Randall G Holcombe

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This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

Randall Holcombe ('Randy') was a Professor of Economics at Auburn University, in Alabama and then with Florida State Uni. For most of the time he worked for the tobacco industry as a paid mercenary lobbyist. He was an early member of the Cash for Comments Economists Network which was run for the Tobacco Institute by Professor Robert D. Tollison and professional lobbyist James Savarese with the help of Tollison's wife Anna and the staff from the Center for Study of Public Choice which was located on the grounds of George Mason University.

The Cash for Comment Economists Network eventually split up and most of the members transferred over to work for the tobacco industry under the cover of the Independent Institute with William F Shughart taking a leading role. Savarese and Tollison then appeared to have formalised their partnership, with Tollison and his wife becoming part of James Savarese & Associates.

 

HOW THE NETWORK WORKED

The Cash-for-Comments Economists' Network was run by Savarese through a partnership with Professor Robert D Tollison who used the staff and facilities of the Center for Study of Public Choice at George Mason University to prove cut-out and organisation services. They developed and maintained a network of Economics Professors with at least one on tap in virtually every US state. As one Professor transferred or dropped out (there was a regular turn-over) a new one would be recruited in that State. In all, about 130 university professors were involved in the period 1985-1995, and costs ran to $3 million/year at a time when professor's salaries were in the $30-40,000 pa range. An active network member at a State university could almost double his normal salary.

  The main focus of the group was to write commissioned op-ed articles on a subject determined by the Tobacco Institute. The draft article would then pass back through the network to TI staff, who were essentially public relations experts. Here they were 'improved' and refined; then sent to the Institute's outside lawyers for vetting. Modified articles then returned to the professor, who would then send them to a designated State newspaper as if they were his 'independent expert opinion'. The professors received a base amount for writing and bonuses for successfully planting the article on the newspaper. Some, but not all, received a small (eg.$1000) annual retainer.[2]]

  Published papers would also be copied by the professor and sent to his local Federal Representative and Senator (for a further bonus). Sometimes there were special commissions, but generally the work was writing op-eds and LTE's where they were paid just on results (varied from about $700 to $3000 over the years). Network members could also be called upon to provide witness services and promote the cigarette companies' political/economic line at local ordinance or State legislative hearings. An active professor of economics at a State University could almost double his salary with these activities and with some further appearances, for instance, speaking on the importance of cigarettes in economic terms at major economic conferences, etc.
      Cash for Comments Economists Network   &   Robert Tollison   &   James Savarese   &   Network Document Index

 

Documents & Timeline

His current online CV


1950 June 4 Born


1972 BS.BA. in Economics, University of Florida, Gainesville

He was given the Richard Mellon Scaife Foundation Fellowship for a year


1974: Master of Arts in Economics,


1975: Assistant Professor of Economics at Texas A&M University


1976: PhD at the Virginia Polytechnic University. Dissertation Chairman: James M. Buchanan


1977: Assistant Professor of Economics at Auburn University, Alabama


1977 Robert Tollison, Randall Holcombe, W Mark Crain and Thomas Deaton have published "Rational Choice and the Taxation of Sin," in the Journal of Public Economics, Vol. 8

The traditional literature on sumptuary taxation indicates that these taxes are the result of a majority of individuals imposing their moral code upon consumers of goods that are thought to be undesirable. Undoubtedly this explanation is not trivial, and accounts for the existence of the sumptuary taxes, the authors report. [3]

[This became widely quoted as an argument against 'regressive' excise taxes.]

1984 Oct A "revised Draft" of a joint paper by James Savarese and William Shughart "The Incidence of Taxes on Tobacco" in the files of RJ Reynolds Tobacco quotes the earlier Tollison/Holcome paper:

"Crain, Deaton, Holcombe, and Tollison (1977) suggest, however, that an individual could approve an excise tax on a good that he or she consumes. Their argument is that the tax-induced price rise may lower the cost to consumers of exercising moral restraint. For example, when an excise tax on alcohol raises the price of liquor, it is cheaper at the margin to reduce drinking. This allows the individual to consume more of other commodities, including goods such as "safe driving." Alternatively, Buchanan and Flowers (1980, p. 427) contend that because taxes an smoking are discriminatory, it is unlikely that they could be enacted were it not for the nonrevenue aspects. "

Their conclusion is that tobacco excises are economically regressive, which anyone who smokes could have told them in ten minutes. They are also medically 'progressive since higher prices cut down on the amount smoked. [4]

[This is one of those quick-and-dirty studies cobbled together by some quotable 'expert' in order to have something to say at some legislative or ordinance hearing.]

