T​he Fraser Institute recently released its annual “Economic Freedom of the World” report. While the US inched up one spot from its previous ranking to fifth-best, this ranking remains below its peak of third-best in 2000.

A first-time finding not seen in any of 27 prior years: Hong Kong fell from first place. Singapore nudged out Hong Kong for the top spot by 0.01 points. While that rating may seem minuscule, the implications of how both countries got here are not. 

The report, which shows comprehensive data from 2021, assesses economic freedom among nations across five major areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulations.  

According to the Fraser Institute’s Matt Mitchell, “The most important component of economic freedom…is the rule of law section…you need to be able to trust that the contracts you form and the property you acquire will be protected. We found that regulatory barriers and the rule of law matter more than taxes [for economic freedom].”

Given these guidelines, Hong Kong’s fall isn’t surprising. 

China’s special administrative region allowed to manage most of its own affairs under the “one country, two systems” precedent since 1997, Hong Kong’s independence has been seriously threatened since 2020 with the passage of China’s new security law. 

Today, as a result, Hong Kong has one of the fastest-growing political prisoner populations worldwide. Although the protection of Hong Kong’s independence under the system was set to last until 2047, it seems unlikely that China will keep its promise.

Over the past two years, Hong Kong’s economic freedom ranking dropped by a substantial 0.40 points, a total decline of 0.64 points since its highest rating of 9.19 in 2010. This is much steeper than the average economic freedom drop worldwide following the pandemic, which is the lowest average score since 2009, pointing to China’s harsh policies as a primary factor. 

China’s recent security law inhibits free speech and impartial justice, integral to the rule of law which is the foundation upon which individuals can construct their economic aspirations, with trust as the indispensable glue. 

But trust isn’t just a legal concept. It’s deeply interwoven with a nation’s cultural fabric. Trust is the bedrock upon which economic prosperity thrives, allowing individuals and businesses to engage in voluntary exchanges with confidence. 
Recent developments, including China imposing significant trade barriers, limits to foreign labor employment, increased business costs, and new attempts to restrict media, tarnished Hong Kong’s overall score. 

The lesson from the report rings loud and clear: A small government footprint in fiscal matters alone won’t guarantee economic freedom. 

What’s needed is a symphony of elements: the rule of law, property rights, stable currency, open trade, and sensible regulation. High-income industrial economies like now top-ranking Singapore shine in areas related to legal systems, property rights, sound currency, and international trade while keeping their government size compact.

The report is a valuable tool for deciphering economic freedom’s complexities, and the factors underlying the success story of Singapore and Hong Kong’s decline drive home the point that tax rates don’t solely determine economic prosperity. It hinges on the quality of institutions, the rule of law, and the cultural values that champion trust and voluntary exchange. 

As the US strives to enhance its economic freedom, the country would be wise to heed the lessons offered by Singapore’s rise and Hong Kong’s fall. In particular, this should include removing government barriers so that there are more ways for free people to prosper.

Originally published at American Institute for Economic Research.

Originally published at American Institute for Economic Research. 

T​he Fraser Institute recently released its annual “Economic Freedom of the World” report. While the US inched up one spot from its previous ranking to fifth-best, this ranking remains below its peak of third-best in 2000.

A first-time finding not seen in any of 27 prior years: Hong Kong fell from first place. Singapore nudged out Hong Kong for the top spot by 0.01 points. While that rating may seem minuscule, the implications of how both countries got here are not. 

The report, which shows comprehensive data from 2021, assesses economic freedom among nations across five major areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulations.  

According to the Fraser Institute’s Matt Mitchell, “The most important component of economic freedom…is the rule of law section…you need to be able to trust that the contracts you form and the property you acquire will be protected. We found that regulatory barriers and the rule of law matter more than taxes [for economic freedom].”

Given these guidelines, Hong Kong’s fall isn’t surprising. 

China’s special administrative region allowed to manage most of its own affairs under the “one country, two systems” precedent since 1997, Hong Kong’s independence has been seriously threatened since 2020 with the passage of China’s new security law. 

Today, as a result, Hong Kong has one of the fastest-growing political prisoner populations worldwide. Although the protection of Hong Kong’s independence under the system was set to last until 2047, it seems unlikely that China will keep its promise.

