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Texas Should Reject HB 149: AI Regulation Gone Too Far

5/6/2025

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Originally posted on X.

Texas is on the verge of making a huge mistake. And it won’t just cost us money—it could cost us the future.
HB 149, the second iteration of last session’s failed HB 1409, aims to regulate artificial intelligence under the banner of “responsibility.” But don’t be fooled. This bill—authored by Rep. Giovanni Capriglione—would expand government, stifle innovation, and impose California-style overreach, undermining the freedom that makes Texas strong.

According to the fiscal note, HB 149 would cost taxpayers more than $55 million over five years, grow government by 20 new full-time employees, and empower the Attorney General to penalize developers and businesses for undefined “discrimination,” including on political viewpoints and biometric identifiers. It opens the door to chilling speech, increasing litigation, and dragging Texas down the same path as progressive AI legislation that already failed in Connecticut and California, but unfortunately passed in Colorado.

Why is Texas copying California? The Texas Senate Committee on Business and Commerce held a hearing on May 1 for testimony on HB 149. But the Committee left it pending, where the bill should stay and die.

By contrast, HB 3808, by Rep. Brian Harrison, is a model of restraint. It would create a temporary advisory council focused on state agency use of AI—not private sector innovation. It sets up a sandbox environment to allow safe testing of new technologies and sunsets in 2029. No bureaucracy. No sweeping mandates. No innovation-killing red tape. Unfortunately, the Texas House's Delivery of Government Efficiency (DOGE) Committee hasn't heard this bill yet. It may not, given that Rep. Capriglione is the chair of it and wants to push his big-government bill.

Even better than HB 3808? Do nothing. If lawmakers aren’t confident, then don’t legislate out of fear. Let freedom work.

We don’t need to ban, restrict, or punish technology because some policymakers are uncomfortable with progress. Texas should lead with humility, freedom, and a commitment to learning before regulating.

The Texas Senate must save our tech future. It can stop HB 149 before it becomes law, back HB 3808 as a better alternative, or simply do nothing—and let freedom work.
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Let’s not build a $55 million bureaucracy to fear the future. Let’s lead it instead!
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Why Profit Is Good—and Why Free Markets Let People Prosper

5/5/2025

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Originally posted to Pelican Institute. 

Lately, more lawmakers—even some conservatives—are criticizing companies for “making too much profit.” That’s happening right now in the Louisiana Legislature and across the country. Some are advocating for new laws to penalize businesses through stringent rules, price caps, and taxes, particularly in the tech and insurance industries. The idea is that taking profit away will somehow make things better for everyday people.

But that thinking is backward. Profit isn’t the problem. Profit is part of the solution.

Here’s why.

In a free-market economy, businesses earn a profit when they provide goods or services that people want. That profit indicates that the company is utilizing its resources effectively, whether it’s selling food, insurance, phone service, or any other product or service. No one is forced to buy these things. When someone buys a product, it means they think it’s worth the price.

That’s Economics 101: voluntary exchange makes both the buyer and the seller better off.

And when a company fails to meet people’s needs? It loses money. That’s how the profit-and-loss system works. It rewards good ideas and punishes bad ones. That feedback loop helps businesses learn, improve, or step aside for someone else who can do better.

Profit is what allows businesses to grow, hire more workers, and reinvest in new tools, products, and services. Without it, there’s no incentive to take risks or innovate.

Yet too many lawmakers are focused on capping profits instead of solving real problems.

Take insurance. Rates are high in Louisiana—not because companies are raking in profit, but because the state has one of the worst legal climates in the country, coupled with a large number of uninsured motorists. Lawsuit abuse drives up costs, and regulatory mandates limit choices. Instead of fixing the system, some want to go after the insurers.

The same thing is happening in tech. Some want to break up large companies or impose new regulations on them. But these businesses have created thousands of jobs, made life easier through innovation, and opened up new markets for small businesses. Still, the policy response is to punish profits rather than address the root causes.

Government price controls sound like a quick fix, but they almost always backfire. Setting prices too low leads to shortages. Think about it: if insurance rates are capped below what it costs to cover risk, companies will stop offering coverage. If tech companies are fined or slapped with heavy-handed regulations for offering popular products, they’ll stop investing and innovating. That means fewer jobs, slower growth, and worse service.

It’s also important to understand that only people pay taxes. When the government taxes a business more, it doesn’t magically come from a corporate wallet. It comes from workers (in lower pay), consumers (in higher prices), or shareholders (which includes anyone with a retirement account). Blaming companies for not paying “enough” taxes ignores how the tax system actually works.

