Originally published at Econlib.
After a year dominated by historically high inflation and soaring home loan rates, 2023 is carving another negative as the annum of antitrust accusations. From lawsuits targeting Amazon and Google to the emergence of concerns over trading card and sandwich shop monopolies, the growing antitrust frenzy poses a threat to what these laws were originally crafted to safeguard: consumers. Actions of antitrust’s biggest modern advocates, like the Federal Trade Commission’s Chair Lina Kahn and U.S. Sen. Elizabeth Warren, reveal their misunderstanding of these competition laws. To maintain their protected freedoms to buy, sell, and trade, consumers and businesses must know the truth enshrined in these laws and not be duped by misrepresentation. Antitrust laws were enacted with a noble purpose—to protect consumers and promote fair competition. These laws were designed to ensure consumer access to various choices across the marketplace and prohibit businesses from engaging in anti-competitive practices. If those parameters seem vague, that’s because they are. That is, without antitrust’s crucial cornerstone, “the consumer welfare standard” established in the 1970s to help narrow the law’s scope. A principle that assesses whether consumers are better or worse off due to a company’s actions, the consumer welfare standard is mathematically defined as “the value consumers get from the product less the price they paid.” The addition of this language shifted antitrust’s emphasis from preserving competitors to competition. But perceived value varies between individuals. Concerns about monopolies can be legitimate when there is concern about diminished value from a product or service because of a company’s actions. Such monopolistic behavior may result in higher prices and lower quality. These tactics are most likely to prevail when outside competition is intentionally stifled by the government through regulations, spending, and corporate welfare. However, having a large or growing market share alone does not violate antitrust laws, as progressives like Warren would lead people to believe. In a healthy competitive market, companies naturally strive to develop and acquire other businesses to expand their offerings and meet consumer demands. Roark Capital’s acquisition of Subway, adding the sandwich chain to its portfolio, and major sports leagues signing contracts with trading card company Fanatics may seem like consolidation of power, but these changes do not inherently harm consumers or competition. In fact, if permitted to expand via purchasing and agreements with other companies or leagues, not just these but all businesses can improve consumer welfare and profitability. To the chagrin of its Italian competitor, the NFL, MLB, and NBA making agreements with the sports trading card company Fanatics was a voluntary decision executed because increased, not diminished, consumer welfare was perceived. While Panini SpA points the antitrust finger at Fanatics, it has three other fingers pointing back at itself, as the company has its own agreements with the NFL and NBA. Rather than viewing the new competition as an opportunity to improve its company and become the first choice, Panini SpA would rather waste time and resources trying to punish its competitor. This is what the FTC will try to do with Subway, the European Union wants to do with Amazon, and the DOJ has tried to do with Google. This knowledge is critical because consumers are being swayed to favor legal action that does not serve their best interest, more than likely because of widespread misinformation. For instance, a recent poll showed that 60% of Americans believe Google is too big and hurts businesses and consumers. However, conflicting data reveal that, overwhelmingly, Google users and employees derive immense value from its service. At the same time, other search engines continue to increase in popularity alongside Google, with Safari recently reaching more than one billion users. So, if the majority of Google users are happy with the service and other search engine options exist, the welfare of its consumers is far from threatened. But that hasn’t stopped the FTC from trying to take them down. So-called “big tech giants” and “trading card monopolies” aren’t the true titans threatening consumer welfare; it’s the rent-seeking politicians, government bureaucrats, and corporate rent-seekers wielding an insatiable appetite for control that are consumers’ actual adversaries.
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Economic Reality Check: What Do Falling Mortgage Rates & Jobs+Inflation Signal for the 2024 Economy?12/15/2023 Thank you for tuning into the 39th episode of “This Week’s Economy.”
Much information is packed into today’s newsletter, including my new podcast episode revealing the economic news you need to know in less than 14 minutes! Today, I cover: 1) National: -Why the new U.S. jobs report (my latest commentary) is not as strong as some say -Inflation rates have moderated but still remain well above the Fed’s 2% rate target -Federal Reserve paused again with its federal funds rate target in the range of 5.25-5.5%, supporting a boost in the stock market and likely lower mortgage rates 2) States: -Sustainable Colorado Budget was released that I authored with Ben Murrey at Independence Institute, which provides a path forward for the Centennial state to return to its TABOR roots and buy down the income tax -School choice challenges face Texas as many state leaders are against it, and they keep spending too much -California’s deficit reaches crazy highs, proving why spending is the ultimate government burden 3) Other: -Don't miss my latest LPP episode with Jennifer Huddleston discussing problems with regulating technology, including AI -One of my latest op-eds argues why China is not our biggest threat…what is? -Argentina's new president makes significant strides that could set an example for the U.S. Recent polling data from CNN reveals a grim reality: 84 percent of Americans are concerned about the national economy. Despite President Biden’s efforts to highlight seemingly positive metrics as indicators of the success of his progressive policies, a closer look at the data reveals why most Americans remain dissatisfied.
