Many Americans are recovering after the economic collapse that began in March due to the COVID-19 pandemic and shutdowns by state and local governments.

While the strength of that recovery has weakened, a sound policy approach will help support a safe, expedited, and less debt-riddled rebound so Americans have more opportunities to prosper.

https://www.texaspolicy.com/the-ginn-economic-brief/

We at the Texas Public Policy Foundation are saddened to learn of the passing of economist Walter E. Williams.

“Walter Williams’s journey from the projects of Philadelphia to a professorship in economics at George Mason University—and becoming one of the most recognized and respected conservative voices of our time—was remarkable,” said TPPF Executive Director Kevin Roberts. “His great gift was communicating complex economic principles in everyday language. Always a cheerful combatant—yet one who would ‘Suffer No Fools,’ as the title of a documentary about him pointed out—Walter was an effective advocate for freedom.”

“There are few people who so eloquently explained how people can prosper—given scarce resources and limited government involvement—than the free market economist Walter Williams,” said TPPF Chief Economist Vance Ginn. “It was a pleasure to read and learn from his many academic publications, commentaries, and books over the years. While it’s a day to mourn his loss, let’s also celebrate his many gifts to us and continue to build on them, so that every person has the best chance to thrive in life—like he did.”

https://www.texaspolicy.com/press/tppf-statement-on-the-passing-of-esteemed-economist-walter-williams

Could you have imagined, just a few short months ago when we had one of the best U.S. economies on record, that we would be facing one of the worst today?

It’s difficult to do.

But the disruptions caused by fear of COVID-19 and the shutdowns ordered by state and local governments have dramatically changed our lives — so much so that it’s difficult for many to have hope in a prosperous future. This recession should be called the Great Disruption.

But we can look to that roaring economic situation in February for guidance in finding the path to increasing our freedoms and flourishing now, no matter the circumstance.

This begins with responsibly ending the shutdowns ASAP.

We should look at the data and understand there is still a need to protect our vulnerable populations — but our kids should get back to school and us healthy adults should get back to work.

We take on risk every day, and even the shutdowns aren’t without risk. The data keep pouring in, demonstrating that in this case, the cure has been worse than the disease.

Researchers from top institutions looked at the data on fatalities related to COVID-19 and those losses of life from unemployment and missed health care due to the shutdowns. What they find is startling: “the disease has been responsible for 800,000 lost years of life so far” while the lockdowns are responsible for a conservative estimate of “at least 700,000 lost years of life every month, or about 1.5 million so far.”

In other words, the costs of the shutdowns on lost life-years is almost double that from COVID-19.

The value of life is hard to measure because each one is beautiful. That’s why it’s disturbing that the deaths from issues related to the shutdowns seem to be far exceeding those directly related to the disease.

Economist Casey Mulligan, who is a Professor at the University of Chicago and was recently the Chief Economist at the White House’s Council of Economic Advisers, has been tracking the daily cumulative costs of the COVID-19 pandemic at pandemiccosts.com.

Mulligan notes that these costs were at least $1.3 trillion in total, or $10,954 per household through May 22. This includes mortality costs and market and nonmarket costs of shutting down the economy.
And this is just through May 22.

Consider the lost economic output on an annualized basis of -5 percent in the first quarter of 2020 and of a projected record -40 percent in the second. Compare this with the growth we could have had if pro-growth policies in President Trump’s budget that I helped craft had been implemented, and that’s roughly $2 trillion in lost prosperity.

If you add the more than $9 trillion Congress has approved in financial assistance packages, then you’re talking about nearly half of the economy being redistributed in some capacity — in a very short period.

This is certainly the greatest disruption ever and the swiftest redistribution ever — both of which will cause massive distortions throughout our livelihoods, including for future generations, and will need to be corrected soon.

And now, states are asking for more federal bailouts (when they’ve already been authorized to get about $1 trillion).

Bailouts will only enable blue states to extend their costly shutdowns and continue their poor fiscal policies, which long predate the pandemic. Yet House Democrats are prepared to grant the states’ requests, as they have passed another $1 trillion in state bailouts in the HEROES Act.

We must not let this happen.

Let’s not let this COVID-19 crisis go to waste, though. Let’s learn from our mistake — shutting down the economy is a cure clearly worse than the disease.

What should the path forward look like? Responsibility, not restrictions. Social distancing, not shutdowns. And governments and civil society must be better prepared for major costly events.

