regulatory environment, particularly for small businesses. Burdensome regulations, including licensing requirements and other red tape, slow business formation and expansion, hindering economic dynamism. Lawmakers should comprehensively review regulations and focus on removing outdated or excessive rules that stifle small businesses. Streamlining occupational licensing would make it easier for entrepreneurs to start and grow businesses, creating more jobs and opportunities for workers.

Spending Restraint and Fiscal Responsibility

Reducing taxes must go hand-in-hand with controlling government spending. Excessive spending forces higher taxes and crowds out private-sector investment, creating a drag on economic growth. Implementing fiscal rules that limit state spending growth to the maximum rate of population growth plus inflation would ensure that Kansas maintains fiscal discipline. By restraining spending, Kansas can fund critical infrastructure and education without placing additional burdens on taxpayers.

Conclusion: A Path to Greater Freedom and Prosperity

Kansas has the potential to move up the economic freedom rankings, but achieving this requires bold action. By reducing taxes, cutting unnecessary regulations, and controlling government spending, Kansas can build a more vibrant and competitive economy. Following the lead of states like South Dakota and Texas, which prioritize pro-growth policies, Kansas can improve its labor market outcomes, attract investment, and create a more prosperous future for all residents.

Chairman Meyer and Members of the Committee,

Thank you for the opportunity to submit written testimony. I am Dr. Vance Ginn, president of Ginn Economic Consulting, a citizen and economist concerned about Texas's high and rising burden of property taxes. 

Over the last decade, the Texas Legislature has made some progress in providing property tax relief, but the housing affordability crisis demands more action. Moreover, property taxes are not just a financial burden but are fundamentally immoral as they force Texans to perpetually rent from the government, functioning as unrealized capital gains and wealth taxes paid annually. This system makes it difficult for many families to build or pass on a legacy. Property taxes have risen too fast for too long, as noted in the following three charts. ​

Last session, despite a $32.7 billion surplus, the Texas Legislature allocated just $12.7 billion to new property tax relief. Meanwhile, the state budget increased by a record 32% in state funds from GAA appropriations to appropriations, which is unsustainable. ​

Although this was the second-largest tax relief amount in Texas history, property taxes barely changed last year because of excessive spending and debt increases by local governments. ​

The property tax data in the chart above were presented by the Texas Comptroller’s Office during the Texas Senate Committee on Finance hearing on September 4, 2024. In my testimony that day, I included data showing an increase of $165 million in total property taxes collected because my calculations were based on what the Comptroller had on their website then. However, the Comptroller’s Office has since updated its website with the latest data. I should note there are 12 ISDs without final property tax data in its spreadsheet because of court cases to finalize valuations and property tax amounts due. This means the amount of property taxes collected in 2023 could be higher than the Comptroller’s Office estimates, likely negating the decline estimate.

How did this relief happen?

We should note that school district property taxes did not go down by $12.7 billion. Last year, the Texas Legislature allocated this amount toward reducing school district maintenance and operations (M&O) property tax rates by 10.7 cents per $100 valuation and raising the homestead exemption by $60,000 to $100,000 in 2023. Based on the latest available data, these measures reduced total school district property taxes, which includes M&O and I&S for debt, by nearly $4.3 billion because school districts raised their property taxes levied by increasing M&O spending and I&S debt. 

While about $6.4 billion of the $12.7 billion was allocated to accomplish this relief, the other $6.3 billion is reserved to maintain the relief in the next fiscal year. Texans receive only about 33% of the total from their surplus dollars in relief. This is not a good return for taxpayers because the relief was not directed toward helping everyone, and local governments continued to tax too much so they could spend more. 

Rather than allocating all $12.7 billion to reduce school district M&O property tax rates to help everyone with a homestead, rental, or business property, the Legislature chose to pick winners as those with a homestead and losers as those without. In addition to the fact that school districts and other local governments increased spending and taxes excessively, total property taxes levied across the state may have declined slightly by -0.42%. This is the second-best relief since 1998, after a decline of 1.03% in 2007. 

But this could have been the largest relief had the Texas Legislature used more of the $32.7 billion surplus toward compressing school district M&O property tax rates, freezing school district property taxes so that when they are cut, they go down by the full amount, imposing a spending limit on local governments, and capped all other property taxes at the no-new-revenue rate for voters to approve any tax increase.     