Over the past two years, Hong Kong’s economic freedom ranking dropped by a substantial 0.40 points, a total decline of 0.64 points since its highest rating of 9.19 in 2010. This is much steeper than the average economic freedom drop worldwide following the pandemic, which is the lowest average score since 2009, pointing to China’s harsh policies as a primary factor. 

China’s recent security law inhibits free speech and impartial justice, integral to the rule of law which is the foundation upon which individuals can construct their economic aspirations, with trust as the indispensable glue. 

But trust isn’t just a legal concept. It’s deeply interwoven with a nation’s cultural fabric. Trust is the bedrock upon which economic prosperity thrives, allowing individuals and businesses to engage in voluntary exchanges with confidence. 

Recent developments, including China imposing significant trade barriers, limits to foreign labor employment, increased business costs, and new attempts to restrict media,l tarnished Hong Kong’s overall score. 

The lesson from the report rings loud and clear: A small government footprint in fiscal matters alone won’t guarantee economic freedom. 

What’s needed is a symphony of elements: the rule of law, property rights, stable currency, open trade, and sensible regulation. High-income industrial economies like now top-ranking Singapore shine in areas related to legal systems, property rights, sound currency, and international trade while keeping their government size compact.

The report is a valuable tool for deciphering economic freedom’s complexities, and the factors underlying the success story of Singapore and Hong Kong’s decline drive home the point that tax rates don’t solely determine economic prosperity. It hinges on the quality of institutions, the rule of law, and the cultural values that champion trust and voluntary exchange. 

As the US strives to enhance its economic freedom, the country would be wise to heed the lessons offered by Singapore’s rise and Hong Kong’s fall. In particular, this should include removing government barriers so that there are more ways for free people to prosper.

A recent survey found that 25 out of 100 Americans buy items on Amazon at least once per week. But the Biden administration’s Federal Trade Commission’s (FTC) decision to sue Amazon in federal court for supposedly violating antitrust law last week could change that for consumers.   

Specifically, the FTC claims that “Amazon’s ongoing pattern of illegal conduct blocks competition, allowing it to wield monopoly power to inflate prices, degrade quality, and stifle innovation for consumers and businesses.” 

This federal case will waste a lot of time and taxpayer money as it has no basis.  

In the Pelican Institute’s recent research, we highlighted the radicalism by those looking to make political points regarding antitrust enforcement instead of following the half-century, objective consumer welfare standard.  

As history has proven, empowering people in the marketplace rather than bureaucrats in government results in more efficient and effective outcomes and better supports liberty and prosperity. 

The FTC’s Chair, Lina Khan, and Assistant Attorney General Jonathan Kanter of the Department of Justice’s antitrust division, have been doubling down on the administration’s aggressive approach to antitrust enforcement. This is the latest example, and they haven’t had a good track record. 

Antitrust laws were designed to protect consumers and promote fair competition but rarely achieve these goals. Inevitably, businesses become the antitrust enforcement targets, resulting in less economic growth, innovation, and job creation, leading to higher prices and hindered prosperity. 

In short, consumers and employers are hurt by antitrust overreach, which will result from this sham case against Amazon by the FTC. And it will mean other companies must increase their legal team because they may be next.  

Protecting consumer welfare, which refers to the value consumers receive above the price they pay for goods and services, should be the driving force behind antitrust enforcement. This acknowledges that consumers have the sovereignty to make decisions supporting the competitive market process.  

If not, we will have much less consumer satisfaction, which would be unfortunate because of the administration’s radical approach in the Amazon case. Instead, common sense should lead the way so that Amazon can continue to provide the satisfaction demanded by consumers rather than be directed by government. ​

Originally posted at Pelican Institute. 

​Federal and state layouts are vastly outpacing the combined rate of inflation and population growth.

​The U.S. national debt recently passed $33 trillion, more than 120% of gross domestic product. Left-wing politicians assert that Americans are undertaxed, but the data show that the government spends too much.

Americans for Tax Reform launched the Sustainable Budget Project in September to document the rise in government spending over the past decade. The results are clear: Overspending is the problem.

Between 2013 and 2022, aggregate annual spending by the 50 state governments, excluding federal funds, increased 51.7%. Total annual federal spending rose 69.4% during the decade, more than three times as fast as the 21.6% increase in the rate of population growth plus inflation. If government grows faster than this rate, then it is growing faster than what the average taxpayer can afford.

