262. 6 Lessons to Let People Prosper | This Week's Economy Ep. 66
Insights on State Job Openings, School Choice, and Federal Fiscal Challenges
Welcome to Episode 66 of "This Week's Economy”! Watch my podcast here or find it on Apple Podcast, Spotify, or your favorite podcast platform.
Today, we're diving into key national and state economic issues, including the latest insights on state job openings, the CBO report on the dire federal fiscal situation, Louisiana passes school choice, and much more.
1. State-Level Job Openings and Labor Turnover Survey (JOLTS) Report Overview:
The Bureau of Labor Statistics State JOLTS for April shows job opening rates decreased in 12 states and increased in 3. Hire rates rose in 4 states but fell in 2. Total separations increased in 3 states and decreased in 2.
Texas saw minimal job openings and hire changes, reflecting a stable labor market. Florida had a notable decrease in layoffs and discharges, highlighting economic resilience.
Red states like TX and FL have led job growth since Feb 2020, showing less government intervention supports economic prosperity.
All states should adopt pro-growth policies: sustainable budgeting, tax relief, and fewer barriers to work. Read more (charts here)
2. Louisiana Governor Landry Signs School Choice Bill:
After 4 years and 12 separate bills and legislative resolutions, the Louisiana Legislature has finally passed a universal education savings account program to expand K-12 educational options for Louisiana students and their families, the 12th such program in America.
The program is named after Louisiana’s official state reptile: the “Giving All True Opportunity to Rise” (GATOR) Scholarship Program.
The program is scheduled to be universal over three years, so it is not perfect, but it is better than most states, including Texas and Tennessee, that haven’t passed school choice yet.
Great work by the Pelican Institute! Read more.
3. Latest CBO Update to the Budget and Economic Outlook, 2024-2034:
The latest budget update by the Congressional Budget Office paints a worse fiscal picture for the federal government.
This budget outlook shows problems of slow economic growth and excessive government spending, not a revenue problem that continues to reach record highs.
Deficits could be $3 trillion per year, and the national debt could be up to $51 trillion by 2034.
A simple way to correct this issue is by supporting more economic growth through pro-growth policies, including less spending, taxes, and regulations. Read more.
4. Michigan’s Budget and Economic Ranking:
The benefits of sustainable budgeting extend beyond fiscal stability. By reducing unnecessary spending and lowering taxes, Michigan can increase disposable income for families, encourage consumer spending, and boost total economic activity.
The Fraser Institute publishes the Economic Freedom of North America index, which evaluates how states' policies support economic freedom. The index considers three main areas: government spending, taxes, and labor market regulations.
Higher scores indicate greater economic freedom. In the latest report, Michigan ranks 31st in economic freedom among U.S. states. This ranking reflects areas where Michigan lags in supporting economic freedom and highlights opportunities for policy improvements.
By addressing its economic and fiscal policy weaknesses, Michigan can improve its rankings and create a more robust and dynamic economy. Sustainable budgeting, tax reform and regulatory efficiency are key to unlocking Michigan’s economic potential. This can lead to more jobs, higher wages and improved living standards for all Michiganders.
Read articles on sustainable budgeting and economic freedom ranking.
5. Texas’ STAAR 3-8 Grade Test Results Prove Need for Universal School Choice:
Texas students' math and science scores are plummeting.
Democrats target school choice to flip TX House seats, ignoring evidence that school choice boosts performance.
Why not focus on fixing failing schools instead of adding taxpayer money?
Universal education savings accounts empower parents. Read more.
6. Kansas Passes bad STAR Bond Bill but Provides Tax Relief:
I’ve recently been working with the Kansas Policy Institute to kill the STAR Bond proposal that would provide $3 billion in debt to potentially fund a Kansas City Chiefs stadium in Kansas instead of Missouri and possibly a new Royals stadium (listen to my radio interview on The John Whitmer Show).
This corporate welfare is a bad deal. Unfortunately, the Legislature passed it in their special session.