1985 June/1986 March-July The Cash for Comments Economists Network was commissioned by the Tobacco Institute to write economic opinion pieces opposing excise taxes on cigarettes in mid-year-1985. This propaganda requirment resurfaced as a major project for the economist in the peak of the Tobacco Industry's PR campaign against the Packwood tax plan (although the threat was obviously still a possibility until the end of 1986r).

The Tobacco institute (much later) put together a package of commissioned economics reports (see front section of document), followed by about thirty op-eds and composite pieces which were generated by the Tollison/Savarese Cash for Comments Economists Network in this 1985-86 time frame. It illustrates the propaganda value of this network -- and shows what it can accomplish in a very short time for just a few thousand dollars in academic bribes.

These op-eds attacking the Packwood tax plan were all published in local newspaper across the USA. (Copies needed to be sent in for payment to be made.) A few are from July 1985 and the rest appeared in local newspapers during March-July 1986. These spontaneous independent expressions of expert opinion all miraculously come from Professors of Economics attached to the Center for Study of Public Choice ...

Joseph M Jadlow, Oklahoma State Uni. (He had two op-eds in different papers.);   William C Mitchell Uni of Oregon, Eugene;   Lee G Anderson, Uni of Delaware;   John S Howe Uni of Kansas, Lawrence;   D. Allen Dalton, Boise State University;   Thomas F Pogue, Uni of Iowa, Iowa City (He had two.);   Scott Atkinson, Uni of Wyoming. (He had two in different papers.);   S. Charles Maurice, Texas A&M Uni;   Todd Sandler, Uni of Wyoming;   Michael A Crew, Rutgers Uni, Newark;   Robert B Ekelund Jr., Auburn Uni (He had two.) ;   Ann Harper-Fender, Gettysburg College;   Lee Alston, Williams College;   Paul L Menchik, Michigan State Uni;   Henry N Butler, Texas A&M Uni;   Burton A Abrams, Uni of Delaware;   Ryan C Amacher, Clemson Uni (He had two.);   Dominick T Armentano, Uni of Hartford;   Fred McChesney, Emory Uni;   and a think-tanker David Wilhelm (Citizens for Tax Justice);

Also short extract pieces and letters-to-the-editor from A James Heins, Uni of Illinois, Champaign-Urbana;   William J Hunter, Marquette Uni, Milwaukee;   Dennis E Logue, Dartmouth College;   William F Shughart, George Mason Uni;   Harold Hochman, Baruch College, City Uni of New York;

Also uncredited overviews in the Newport Daily News, the Times-Review in Texas, Herald PA, etc. which expresses the encapsulated wisdom of most of the above with the addition of Thomas Borcherding (Claremont Graduate School, Calif);   K. Celeste Gaspari, Uni of Vermont, Birmingham;   David N Laband, Uni of Maryland;   Dean Tipps (Service Employees Intl. Union);   Allen M Parkman, Uni of New Mexico, Alburquerque, NM;   Richard K Vedder, Ohio Uni, Athens;   Roger L Faith, Arizona State Uni, Tempe;   Lee Alston, Williams College Mass;   and William J Hunter, Marquette Uni, Wisc.; (Some sections were published in multiple papers). [5]
This was a massive amount of propaganda coverage for a payment of less than $1000 each to these Professors at that time.

 


1988: Transfered to Florida State University



1988 An excise study by Holcombe claimed to have...

... found that none of the traditional bases fit the actual structure. While excises at one level all generate revenue, he found that the levels of taxes on gasoline and on tobacco did not vary across states, removing credence in the use of the tax as an efficient revenue source. [6]

The fact that every state found gas and cigarette taxes a highly efficient source of revenue doesn't seem to have swayed his conclusions.

1988 Nov Robert Cook of the University of Richmond has sent his draft Discussant's Remarks to the Tobacco Institute for vetting. It has been prepared for presentation at the Southern Economic Association meeting, November 1988 to be held in San Antonio, Texas. He is actually critical of Holcombe's paper and its pro-tobacco assumptions:

Session: Political Economy of Excise Taxation
Excise Taxes in Theory and in Reality. Holcombe, Randall G.

This paper rejects the theory of public finance as it applies to excise taxation. The author suggests that in a representative democracy the theory of special interest groups is the "real" explanation for the incidence of excise taxes.

The theory of public finance is rejected on empirical grounds. The author argues - without empirical support - that the demand for gasoline and tobacco are inelastic. As a corollary the elasticity of demand should be constant across states.