​After ending the shutdowns, a way to ensure this is by passing the Workplace Recovery Act.

This Act would direct federal funds to assist any business that experienced losses due to the shutdowns out of their control. It would provide the operating cash businesses need to survive and employ workers. And while I’d prefer not one more dime be authorized, this proposal would work as a targeted automatic stabilizer until normality returns where businesses hire workers to not waste taxpayer money.

And if there’s a double-dip recession caused by shutdowns due to another wave of COVID-19, then Congress doesn’t need to pass more massive spending bills that bankrupt future generations. The WRA isn’t a silver bullet, but it will help give Americans confidence that no other legislation yet has.

We’ve had a natural experiment on how to deal with a pandemic. There were the best of intentions. But as Milton Friedman said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

The results show we have much to learn, but an important one is governments should never shutdown our freedoms again.

Vance Ginn, Ph.D., is Chief Economist at the Texas Public Policy Foundation in Austin, Texas. He is the former Associate Director for Economic Policy of the Office of Management and Budget at the Executive Office of the President.

https://thehill.com/opinion/finance/502518-we-must-learn-from-the-shutdown-mistake

In this Let People Prosper episode, we discuss the key elements of real property tax cuts (slower growth rates and lasting tax reductions), movement afoot to eliminate civil asset forfeiture, and potential expansions in local liberty that are being discussed at the Texas Legislature. As we get closer to the end of session, these are critical aspects that you don't want to miss. 

​#letpeopleprosper

The latest BLS state-level jobs report for February shows that Texas continues to lead the way in job creation for the last 12 months and keeps the state's near record low unemployment rate of 3.8%. Here's the statement by the Texas Workforce Commission. 

The presentation below provides an overview of Texas’ economic, labor market, and fiscal situation while also comparing Texas with other large states. There are also policy recommendations to strengthen the Texas Model of limited government so that it can foster more individual liberty and economic prosperity.

My prior research on how institutions matter takes a deeper dive into these figures. I recommend reading it along with watching my vlog on the subject. To summarize, Texas should increase economic freedom by eliminating unnecessary government barriers to competition to let people prosper.

Watch my explanation of previous state-level labor reports and other videos at my YouTube channel: Vance Ginn Economics. 

https://www.texaspolicy.com/blog/detail/texas-economic-labor-market-and-fiscal-situation ​

​In this Let People Prosper episode, James Quintero, Dr. Derek Cohen, and I discuss today's release of reports on the U.S. and Texas jobs picture, movement on annexation reform (HB 347), and various issues related to criminal justice reforms (HB 63). Find more of TPPF's work at www.txlegehub.com. 

#LetPeopleProsper

In this Let People Prosper episode 75, Chance Weldon of TPPF's Center for the American Future joins James Quintero and me to discuss today's Supreme Court ruling that's a win for people and for TPPF. James discusses his recent testimony before the Texas House Public Education Committee in support of House Bill 134 that increases bond transparency. I discuss my recent testimony before the Texas House Ways & Means Committee at the 45-minute mark here (written testimony) on ways to strengthen the Texas Model. 

#LetPeopleProsper

In this Let People Prosper episode, James Quintero, Derek Cohen, and I discuss key topics this week for Current Events Friday.

• Amazon's decision to not build in New York after receiving offer of costly $1.525 billion in tax incentives (i.e. govt favoritism) but disliked their otherwise poor business environment (see Economic Freedom of North America report);
• Texas Committees' organizational meetings overview (e.g. House Criminal Jurisprudence, House Corrections, & House Ways & Means); 
• Legislation filed on paid sick leave and other poor local government mandates (e.g., SB 15 & HB 1654); and
• Update on property tax reform with a committee substitute for SB 2 passing out of the Senate Property Tax Committee with an opt-in provision. 

More to come on Monday. #LetPeopleProsper

It's Current Events Friday!

In this Let People Prosper episode 72, James Quintero, Dr. Derek Cohen, and I discuss this week's current events. The big stories this week are Governor Abbott's State of the State, President Trump's State of the Union, and property tax hearing held by the Texas Senate Committee on Property Taxes. We dive into each of these issues to consider which government actions preserve liberty and which ones don't. 

Regarding property taxes, there's some hope in sight! Senate Bill 2 could provide historic property tax reform (read my written testimony and watch testimony at time 1:13:10) that would put in place a 2.5% property tax revenue rate that would trigger an automatic election in November for a local government that wanted to increase their revenue above that point. This reform is an essential element for any property tax relief of lowering property tax bills like TPPF’s plan to eliminate the school M&O property tax over time by slowing spending growth. 

