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Sizing Up the Size of Government Measuring Economic Freedom Closer to Home

Two essays by Bridwell Institute researchers examine economic freedom from different perspectives. Ryan Murphy’s “Sizing Up the Size of Government” looks at U.S. public spending, taxation, social safety nets and COVID-19 policies through the lens of the Economic Freedom of the World report. Dean Stansel’s “Measuring Economic Freedom Closer to Home” presents an updated version of his index for U.S. metropolitan areas, finding wide gaps among cities in factors that help determine how fast incomes, jobs and populations grow.

The Economic System for All of Us

A Bridwell Institute study finds that after-tax real earnings from work – or, more simply, households’ living standards – are highest in states with the greatest economic freedom for Whites, Hispanics, Blacks and Asian-Americans. The data look across five education levels and 70 occupations. When it comes to the occupations, for example, earnings by racial and ethnic groups were $13,000 to $18,000 higher in the 10 states with the highest economic freedom than in the 10 least-free states.

Not An End… A New Beginning: Introducing the Bridwell Institute 

By W. Michael Cox and Richard Alm

The O’Neil Center changed its name to the Bridwell Institute for Economic Freedom at the beginning of this academic year – thus the “new beginning” in the title. This final O’Neil Center 2019-20 annual report recaps a year that began with business as usual and ended with COVID-19's remote classes and programs. The highlights include a conference on how history shaped today’s economy, two new books by O’Neil Center authors and Texas Economic Forums on energy and the pandemic’s toll on the state. 

Big Business: Disruptive Technologies, Market Structure and Competition in the 21st Century

By W. Michael Cox and Richard Alm

The essay focuses on how digital technologies are creating a business ecosystem characterized by high fixed costs and low marginal costs. This cost revolution leads to bigger companies and more concentrated industries. The swing towards big business raises questions about pricing power, consumer welfare, profits, mergers and acquisitions, investing, corporate governance and the pace of innovation. For the economy, this new reality presents challenges for the established views on growth, inflation, job creation, inequality and antitrust policy.

Texico: The Texas-Mexico Economy and its Uncertain Future

By W. Michael Cox and Richard Alm

The essay looks at Texico, the increasingly integrated economy astride the Rio Grande. Integration began in earnest just a quarter century ago, when the right economic and policy factors finally coincided. Since then, the two economies have built myriad new connections for goods, services investment and knowledge transfers. Despite increasing cross-border business, Texico hasn’t realized the expected convergence between north and south, largely due to Mexico’s persistent corruption, cronyism and drug violence.

The Imagination Age - America's Fourth Wave of Economic Progress

By W. Michael Cox and Richard Alm

The essay contends the U.S. economy entered the Imagination Age. Machines replacing muscle power ended the Agricultural Age.  Cheap power brought down the Industrial Age. Computers, software and the Internet made data a commodity, finishing off the Information Age. In this fourth age, technology is abundant, and our imaginations will determine the pace of progress. Old jobs will fade, and new ones will employ our most human attributes, including imagination and creativity.  

Onward and Upward! Bet on Capitalism--It Works

By W. Michael Cox and Richard Alm

The essay revisits a question that dates back to Thomas Malthus: Can the economy produce enough to raise living standards for a growing population? Malthus declared it couldn’t, predicting widespread poverty, but the long-run behavior of real prices for metals, commodities and consumer goods refutes the pessimists’ view of growing scarcity. The evidence points to an opposing conclusion—the optimistic view of increasing abundance, thanks to the almost limitless potential of human ingenuity operating in a capitalist system.

The Wealth of Cities: Pursuing Economic Freedom Closer to Home

By W. Michael Cox and Richard Alm

The essay reports on research that links economic freedom to the success of U.S. urban economies. Among the 100 largest metropolitan areas, more economic freedom is associated with faster GDP growth, higher job creation, lower unemployment, higher wages, lower living costs and less inequality. However, cities routinely intervene in the local economy with heavy-handed regulations that inhibit business activity and protect existing enterprises.

Living Above Our Means

By W. Michael Cox and Richard Alm

The essay takes an innovative look at economic freedom, seeing it as a form of capital stock that takes a long time to build and depreciates if not properly maintained. Economic freedom is essential to building physical capital, a key to the gap between rich and poor countries. About 90 countries are living below their means and can look forward to rising consumption in the future. With its recent declines in economic freedom, the United States is one of just four countries living above their means. 

Living Above Our Means

By W. Michael Cox and Richard Alm

The essay takes an innovative look at economic freedom, seeing it as a form of capital stock that takes a long time to build and depreciates if not properly maintained. Economic freedom is essential to building physical capital, a key to the gap between rich and poor countries. About 90 countries are living below their means and can look forward to rising consumption in the future. With its recent declines in economic freedom, the United States is one of just four countries living above their means. 

Which Way, America? Economic Freedom or the Road to Serfdom

By W. Michael Cox and Richard Alm

The essay presents the stark choice facing the United States: Greater economic freedom or bigger government, the former bringing prosperity and the latter economic decline. Market incentives encourage people to work, save, invest, innovate, start businesses and take risks. These good choices grow GDP. The essay warns that high taxes, rising entitlements and excess regulation foster negative incentives that sap productive activity, leading to lower living standards.

Looking for the New New World

By W. Michael Cox and Richard Alm

The essay examined migration within the United States—people voting with their feet—to determine why Americans have been leaving places like California and New York and moving to places like Texas.

It identified six significant drivers of net migration among states—marginal income tax rates, the power of unions, the rate of increases in state spending, housing prices, the quality of schools and climate.

The Ascension of DFW: How to Keep a Good Thing Going

By W. Michael Cox and Richard Alm

The O’Neil Center’s first annual report essay focused on the importance of economic freedom and globalization in making the Dallas-Fort Worth region one of the nation’s fastest-growing major metropolitan area. An unrecognized strength in global markets has been DFW’s prowess in the types of services that are readily exported—information, finance, and professional and business services.