Biden’s claim of adding 14 million jobs since taking office would be impressive if it were true. The reality is that, since he took office in Jan. 2021, 13 million private sector jobs have been added. This appropriately excludes the unproductive addition of one million government jobs that will soon set a record under his watch. But the bigger point negating his rosy scenario is that the vast majority of this touted “job growth” stems from restoring job losses from the pandemic lockdowns. When we accurately tally the new jobs added since the shutdowns began in Feb. 2020, the count stands at 4.5 million private sector jobs added in three years. While this is a positive, it’s an average of 1.5 million jobs yearly, far from qualifying as record-breaking job creation. The latest U.S. jobs report for November provides additional data, reaffirming the mixed nature of the labor market. The payroll report indicates a feeble performance. There was a headline number of 199,000 jobs added. But there were revisions in October of 35,000 fewer jobs added. So, net additions stand at 164,000 jobs. When government jobs are correctly subtracted, the count is just 115,000 new productive private jobs last month. On a more positive note, the household report shows a substantial increase of 532,000 in the labor force, resulting in a 62.8 percent participation rate. Employment experienced robust growth of 747,000, contributing to a decline in the unemployment rate to 3.7 percent. But the broader unemployment rate that includes underemployed and discouraged workers is nearly twice as high at seven percent. However, it’s crucial to note that the average weekly earnings show a 3.7 percent increase over the last year, though this has been overshadowed by the elevated inflation. Fresh data on inflation as measured by the chained consumer price index (chained-CPI), which accounts for the substitution effect of changes in individual prices not accounted for by the headline CPI, reveals signs of moderation. The latest core chained-CPI inflation rate, which excludes food and energy and is watched by the Federal Reserves, for Nov. 2023 was up 3.7 percent year-over-year. Not only is this 85 percent higher than the Fed’s average inflation rate target of two percent, it also nearly matches the increase in earnings, negating any increase in purchasing power. In fact, real average weekly earnings have declined for 24 straight months. No wonder people are concerned about the economy. The ongoing reduction of the Fed’s balance sheet contributes to this inflation moderation, but further cuts to its bloated balance sheet are necessary to stabilize prices across the economy. Their balance sheet currently hovers around $8 trillion, nearly double its pre-pandemic figure, having increased tenfold in fifteen years from $800 billion in 2007. While some blame the national debt crisis on not having enough tax revenue from slower-than-optimal GDP growth, the truth is excessive government spending. Inflation is not your fault, as The Atlantic recently claimed. It’s the fault of excessive government spending by Congress that led to rising national debt which the Fed purchased and printed money. Too much money chasing too few goods is the classic definition of inflation, and it fits this time, too. A better way to solve this would be to slash government spending and taxes like President Calvin Coolidge did a century ago. During the Roaring 20s, the national debt declined, and the economy supported more opportunities for people to flourish. In light of the evidence, the question arises: Is Bidenomics working? The answer, drawn from the data, suggests it is not. To guide the economy back on course, recalibration is imperative. This includes prioritizing fiscal responsibility, pruning the Fed’s ballooning balance sheet, and reining in excessive government spending. Only through such pro-growth measures can we hope to unlock genuine economic recovery and chart a course toward lasting prosperity. Is Being Big Bad? Are Antitrust Accusations of “Big Tech,” “Big Sandwich,” and Others Warranted?12/11/2023 Thank you for tuning into the 74th episode of the Let People Prosper Show podcast.
Today, I’m joined by Jennifer Huddleston, a technology policy research fellow at The Cato Institute. Today, we discuss: 1) What is the proper role of government in regulating or adapting to technological advancements; 2) Pros and cons of restricting AI, and why antitrust accusations are on the rise, specifically targeting “big tech,” and; 3) What you should know about government regulation on social media for minors, and how parents can be empowered to facilitate social media use at home. Originally published at American Institute for Economic Research. Rating agency Moody’s just downgraded China’s credit outlook from stable to negative after doing the same to the US about a month ago. Does this mean that China is on equal footing with us? Worse? Better off? An economic analysis suggests that China is not our biggest threat, nor are we theirs. In fact, the biggest problem we face is completely self-inflicted and found on our home soil. Apprehensions about China’s military actions and trade strategies maintain resonance, especially among middle-aged and older Americans. While caution is warranted, especially concerning their censorship and the treatment of Hong Kong and Taiwan, an economic comparison settles many doubts. Regarding economic might, the US outshines China with a GDP of $27 trillion compared to China’s $18 trillion. The contrast is stark on a per-capita basis. Americans enjoy an average income of $79,000, six times more than their Chinese counterparts. One alarming similarity stands out though: Both nations have weathered credit downgrades mainly due to escalating budget deficits and national debts. The United States’ national debt is shaping up to be this decade’s hallmark. Now nearly $34 trillion, the deficit spiked in 2020, with trillions of dollars more added since. Net interest payments on the debt climbed by 39 percent and recently surpassed $1 trillion annually. The repercussions of the national debt crisis are not merely theoretical – they are tangible, affecting the everyday lives of citizens.
In 2023, the dollar has significantly depreciated. Fitch (and now Moody’s) downgraded our creditworthiness. Home sales hit their slowest pace since 2010. Average 30-year fixed mortgage rates reached their highest point since 2000. And real median household income dipped to its lowest level since 2018, to name just a few of our recent economic woes. These findings shed new light on our competition with China. They should prompt America’s leaders to reevaluate our priorities and consider whether the enemy across the Pacific is as pressing as the ones we face at home. While some argue the government spending that drove the deficits was necessary, especially during the pandemic’s peak, it underscores the broader problem – a lack of fiscal discipline and a predisposition to rely on debt as a quick fix. It is high time the US adopted a spending-limit rule. Without one, we’ve only made things worse and failed to reach budget agreements. A reasonable spending limit of no more than the rate of population growth plus inflation has worked at the state level, and it would work at the federal level. While the US points the finger at China, we have three other fingers pointing back at us. Excessive government spending and a burgeoning national debt are eroding the foundation of our economic stability. Now is not the time to allocate excessive resources to confront external foes, but to address the fundamental issue plaguing us: a government that refuses to rein in spending of taxpayer money. America should also correct the errors in recent years of trade protectionism. There is reason to counter those countries who don’t play by the same rules, like China, but that should be done by joining free trade agreements with allies. This would be a more effective and affordable approach for Americans instead of raising taxes on them through tariffs, appreciating the dollar thereby increasing the trade deficit and contributing to trade wars that often lead to military wars. Let’s refocus our efforts, fortify our economic foundation, and confront the genuine threat within our borders. If not, governments will not be able to do their job of preserving liberty. This is of utmost importance. Does New Data Support that Bidenomics is Working? Former White House Chief Economist Tells All12/8/2023 Thanks you for tuning into the 38th episode of “This Week’s Economy.”