​#letpeopleprosper

In this Let People Prosper episode 69, I sit down with James Quintero, director of the Think Local Liberty project, and Dr. Derek Cohen, director of the Right On Crime project, to discuss the Texas budget, ban-the-box, and annexation. 

You don't want to miss this first episode of many where we'll address a number of good, bad, and pretty good bills that influence our prosperity throughout session while giving you a heads up on which bills will be heard in committee so you can make your voice heard. 

In this episode we discuss the state's recommended budgets by the House and Senate and how they compare with the Conservative Texas Budget, bad bill of HB 495 related to criminal history, and a prosperity-enhancing bill of HB 347 related to annexation that builds on passage of SB 6 during the 2017 special session. 

#LetPeopleProsper

In this Let People Prosper episode 67, let's discuss the importance of sustaining and improving the Texas Model of no personal income tax, relatively low taxes, relatively less government spending, and sensible regulation that allow entrepreneurs opportunities not available elsewhere. This can be boiled down to: Institutions Matter. Let's recall previous discussions highlighting these key points while noting how Texas led the way in job creation again in 2018. 

#LetPeopleProsper

In this Let People Prosper episode, I am interviewed by Liz Wheeler on her show the Tipping Point on One America News.


We discuss the high cost of deficits and debt and the need for government spending relief along with the latest farm bill which continues the expansion of welfare.

In this Let People Prosper episode 57, let's discuss the following: 1) latest news on the stock market volatility from uncertainty regarding international trade and the Federal Reserve actions; 2) my latest co-authored piece at the Dallas Morning News on the economic freedom of Buc-ees and what could be done to increase prosperity; and 3) what's next for Texas' rainy day fund. 

In this Let People Prosper episode, let's discuss my recent trip to Washington D.C., where I spoke at the American Legislative Exchange Council's meetings about the importance of institutions and did an interview with Freedomworks, and then discussed the federal budget with Russ Vought, who is the Deputy Director of the White House's Office of Management and Budget. 

​Let's also discuss the latest economic reports about the continued strength of the U.S. economy in terms of GDP growth and personal income, and examine trade issues being discussed at the G-20 Summit. 

Below are a few pictures from my recent trip to D.C. ​

Below is the file for my presentation before the American Legislative Exchange Conference's Fiscal Policy Reform Working Group in Washington, D.C.  This presentation is based on my TPPF research paper titled "Do Institutions Matter for Prosperity in Texas and Beyond."

​I've also provided a more in-depth presentation in this episode of my YouTube series "Let People Prosper" at the channel "Vance Ginn Economics."

In this Let People Prosper episode, let's discuss one of the things that's on most Texans' mind: property taxes.  I recently testified before the Texas Commission on Public School Finance's Revenue Workgroup on the problem and solutions to wretched property taxes in Texas. Here's my written testimony and you can watch my oral testimony at time 59:45 here. 

​
Texas’ property tax system has turned property owners into renters, where government is their landlord and Texans who struggle to pay annual tax bills face confiscation of their properties. Additionally, the growth of government is harming taxpayers and the economy through higher taxes and more regulation.

The goal must be to eliminate all property taxes as they violate property rights, destroy economic growth, and disproportionately hurt the poor while being subjectively determined as they support excessive local government spending. A good place to start down that road is by ending nearly half of the property tax burden in Texas through the elimination of the school maintenance and operations (M&O) property tax, which is supported by the 18 groups in the Conservative Texas Budget Coalition. This is relatively easier than other local tax jurisdiction because the state already determines the school finance formulas and has a way to distribute funds to school districts.

Let's discuss.

First, we must identify the problem.

From 1996 to 2016, total property taxes across the state have increased by 233% while the school portion of the property tax increased by 201%. Personal income has increased by 199%; however, the best metric of the average Texan's ability to pay taxes is measured by the compounded growth of population plus inflation for that period, which was only 123%.  This means that the total tax levy increased by 1.9 times more than pop+inf and the school district tax levy increased by 1.6 times more than the average Texan's ability to pay.

It's no wonder that many people are being forced out of their homes and businesses because of skyrocketing property taxes. This is a travesty what government is doing to people who are trying to leave a legacy for their kids and grandkids. 