However, they also passed some good tax relief of more than $400 million by reducing the income tax brackets from three to two and other measures. Will Governor Kelly sign it?
This continues to increase the number of states that have passed tax cuts over the last few years to get flat income taxes until they reach zero, like 7 other states. Read more.
Media Hits and Events:
📃 Article on Not Letting a Crisis Go to Waste in 2025: My latest article at the American Institute for Economic Research discusses the upcoming federal fiscal storm in 2025 and what should be done about it. Read the article.
Commentary on FDIC’s toxic culture that raises an opportunity to address its toxic government schemes in The Hill.
I attended the James Madison Institute’s Technology and Innovation Summit in Miami, Florida: It was a great event this week with valuable discussion and insights on the next steps in ensuring parents can parent their kids online, the government doesn’t keep AI from helping the next revolution, and improving education for people across the country.
🎤 Interviews:
Podcast with Newt Gingrich: Listen to our great discussion on the economy, Trump tax cuts, inflation, sustainable budgeting, FDIC, bank regulations, and more.
Let People Prosper Show
Don't miss the latest informative Let People Prosper Show Episode 101 with Dr. Robert Gmeiner at the link below.
On Monday, Episode 102 of the Let People Prosper Show is with Dr. Veronique de Rugy, George Gibbs Chair in Political Economy and Senior Research Fellow at the Mercatus Center at George Mason University. We discuss fiscal policy, national conservatism, and the need to treat people like people.
Quote of the Week
Bible Verse of the Week
Conclusion
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How Red States Are Leading in Job Growth
Behind the Paywall: Detailed Analysis and Insights
How Policy Uncertainty Drives Economic Volatility in an Election Year - Speech to Texas Aggregates and Concrete Association
It's a pleasure to speak with the Texas Aggregates and Concrete Association again and enjoy the great resort here with my wife and three young kids. While aggregates and concrete may not always be in the spotlight, they are the bedrock of our infrastructure, forming the foundation upon which we build our homes, businesses, and communities.
Reflecting on my journey, I realize how essential the right direction and strong institutions are in shaping our paths. Much like the solid foundation of concrete, institutions give us the stability to build and grow. Like the economy, my life has been a series of peaks and troughs. In my younger years, I grew up in a low-income, single-mother household in South Houston as my dad had epilepsy, and they divorced when I was five years old. I went to private school from K-2 grades, public school from 3-6 grades, and home school from 7-12. Unlike many of you, I took many risks during my teenage years and began playing drums in a band called "Sindrome," living the rockstar life. But a near-fatal car accident in 2002 was my wake-up call, one of several but the one that turned me toward a brighter path. Through this experience, a month in bed with many bumps and bruises, and a lot of prayer, I found my purpose: to help others through my calling to let people prosper.
We find ourselves at a pivotal point in our country and in Texas. The recent elections tell us that there is a clear call for change in the Lone Star State. The upcoming November elections will be another opportunity for the country to steer towards a path of prosperity or continue down a troubling road. As an optimist, I believe in our potential, but I also recognize our country and state's many economic, political, and cultural issues.
Policy Uncertainty and Economic Volatility
At the national level, we face several economic challenges. The Biden administration has been keen on infrastructure spending, which includes the $1.2 trillion Infrastructure Investment and Jobs Act. While this aims to rejuvenate our infrastructure, it also raises concerns about efficiency and the role of government in these projects, and the fact that we are running deficits higher than that per year with the national debt at nearly $35 trillion and net interest payments of $1 trillion exceeding national defense expenditures of about $860 billion. Excessive government spending, increased regulation, and interventionist policies often lead to inefficiencies and distortions in the market. Milton Friedman, my favorite economist, warned about the dangers of heavy government involvement, advocating instead for free-market solutions that empower individuals and businesses.
Election years heighten policy uncertainty, which can drive economic volatility. Businesses and investors become cautious, waiting to see which policies will prevail. This hesitation can slow economic activity, affecting everything from job creation to investment in new projects. For the aggregates and concrete industry, this means potential delays in infrastructure projects and fluctuations in demand.
