- There is much the government can do to strengthen other institutions that help to fuel our economy by simply getting out of the way. Tweet This
- With a relatively low tax-and-spend burden, no individual income tax, and sensible regulation, the Texas model provides an institutional framework supporting families. Tweet This
“But if we are honest with ourselves, we’ll admit that what too many fathers are also missing—missing from too many lives and too many homes. They have abandoned their responsibilities, acting like boys instead of men. And the foundations of our families are weaker because of it.”
Though these words were spoken just 10 years ago, they seem dated in our world of enforced tolerance. The speaker was former President Barack Obama, then a U.S. senator running for the office. He spoke on Father’s Day before the Apostolic Church of God in Chicago, where he also explained the consequences of family breakdown:
We know that more than half of all black children live in single-parent households, a number that has doubled — doubled — since we were children. We know the statistics — that children who grow up without a father are five times more likely to live in poverty and commit crime; nine times more likely to drop out of schools, and 20 times more likely to end up in prison. They are more likely to have behavioral problems, or run away from home or become teenage parents themselves. And the foundations of our community are weaker because of it.
What Obama and economists like me realize is that you can’t separate prosperity—or the lack of it— from family structure. Why? Because institutions matter and our most fundamental institution is the family.
While the numbers have changed some in the decade since Obama’s speech, they aren’t much better. According to the Pew Research Center, the share of children living with an unmarried parent has more than doubled since 1968, reaching 32% of all U.S. children in 2017.
Another disturbing trend is the number of children living with cohabitating parents—a household that lacks the stability and permanency, however imperfect, of marriage. About 7% of kids live with cohabitating parents, a percentage that has doubled in the last 20 years. As the Institute for Family Studies notes, this amounts to about three million children living with unmarried parents.
These trends reflect a decline in marriage. Pew says that about half of all U.S. adults are married, and though that number has been relatively stable in recent years, it’s down significantly from the high of 72% in 1960.
Institutions, like the family, provide the structure for society and protection from the caprices of life. There are big institutions—things like economic systems such as capitalism and socialism—and there are smaller, though not less important, institutions of civil society, like churches, communities, and charities.
People build their lives with a collection of such institutions and leave a legacy to their children and grandchildren. When institutions are strong and inclusive—intact and supportive families, solid civil society, and economic freedom—people prosper. When institutions are weak and extractive—broken families, poor civil society and government dependent—people suffer.
The problem is that for too long, many of our nation’s leaders have attempted to use the power of federal bureaucracies to address these disturbing trends. But that doesn’t work because most often government is a big part the problem. Federal institutions have become far more extractive over time. For example, the Fraser Institute ranks the U.S. the 11th most economically free nation, after ranking it the fifth most free in 2007. This weaker economic position was from years of rising government spending, higher taxes, and stifling regulations. The result was the slowest economic recovery since WWII.
With so many people becoming more dependent on government, Chicago economist Casey Mulligan called the last national recession the “Redistribution Recession,” with years of continued dependency thereafter. Clearly, the institutional framework in D.C. has long not worked for many families as government weakened our institutions.
What does work, as we have seen in Texas, is the exact opposite. In fact, there is much the government can do to strengthen other institutions that help to fuel our economy by simply getting out of the way.
Texas’ economic success has often been called the “Texas miracle.” But calling it a miracle implies that success came by coincidence (or providence) and will be short-lived. The Texas miracle is neither. It is, instead, the result of the consistent application of the principles on which this country was founded, and which we at the Texas Public Policy Foundation like to call the Texas Model.
Texas keeps taxes and regulations relatively low, which allows businesses to prosper. In fact, the Fraser Institute’s measure of economic freedom for the states ranks Texas the second most economically free, based on relatively low levels of government spending, taxation, and labor market regulation—a stark contrast with the entire nation. This includes having the 14th lowest state-local spending per capita that contributes to the fifth least state-local tax burden nationwide and the 13th best business tax climate, according to the Tax Foundation.
When employers prosper, they hire more people and raise wages. This pro-growth climate also attracts new entrepreneurs to the state. Texas has been America’s jobs engine, creating one of every four new civilian jobs added nationwide in the last decade.
And jobs strengthen the institution of the family in many ways, including enabling self-sufficiency and supporting civil society. For example, the Family Prosperity Institute uses a number of economic and family-related measures to create an index of family prosperity. Texas ranks seventh best in the overall index in 2018, improving from a ranking of 11th in 2012. This is a function of ranking in the top 20 in sub-indices of the economy (fourth), demographics (second), family health (seventh), and family structure (17th), while not doing as well in family self-sufficiency (28th) and family culture (33rd).
With first being the best, Texas is also fourth in fertility (75.5%), 14th in the marriage rate (0.81%), 18thin the divorce rate (0.34%), and 19th in unwed motherhood (38.9%), while ranking 26th in the nation in married-couple households (67.9%).
While there’s room for improvement in Texas’ family prosperity, as in most states, many of these family stability issues are consequences of policy at all levels of government along with demographic factors that are unlikely solved by policy—and potentially made worse. In fact, the improving family prosperity in Texas as the economy continues robust growth over time is evidence that a limited government philosophy supports family prosperity.
But it also works the other way around. Strong families strengthen the economy. As the Sutherland Institute notes,
Marriage protects children from poverty and motivates employees to work harder, longer and smarter to support and improve the economic situation of their family...Research has found that if rates of married parenthood were the same today as they were in 1980, median income for families with children would be 44 percent greater.
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 families through more job growth, higher wages, lower income inequality, and less poverty.
The Trump administration has taken steps toward following the Texas Model, and the positive results are numerous. But there’s more work to do to let families prosper in Texas and beyond by reducing their dependence on government.
In Texas, this means reining in government spending, reducing welfare for individuals and businesses, eliminating the business margins tax, cutting property taxes in nearly half, and getting rid of government barriers to opportunity throughout society (for more on this, see the TPPF's Legislator’s Guide to the Issues).
These measures should give the federal government a playbook within which to provide an inclusive institutional framework for families to flourish. As we have seen in Texas, by limiting government to securing liberty, the justice system, and a few public goods that include assistance to only the neediest among us, the economy can grow and families can become more self-reliant and better able to create a vibrant civil society.
Vance Ginn, Ph.D., is director of the Center for Economic Prosperity and senior economist at the Texas Public Policy Foundation.