This points to the disease of the symptom of high taxes: excessive government spending. Taxes (and deficits) are always and everywhere a spending problem. To gain control of skyrocketing taxes, we must first get control of the driver of the problem in excessive government spending.

This brings us to a solution: By limiting state and local government spending, Texas can use taxpayer dollars collected at the state level to eliminate the school maintenance and operations (M&O) property tax, which is nearly half of the property tax burden, very soon. While other options have been tried in the past, like raising the homestead exemption and swapping the property tax with a reformed franchise tax ("margins tax"), those didn't permanently reduce property taxes--making those attempts a failure in the eyes of most taxpayers. 

Fortunately, there are solutions.

One option is to permanently buy down the school M&O property tax with state surplus dollars until it is eliminated. Here's how:

• Consider similar language as in SB 66 (2018) whereby biennial growth of general revenue-related funds (GRR) above 4% biennially would go toward buying down the school M&O property tax rate each session.
• Have school districts set their tax rate each year to reduce property tax revenue by the amount of the state’s replacement funding until eliminated.
• Allow school districts to only exceed this rate with the approval of more than 50% of voters in an election with at least a 20% turnout, but excess revenue raised by the vote will be recaptured by the state.
• If the historical rate of GRR growth holds, Texas should be able to eliminate the school M&O property tax in 11 years (see Table below). If GRR growth is lower, then it will take longer.
• In addition, to slow the growth rate of the other local tax jurisdictions, increases in city, county, and special purpose district property tax revenue will be limited to 2.5% annually to keep local governments from raising taxes to fill the gap caused by lower school district taxes. The limit can be exceeded with the approval of 50% of voters in an election with at least a 20% turnout.
• This accomplishes the task of slowing state and local government spending while connecting spending less with actual tax relief with the eventual elimination of nearly half of the property tax burden in Texas.

Another option is to replace the school M&O property tax by broadening the sales tax base and limiting state and local government spending. Here's how that could work:

• Consider similar language in HB 285 (2017) that would eliminate the school M&O property tax by broadening the sales tax base so the tax rate works politically and economically.
• Goal should be to sufficiently broaden the base to fund elimination of the school M&O property tax without taxing the transfer of property or raising the tax rate much if at all.
  
• Given that since Adam Smith we have known that the wealth of nations is from the formation and accumulation of capital and that property is nothing more than capital, we should not tax property. This is particularly true if we don't eliminate all property taxes because we don't want a property tax levied by cities, counties, and special purpose districts and a transfer tax imposed by school districts to ratchet around over time.
• Broadening the base could sufficiently be done be eliminating many of the goods and services excluded from the sales tax base as noted here by the Texas Comptroller.
• This should also include a state spending limit as noted in SB 66 that says any GRR above 4% growth biennially would go to buying down the franchise tax or sales tax along with an automatic rollback election for other local tax jurisdictions of 2.5% annually. 
• This accomplishes the task of slowing state and local government spending while connecting spending less with actual tax relief with the eventual elimination of nearly half of the property tax burden in Texas.

The following Table shows different sales tax bases and rates starting with taxing everything in the private sector then subtracting multiple industries measured by the Bureau of Economic Analysis as to keep from resulting in a value added tax system. In other words, we could keep the same sales tax rate of 8.25% (state portion is 6.25% and local portion is a max of 2%) with a GDP base of around $750 billion, which is about half of the private sector economy and about 67% higher than the base today. 

Clearly there is no silver bullet. This will be a difficult hill to climb whichever option is chosen.

​Recently, two economists from Rice University estimated that if the buy down option or the swap option over time was chosen, the Texas economy could expand by about $12.5 billion above expected growth and private sector job creation could increase by 183,000 net jobs above expected growth soon after reform. 

The Texas Model is strong, but there's more that must be done. These options would provide a clear path to more prosperity and less of a burden of holding property until you can finally own it when property taxes are eliminated entirely. 

In this Let People Prosper episode, let's discuss how the recent election gives us insight on how we need more civil discourse to find ways to strengthen institutions so people can flourish. 

My recent paper on how institutions matter provides a good overview of what I discuss in this episode along with economic data to support the theory. Here is a graphic that explains rather well the ecology of human development. 

The data provide overwhelming evidence that the Texas Model of inclusive institutions with a relatively low tax-and-spend burden, no individual income tax, and sensible regulation provides an institutional framework supporting more job growth, higher wages, lower income inequality, and less poverty than in comparable states and the U.S., in most cases. Texas is doing something right. Other states and D.C. would be wise to consider adopting Texas’ inclusive economic and political institutions that champion individual liberty, free enterprise, and personal responsibility.