Many understandably desire fairness. However, true fairness means creating a system where anyone, regardless of their background, has an equal opportunity to succeed. This means encouraging competition, protecting property rights, and eliminating unnecessary bureaucratic hurdles.

Everyone acts in their self-interest. That’s not a flaw—it’s a fact of life. People seek better jobs, more affordable prices, and improved lives. A free-market system takes that normal behavior and channels it into something good.

You can only earn a profit by giving someone else something they value more. That’s cooperation, not exploitation.

Instead of punishing profit, we should fix what’s broken. That means tackling lawsuit abuse, improving education, empowering parents with tools and supports to help their children, and letting businesses compete on a level playing field. It means making sure the government doesn’t block innovation or create winners and losers through handouts and heavy-handed regulation.

Free-market capitalism isn’t perfect, but it’s the best system ever created to help people lift themselves. It lets people try, fail, learn, and succeed. It gives room for new ideas to grow. It allows individuals, not the government, to decide what’s worth doing.

If we want a stronger economy, more jobs, and better opportunities for everyone, we need more freedom in the market, not less. Profit is how people get ahead. Let’s stop treating it like a problem and start treating it like the pathway to prosperity.
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Two Pots, One Problem: Will Texas School Choice Be Universal?

5/5/2025

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Originally posted on X.

Big day in Texas: Governor Abbott finally signed the state’s first school choice law on Saturday. ESAs will begin in the 2026–27 school year.

For years, I’ve fought for education freedom—not just as an economist, but as someone who lived it. I started in a small private school from kindergarten through second grade, where my mom worked just to afford tuition. I then attended government schools in South Houston and Weatherford for grades 3–6, before finishing grades 7–12 as a homeschooler. After a government-run junior college, I earned my bachelor’s and PhD at Texas Tech University, a government school.

That diverse education experience opened doors for me, and that's why I believe every Texas family deserves the same freedom to choose what works best for their children.

Watching the signing of SB 2 was personal, but it was also bittersweet. Yes, Texas finally passed school choice, but it’s not truly universal, not even close.
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The ESA program is capped at 100,000 students—just 1.5% of Texas’ 6.3 million school-aged kids. Of those, only a strictly limited number of students from households earning above 500% of the federal poverty level—roughly $160,000 for a family of four—can even qualify.

That’s bad policy and worse economics.

When higher-income families are blocked from participating, the program loses political support, economic scale, and its ability to build momentum. Every student, regardless of income, deserves the opportunity to learn better. Each taxpayer deserves the efficiency and innovation a competitive education system can deliver.

Meanwhile, for every $1 spent on ESAs, up to $8 in new taxpayer money will go to the government-run school system. That’s hardly competition—it’s a rigged market. Texas spends more than $100 billion annually on the monopoly government school system. A small, capped ESA program won’t bring the accountability or market pressure needed to improve outcomes across the board.

Even worse, students using ESAs receive $10,000 or less yearly, while the average government school student is subsidized at more than $18,000. If ESAs were available to every student in Texas, the cost could be closer to $12,000 per child, still significantly lower than the status quo.

So when critics claim ESAs “subsidize the rich,” they’ve got it backwards. The current system gives a blanket $18,000 subsidy to high-income families who keep their kids in public schools. School choice simply levels the playing field—and at a discount.

Texas lawmakers got part of the policy right this session. However, the dual-funding structure, ESA cap, and income restrictions show how far we must go.

The correct answer is clear: end the two-pot system and adopt a single-pot funding model where every dollar follows every student, regardless of income or schooling type. That shift could save over $20 billion annually, reduce bureaucracy, and deliver the freedom and efficiency Texans deserve.
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School choice isn’t about rationing opportunity—it’s about restoring it. The best thing we can do now is expand this program to all families, fully fund it, and give every Texas child a chance at a better future.
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Texas Is Still Growing — But Austin Keeps Getting in the Way

5/5/2025

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Originally posted to Texans for Fiscal Responsibility. 

Texas continues to lead in many ways. There were 192,100 new jobs added over the past year — the most of any state in raw numbers. In March alone, Texas added 26,500 nonfarm jobs, bringing the total number of jobs to a record 14.3 million. Texas also set a new record for its labor force, with 15.8 million Texans working or seeking employment, and 15.1 million employed.

That’s worth celebrating. But weaknesses are mounting.