Milton Friedman once said, "If you put the federal government in charge of the Sahara Desert, in five years, there’d be a shortage of sand." This sharp but insightful remark underscores the inefficiency that often accompanies government intervention. In his view, infrastructure projects should be managed by private entities with a direct stake in the outcome and can respond more agilely to changes and needs.
Here in Texas, we are not immune to these challenges. Our state is known for its robust economy and low taxes, but we're grappling with excessive government spending and high property taxes. The Texas Comptroller's report highlights how our spending on transportation is around $10 billion annually. While infrastructure is crucial, we must be mindful of how these funds are used to ensure they generate real value for taxpayers.
Weak Labor Market Amid Headlines of Strength
Despite headlines showing strength, the U.S. labor market reveals underlying weaknesses. Nearly half of Americans think we are in a recession, reflecting a disconnect between reported statistics and personal experiences. Real average weekly earnings have declined by nearly 4% since January 2021, squeezing household budgets and diminishing purchasing power. The labor force participation rate remains low at 62.5%, significantly below the February 2020 level. If participation were the same as it was then, the unemployment rate would be closer to 6% rather than the reported 4% today.
Texas, however, leads in job gains, which is a testament to our state's resilient economy. Yet, we must acknowledge that the 25% increase in the two-year state budget last year was excessive. This surge in spending did not provide sufficient property tax relief, which is critical for maintaining economic vitality and keeping Texas attractive for businesses and residents alike. Moreover, we must prioritize universal school choice next year to ensure educational opportunities that meet diverse needs and drive future economic growth.
Election Year Volatility
During election years, the stakes are even higher. Uncertainty about future policies can cause volatility in markets and economic performance. For instance, debates over infrastructure funding, environmental regulations, and tax policies can create an unstable business environment. Companies may delay or cancel projects, affecting the demand for aggregates and concrete. This uncertainty trickles down, impacting jobs, investments, and overall economic health.
Aggregates and concrete are essential for the development and maintenance of our infrastructure. These materials for things like highways and homes are our physical landscape's backbone. However, it's crucial to approach their use smartly. We don't need to resort to industrial policies with high costs and trade-offs, burdening taxpayers. Instead of a top-down approach, which often fails due to bureaucratic inefficiencies, we should consider a bottom-up approach to transportation projects. This includes government projects, public-private partnerships, and private projects.
A significant portion of infrastructure could be managed through private toll roads. While my ideal vision leans heavily on privatization and tax cuts, I recognize that a balanced approach is more realistic in the current environment. Public-private partnerships can bring innovation and efficiency, reducing the burden on taxpayers while still delivering essential infrastructure.
Let me share an example from my work. My research finds that private toll roads can often be built faster and cheaper than public projects. Private companies are directly incentivized to minimize costs and maximize efficiency. For instance, the LBJ Express project in Dallas, a public-private partnership, was completed ahead of schedule and under budget, demonstrating the potential benefits of such collaborations. There is also a need to move to design-build for projects in Texas rather than today's more costly and time-consuming design-bid-build approach.
Additionally, Texas is experiencing significant population growth, with more people moving to the state, increasing the demand for our infrastructure. The Texas Department of Transportation (TxDOT) is investing in expanding highways and improving ports to accommodate this growth. Projects like the $7.5 billion North Houston Highway Improvement Project aim to address these demands. However, we must ensure that these investments are managed efficiently and effectively.
Role of Institutions and Central Planning
Another key aspect is the role of institutions. Friedrich Hayek, in his book "The Road to Serfdom," cautioned against the overreach of central planning. He emphasized that central planning often leads to inefficiencies and a loss of individual freedoms. His insights are particularly relevant today as we navigate the complexities of modern infrastructure development.
To truly flourish, Texas needs to embrace more free-market capitalism and resist the creeping influence of socialism in our economy. This applies to transportation and beyond. By focusing on the efficient use of resources, reducing regulatory burdens, and fostering competition, we can build a more prosperous future. The bottom-up approach not only ensures better utilization of resources but also empowers local communities to take charge of their development, aligning projects more closely with the actual needs and priorities of the people.