This is a path to providing an economic environment that allows entrepreneurs the greatest opportunity to thrive and for prosperity to be generated for the greatest number of people. Despite this success, improvements are needed to keep the Texas Model competitive and create even more opportunities for all to flourish. These improvements to Texas’ institutional framework include:

• limiting the growth in government spending,
• eliminating the state’s onerous business franchise tax,
• reducing barriers to international trade,
• reducing the escalating burden of property taxes, and
• relieving Texans from burdensome occupational licenses.

​Even with these improvements, the data overwhelmingly show it was not a miracle in Texas, but rather abundant prosperity generated by Texans from a proven institutional framework called the Texas Model. ​

By strengthening institutions to let people prosper, we can also engage in more civil discourse so that we have many opportunities to work together. 

In this Let People Prosper episode, let's discuss Nobel prize-winning economist Paul Krugman's recent concern about the $779 billion budget deficit in FY 2018 under President Trump. Unfortunately, he wasn't worried about the 4 years of more than $1 trillion in deficits under President Obama and he in fact wanted even higher deficit spending. This episode provides a lesson in economics on the aggregate demand-aggregate supply model of how these policies should work in theory but how this mainstream view misses a lot that actually results in my preferred mainstream view of how the economy actually works and the burden higher government spending and resulting deficits put on economic activity and our prosperity.

Last Friday the Bureau of Economic Analysis reported that there was an increase of 3.5% in real GDP growth in the third quarter of 2018, indicated that 2018 may be above 3% growth for the first time in more than a decade. This issue along with the rising deficit gave rise to Krugman's tweet below.

Here's what Krugman tweeted: "Reaction to the GDP numbers: quarterly growth rates don't mean much. For one thing they fluctuate a lot -- e.g. rapid growth in 2014, signifying little. For another, you can always juice the numbers for a few quarters by running big deficits. What about the long term"?

Here was my tweeted response to his tweet that received a lot of attention: "Who is this @paulkrugman who wasn’t worried about budget deficits during #Obama’s 4 years of more than $1 TR deficit but is worried about #Trump’s $779 B? Recall #Krugman was in favor of LARGER deficit spending to “stimulate” the economy under #Obama. Principles matter." 

I recommend going to my tweeted response and viewing the comments and discussion. It was a rather lively discussion with some good info in there along the way, but much of it was just noise. 

This recent WSJ opinion piece by Nobel prize-winning economist Edmund Phelps explains the fantasy of fiscal stimulus quite well along with the nice figure below that shows stimulus doesn't correlate with faster economic growth. 

What we really need for more prosperity is a government that simply sets the rules of the game such that the institutional framework allows for civil society to flourish along with the resulting prosperity for people. Government under presidents of each main party have fallen victim to the "stimulus" argument when in fact it should be about providing the most pro-growth economic environment while running balanced budgets. A good model would be to look at Texas. 

#LetPeopleProsper

OPINION: CALIFORNIA IS A FAILED MODEL NO MATTER HOW YOU LOOK AT IT
Vance Ginn and Elliott Raia | Director and Research Associate, Center for Economic Prosperity
​
When you have to begin an argument with “depending on how you look at it,” you’re not arguing from a strong position. Yet such has become the answer to the question of, “Is California a good role model?” posed recently in The New York Times.

Even its defenders say California’s prosperity is relative. The good news is that those seeking more concrete progress need only to look to the state that inspired the lone star in the upper-left corner of the Golden State’s flag: Texas.

While the Texas Model of limited government needs improving, it has already proven to be a more sustainable catalyst for job creation and economic prosperity than in California.

Although the idea of limited government may be foreign to many Californians, the Texas Model embraces the principle of reengaging institutions such as family, community, and free markets — institutions that are often undermined by an over-burdensome state.

This is not to say the government has no place in Texas; it does. Nor is this to say that those who have fallen through the cracks don’t deserve help in their times of need; they do.

Rather, the model revives the notion that government’s primary responsibility is to preserve the liberties of families and individuals, instead of attempting to supplant them. In the case of Texas, this also means allowing employers to operate with freedom and without onerous regulation.

The outcome of Texas’ limited government approach is empirically clear. In creating jobs, no one messes with Texas as one in four jobs added nationwide were created in the Lone Star State in the last decade since the Great Recession.