I do not know why the elasticity of demand for tobacco in Alaska is correlated with the elasticity of demand in Florida, however the author asserts this is true. I suspect the demand for tobacco is a function of socio-economic factors that are not constant across states. Surely the demand for gasoline is a function of the availability of substitutes for private passenger vehicle transportation. [7]
[When presented, Holcombe's paper was actually called "Excise Taxes in Theory and Practice "

The original discussants were to be two old tobacco lags, Joseph Jadlow and Henry Butler. Robert Cook replaced Butler -- but they didn't ask him again. [8] [9] [10]


1988 Nov 20 Holcombe is still at Auburn University, and working with Robert Ekelund, Dwight Lee, Richard Wagner, Henry Butler and Joseph Jadlow at a Southern Economic Association meeting in San Antonio. The Tobacco Institute has vetted these papers and paid the economists to attend to attack the concept of excise taxes.

  • Randall Holcombe of Auburn University has presented "The Fiscal Politics of Excise Taxation" . [11]
  • Robert Ekelund later cited his paper extensively [while knowing full-well that it was a tobacco-funded stitch-up] Ekelund summed it up as saying:

    In an empirical study of whether the standard theoretical justifications for excise taxes — as sources of revenue, as user charges, or as sumptuary taxes -- explain the pattern of excises across states, Randall Holcombe (1988) found that none of the traditional bases fit the actual structure.

While excises at one level all generate revenue, Holcombe found that the levels of taxes on gasoline and on tobacco did not vary across states, removing credence in the use of the tax as an efficient revenue source. Further, he found the user charge explanation on tobacco excises — which would suggest higher taxes in metropolitan areas due to the supposed social costs of smoking -- to have only weak statistical support. [12]


1988 Nov 28 Debbie Schoonmaker at the Tobacco Institute writes to Savarese about Social Cost Research Papers .

Enclosed are drafts of the Wagner and Ekelund social cost papers.

Each has been reviewed and will not need further clearance provided the recommended changes are incorporated into the final versions of the papers.

The legal comments are fairly straight-forward. If you or the authors need an explanation or wish to discuss further, please call.

You'll also see that I've enclosed a copy of the California Health Department's "social cost" study. We can discuss this example in our "SWAT team" meeting.

She also attaches three lists of cash-for-comments speakers who have been selected to talk at various meetings of local economic associations they wish to influence [See earlier list]  :

[13]
These meetings are like a weekly boy's club, where everyone repeats the same mantras, and then they get to drink together for a while.

1988 Nov 29 Savarese bills the Tobacco Institute for:

Final third, book Review Project for Smoking and the State by Robert Tollison and Richard Wagner -- $20,000.00

[This would include payments made to all the network economists who wrote op-eds promoting the booklet.]

He also includes about $11,500 in further payments for the Tollison/Wagner media tours promoting the book, and also some $20,000 worth of professional and expenses claims for economist attending the Southern Economic Conference. Randall G Holcombe has billed them for professional services (approx 1/4 of $18,500) and for a further $630 in hotel and airfare expenses [14]


1989 Nov 13 Debbie Schoonmaker writes to her superiors at the Tobacco Institute about "Political Entry Barrier and Tax Incdence: The Political Economy of Sales and Excise Taxes," recently published in Public Finance . The authors are Robert Tollison, Gary Anderson and William Shughart -- three of their favourite cash-for-comments academics. Walter Woodson has ccd the document to the Regional VPs, Kurt Malgrem, George Minshew and 'BC' with the note: "This piece may be of interest to you and some of your more 'scholarly' associates." It is an article on the "regressive" nature of excise taxes. Debbie says:

This hypothesis may be useful in tax battles in Congress and the states. While The Tobacco Institute did not commission the piece, legal counsel advises that we may use the article should we wish to do so.

[15]

[Note that she needs to tell everyone when the TI didn't commission Tollison's articles. About half the reference articles cited were written by fellow cash-for-comments economists, including Holcombe.]


1989 Dec 14 Jim Savarese is listing the economists taking part in their new Excise Tax Op-Ed project.

I have attached the list of economists that we have contacted to participate in the new excise tax project. I have also listed the newspapers we plan to target and a package of the materials we are sending to the economists. We should start getting drafts of the op-eds around the first of the year.