Consider the example of toll roads in other states. Using private toll roads in Virginia has significantly improved traffic flow and reduced congestion in previously bottleneck areas. This model can be replicated in Texas, where traffic congestion is growing, especially in urban areas. By allowing private companies to manage and maintain these roads, we can ensure they are kept in optimal condition without continuously draining public funds.
Furthermore, private toll roads can be a source of innovation. Companies can introduce advanced technologies for traffic management and toll collection, making the entire system more efficient. For example, using electronic toll collection systems in Florida has greatly reduced vehicles' time at toll booths, enhancing the overall travel experience.
However, this doesn't mean we should eliminate public involvement in infrastructure projects. There are instances where government intervention is necessary, especially in projects that may not be immediately profitable but are crucial for public access and economic activity. This is where public-private partnerships come into play, allowing us to leverage the strengths of both sectors.
The government should act as a facilitator rather than a direct manager of projects. By setting clear regulations and standards, it can ensure that private companies operate fairly and efficiently while also protecting the interests of the public. This approach can help us avoid the pitfalls of excessive government control while still reaping the benefits of private sector efficiency.
Paul Krugman and other progressives might argue that significant government intervention is necessary to address market failures and ensure equitable outcomes. They believe that without government oversight, critical infrastructure could suffer from underinvestment, and social inequalities could worsen. While these points are worth considering, history has shown us that excessive government control often leads to inefficiencies, higher costs, and reduced innovation.
Learning from Failures and Future Outlook
My journey from poverty to rockstar to entrepreneurial economist taught me the value of strong institutions and the importance of aligning personal purpose with societal needs. This principle applies to our infrastructure as well. Just as a solid foundation is critical for a stable building, a robust institutional framework is essential for a thriving economy. We must ensure that our policies and investments in infrastructure reflect this understanding.
As we look toward the future, we must remain vigilant against the encroachment of socialist policies that threaten to undermine the free-market principles that have made Texas a beacon of prosperity. Instead, we should champion policies that promote individual liberty, economic freedom, and responsible stewardship of resources.
Failure provides us with valuable lessons, and too often, people want to mitigate this by expanding government intervention, which can be detrimental to our learning and growth.
We are at a critical juncture in our state's history. The recent elections have shown us that Texans are ready for a change. The upcoming November elections present another opportunity to reaffirm our commitment to the principles that have made Texas great. While I am optimistic about our future, we must address the economic, political, and cultural challenges that threaten our way of life.
Election Year Volatility and Policy Uncertainty
One of the most pressing issues is the rise of big government. Across the political spectrum, there is a growing tendency to rely on government intervention to solve problems. This trend is particularly concerning in Texas, where we have traditionally prided ourselves on independence and self-reliance. Many of you might be demanding the government give you handouts or reap the benefits of federal, state, or local spending, but all this comes from taxpayers' pockets. We must try a different approach.
Election year volatility adds another layer of complexity. Businesses and investors are left guessing about the future as policies swing with the political tide. This uncertainty can stall projects, delay investments, and increase costs. The aggregates and concrete industry, heavily reliant on long-term planning and stability, feels these effects acutely.
Conclusion
In conclusion, aggregates and concrete are vital for Texas's growth, but their smart use is paramount. Let's leverage the strengths of the free market, prioritize efficiency, and ensure that our infrastructure investments truly benefit Texans. As we progress, I am eager to collaborate with any of you on projects aligning with these principles. Together, we can build a stronger, more prosperous Texas.
For those interested in further discussions on economic policy and free-market solutions, I invite you to check out my podcast, the Let People Prosper Show on all major platforms, and my Substack newsletter at vanceginn.substack.com, where I delve into these topics in greater detail. You can also visit my website, VanceGinn.com, for more information and resources.
Thank you for your time and attention. Let's work together to build a future where smart infrastructure investment and strong institutions pave the way for a prosperous Texas.