Lots of information is packed into today’s newsletter, including my new podcast episode revealing the economic news you need to know in <13 minutes! Today, I cover: 1) National: Data shows that the economy is Americans' biggest concern and Bidenomics is making it worse, what the latest state and national GDP show, The Atlantic's bizarre claim about inflation, why my tweet about Biden’s job market claims made the community page, and why we should say no to a carbon tariff; 2) States: What a comparison between Florida and California reveal about policy, what I think Texas should do about School Choice and its $20 billion rainy day fund, and how a conservative state budget could take Iowa to the top; and 3) Other: What I learned attending the Meant for More Summit by the American Enterprise Institute and The Alliance for Opportunity about preventing poverty, my recent podcast episode with Dr. Gale Pooley, and a sneak peek of Monday's episode with Jennifer Huddleston. Originally published at Independence Institute. In 1992, Colorado voters adopted the Taxpayer’s Bill of Rights (TABOR) to limit the growth in state and local spending. Over the past three decades, however, politicians from both parties and a complicit judicial branch have exempted more and more state spending from the TABOR limit. When voters adopted TABOR, 67% of state spending was subject to the limit. Today, the majority of state spending is not subject to the limit. Consequently, state spending has far outpaced Coloradans’ incomes over the last decade. To uphold the original intent of voters when they adopted TABOR, Independence Institute proposes the Sustainable Colorado Budget (SCB), which limits state spending from state funds (excluding federal funds) at the rate of population growth plus inflation. The state should then use the surplus revenue above the SCB spending limit to reduce the income tax rate for all taxpayers. This commentary was originally published at The Center Square here.
A record number of states have passed universal school choice so far this year, but it seems Texas won’t be among them. Given the lack of universal school choice in multiple bills this year, I’m relieved it hasn’t passed in Texas yet. I’ve long been a researcher and staunch supporter of universal school choice. The way to do this is by making the eligibility and funding for education savings accounts (ESAs) available for all 6.3 million school-age students. ESAs put the power of choosing kids’ schooling in parents’ hands by picking public, private, home, co-op, micro, or other types of schooling. ESAs would be funded through the current school finance system and other general funds or new tax credits as necessary. After the Texas Legislature failed to pass a school choice bill in the regular legislative session earlier this year, Texas Gov. Greg Abbott added school choice to the third and fourth special sessions. The first two special sessions focused on property tax relief and border security. The latest $7.6 billion K-12 education-related bill supported by Gov. Abbott in the fourth special session was killed in the House. The massive education bill died after Rep. John Raney, R-College Station, introduced an amendment to remove Texas’ first ESA program from the bill. The amendment passed with 21 Republicans joining all Democrats, essentially killing the bill as it likely is stuck until the special session ends Dec. 7. Gov. Abbott asserts that he will keep fighting for school choice, with the possibility of calling more special sessions. But trying to pass universal school choice before the next regular session in 2025 would be a mistake. This progress was historic as it was the first time since 2005 that a school choice bill had passed out of the House Public Education Committee and made it to the House floor. The Senate has passed school choice bills out of its chamber many times since then, including several times this year. The latest House bill allocated $7.1 billion for additional public school funding and only $486 million for ESAs. Put another way, that’s more than $14 for public schools for every $1 for school choice, which amounts to providing an ESA of $10,700 to only 45,400 students, or just 0.7% of the 6.3 million school-age kids. Texas is long overdue to join the growing number of states that have passed it. But there’s no path to real school choice for every student in Texas now because of politics, not from a lack of support among Texans. A recent University of Houston survey found that 47% of Texans support school choice “for all parents, regardless of income,” and only 28% oppose it. The support exceeds opposition to it across all demographics, including rural areas. The politics of this is a strange bedfellows of some Republicans and all Democrats spreading fear based on teacher union claims that public schools won’t survive. But doesn’t that fear concede that those schools in a monopoly government school system can’t compete and aren’t serving families well? The best chance to pass true universal school choice, not the minimal and problematic school choice in the House’s and the Senate’s bills, is to vote out representatives who prioritize teacher unions over Texans. Then, come back to the regular session in 2025 and pass a bill that won’t let Texans continue to fall behind. This is how to help students, parents, and teachers–who would see better pay and benefits through school choice. Gov. Abbott is leading the way. He recently endorsed 58 House Republicans who voted against Raney’s amendment and made his first endorsement of a candidate running against an incumbent who voted for the amendment. Some argue that more Texas public school funding is the answer instead of school choice. But as Texas continues to increase funding for public education to record levels, a recent public school ranking shows that Texas public schools rank 13th worst of all 50 states. In another ranking, only 23% of 8th graders performed at or above the National Assessment for Educational Progress (NAEP) proficiency level on its nationally recognized exam. This means that 77% of 8th graders in Texas scored below proficiency on this national exam. Clearly, the monopoly government school system is failing students in Texas. More funds will not fix this monopoly government school system problem; only more parental freedom will. Although history was made this year, these efforts aren’t enough. Universal school choice with ESAs for every parent to choose the type of schooling for their kids must be the outcome for better student outcomes, higher teacher pay, more parental opportunities, and greater taxpayer benefits. Gov. Abbott has been pushing the correct path of universal school choice for more than a year. But given the current makeup of the Legislature, especially in the House, he should give passage of school choice a rest for now. Texans can only hope that the 2024 election will yield a new wave of politicians who reflect what they want: putting kids first. What can state and federal governments glean from Iowa's example when it comes to responsible budgeting? Find out! If you value responsible government budgeting and fiscal conservatism, I believe you’ll enjoy this podcast episode. Thank you to Iowans for Tax Relief Foundation’s ITR Live podcast for having me on their show to discuss a conservative approach to balancing Iowa’s state budget, my time at the White House, and free trade. Listen on Apple Podcasts or YouTube! Original publication at Iowans for Tax Relief Foundation. If you’d like to learn more about the responsible state budget revolution sweeping the nation, check out my post, where I dive deeper into the topic, including my extensive work helping reform state budgeting across the country.
www.chronicle-tribune.com/opinion/could-social-media-regulation-stifle-our-future/article_1dd66cd8-5e61-5e04-ac82-e9c56b12d166.htmlOriginally published at the Tribune.