But it’s an even longer period of prosperity. Consider that the average unemployment (U3) rate since 2000 was 5.8 percent in Texas compared with 7.7 percent in California and 6.4 percent nationwide.

Perhaps more telling of the complete picture is the average underutilization(U6) rate, which includes the unemployed, underemployed, and discouraged workers. Given the data available since 2003, Texas averaged 10.5 percent while California averaged 14.3 percent and the United States averaged 11.6 percent.

And poverty is lower in Texas. The Census Bureau’s supplemental poverty index that adjusts for regional costs of living differences and government transfer payments places California’s 19 percent poverty rate the highest nationwide whereas Texas’ rate of 14.7 percent is near the U.S. average of 14.1 percent.

With a relatively light tax burden on employers in Texas compared with California, Texas’ employers have the freedom to innovate and grow. Although the current level of taxation is a stark departure from West Coast philosophy, Texans already see where improvement can be made as efforts to corral skyrocketing property taxes are underway to maintain their economic canter.

While taxes play a role in overall government intrusion, burdensome regulations do, too. The Texas Model, while still not free of all unnecessary regulation and corporate welfare, places more faith and decision-making in markets, where individuals — not politicians — decide the best way to satisfy their desires.

Consider the energy industry in Texas.

While the state has yet to completely eliminate its wind subsidies, it has, in general, taken a more moderated position on industry regulation than the California model. Instead of coercing consumers towards a source of energy favored by bureaucrats and politicians, Texas strengthens its power generation, reliability and cost efficiency by allowing consumers to access a wide energy portfolio.

As a result, Texans pay half the price for their electricity than their Californian counterparts, while also not having to contend with potential rolling blackouts whenever the sun doesn’t shine and the wind doesn’t blow.

While energy is just one example, the California Model’s policies highlight why the state has nearly 20 percent of its population in poverty. No matter how well-intentioned, when government entangles itself in the lives of individuals and tries to supersede other institutions that may be more effective, tribulation soon follows.

Will the nation follow California down a road to serfdom, or, more recently, follow Texas down a road to liberty? That question remains undecided.

But if the mass migration of individuals and businesses out of California and into Texas is any indication, the trend is clear that institutions matter. When institutions in civil society are strengthened by limiting government, people prosper.

Vance Ginn, Ph.D., is director of the Center for Economic Prosperity and senior economist. Elliott Raia is a research associate. Both work at the Texas Public Policy Foundation. Read the Foundation’s latest report for more.
​

In this Let People Prosper episode, I discuss my latest published research on how institutions matter for prosperity in Texas and beyond. I compare multiple measures of economic freedom and economic results between the largest four states in terms of population and economic output of California, Texas, New York, and Florida along with U.S. averages. These data indicate that Texas has greater economic freedom and prosperity, which should be emulated by other states and D.C., but there's more to do to improve the Texas Model. 

In this episode, I explore the following questions: What are claimed market failures? Do they exist? Can government intervention correct them? Is there such thing as government failure? It's important to ask these questions to determine whether or not market failure or government failure are the bigger problem in society. Much of this has do with the differences between Mainline Economics (my preference) and Mainstream Economics. 

This enters controversial territory in economics and politics by discussing the myths of "market failure." Supposed market failures usually include problems with markets because of asymmetric information (occupational licensing and healthcare), monopolies (utilities and EpiPen), and externalities (pollutants) that can theoretically be corrected by government intervention.  

However, I make the case that these issues in markets are generated by government intervention, not unhampered markets, and the introduction of government intrusion to attempt to correct these potential issues only expand government and make the problem worse.

Moreover, there are no free-market government solutions, which is why toxic pollutants should be dealt with by letting markets sufficiently price them or alternatively, though not recommended, by regulation. Policy solutions such as a carbon tax indirectly price externalities and the price will always be wrong because of the "knowledge problem" taught by economist Friedrich Hayek and the poor modeling that's done by so-called experts (see William Easterly's book The Tyranny of Experts). In general, the institutional structure of an economy should be supported by the government through upholding contracts, protecting people, and providing very few public goods. 

Instead of resorting to government intervention to solve supposed market failures, we should first understand that the government is likely the problem and Let People Prosper by promoting institutions with strong private property rights and fewer barriers to entry and exit markets. 