Holcombe is back on the list for

FLORIDA:
Randy Holcombe

      Orlando Sentinal

[16]


1990 Jan At the beginning of 1990 he has made a complaint to Florida Senator Connie Mack about the FAA's use of an Aviation Trust Fund. We can presume this is tobacco related since this top-class copy ended up with the Tobacco Institute. [17]

In January 1990 he also wrote "The Tax Cost of Privatisation" which was published in the Southern Economic Journal.[18]


1990 Jan The newsletter of the National Center for Policy Analysis [A Dallas-based, Koch-funded, offshoot of the Atlas Foundation] is promoting a study on privatisation:

Randall G. Holcombe, 'The Tax Cost of Privatization" Southern Economic Journal, January 1990.

The article, "Effects of Tax Law" has been written by David R Henderson, a conservative economist and adjunct fellow at the Center for the Study of American Business [19]


1990 Mar /E He is now at Florida State University and has written Excise Taxes In Theory And In Reality The main table in the article gives Cigarette And Gasoline Excise Taxes By State in 1985.

In conclusion, there are many theoretical justifications for excise taxation. The tax structure is the product of the political process, however, and this paper finds evidence that special interests are more important in shaping the structure of excise taxation than the theoretical justifications suggested by economic theory.

[20]

[There is no mention that this was written for the tobacco industry.]


1991 Jan 10 A Louisiana state University biomedical study on T-cells acknowledges discussions with two other academics -- for some completely unfathomable reason !

The authors wish to thank Mr. Kevin Boykin for his technical assistance throughout this work and Dr Randy Holcombe for helpful discussions of these data. This work was supported by American Cancer Society grant #IM-568.

[21]

About the only useful discussion a T-cell researcher could have with Holcombe would be how to get tobacco industry funding for your next study.

1993 Jul 21 The Orlando Sentinal Story "Pros huddle to plot [Jeb] Bush's race for Goveror" reveals that Bill Kristolo (ex chief of staff to Dan Quayle, and associates of Governor Bob Martinez, were being funded by businessmen Phil Handy for a three-day confab to lever Niami developer, Jeb Bush, into the governor's office. One singled out for mention in the article was "Florida State University professor, Randy Holcombe, an advocate of budget caps." [22]

There are no 1993 documents carrying his name in the tobacco archives. He seems to have retired from the network.

1994 Mar /E Holcombe has written "The Politics of Selective Excise Taxation" and sent a copy along to Philip Morris. This is also the chapter in the book "Sin Taxes" for the Independent Institute, which is now fronting the network for the Tobacco Institute. [23]


1994 Oct 14 Holcombe has a chapter in a proposed book on "Sin Taxes" to be funded by the Tobacco Institute through the Independent Institute. The director and editor of the project is the cash-for-comments economist, William Shughart, and all the chapters are written by tobacco industry Cash for Comments Network Economists.

The Independent Institute would act as a front and promote the book. It would also arrange lectures and pubic presentations. With tongue held firmly in their cheek, they say:

"Sin Taxes" would be the culmination of a separate research project involving economics, law, political science, history, and other fields. The book's authors are selected as Research Fellows based on their track-record of outstauding tesearch in public policy employing research techniques of methodological individualism.

['methological individualism', presumably means techniques not used by any other economists ?]

They would be paid an honorarium on a performance basis....

"Sin Taxes" would be completed by a team of authors, who would report to, and work in conjunction with, the Independent Institute's Research Director, Dr Robert Higgs, who oversees the Institute's overall research program. [24]

[Higgs worked on the side as a TI cash-for-comments economist.]


1995 The Politics of Selective Excise Taxation: Randall G. Holcombe, Florida State University

Economic theory provides three clear rationales for selective excise taxation.

  1. An excise tax can be applied as a substitute for a user charge, as, for example, a gasoline tax earmarked for financing highway expenditures, or the federal excise tax on airline tickets earmarked for the aviation trust fund.
  2. Excise taxes can be part of an efficient tax structure if they are placed on goods with inelastic demands, following the Ramsey rule for allocating taxes among markets.
  3. An excise tax can be placed on goods whose consumption is considered to be undesirable; in this case, the tax can be viewed either as a penalty for consuming the good, as a tax on a negative externality associated with the good's consumption, or both.
These justifications for excise taxes can provide an omniscient and benevolent government with the guidance it needs to set taxes optimally. In reality, taxes are not set by benevolent despots, but are created through the political process. Interest groups, not economic theory, determine the structure of excise taxes.
[This argument was a double-edged sword] [25]

1996 June 27 The Florida Business Network newsletter reports on:

Citizen for Tax Justice a so-called "non-partisan research group" says Florida's tax system is regressive.

According to these figures, Florida's poorest families pay almost four times as great a share of their earnings in taxes as the wealthiest families. And middle-income families in Florida pay 2.2 times as high a share of their income in taxes as the wealthiest families.