This is the season of controversial big-government actions by Republicans and Democrats. They too often want to direct people’s actions toward how politicians see fit, through policies dealing with industrial support, climate change, and labor markets. One concern is regulating social media. From the Supreme Court’s scrutiny of Texas and Florida’s social media laws to Utah and other states unveiling social media rules for the digital world, parental rights and capitalism are at a pivotal moment. The policy choices we are making now on these issues will impact the brightest spot in the American economy. As economist Thomas Sowell correctly noted, there are no solutions, only trade-offs. This is a reason why it is crucial for Americans to grasp the trade-offs of social media regulation before politicians and bureaucrats take action. Utah’s ”Social Media Regulation Act” serves as a cautionary tale of government overreach with severe trade-offs. While the road to online safety is paved with good intentions, as we all want the best for minors (and everyone), we must evaluate policies by their real-world results. Utah’s law mandates minors under 18 must obtain a guardian’s permission to create social media accounts. If they proceed, the guardian gains full access to the minor’s account, with default curfew settings between 10:30 p.m. and 6:30 a.m. Additionally, minors cannot receive unapproved direct messages, and their accounts are blocked from appearing in search results. While there is mixed evidence suggesting a relationship between excessive social media usage and declining mental health, a recent study from Gallup reveals that parents have an even more prominent role than social media when it comes to well-being: “The strength of the relationship between an adolescent and their parent is much more closely related to their mental health than their social media habits. When teens report having a strong, loving relationship with their parents or caretakers, their level of social media use no longer predicts mental health problems.” Even if the mental health studies are correct, Utah’s law may not help teens most in need. Implementing government regulations always comes with a cost, and in this case, the very thing this policy intends to help could be harmed as a result. Parenting could be taken from parents and given to social media companies and government bureaucrats. Another trade-off looms: Will children growing up with restricted access to social media be disadvantaged compared to their counterparts in states and countries without such restrictions? Social media plays a key role, not just socially, but also professionally. The effect of limited exposure to these platforms remains uncertain. Beyond concerns about parental rights and career challenges, bills like these can seriously disrupt free markets and the prosperity we’ve seen them bring. Instead of restrictions, states and the federal government should focus on education. Indeed, many states are considering such digital literacy laws, following in Florida’s footsteps. On the free speech side of social media regulations, the bills in Texas and Florida aimed to prevent social media companies from selectively influencing digital expression. The Texas law was challenged in court and upheld; the Florida law was challenged and struck down. Now, these laws will be considered by the Supreme Court, and the outcome will have a big impact on the social media ecosystem. Although it’s frustrating for social media companies to potentially influence users by removing, promoting, or de-ranking specific content besides pornography, they are within their rights to do so. Content moderation practices, whether strict or open, bring a great opportunity for competition. For example, platforms like Rumble emerged in response to concerns that the big social media companies were unfairly moderating their content and attracting millions of users. This exemplifies the essence of free enterprise — problems inspire innovation, and competition drives improvement, allowing for diversification. But if social media companies in these states are compelled to adhere to the restrictive regulations, it will deter new startups and stifle growth. The social media landscape is evolving rapidly, and regulations like these demand careful consideration. While the safety of minors online is paramount, for our kids and yours, it’s crucial to strike a balance that preserves parental rights, encourages innovation, protects free speech, and safeguards individual freedoms. As we navigate this digital age, let’s remember that effective solutions should empower parents, consumers, and promote competition, not hinder progress with more government. These are the things that have provided the greatest human flourishing in free-market capitalism. Originally posted at Pelican Institute where I co-wrote it with Jamie Tairov. The Pelican Institute has highlighted the need for better state budgeting and tax reform. This includes the Responsible Louisiana Budget (RLB), which was released earlier this year. The RLB shows that Louisiana’s budget has been growing at unsustainable levels, and that an improved growth factor for the expenditure limit and initial appropriations is needed. Recently, Americans for Tax Reform released a similar comparison for all 50 states, including Louisiana, in its Sustainable Budget Project. This report shows that, on the surface, Louisiana’s spending has not been as unsustainable as the RLB shows. Why is there a different outcome in the two reports?
Outcomes of Each Report The Responsible Budget model is currently being used successfully in other states to rein in spending. This is what Louisiana’s budget would have looked like had the RLB been employed over the last ten years.
Here are the findings from ATR’s Sustainable Budget study over the last decade:
Total spending in FY 22 was 34.4%, or $11.2 billion, higher than the improved expenditure limit. This means that a family of four is paying $8,800 more in taxes to pay for the excess spending, which is not sustainable spending. Is One Report Better Than the Other?