The path forward is clear: spend less and reduce property tax rates rather than complicating the housing market with homestead exemptions, discounts, and abatements that make elimination more difficult because it drives property tax rates higher than otherwise. Texas can eliminate property taxes with three simple cap, pass, and allocate (CPA) steps:

1. Cap property taxes to the no-new-revenue rate and freeze school district M&O taxes.
2. Pass sustainable budgets that limit government spending, with a strong spending limit based on a maximum rate of population growth plus inflation at the state and local levels, like Colorado’s TABOR, but better is a Frozen Texas Budget of no growth or less spending by at least 10%. 
3. Allocate at least 90% of surplus revenue by the state to compress school district M&O property tax rates to eliminate them in about a decade, ending Robin Hood and having taxpayers pay 100% of these taxes through the state. This should include less spending on public education with more efficient universal education savings accounts. Local governments should allocate their surpluses to reduce their property tax rates to zero.

This CPA process will help curb soaring property taxes and pave the way for a more prosperous future without property taxes to preserve life, liberty, and prosperity. Thank you for your time.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting and contributor to more than 15 think tanks, including Americans for Tax Reform, Texans for Fiscal Responsibility, and Texas Policy Research Initiative. Dr. Ginn was previously a lecturer at multiple higher education institutions, chief economist at the Texas Public Policy Foundation, and chief economist at the White House's Office of Management and Budget. He earned his doctorate in economics at Texas Tech University. Follow him on X.com at @VanceGinn and get more of his research at vanceginn.com. ​

Originally published at Texans for Fiscal Responsibility. Get the full report there.

​Overview

• The 2024-25 Frozen Texas Budget would have kept the state’s budget from growing as it is already too big, thereby excessively burdening taxpayers. This also helps quickly achieve the three-step process to eliminate all property taxes over the next decade by limiting government spending at the state and local levels and returning surplus collected taxpayer dollars to taxpayers.
• The 88th Texas Legislature passed the 2024-25 budget in 2023, which resulted in the largest budget increase and second-largest property tax relief in Texas history after a regular and four special sessions. The 89th Texas Legislature in 2025 must practice better budget restraint to reduce the growing spending burden, sustain past property tax relief efforts, and provide more tax relief.
• Freezing the Texas budget and returning “surplus” money to taxpayers by reducing school district maintenance and operations property tax rates will provide a path to eliminate nearly half of property taxes in Texas. Combining this with spending restraint by local governments and returning “surplus” money to taxpayers by reducing property tax rates will provide a reasonable path to eliminating immoral property taxes that tax unrealized gains in Texas so Texans can have their right to own property.
• See an Overview of the Texas Budget.

​In episode 78 of This Week's Economy, I discuss the need for improvements in patient care, property tax burdens, taxpayer giveaways, protectionism, federal spending, and overfunding public education. Get the show notes at vanceginn.substack.com.

​Join me for Episode 114 of the Let People Prosper Show with John Hendrickson as we discuss the importance of the U.S. Constitution, debate over trade protectionism, outline the pro-growth policies in Iowa, and consider the pros and cons of the “New Right.” He is the Policy Director for Iowans for Tax Relief Foundation.

Subscribe, share, and rate the Let People Prosper Show, and visit vanceginn.com for more insights and vanceginn.substack.com for show notes.

Originally published at Mackinac Center. 

​There is no such thing as price gouging. During crises, we see price signals that help allocate scarce resources to those who need them most.

But some Michigan lawmakers are proposing new laws to prevent "price gouging" during emergencies, an approach that misinterprets how markets work. Suppressing these signals, as the proposed laws intend, will result in shortages and ultimately harm consumers.

For example, after the March 2017 windstorm that left many Michigan residents without power, hotel prices surged from $59 to $400 per night. Critics called this gouging, but the price increase wasn’t about greed — it ensured that limited hotel rooms went to those who urgently needed them rather than being snapped up by people with less immediate needs. Higher prices, in this case, helped ensure resources were available for those who needed them most.

In times of crisis — a hurricane, blizzard, or pandemic — demand for certain goods and services soars while supplies become constrained. In a functioning market, prices rise to reflect these changes. This serves two key purposes. First, it encourages consumers to buy only what they truly need, preventing hoarding. Second, it motivates businesses to increase the quantity supplied, so shortages are only temporary. These price signals are essential in ensuring that goods flow where they are most needed.