Our 1.4% job growth rate ranks 19th nationally, lagging behind faster-growing states such as Idaho (2.6%), South Carolina (2.4%), and Utah (1.9%). Worse, our unemployment rate rose to 4.1%, tied for 31st among the states. That’s nearly a full point higher than where we were in early 2023.

Austin needs to own this slowdown.

The 88th Legislature passed the largest state budget in Texas history — $321 billion for FY 2024–25 — and then added a bloated supplemental budget on top. This session, the State funds spending proposal is up 43% over the past two sessions, surpassing the rate of population growth plus inflation. There’s still no firm spending limit in place to stop this.

The result? Unsustainable growth in government — and a missed chance to use our $24 billion surplus for permanent fiscal reform.

Texas’ economy continues to perform well. GDP rose 2.8% over the year, with 1.9% real growth in Q4 2024 alone, outpacing the national average of 1.6%. Personal income also grew 4.6% in Q4, showing continued resilience from Texas households.

But policymakers in Austin have been squandering these strong fundamentals.

Texans were promised real property tax relief — what they got was temporary rate compression, boosted homestead exemptions, and an appraisal cap that distorts valuations. None of this addresses the root problem: overspending on the government school monopoly, which is propped up by revenue from the school district’s M&O property tax, the largest portion of most people’s tax bills. Ultimately, until property taxes are eliminated, Texans will continue renting their homes from the government.

Despite overwhelming voter support, lawmakers also managed to miss the mark on universal school choice.

Yes, Texas passed an ESA program, a good first step — but it’s essentially a pilot program with a hard cap of just 1.5% of the state’s 6.3 million school-age kids. And while some families will benefit, the program falls short of delivering broad educational freedom or true competition. It also came with an $8-for-$1 tradeoff, with $8 in new public school funding for every $1 toward school choice. That’s not empowering all families — that’s propping up the bloated bureaucracy.

At the same time, small businesses and local entrepreneurs continue to face high property taxes, permitting delays, and a complex regulatory maze. Yet, the Legislature expanding the Texas Enterprise Fund and creating new taxpayer-backed programs, such as the Texas Future Funds, expanded Film Incentive Program and the Dementia Research Fund. These programs distort the market and reward the politically connected, all while average Texans are asked to tighten their belts.

The good news? We still have time to get it right.

Texas has the workforce, infrastructure, and innovation to lead the country, but that requires policy decisions rooted in freedom, not favoritism. Legislators need to stop pretending that economic growth happens in a vacuum. It’s the result of intentional decisions: to spend less, tax less, regulate less, and let people prosper.

Here’s what should happen next:
  • Freeze the 2026-27 budget and pass a firm state spending limit tied to population growth plus inflation, no exceptions, for all state and local funds.
  • Provide the path to eliminate school M&O property taxes by using state surpluses for rate compression until they reach zero.
  • Expand education freedom statewide, not just for a select few, or at least acknowledge that is the intention with a clear path to universal school choice.
  • End corporate welfare by defunding slush funds and removing special treatment for insiders, while ending many of the current and proposed constitutionally dedicated funds.
  • Streamline permitting and cut red tape to unleash small business growth and increase housing supply, helping to address the affordability crisis.

Texas remains relatively strong — our $2.6 trillion economy ranks eighth in the world if it were a separate country. However, we can’t continue to make fiscal and economic policy blunders. The warning signs are there. Growth is slowing, and the government is excessively expanding. That’s not the Texas model we’ve spent decades building.
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If Texas wants to keep leading the nation, lawmakers must remember what made this state great: faith, family, and free markets. Let’s get back to that before we turn into California.

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Shrinking Output, Rising Prices: Why the Economy’s Broken and How to Fix It

5/3/2025

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Originally posted on X. 

In the first quarter of 2025, real GDP shrank by 0.3%, even as inflation increased. The PCE index jumped 3.6%, with core inflation rising 3.5%. That combination of lower output and rising prices is called stagflation, and it’s the clearest sign yet that our current economic playbook is broken.
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But this doesn’t have to be permanent. While the problems are real, the solutions are within reach--if we’re willing to abandon failed policies and embrace proven free-market reforms.

Let’s start by understanding the numbers.

Real GDP measures the actual value of goods and services produced, adjusted for inflation. It’s how we track whether the economy is genuinely expanding. When it drops, as it did in Q1, it means the economy is producing less, not just moving money around, but truly slowing down.