No. Both reports are accurate and serve different purposes. The RLB uses initial appropriations which helps lawmakers easily compare appropriation amounts from year to year as they are drafting the budget during session. Because it covers spending instead of appropriations, the ATR study is a backwards-looking metric that can be used for making longer-term spending decisions, but it will be limited in its use during a legislative session. Both reports compare the current expenditure limit with a proposed improved expenditure limit. The current limit is the three-year average of personal income growth, which is an extremely volatile measure. The proposed improved limit is the three-year average of population growth plus inflation. The RLB and ATR reports can work together, providing limits on the front and back end to ensure that spending remains responsible throughout the year. Both reports show recent elevated appropriations and spending. There is clearly room for budgeting restraint in Louisiana. These measures have benefits to lawmakers and the public so that they can have the tools necessary to restrain government spending and provide a responsible budget. Doing so will have many payoffs over time, including making the comeback in the Pelican State happen more quickly by eliminating personal income taxes, providing a more dynamic economy, and improving opportunities for people to flourish. Episode 73 is with Dr. Gale Pooley, adjunct scholar at The Cato Institute, senior fellow at The Discovery Institute, and co-author of the new book, "Superabundance."
Gale and I discuss the following and more: 1) The state of abundance in America and how we compare to other countries; 2) How government interference through regulations and subsidies are restricting healthcare, education, and entrepreneurs; and 3) Why AI should be embraced, not feared, and money is not our most valuable economic asset. If you found today's discussion valuable, be sure to check out Gale's book: https://www.cato.org/books/superabundance Please like this video, subscribe to the channel, share it on social media, and provide a rating and review. Also, subscribe and see show notes for this episode on Substack (www.vanceginn.substack.com) and visit my website for economic insights (www.vanceginn.com). Today, I cover the following:
Check out the short from the episode below if you want a quick recap before watching the full episode. Don’t miss episode 72 of the Let People Prosper show with guest Avik Roy, president of the Foundation for Research on Equal Opportunity (FREOPP).
We discuss America’s biggest economic problems and how to solve them. Avik and I discuss the following and more:
Check out the full show notes at my Substack newsletter and subscribe to get my posts directly in your inbox. To show my gratitude this Thanksgiving, I am offering a limited-time special giveaway to one lucky winner!
I hope you all had a wonderful holiday yesterday, and thank you for tuning in to today’s 36th episode of “This Week’s Economy.” This episode includes a special opportunity for one of you to win a complimentary year-long subscription to this newsletter, which is essential in light of my transitioning to a paid format soon. Click the link to enter the giveaway. Texas lost jobs in October and faces major headwinds with a weak U.S. economy and a poor performance by this year’s 88th Legislature. There is a better way.
Free-market capitalism is the best path to let people prosper, as it is the best economic institution that supports jobs and entrepreneurship for more people to earn a living, gain skills, and build social capital. Table 1 shows Texas’ labor market for October 2023 from the U.S. Bureau of Labor Statistics. These data compare the following important dates: 1) June 2009—Dated trough of that U.S. recession, 2) February 2020—Dated peak of the last U.S. expansion before the COVID-19 shutdowns, 3) April 2020—Dated trough of the last U.S. recession, and 4) October 2023—Latest data available. The labor market declined last month continuing a weakening trend in Texas.
The economy continues to expand in Texas though there are headwinds.
As Texans face an affordability crisis from high inflation and high property taxes and an uncertain future with the U.S. economy likely in a deepening recession, the Legislature provided some tax relief but not nearly enough because of excessive spending.
Strengthening the Texas Model will help Texans better resist D.C.’s overreach, be more competitive with other states, and, more importantly, flourish more for generations to come. Don’t miss episode 71 of the Let People Prosper show with Dr. Norman Horn, president of the Libertarian Christian Institute and co-author of “Faith Seeking Freedom.”
We consider controversial questions to help Christians understand how to glorify God in the marketplace. Dr. Horn and I discuss the following and more:
Originally published at Econlib.
President Biden signed a sweeping executive order to “harness” and “keep” artificial intelligence, two words you never want to hear from the government. This new regulation will inhibit Americans’ flourishing because restricting free markets never works. The EO is reported to ensure safety, equity, and responsible development. While these goals may appear laudable, delving deeper reveals that this motion will hinder economic progress and stifle the innovation it aims to promote. That’s why policies must always be judged by their results rather than their intentions. Details of the order’s objectives include safety tests, industry standards, and government oversight to address potential risks associated with AI. Forcing AI companies to conduct safety tests before going public, known as “red teaming,” will significantly slow the development and deployment of AI technologies. It’s well-established that innovation thrives in an environment of minimal regulatory interference called “permissionless innovation.” So introducing these bureaucratic hurdles will hinder fast-growing AI and all the industries that have begun to rely on it. Medicine and biotech, in particular, have realized remarkable potential with AI that has life-saving ramifications. But Biden’s overreaching EO wants to harness that. As is the case with many regulations, the EO comes at not just a cost to the individuals it affects but to the government’s pocketbook as well. As part of its endeavor to “preserve individuals’ privacy,” the administration will fund the Research Coordination Network. At a time when wages aren’t keeping pace with inflation and the average American family is losing real money due to a suffering economy, the government adding an expense like this is an insult to injury. Congress needs to reduce spending, and the Fed needs to slash its bloated balance sheet now more than ever. One of the most troubling aspects of the EO is its emphasis on regulating AI in the workforce out of concern for the technology displacing workers. Although there has been some uproar out of concern over AI destroying jobs, research shows that only 34% of Americans fear job displacement due to AI. And for good reason. Not only now but historically, concerns about new technologies displacing workers have been overblown. A Harvard paper published in 2013 predicted that by 2023, almost half of all American jobs would be replaced by AI. Clearly, the calculation has not come to pass. That’s because technology is a tool, not a threat. Frequently, implementing AI and technology like it allows humans to do more complex or human-facing jobs that AI can’t do or that people don’t want AI to do. AI is a transformative technology that has the potential to revolutionize various industries, from healthcare to finance and beyond. In a free market, competition drives innovation and efficiency, benefiting consumers and businesses. Restricting AI through excessive regulations and government oversight threatens this dynamic. While the intention behind Biden’s EO on AI may be to ensure responsible development and safe use, the economic consequences could be dire. To maintain America’s leadership in AI and foster economic growth, lawmakers and leaders must avoid overregulation and unnecessary restrictions on this transformative technology. Instead, we should encourage innovation, protect intellectual property, and ensure that AI remains a powerful tool for driving economic prosperity and improving the lives of all Americans. In the fast-paced world of technology, the last thing we need is government interference that hampers progress. President Biden signed a sweeping executive order to “harness” and “keep” artificial intelligence, two words you never want to hear from the government. This new regulation will inhibit Americans’ flourishing because restricting free markets never works.
