Europe Needs a Tax Cut

This has to have been the most unappreciated economic expansion in history. The U.S. economy has now grown at an average rate of more than 4 per cent for 16 quarters—already one of the two or three longest and strongest expansions in a century. Since early 1981, stock prices have doubled, interest rates have been cut in half, inflation has been slashed from 13 per cent to 2 per cent, private savings have increased by more than $200 billion a year, real hourly compensation is up 5 per cent, and after-tax income per capita is up 10 per cent. There are more than ten million new jobs.

For four years, economists and journalists have offered numerous, increasingly creative theories about why all this could not possibly happen. The latest fashion is to raise ominous threats about trade deficits and capital inflows. The rallying cry is “competitiveness”—a slogan that is powerful precisely because nobody even tries to explain what it means.

About the Author

Alan Reynolds

Alan Reynolds, National Review’s economics editor from 1972 to 1976, is a senior fellow at the Cato Institute and the author of Income and Wealth.

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This has to have been the most unappreciated economic expansion in history. The U.S. economy has now grown at an average rate of more than 4 per cent for 16 quarters—already one of the two or three longest and strongest expansions in a century. Since early 1981, stock prices have doubled, interest rates have been cut in half, inflation has been slashed from 13 per cent to 2 per cent, private savings have increased by more than $200 billion a year, real hourly compensation is up 5 per cent, and after-tax income per capita is up 10 per cent. There are more than ten million new jobs.

For four years, economists and journalists have offered numerous, increasingly creative theories about why all this could not possibly happen. The latest fashion is to raise ominous threats about trade deficits and capital inflows. The rallying cry is “competitiveness”—a slogan that is powerful precisely because nobody even tries to explain what it means.