The proposed legislation in Michigan, such as SB 954 and SB 955, would cap price increases at 10% during emergencies. While this might sound like a consumer protection measure, it sets the stage for greater problems. Price caps prevent businesses from responding effectively to surges in demand. If prices are kept artificially low, consumers have no reason to limit their purchases, which leads to empty shelves and shortages. The result is that the people most in need may be left without essential goods.

Moreover, these price caps discourage businesses from entering the market. When prices rise, new suppliers are incentivized to meet the demand. But if businesses know that prices are capped, they may decide it’s not worth the effort or cost to increase supply during a crisis. This means fewer goods are available, harming consumers.

Critics often argue that businesses raise prices unfairly during emergencies to exploit consumers. While prices may rise, this doesn’t mean businesses are being greedy. Temporary price hikes are often a natural response to increased costs. Even if a business temporarily becomes the sole supplier of a product, new competitors will eventually enter the market, bringing prices back down. Markets correct themselves quickly when competition is allowed to flourish.

We saw this dynamic play out during the COVID-19 pandemic. Demand for products like hand sanitizer and masks surged, but price controls prevented the market from adjusting. As a result, stores ran out of stock because prices couldn’t rise enough to reflect higher demand. If prices had been allowed to increase, this would have signaled to producers to ramp up production and encouraged new suppliers to enter the market.

But will these proposed laws matter if a company can demonstrate that its costs increase to produce or deliver a good during an emergency? No. The laws create a mechanism where government officials can investigate and second-guess their price and cost increases after the fact and punish the company for perceived abuses. Not many companies will look at Michigan in a temporary crisis and try to find solutions for Michigan residents if they’re going to get dragged through the mud and penalized for their good deeds.

Price caps also limit vulnerable consumers' access to goods. Wealthier or quicker buyers often purchase large quantities when prices are held artificially low, leaving fewer resources for those without. In contrast, when prices rise, consumers think more carefully about what they need, ensuring that goods are more widely available for everyone.

Michigan’s proposed price-gouging laws are based on a misunderstanding of how markets work. Price signals are essential in balancing supply and demand, especially during emergencies. Instead of capping prices, which will only create shortages and inefficiencies, Michigan should trust the market to function effectively. When prices rise during a crisis, they help allocate goods to those who need them most, encourage conservation, and motivate suppliers to increase production.

Price increases during an emergency are a rational marketplace response to changing conditions. By allowing higher prices, Michigan can ensure that goods are available during emergencies as businesses are incentivized to meet demand. Price signals matter for bringing goods to the people who need them. Making them illegal will harm consumers.

​I joined Don Ma on NTD News to discuss whether the Fed should cut interest rates. Don’t miss it!

Originally published at Texans for Fiscal Responsibility. ​

The State of Texas is pouring unprecedented amounts of taxpayer money into public education with little to show for it. 

From the 2014-15 school year, to the 2022-23 school year, total education spending surged 53% to $92.4 billion, while per-student spending jumped 45% to $16,792. That’s far above inflation’s 28.6% increase. Yet, 76% of 8th graders are below proficiency in math, and 75% in reading.

Clearly, more funding hasn’t improved results for Texas children.  

The problem isn’t underfunding, but overfunding and inefficiency in Texas’s government-run, monopoly education system. There’s no competition or incentive to improve outcomes. 

Universal Education Savings Accounts (ESAs) provide a real solution. 

ESAs let parents direct state education dollars (their tax dollars) to the school or educational service of their choice – public, private, homeschooling, or other options. This competition would force all schools to improve, driving innovation, lower prices, and better outcomes.

Allocating about $12,000 per student through ESAs would reduce the total cost of education from $92.4 billion for 5.5 million students to $75.6 billion for 6.3 million school-age children, saving taxpayers at least $16.8 billion. 

If we focus solely on operational expenditures, ESAs could drop to $12,389 per student for the same spending, or less for savings. The savings should be used to reduce school district property taxes and school debt, further relieving taxpayers. 

Twelve states, including Arizona and Florida, already have universal or near-universal ESAs with positive results. Texas should follow suit.

Governor Greg Abbott has an historic opportunity to lead this charge. Universal ESAs would empower parents, improve educational outcomes, and save billions of taxpayer dollars. 
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It’s time to stop overfunding a broken system. Universal ESAs are the key to transforming education in Texas. Governor Abbott should keep pushing hard for universal school choice and ESA school finance in the next legislative session and lead Texas toward a brighter future.