The EO is reported to ensure safety, equity, and responsible development. While these goals may appear laudable, delving deeper reveals that this motion will hinder economic progress and stifle the innovation it aims to promote. That’s why policies must always be judged by their results rather than their intentions. Details of the order’s objectives include safety tests, industry standards, and government oversight to address potential risks associated with AI. Forcing AI companies to conduct safety tests before going public, known as “red teaming,” will significantly slow the development and deployment of AI technologies. It’s well-established that innovation thrives in an environment of minimal regulatory interference called “permissionless innovation.” So introducing these bureaucratic hurdles will hinder fast-growing AI and all the industries that have begun to rely on it. Medicine and biotech, in particular, have realized remarkable potential with AI that has life-saving ramifications. But Biden’s overreaching EO wants to harness that. As is the case with many regulations, the EO comes at not just a cost to the individuals it affects but to the government’s pocketbook as well. As part of its endeavor to “preserve individuals’ privacy,” the administration will fund the Research Coordination Network. At a time when wages aren’t keeping pace with inflation and the average American family is losing real money due to a suffering economy, the government adding an expense like this is an insult to injury. Congress needs to reduce spending, and the Fed needs to slash its bloated balance sheet now more than ever. One of the most troubling aspects of the EO is its emphasis on regulating AI in the workforce out of concern for the technology displacing workers. Although there has been some uproar out of concern over AI destroying jobs, research shows that only 34% of Americans fear job displacement due to AI. And for good reason. Not only now but historically, concerns about new technologies displacing workers have been overblown. A Harvard paper published in 2013 predicted that by 2023, almost half of all American jobs would be replaced by AI. Clearly, the calculation has not come to pass. That’s because technology is a tool, not a threat. Frequently, implementing AI and technology like it allows humans to do more complex or human-facing jobs that AI can’t do or that people don’t want AI to do. AI is a transformative technology that has the potential to revolutionize various industries, from healthcare to finance and beyond. In a free market, competition drives innovation and efficiency, benefiting consumers and businesses. Restricting AI through excessive regulations and government oversight threatens this dynamic. While the intention behind Biden’s EO on AI may be to ensure responsible development and safe use, the economic consequences could be dire. To maintain America’s leadership in AI and foster economic growth, lawmakers and leaders must avoid overregulation and unnecessary restrictions on this transformative technology. Instead, we should encourage innovation, protect intellectual property, and ensure that AI remains a powerful tool for driving economic prosperity and improving the lives of all Americans. In the fast-paced world of technology, the last thing we need is government interference that hampers progress. Originally published at Econlib. Today, I cover:
New Hampshire has displaced Florida as the most economically free state, according to the Fraser Institute’s new Economic Freedom of North America report. The findings demonstrate that, while size and location account for some of a state’s success, free-market friendliness is everything.
This annual report, now in its nineteenth edition (one of us is its lead author), offers a comprehensive analysis of economic freedom using 2021 data (the most recent available). The report defines economic freedom as “the ability of individuals to act in the economic sphere free of undue restrictions.” The top five states in the report are what one might expect. Unsurprisingly, these top five states tend to spend less, do not have a personal income tax, and have reasonable labor market regulations. New Hampshire improved its economic freedom score from 7.92 to 7.96 to retake the top spot after losing it in the prior year. Florida fell from the top as it dropped from 7.97 to 7.80. Tennessee declined from 7.85 to 7.73 for third place. Texas inched down from 7.67 to 7.64, and South Dakota fell from 7.73 to 7.59. Conversely, the least economically free states were New York (4.09), California (4.27), Vermont (4.27), Oregon (4.56), and Hawaii (4.58), all of which lost ground since the last report. Each state has some of the highest rates of taxation and government spending, as well as stringent labor market regulations. In the freest quartile of states, the population grew on average by one percent in 2022, compared to a 0.1 percent decline in the least free quartile. Americans are voting with their feet in favor of economic freedom, fueling the flood of California and New York refugees pouring into Texas and Florida. Furthermore, hundreds of research papers have used the index, almost universally finding that more economic freedom correlates with positive outcomes such as higher incomes, faster income growth, lower unemployment, and more entrepreneurial activity. Bluntly, states with less government spending, lower taxes, and less burdensome labor market regulations have more opportunities for people to flourish. While the report has many compelling findings, two states stand out: New Hampshire and South Dakota. New Hampshire has embarked on a journey of economic liberation in recent years. In 2021, the state had significantly reduced taxes and had begun its ongoing quest to abolish interest and dividends taxes, a huge step toward reducing the tax burden. While the state’s taxes are already relatively low, they continue to decline. New Hampshire does not have a state minimum wage, reducing labor market regulations allowing wages to be market-determined instead of government-mandated. This helps attract young people and others with less experience, training, or education. As a result, household incomes in the Granite State are among the highest in America. Consistently, states with low minimum wages draw more people than average, while states with high minimum wages — California, New York, Illinois — are experiencing out-migration. Not only businesses, but also parents and students in New Hampshire have seen their freedom expand through school choice, which will help improve economic outcomes. In its commitment to providing school choice for all, the state has implemented education freedom accounts. These accounts empower parents to make educational choices that best suit their children’s needs while promoting a competitive schooling landscape that benefits teachers and students. South Dakota, too, has made remarkable strides in economic freedom, which became particularly evident during the challenging times of the COVID-19 pandemic. In 2021, the state was an exemplar of resilience and recovery, boasting the lowest unemployment rate in the country after the pandemic hit. Its output recovered pre-pandemic levels before any other state, with its real GDP growing by nearly five percent. Fortunately, the state never issued stay-at-home orders or mask mandates. Instead, state leadership allowed individuals to make decisions concerning personal health and safety, a common theme that has assisted the state’s flourishing. One key factor contributing to South Dakota’s economic success is its unique tax policies. The state is a rare tax