Texas Isn’t the HQ of Capitalism Yet — But It Could Be

Originally published on Substack. 

Texas Governor Greg Abbott recently posted on X that “Texas is now the unrivaled HQ for capitalism in the U.S.”

He’s right that capitalism has lifted more people out of poverty than any government program ever could. But claiming that Texas is its headquarters misses an uncomfortable truth: our state is drifting away from the principles that made it great.

I responded:
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“Texas can’t claim to be the HQ of capitalism while excessive spending and crony corporatism still run the show.”

And Texas State Representative Brian Harrison agreed, adding that “Texas leaders obviously do not know what the word ‘capitalism’ means” because they’ve been doubling down on redistribution and corporate handouts in recent budgets.

He’s not wrong. Texas politicians talk about free enterprise while practicing a form of crime corporatism—where profits depend on proximity to power rather than productivity.

Capitalism vs. Cronyism

True capitalism is rooted in voluntary exchange, competition, innovation, and personal responsibility. It’s the system that rewards value creation and drives economic progress.

Cronyism, on the other hand, uses the language of markets to justify government favoritism. It’s when politicians decide which firms get subsidies, abatements, or tax breaks—and which don’t.

Look around Texas today. Programs like the Texas Enterprise Fund and local Chapter 313 and 403 property tax abatements transfer taxpayer money to politically favored corporations under the banner of “economic development.” In practice, they distort competition and punish smaller, homegrown businesses that play by the rules.
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That’s not capitalism. It’s the same interventionist logic that policymakers in Washington, California, and Brussels use when they subsidize electric vehicles, chip manufacturing, or “green energy.” The label may sound different, but the economics are identical: government picks winners and losers, and taxpayers pick up the tab.

​The Spending Problem
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This fiscal drift is made worse by runaway spending. Texas’s state budget has grown far faster than population growth plus inflation over much of the past two decades.

Source: https://www.vanceginn.com/letpeopleprosper/responsible-state-budgets-across-the-us

When government grows faster than the economy that funds it, the burden inevitably shifts to taxpayers—either through higher taxes, higher debt, or slower private-sector growth.

Economists call this the crowding-out effect: as government consumes more resources, fewer remain available for private investment and entrepreneurship. Over time, that erodes the very dynamism that once made Texas stand apart.

If current trends continue, Texas risks following the same path as states like California—a place that once embodied opportunity but lost its competitive edge to regulation, spending excess, and political patronage.

The Real Texas Model

The Texas Model that once set the standard nationally wasn’t built on subsidies or bureaucratic growth. It was built on limited government, low taxes, and economic freedom.

Those principles attracted millions of families, entrepreneurs, and employers seeking a fair chance—not a government favor. But when state leaders chase headlines through new incentives and “economic development” packages, they signal to the market that prosperity comes from politics, not productivity.

If Texas truly wants to be the “HQ of capitalism,” it must return to what works:

• End corporate welfare and targeted subsidies. Let all firms compete on merit.
• Adopt strict spending limits tied to less than population growth plus inflation.
• Cut taxes. Broad-based relief beats narrow giveaways every time.
• Streamline regulation. Free markets flourish when policymakers trust people more than processes.

Learning from History

Every time governments try to manage capitalism, they eventually manage decline. We’ve seen it before. In the 1970s, Britain’s industrial policy was supposed to “save jobs”; it nearly bankrupted the nation. Japan’s “targeted development” strategy produced short-term gains but long-term stagnation. And California’s subsidies haven’t stopped its outmigration—they’ve accelerated it.

Texas doesn’t need to repeat those mistakes. The state already has the most important ingredients for success: a strong entrepreneurial culture, a diverse economy, and people who value freedom. What’s possibly missing is the discipline to govern by principle instead of politics.

The Way Forward

Capitalism isn’t about handouts or headquarters—it’s about freedom, risk, and reward. If Texas wants to lead the nation, it must restore the fiscal and moral foundations that made it exceptional.

That means less central planning, fewer carveouts, and a renewed focus on letting people keep more of what they earn.

Prosperity doesn’t come from the government’s spending pen. It comes from the creativity, hard work, and responsibility of Texans themselves.
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That’s how we make Texas truly free again. That’s how we let people prosper!