Had the federal government limited the growth in spending to a maximum of the population growth rate plus inflation during that decade, in 2022 the federal government would have spent $1.6 trillion less than it did, resulting in at least a $200 billion surplus. If the federal government had done this over the past two decades, the national debt would have increased by less than $500 billion instead of $19 trillion.

If state governments had limited spending growth to the rate of population growth plus inflation during the last decade, they would have spent $1.39 trillion in 2022, $344 billion less than the $1.74 trillion they actually spent.

Had federal and state governments simply grown no faster than the rate of population growth plus inflation, taxpayers could have been spared at least $2 trillion in taxes and debt in 2022 and trillions of dollars more over time. The U.S. hasn’t needed drastic budget cuts, just slower, more sustainable debt growth.

Our project defines each state’s overspending problem by providing a dollar-figure spending ceiling and allowing anyone to see how government spending in a state has grown relative to the rate of population growth plus inflation. It will publish and promote an annual benchmark spending level for every state, which lawmakers must not exceed if they want to keep state spending in check.

Limiting state spending to the Sustainable Budget Project benchmark isn’t impossible. Lawmakers in more states are beginning to implement the sorts of structural reforms necessary to slow the rate of government spending to a sustainable clip. During the past decade, Colorado and Texas have demonstrated that this can be done.

Colorado spent a cumulative $12.8 billion less over the past decade than what could have been available under the benchmark. State lawmakers could have dramatically cut the state’s individual income tax. Instead, there is a push in Colorado to raise taxes and destroy the Taxpayer’s Bill of Rights, the state’s constitutional requirement that all tax increases be subject to voter approval and revenue collected in excess of the state spending cap be refunded to taxpayers.

Texas spent $16.4 billion less than the benchmark over the past decade, savings that could have been used to eliminate its gross-receipts-style franchise tax and other bad taxes. Rather than continuing to keep state spending in check, Texas lawmakers instead passed the largest state budget in the state’s history this year.

Excessive spending at the federal, state and local levels of government deserves more attention. Tax hikes are easy to identify, but there has been no objective, binary metric to determine whether a state government spends too much. By focusing on the rate of population growth plus inflation, the Sustainable Budget Project provides such a standard.

Governors and state legislators need to implement reforms and practice restraint to slow the steep upward trajectory of government spending. That lawmakers in large, politically important states have already demonstrated this ability has shown their counterparts in other states and in Washington that sustainable budgeting is possible. With more modest growth in state government spending, lawmakers can lower taxes and Americans can keep more of what they earn.

Mr. Norquist is president of Americans for Tax Reform. Mr. Ginn, a senior fellow at ATR, served as chief economist of the White House’s Office of Management and Budget, 2019-20.

Originally published at Wall Street Journal.

Just weeks after launching its pointless lawsuit against Google, Biden’s Federal Trade Commission set its sights on Amazon, beginning the process of suing one of Americans’ favorite companies.

While government regulation is often portrayed as a means to protect consumers, this lawsuit appears to be another attempt to control the marketplace, with potentially detrimental consequences for consumers, competition and innovation.

The Amazon lawsuit is part of the FTC’s ongoing tirade against businesses, including “Big Tech,” that they accuse of violating antitrust law. But the real “violation” here is against free-market capitalism and human flourishing. 

The FTC takes issue with how Amazon manages its online marketplace for sellers, claiming that sellers are forced to charge high prices and lose profit by using Amazon’s add-on services and advertisements. Both of which are optional. It’s not unlike how popular media platforms employ algorithms to favor certain types of content, which some people may try to circumvent by purchasing ad campaigns.

But the FTC claims these choices are optional “in name only” and that Amazon is operating like a monopoly, forcing customers to pay higher prices for lower quality products. 

And just like with the Google lawsuit, the real problem reveals itself with this complaint. 

Antitrust laws were established to preserve competition and protect consumers. They focus on the consumer welfare standard, which evaluates whether consumers are better or worse off due to a company’s actions. Research, however, shows that Amazon’s consumers are pleased with the service. Otherwise, they’d stop using it. 