haven with no corporate or personal income taxes and no durational limits on trusts. By allowing families to hold wealth indefinitely within trusts, and letting earners keep more of their hard-won incomes, South Dakota has remained a top spot for entrepreneurs. This tax-friendly environment in South Dakota reaffirms a fundamental economic principle: spending and taxes influence individual choices. As evidenced by the state’s success, people gravitate toward regions with lower tax burdens and more favorable financial policies. The success stories of New Hampshire and South Dakota underscore the power of economic freedom in fostering human flourishing. In a society where consumers are free to choose, businesses must continually improve the quality and affordability of their products and services. This dynamic situation fuels increased productivity and benefits everyone in the economy. Economic freedom isn’t just about lower taxes. It encompasses a broader spectrum of policies that allow individuals to make decisions about their lives, finances, and education. It’s about governments empowering people with opportunities rather than restricting or directing activity. By following New Hampshire and South Dakota’s lead, other states can unleash the power of economic freedom to boost investment, create jobs, improve human flourishing, and make their regions more competitive and attractive places to live. In a world where economic challenges are ever-present, these states serve as beacons of hope, proving that less government spending, lower taxes, and reduced labor market regulations can pave the way to a brighter economic future, full of greater opportunity for all. Originally published at Daily Caller. Originally published at American Institute for Economic Research.
The rise of several underdog states and the fall of previous favorites tells the story of the Tax Foundation’s new 2024 State Business Tax Climate report. The findings support how less government contributes to more flourishing, while heavy-handed taxes hinder prosperity. The scores for the 50 states in the report declined by 0.19 points from the prior report, indicating a less overall competitive business tax climate nationwide. Considering that half of all states have cut taxes over the past three years, and an increasing number are moving to flax taxes, pressure is building on states to seek tax cuts or risk getting left behind. An inspiring success story is Iowa, which has emerged as a beacon of pro-growth tax reform. Iowa reduced its top marginal individual income tax rate from 8.53 to 6.0 percent. By consolidating its previous nine tax brackets into four, the newer, more streamlined tax system is less burdensome for Iowans. Another improvement in Iowa’s reforms was reducing the marriage penalty. The state removed a longstanding tax burden by doubling the bracket amounts for married couples filing jointly. The state also shifted its previously three-bracket corporate income tax structure into just two brackets, which caused the top rate to drop by 1.4 percentage points. As a result of these changes, Iowa’s ranking improved from 38th to 33rd in just one year. While there’s room for improvement, the state is on a better path. Considering the conservative budgeting by Governor Reynolds and the legislature, and the transition to a flat 3.9 percent income tax rate by 2026 and a flat corporate income tax rate of 5.5 percent, the state could soon be on its way to 15th place. Massachusetts, on the other hand, experienced the sharpest decline of all the states, plummeting 12 places down to 46th. This regression in business tax competitiveness can be largely attributed to a new state constitutional amendment. It transitioned Massachusetts from a single-rate to a graduated-rate income tax system with a new 4 percent surtax for a top marginal tax rate of 9 percent for incomes over $1 million. This progressive policy not only represents a departure from the trend of rate reductions and bracket consolidation in other states as part of the flat tax revolution, but also introduces a significant marriage penalty. While implementing a new payroll tax further contributed to Massachusetts’s decline in tax competitiveness, the state’s individual tax component ranking fell from 11th to 44th. Unfortunately, this fall was foretold by the vast number of people fleeing the state, many of whom were no doubt searching for a more tax-friendly place of residence. After all, people vote with their feet. While Massachusetts experienced a sharp fall, Mississippi and Idaho emerged as rising stars in the world of tax reform. Mississippi’s ranking jumped from 27th to 20th thanks to three major shifts. It became the second state to implement permanent full expensing for select investment in machinery and equipment, passed a flat personal income tax, and will soon phase out its franchise tax. These forward-thinking policy changes encourage investment and economic growth, positioning Mississippi as a more competitive business destination. Likewise, Oklahoma has also made significant strides in tax reform. In addition to eliminating its marriage penalty, the state reduced its split roll ratio in property taxation and withdrew its capital stock tax. These actions propelled its property tax component ranking to substantially improve from 30th to 15th. As a result of these reforms, Oklahoma’s overall ranking has risen significantly, now at 19th. And while Governor Stitt’s recent special session was unsuccessful in making bigger strides for tax cuts, the state looks poised to do so soon, thereby improving its competitiveness. On a similar path, Idaho made a noteworthy move by transitioning from four brackets to a flat individual income tax at 5.8 percent. Additionally, the state cut its corporate income tax rate to 5.8 percent, further enhancing its tax competitiveness. These reforms boosted its individual tax component rank by two places, now at 17th. The findings from the Tax Foundation’s report underscore a fundamental economic truth: Free markets do not discriminate. They thrive where they are permitted to flourish, and that starts with sustainable budgeting and sound tax policy. States like Iowa, Oklahoma, Mississippi, and Idaho, which prioritize tax cuts and financial freedom, are poised to rise in the rankings and could quickly become some of the more sought-after states. As they continue to reduce tax burdens, they create environments where individuals and businesses can retain more of their earnings, which invites innovation, improves the quality of life, and encourages moving to those states. Meanwhile, states like Massachusetts and New Jersey, which ranks 50th in the report, choose high spending and taxes that will contribute to continued out-migration as individuals and businesses seek refuge in states prioritizing economic freedom. The message is unmistakable. Free markets work, and policymakers should heed the lessons from these tax climate rankings. There’s much to every person’s journey. Mine has many cycles that made me the man I am today. The video above and the document below tells my story of a key cycle that highlights a peak, trough, and subsequent peak on the anniversary of this life-changing event. I've included pictures throughout that will hopefully give you a good perspective. Moral of the story: Even “rockstars” can make a difference! #LetPeopleProsper The rise of several underdog states and the fall of previous favorites tells the story of the Tax Foundation’s new 2024 State Business Tax Climate report. The findings support how less government contributes to more flourishing, while heavy-handed taxes hinder prosperity.