​#LetPeopleProsper

In this let people prosper episode, I discuss two key reports released today. The first is that the Energy Information Administration reported that the U.S. oil production exceeded Russia and Saudi Arabia to become the top oil producer in the world in August 2018. The second is the Census Bureau released the latest income and poverty-related data that shows less poverty nationwide with little change in Texas' supplemental poverty measure (SPM) while California still has the highest SPM in the nation.  

Regarding the EIA's data, the following figure shows this historic moment in U.S. history. Here's the EIA's projection through 2019: "Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in STEO, EIA expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019." 

Much of this expansion in oil production has been in Texas. In fact, Texas is producing a record amount of oil at 4.4 million barrels per day as of June 2018 (latest data available), which is about 40% of total U.S. production that month. 

The increase in oil production in the last couple of years has contributed to faster economic growth and job creation, thereby helping to reduce the poverty rate. Of course, this is a relatively small direct relationship, but the indirect relationship of more production capacity in the private sector is quite remarkable. Moreover, the regulatory cuts last year and the general increased economic activity and job creation in recent years has helped get people out of poverty.

This is noted by poverty measures improving some in the latest report for the average of the 2015-17 period (see page 26-27 of this report). The Official Poverty Measure (OPM) looks at one poverty level across the entire nation with the federal poverty level of $12,752 for an individual and a family of four (two adults and two kids) of $24,858. The OPM declined to 12.9%, or 41.2 million, nationally for the average of 2015-17.

​However, the OPM is a poor measure of poverty because there are different housing costs in each state along with different levels of government benefits.

Several years ago the Census Bureau created the Supplemental Poverty Measure (SPM) that accounts for after-tax income, differences in regional costs of housing and other expenditures, and government transfers (see figure below). The SPM declined to 14.1 percent, or 45.3 million, nationally.

These measures for the 2015-17 period are also available by state. Let's consider the two largest states: California and Texas. California's OPM is 13.4%, which is near the national average, with 5.3 million people in poverty, and SPM is 19%, which is the highest nationally, with 7.5 million in poverty. Texas' OPM is 14%, more than a percentage point higher than the national average, with 3.9 million people in poverty, and SPM is 14.7%, which is near the U.S. average, with 4.1 million in poverty.

These data make sense because Texas is a relatively cheaper place to live that in California so Texans' dollars go a lot further than Californians' even as California has a more liberal welfare state and spends much more per capita.

In this Let People Prosper episode, I'm honored with the "Champion of Freedom" award from Grassroots America--We The People's Executive Director JoAnn Fleming for advancing economic freedom and prosperity in Texas and beyond.

I'm thankful for receiving this stellar award!

Here's Part 1 with JoAnn Fleming announcing my award and providing some very kind remarks. 

Here's Part 2 where I give my acceptance speech. Short and to the point. 

I thank God, wife, family, colleagues at TPPF, and all of the freedom fighters working hard to assure liberty is rising! Now let's get to work to assure to expand opportunities to #LetPeopleProsper.

In this Let People Prosper episode, I discuss the latest state-level jobs report for July 2018 issued by the U.S. Bureau of Labor Statistics while highlighting how economic freedom and the recent federal changes to the State and Local Tax Deduction (SALT) matter to our prosperity.

As noted in my previous blog post (see presentation), Texas continues to be America's jobs creation engine as the Lone Star State has created 23% of all new civilian jobs added nationwide and created the most nonfarm jobs of 377,100 in the last 12 months.

In general, states with more economic freedom and lower taxes have performed better in terms of economic growth and job creation over time than states with less economic freedom and higher taxes. Hundreds of papers have found this connection when considering the Economic Freedom of North America report by the Fraser Institute. 

Watch the episode to find out more. Have a blessed day and let people prosper. 

(Tip: Get checked by a dermatologist periodically, especially if you have fair skin like I do. That's the reason for the band-aid on my left cheek--praying for no issues!)

In this episode, I discuss today's decision by the San Antonio City Council with a 9-2 vote to pass a city ordinance mandating private businesses provide paid sick leave of 64 hours for those with more than 15 employees and of 48 hours for those with 15 or fewer employees.

As I noted in a previous blog post, this sort of forced activity by government is bad for employers (raises costs), bad for employees (reduces negotiating power), bad for consumers (increases prices), and bad for the Texas economy (less economic activity).

Instead, San Antonio and Austin, which passed this ordinance earlier this year, should find ways to provide a pro-growth economic framework to let people prosper instead of making people poor while likely violating state law (Texas Minimum Wage Act). 

#LetPeopleProsper