The report attributed the disparities to the state's reliance on sales and excise taxes, instead of personal income taxes, to pay for public services. But Randall Holcombe, an economics professor at Florida State University, said the study's findings were overstated because Florida does not tax food or rent, and it allows a homestead exemption on owner-occupied housing.

Holcombe also said that not excessively taxing the rich can be beneficial for the whole state, because it attracts the wealthy to Florida. While the percentage tax on the wealthy may be relatively low, the actual amount of money they pay to the state is large.[26]
The Florida sun must have got to him. He is criticising another tobacco-funded group's report!

Randall Holcombe doesn't appear to have worked for the tobacco industry after this. However he still figured on some of the George Mason Uni lists of useful economists, so his name was listed along with the other network economists on later proposals.


1997 May 20 Draft: " A Concept Proposal for a Social Cost Forum" has been sent to Philip Morris. [by The Department of Economics at George Mason University under the auspices of Dr Walter Williams ... (The seem to have split now with Robert Tollison)]

Outlandish claims made by some anti-industry advocates pertaining to so-called costs that products such as automobiles, beer, tobacco and other products impose on society as a whole are generally deemed credible by much of the general public, and are often used as excuses for increased taxes and regulations. This occurs despite the fact that the entire idea of a social cost is generally spurious.

In order to reverse the tendency of both the media and the general public to blindly accept outlandish statements made by special interest advocates, it has been proposed that an inter-industry coalition sponsor an academic forum to discuss the idea of social costs and social cost theory. This forum will bring together academics, corporate research managers and decision makers to discuss the current state of research concerning these theories and to propose and promote additional academic research to fill in existing gaps in knowledge and answer current questions.

Corporate funding for the forum will come from a minimum of five separate firms, including Philip Morris, which will cover one-fifth of the costs of the symposia. While corporations will fund the forum, all control over content will rest with George Mason University and Dr Williams.

[The standard Faustian disclaimer that denies the influence of Mephistopheles]
George Mason will use the Social Cost Forum to bring together representatives from academia, industry, government and the public policy community to discuss the current state of the research on social cost theory. As currently envisioned, the forum will bring together approximately: 15 Leading Academics
'[His list is almost entirely from the Public Choice Society]  : -
[27]

Williams later supplied brief biographical descriptions about each of his suggested participants, and he added a new name:

The obvious notable names absent from this list re the old core group around Robert Tollison -- Dwight Lee, Fred McChesney, Mark Thornton, Richard Wagner, etc.

1997 May 21 Biographies of participants by Walter Williams in support of his project for a "Social Cost Forum" sent to Philip Morris.

Professor Randall G Holcombe
Florida State University
PhD Virginia Polytechnic University (1976). Selected Publications: Growth and Variability in State Revenue, The Economic Foundations of Government, "The Welfare State, Poverty, and Economic Opportunity," "Politics and Deficit Finance," "Absence of Envy Does Not Imply Fairness."
[29]


1998 Apr 13 An RJ Reynolds Tobacco tax lobbyist, Lewis K Uhler (founder and president of the National Tax Limitation Committee, headquartered in Sacramento CA), has been corresponding about Fiscal Strategy Considerations (CONFIDENTIAL). The index tells us that his letter discusses President Clinton and "Conservative Friends" He has mentioned cash-for-comments economists James Gwartney, Robert Lawson, and Randall Holcombe. [30]


2004 Holcombe has left the university and is now a Senior Fellow with James Madison Institute, Tallahassee, Florida


2006 President of Public Choice Society for two years.


2013 Randall G Holcombe is a Research Fellow at the Independent Institute.  

Independent Institute
The Independent Institute, which is itself a component of the Atlas Group of ultra-free-market think tanks with links to the Alexis de Tocqueville Institute [all or which are heavily dependent on commissioned corporate funding] appears to have taken over the role of administrator of the Tobacco Institute's cash-for-comments network at the end of the 1990s.

Their research director and journal editor, Robert Higgs, was already a member of the network. Tobacco funding continued to flow to the economists throu the Independent Institute which appears to have taken on the role of 'warehousing' these academic supporters to insulate them from discovery. The Institute acquired the bulk of the cabal of cash-for-comments economists who were still operating, and some who had been retired:

Senior Fellows Research Fellows Also dozens of other academics and writers who provided independent contract services to the tobacco industry -- like Richard Epstein, John Goodman, Peter Huber, Paul Craig Roberts, Paul Rubin, Peter Samuel, S. Fred Singer, Russell Sobel, etc. [31]

References