The scores for the 50 states in the report declined by 0.19 points from the prior report, indicating a less overall competitive business tax climate nationwide. Considering that half of all states have cut taxes over the past three years, and an increasing number are moving to flax taxes, pressure is building on states to seek tax cuts or risk getting left behind. An inspiring success story is Iowa, which has emerged as a beacon of pro-growth tax reform. Iowa reduced its top marginalindividual income tax rate from 8.53 to 6.0 percent. By consolidating its previous nine tax brackets into four, the newer, more streamlined tax system is less burdensome for Iowans. Another improvement in Iowa’s reforms was reducing the marriage penalty. The state removed a longstanding tax burden by doubling the bracket amounts for married couples filing jointly. The state also shifted its previously three-bracket corporate income tax structure into just two brackets, which caused the top rate to drop by 1.4 percentage points. As a result of these changes, Iowa’s ranking improved from 38th to 33rd in just one year. While there’s room for improvement, the state is on a better path. Considering the conservative budgeting by Governor Reynolds and the legislature, and the transition to a flat 3.9 percent income tax rate by 2026 and a flat corporate income tax rate of 5.5 percent, the state could soon be on its way to 15th place. Massachusetts, on the other hand, experienced the sharpest decline of all the states, plummeting 12 places down to 46th. This regression in business tax competitiveness can be largely attributed to a new state constitutional amendment. It transitioned Massachusetts from a single-rate to a graduated-rate income tax system with a new 4 percent surtax for a top marginal tax rate of 9 percent for incomes over $1 million. This progressive policy not only represents a departure from the trend of rate reductions and bracket consolidation in other states as part of the flat tax revolution, but also introduces a significant marriage penalty. While implementing a new payroll tax further contributed to Massachusetts’s decline in tax competitiveness, the state’s individual tax component ranking fell from 11th to 44th. Unfortunately, this fall was foretold by the vast number of people fleeing the state, many of whom were no doubt searching for a more tax-friendly place of residence. After all, people vote with their feet. While Massachusetts experienced a sharp fall, Mississippi and Idaho emerged as rising stars in the world of tax reform. Mississippi’s ranking jumped from 27th to 20th thanks to three major shifts. It became the second state to implement permanent full expensing for select investment in machinery and equipment, passed a flat personal income tax, and will soon phase out its franchise tax. These forward-thinking policy changes encourage investment and economic growth, positioning Mississippi as a more competitive business destination. Likewise, Oklahoma has also made significant strides in tax reform. In addition to eliminating its marriage penalty, the state reduced its split roll ratio in property taxation and withdrew its capital stock tax. These actions propelled its property tax component ranking to substantially improve from 30th to 15th. As a result of these reforms, Oklahoma’s overall ranking has risen significantly, now at 19th. And while Governor Stitt’s recent special session was unsuccessful in making bigger strides for tax cuts, the state looks poised to do so soon, thereby improving its competitiveness. On a similar path, Idaho made a noteworthy move by transitioning from four brackets to a flat individual income tax at 5.8 percent. Additionally, the state cut its corporate income tax rate to 5.8 percent, further enhancing its tax competitiveness. These reforms boosted its individual tax component rank by two places, now at 17th. The findings from the Tax Foundation’s report underscore a fundamental economic truth: Free markets do not discriminate. They thrive where they are permitted to flourish, and that starts with sustainable budgeting and sound tax policy. States like Iowa, Oklahoma, Mississippi, and Idaho, which prioritize tax cuts and financial freedom, are poised to rise in the rankings and could quickly become some of the more sought-after states. As they continue to reduce tax burdens, they create environments where individuals and businesses can retain more of their earnings, which invites innovation, improves the quality of life, and encourages moving to those states. Meanwhile, states like Massachusetts and New Jersey, which ranks 50th in the report, choose high spending and taxes that will contribute to continued out-migration as individuals and businesses seek refuge in states prioritizing economic freedom. The message is unmistakable. Free markets work, and policymakers should heed the lessons from these tax climate rankings. Originally published at AIER. Don’t miss episode 70 of the Let People Prosper Show podcast with guest Pete Sepp, president of the National Taxpayers Union.
We discuss the key issues facing AI, technology, and many others. While we recorded this before Biden’s latest executive order regulating AI, we hit on many reasons why we should reject this approach. I am discouraged by President Biden’s new executive order that aims to “harness” artificial intelligence. Pete and I discuss:
Full show notes here. |
Vance Ginn, Ph.D.
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