According to the latest American Customer Satisfaction Index, Amazon takes first place for its selection, value and online shopping experience. And what’s more, NetChoice polling shows a staggering 84 percent of Americans and 92 percent of Republicans view the FTC’s lawsuit against Amazon as a waste of resources.

If the FTC prevails, the result could be fewer product choices, higher prices, slower deliveries and fewer opportunities for small businesses — an outcome contrary to the intended purpose of antitrust laws.

This lawsuit threatens to waste taxpayers’ dollars that could be better utilized elsewhere, particularly when the economy faces challenges like the labor shortage, high housing costs and inflation, to say nothing of Congress’ refusal to avoid accruing more debt. 

It also highlights the knowledge problem that economist Friedrich Hayek pointed out. Central planners lack the dispersed knowledge necessary to determine market dynamics effectively. Manipulating markets through government intervention often leads to unintended consequences, undermining the principles of free-market capitalism.

The FTC’s lawsuit against Amazon raises serious concerns about its true intentions and potential negative consequences. Rather than stifling free markets and wasting resources, government should focus on getting out of the way of productive activities that benefit consumers, workers and employers alike.

Originally posted Daily Caller. dailycaller.com/2023/10/03/ginn-ftc-amazon-big-tech-tirade-free-market/

​Naomi and I discuss:
1) Pros and cons of taxpayer-funded health care and whether it is a human right;
2) Problems with Medicaid and how it is putting doctors and patients at a disadvantage; and
3) The crucial roles of free market competition and technology in quality, affordable health care.
​
Naomi’s bio:

• Naomi Lopez is the founder of Nexus Policy Consulting, a Senior Fellow at the Goldwater Institute, and a public advisor to Paragon Health Institute.
• Her work focuses on a broad range of healthcare issues, including the Right to Try, off-label communications, pharmaceutical drug pricing, supply-side healthcare reforms, the Affordable Care Act, Medicaid, and 21st-century healthcare innovation.
• Naomi has 25 years of experience in policy and has previously served at organizations including the Illinois Policy Institute, the Pacific Research Institute, the Institute for Socioeconomic Studies, and the Cato Institute. She previously served as Vice President for Healthcare Policy at the Goldwater Institute, leading the Institute’s efforts to implement federal and state healthcare reforms that benefit all Americans.
• A frequent media guest and public speaker, Naomi has authored hundreds of studies, opinion articles and commentaries. She holds a B.A. in economics from Trinity University in Texas and an M.A. in government from Johns Hopkins University.

You can watch this episode and others along with my Let People Prosper Show on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor. Please share, subscribe, like, and leave a 5-star rating!

For show notes, thoughtful insights, media interviews, speeches, blog posts, research, and more, check out my website (www.vanceginn.com) and please subscribe to my newsletter (www.vanceginn.substack.com), share this post, and leave a comment.

​What is going on in Louisiana’s economy? How is the labor market doing for Louisianans?

What you hear in the media or by politicians may not always match reality. The Pelican State has many fantastic resources with educated people, eccentric culture, robust ports, abundant oil and gas production, and much more. But Louisianans can’t reach their full potential and flourish because of failed public policies, highlighted by job losses in two of the last three months and many still out of the labor force.

The Pelican Institute’s “Comeback Agenda,” which includes our recently released tax and budget reform plan, provides a prosperous path forward.
​
Let’s dive into the data, consider myths and realities, and note which policies would help.
​

• Louisiana’s unemployment rate is a record low because more people aren’t looking for work.

​
Table 1 provides Louisiana’s key labor market data during important dates from the U.S. Bureau of Labor Statistics. These dates are December 2007, when the Great Recession started; February 2020, when the last expansion peaked before the COVID-19-related shutdowns; April 2020, when the shutdown recession ended; and August 2023, for the latest data available.

​These data indicate strength on the surface, but how are Louisianans really doing?

In August 2023, the unemployment rate declined to 3.3%, with 68,814 people unemployed; both are the state’s record lows. Louisiana Governor John Bel Edwards cheered these points as a testament to his policies since he took office in January 2016. But are these data worthy of praise?

Let’s start by looking at how the unemployment rate is calculated: unemployed divided by the labor force, which includes the employed and unemployed. This calculation can show a lower unemployment rate in multiple ways, including fewer unemployed with the same labor force or fewer unemployed and fewer in the labor force. These data are collected from a survey of households across the state.

