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Alan Reynolds

Senior Fellow at the Cato Institute. Former Director of Economic Research at the Hudson Institute, former Vice President and Chief Economist at the First National Bank of Chicago. In 1996, Reynolds served as research director with the National Commission on Tax Reform and Economic Growth (the "Kemp Commission"), has advised the U.S. House of Representatives and Senate Committees, and has been published by the O.E.C.D. and numerous journals.


The terror of the Great Crash has been the failure to explain it. People were left with the feeling that massive economic contractions could occur at any moment, without warning, without cause. That fear has been exploited ever since as the major justification for virtually unlimited federal intervention in economic affairs.

Nov. 9, 1979 - from "What Do We Know About the Great Crash", in National Review
... we tax generosity within families -- even as we encourage people to deduct gifts to strangers.

May 1, 1997 - criticizing death taxes in "Death to Destructive Taxes -- Good Economics", in the Wall Street Journal
Critics of productivity statistics are right to be skeptical when comparing such figures over long periods of time, such as between the sixties and the nineties. They are also right that productivity figures for such undefinable categories as "services" or "manufacturing" are very crude and bound to mix things up. All of the best criticisms combined, however, cannot excuse the fashionable statistical nihilism of recent years, which often comes down to little more than picking the economic numbers you like and discarding all the rest.

Nov. 20, 1997 - from "Can the Old Measurements Gauge the New Economy?", published at IntellectualCapital.com
Experts of all ideological stipes seem to agree that charitable contributions are minuscule, almost insignificant. The way they make this point is to compare a very narrow definition of charitable contributions to a very broad definition of the revenues of all nonprofit organizations. ... Fans of federal welfare programs use these statistics to argue that charity is too puny to replace any government social spending. Conservative tax reformers find the same figures useful when arguing that ending charitable tax deductions would not matter. The ratio of gifts to the revenues of nonprofit organizations is therefore a handy polemical device. But is a meaningless number. [Reynolds continues by showing that non-profit 'revenue' is substantially discounted through various practices, and non-profit 'total income' substantially inflated by including Chambers of Commerce, the AFL-CIO, National Football League, and many other such organizations not involved in support of the underprivileged.]

from "The Myth of the Non-Profit Sector", published in Chronicle of Philanthropy
The statistical gamesmanship used to denigrate the importance of private charities pales in comparison to the artful devices by which the charitable nature of politics is exaggerated. ... myths seem to be contagious. ... the whole idea that private charities will never have enough money to replicate the welfare state assumes (1) that the welfare state works; (2) that reducing federal spending would not leave taxpayers with more money to donate; (3) that private charities cannot do more for less; and (4) that just as many people would demand private assistance as the number who now believe themselves entitled to public assistance. The terms 'charities' and 'nonprofits' are not interchangeable. Lumping philanthropy together with tax-exempt medical, educational and other businesses and calling that a 'sector' has resulted in widespread confusion. To say that contributions are small relative to all the money taken in by nonprofit institutions, or relative to all public spending on pensions and education, is no more enlightening than to say that contributions are small relative to the Defense budget, or the global sales of the Fortune 500.

from "The Myth of the Non-Profit Sector", published in Chronicle of Philanthropy
In January 1980, South Korea was persuaded (bribed) to adopt the usual IMF 'stabilization package' -- devaluing the currency and imposing punitive income tax rates (as high as 80%). As a World Bank book on 'The East Asian Miracle' later acknowledged, 'Things got worse...' The strong medicine was partly responsible for the economy's worsening symptoms: the devaluation spurred inflation, while tighter aggregate demand policies [i.e., higher tax rates] exacerbated the drop in output.

Mar. 17, 1998 - from "Tax Cuts Will Restore the Tigers' Roar", published in The Wall Street Journal
In their classic Monetary History of the U.S., Milton Friedman and Anna Schwartz noted that, 'there is no doubt that desire to curb the stock market boom was a major if not dominating factor in Federal Reserve actions during 1928 and 1929.' Between January 1928 and August 1929, the discount rate was increased four times, to 6% from 3.5%. The rate on call money hit 20%. With a lot of help from the Smoot-Hawley tariff (which imploded world trade), the Fed clearly set out to deflate U.S. stock prices in 1929. Modern bubble theorists' [those who postulate that the robust late-90's economy is a bubble about to burst] complaint with what the Fed did in 1928-29 is to wish the Fed had acted with greater alacrity and sadism.

May 22, 1998