Meanwhile, prices are rising. Inflation isn’t just “sticky”—it’s accelerating again. After some moderation last year, the Fed’s preferred inflation measure is back up to levels that erode wages and strain household budgets.
Rising prices without rising production means we’re all paying more for less.

Yet some observers might point to nominal GDP growth of 3.5% as a sign of health. That’s misleading. Nominal GDP tracks the dollar value of spending, unadjusted for inflation. Rising prices inflate nominal GDP. This is why nominal GDP targeting—a policy better than the current regime--is flawed. It gives equal weight to real output and inflation. But inflation doesn’t build prosperity. It distorts it. Real growth is what improves lives and livelihoods.

The Federal Reserve can influence inflation, but can’t create real output. It doesn’t build factories, invent products, or hire workers. What it controls is the size and structure of its balance sheet, which it has used to pump trillions of dollars into financial markets since 2008. This money flows first to financial institutions and asset markets before trickling into the real economy. That’s how we end up with too much money chasing too few goods, and prices rising ahead of real production.

Eventually, markets correct. That’s the bust after the Fed-fueled boom. These boom-bust cycles aren’t random—they’re policy-driven. And they hurt.

But the distortions don’t stop with the Fed. Washington’s broader economic policy—especially spending, trade, taxation, and regulation—has become a breeding ground for uncertainty and overreach, keeping the economy off balance.

A key example in last quarter’s GDP report is the surge in private inventories. On the surface, it looks like strong investment. In reality, it’s a red flag. Inventories are goods that were produced or imported but not sold. They’re leftovers, not growth. They’re also one of the most volatile parts of GDP. And they often rise when businesses feel unsure about the future.

That’s what’s likely happening now. With President Trump's renewed tariff hikes with a minimum rate of 10% on all countries and higher tariffs on some countries and some things, businesses are bracing for higher input costs and supply disruptions. When that happens, they stockpile goods. This behavior isn’t about optimism but protecting against policy-driven risks. And when inventory surges fade in future quarters, they’ll drag GDP down even further.

We also saw a rise in imports, which are subtracted from GDP in the accounting formula. That doesn’t mean imports are bad—it’s just how GDP is calculated. Since imports show up in consumption and investment but aren’t produced here, the amount is removed from the calculation to measure domestic production. So, a rise in imports could reflect strong demand or better global supply chains.

Meanwhile, government spending fell slightly—mainly from a drop in federal defense spending. But state and local governments increased spending, especially on salaries. This isn’t a shift toward leaner, more effective government. It’s just more bureaucracy at a time when we need real productivity.

Put all this together, and we’re looking at an economy where shrinking output and rising prices are being propped up by temporary, unstable forces—inventory build-ups, uncertain trade policy, and fiscal gimmicks. But again, the good news is that we don’t have to stay on this path.

Here’s how we fix it—with simple, proven, market-driven rules:
  1. Monetary Rule: Shrink the Fed’s balance sheet back to about 5% of GDP, where it stood before the Great Financial Crisis. It’s now over 23%. This would mean a transparent path for the balance sheet to go from $6.7 trillion today to $1.5 trillion soon. This would provide a smaller Fed footprint, meaning less distortion in asset prices, interest rates, and credit markets.

  2. Spending Rule: Cut federal spending by $2 trillion up front, then allow it to grow by no more than the rate of population growth plus inflation thereafter—what taxpayers can actually afford.

  3. Regulatory Rule: Reduce federal final regulatory costs by 20% immediately, then apply the same pop + inflation cap going forward. Regulatory costs are a hidden tax, especially for small businesses and entrepreneurs.

These reforms would rein in government excess and help bring better market discipline, stability, and freedom back to the economy. They’d empower people to build, invest, and innovate without fear of constant shifts in interest rates, trade policy, or red tape. They would stop the bleeding of rising prices and falling productivity and replace it with a real path to growth.

So yes, today’s economy is underperforming. We’re paying more while producing less. But that doesn’t mean we’re stuck. We can reverse this trend—if we dare to step away from central planning and back toward economic freedom.
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Shrinking output and rising prices don’t have to be our future. With the right policies, we can grow more and pay less. That’s the free-market path forward. That’s how we let people prosper.
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    Vance Ginn, Ph.D.
    ​@LetPeopleProsper

    Vance Ginn, Ph.D., is President of Ginn Economic Consulting and collaborates with more than 20 free-market think tanks to let people prosper. Follow him on X: @vanceginn and subscribe to his newsletter: vanceginn.substack.com

    View my profile on LinkedIn

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