The first reason would be considered by most as a positive result, while the latter as mostly negative if people stopped looking for work because they couldn’t find it or opted to receive temporary government assistance. There were massive increases in the number of Louisianans enrolled in social safety net programs over the last three years, which likely changed people’s incentive to work.

But considering what has happened in the labor market since January 2016, the result is not as rosy.

Since January 2016, Louisiana’s working-age population has declined by 29,650 to 3.5 million. The labor force has declined by 40,236 to 2.1 million. The number of unemployed has declined by 59,966 to 68,814. These data reflect how Louisiana has had people leave the state for years, including the third highest net out-migration in the country last year. The situation today is much different than in January 2016.

If we account for the decline of 40,236 in the labor force and say those people didn’t leave the labor force and are unemployed (understanding some of them may find employment, but we don’t know how many would), then the unemployment rate would be 5.1%. This unemployment rate is lower than the 6% in January 2016 but 55% higher than the reported 3.3% rate today. Moreover, if the working-age population hadn’t declined, the labor force participation rate would be 59.7% instead of the 59.0% rate today.

Work matters, as it brings about dignity and self-sufficiency and leaves fewer people needing help from government safety net programs. These calculations show that while the labor market data can look good on the surface, there are many real problems facing Louisianans that need to be addressed by state leaders. There are obstacles imposed by the government that can be solved, and we need only look to Utah as an example of how states can do a better job of connecting citizens with employment and supportive services that lead to self-sufficiency.

• Louisiana’s nonfarm employment has declined in two of the last three months.

Nonfarm employment is what economists most often report because the data are considered more consistent with the health of the labor market. This is collected from established businesses instead of households across the state. There was an increase in nonfarm employment by 7,400 jobs in August (9th most in percentage terms of any state). But this was after cumulative losses of 3,600 jobs during the prior two months for an increase of just 3,800 jobs over the last three months.

Considering nonfarm employment over a longer period, it is up by 34,200 jobs from a year ago (23rd most in the country). But it is down by 20,900 since January 2016 and down by 28,000 since February 2020 (one of only ten states not to have regained all jobs since then).

We can see where jobs are added in Louisiana by diving deeper into these data. Jobs in the private sector increased by 6,700 last month to 1.65 million, and government employment increased by 700 jobs to 316,600 last month. Compared with a year ago, the private sector added 29,600 jobs, and the government added 4,600 jobs. But the private sector is down by 8,700 since January 2016 and down by 13,600 jobs since February 2020. There is growing weakness in the labor market, with job losses and average weekly earnings not rising as fast as CPI inflation of 3.7% in many industries (Figure 1).

​Overall, these data show the hardship that many Louisianans are facing across the state.

• Another weakness is economic growth.

​Table 2 shows how the U.S. and Louisiana economies performed since 2020, as reported by the U.S. Bureau of Economic Analysis.

The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most. Figure 2 shows how the increase in real GDP in Louisiana of +1.4% in Q1:2023 ranked 31st in the country to $289.9 billion, after an annual decline in economic output by -1.8% in 2022 which was the second worst in the country.

The BEA also reported that personal income in Louisiana grew at an annualized pace of +6.2% (ranked 27th) to $258.5 billion in Q1:2023 (above +5.1% U.S. average). There was personal income growth of 0.0% in 2022, ranking 50th of the states.

• Compared with neighboring states based on several measures there continue to be major concerns in Louisiana (see Table 3).

​Bottom Line: Louisiana’s economy is weak when it comes to the labor market; economic growth and reforms can unleash the potential of Louisianans and make the state more competitive.

• There was an irresponsible budget passed in 2023 that excessively grew spending, busted spending caps in FY23 and FY 24, and didn’t provide tax relief even with billions in excess tax revenue.
• Given these results, there will not be improvements in the state’s poor business tax climate, net outmigration of Louisianans, or one of the highest poverty rates in the country.
• The Pelican Institute’s “Comeback Agenda” that encourages spending restraint, tax reform, regulatory relief, education freedom, and more, would provide opportunities to enable people to prosper.

This is not only what Louisiana needs; it’s what Louisianans want, according to a recent poll.

​Originally posted at Pelican Institute.