William A. Niskanen
Encyclopedia
William Arthur Niskanen was an American economist noted as one of the architects of President Ronald Reagan's economic programme
and for his contributions to public choice theory
. He was also a long-time chairman of the libertarian Cato Institute
.
from Harvard University
in 1954. He pursued graduate study of economics at the University of Chicago
, where his teachers included Milton Friedman
and other prominent economists who were then revolutionizing economics, public policy, and law with ideas that would come to be known as the Chicago school of economics. Niskanen received his M.A.
in 1955 and his doctorate in 1962, writing his dissertation on the economics of alcoholic beverage sales.
, where he became one of Defense Secretary Robert McNamara
's original Pentagon "whiz kids" who used statistical analysis to examine Defense Department operations.
During his time at the Pentagon, Niskanen became disillusioned with the nation's political leadership, later claiming that the president and other executive branch officials "lied with ... regularity" to the public. He frequently quipped that this disillusionment sometimes caused him to question whether the United States truly landed on the moon in 1969.
Niskanen would later hold other positions in defense policy, including director of the Program Analysis Division at the Institute of Defense Analysis, assistant director of the Office of Management and Budget, and defense analyst at the Rand Corporation.
, who appointed him to a task force on the state's economy.
under chairman Henry Ford II and president Lee Iacocca
. He quickly became critical of Ford's corporate culture and its failure to follow consumer trends, such as the 1970s desire for more fuel-efficient cars because of rising gas prices resulting from OPEC
constraints on oil supply.
Foreign automakers, especially the Japanese, were quick to exploit American consumers' demand for more fuel-efficient cars, gaining a growing share of the U.S. market in the 1970s. Ford responded by asking the U.S. government to place import quotas on Japanese cars. Niskanen, a free-trade advocate, argued internally against this policy, saying that Ford needed to improve its products in light of consumer demand. In response to this criticism, Ford fired Niskanen in 1980.
, which was responsible for conducting and analyzing economic research to inform executive branch policies. The appointment was surprising given Niskanen's hawkishness on deficits and concern about military spending--views that conflicted with Reagan policies.
Niskanen's blunt-spokenness both inside and outside the CEA sometimes caused problems. In a speech before a women's group in 1984, he commented that women's leaving the workforce to raise children contributed to a disparity in pay between the genders. Though broadly accepted and empirically supported today, Niskanen's comment was condemned in 1984, including criticism from Democratic presidential nominee Walter Mondale
, who claimed it exemplified a lack of respect toward women by the Reagan administration.
The following year, another of Niskanen's blunt comments would ultimately lead to his departure from the Reagan administration. During the negotiations over legislation that would ultimately become the Tax Reform Act of 1986
, Niskanen internally criticized the administration proposal that was drawn up by the Treasury Department under Secretary Donald Regan
, telling President Reagan in front of Regan that the proposal was "something Walter Mondale would love." Regan took offense at the comment and, after becoming Reagan's chief of staff, blocked Niskanen's ascendancy to chair the CEA after Martin Feldstein
left to return to Harvard. Niskanen served as acting chair for a brief period, but then resigned from the CEA. Niskanen later chastised Regan as "a tower of jelly" in his book Reaganomics.
, a field of both economics and political science that examines the behavior of politicians and other government officials. Public choice eschewed the traditional, naive notion that these agents are motivated by selfless interest in the public good, and instead considered them as typically self-interested, like other agents. His chief contribution to public choice theory was the budget-maximizing model
-- the notion that bureaucrats will attempt to maximize their agency's budget and authority. He presented this theory in 1971 book Bureaucracy and Representative Government.
and strongly challenged the field of public administration
in the spirit of Ludwig von Mises
' work. The book was for a long time out of print, but was reissued with several additional essays as, William Niskanen, Bureaucracy and Public Economics (Cheltenham, UK: Edward Elgar, 1994). Niskanen's work was an early text in rational choice models of bureaucracy
. In his work he proposed the budget-maximizing model
.
Another of his noted works was his 1988 book Reaganomics, which describes both the policies and inside-the-White House politics of Reagan's economic programme. Washington Post columnist Lou Cannon, author of the biography President Reagan: The Role of a Lifetime, described the book as "a definitive and notably objective account of administration economic policies."
Niskanen's final book was Reflections of a Political Economist (2008). The book is a collection of essays and book reviews on public policy and economic topics, and serves as an intellectual biography.
Reaganomics
Reaganomics refers to the economic policies promoted by the U.S. President Ronald Reagan during the 1980s, also known as supply-side economics and called trickle-down economics, particularly by critics...
and for his contributions to public choice theory
Public choice theory
In economics, public choice theory is the use of modern economic tools to study problems that traditionally are in the province of political science...
. He was also a long-time chairman of the libertarian Cato Institute
Cato Institute
The Cato Institute is a libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Edward H. Crane, who remains president and CEO, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries, Inc., the largest privately held...
.
Education
Niskanen received his B.A.Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...
from Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
in 1954. He pursued graduate study of economics at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
, where his teachers included Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
and other prominent economists who were then revolutionizing economics, public policy, and law with ideas that would come to be known as the Chicago school of economics. Niskanen received his M.A.
Master of Arts (postgraduate)
A Master of Arts from the Latin Magister Artium, is a type of Master's degree awarded by universities in many countries. The M.A. is usually contrasted with the M.S. or M.Sc. degrees...
in 1955 and his doctorate in 1962, writing his dissertation on the economics of alcoholic beverage sales.
To Washington
After Chicago, Niskanen was appointed director of special studies in the Office of the Secretary of DefenseOffice of the Secretary of Defense
The Office of the Secretary of Defense is a headquarters-level staff of the Department of Defense of the United States of America. It is the principal civilian staff element of the Secretary of Defense, and it assists the Secretary in carrying out authority, direction and control of the Department...
, where he became one of Defense Secretary Robert McNamara
Robert McNamara
Robert Strange McNamara was an American business executive and the eighth Secretary of Defense, serving under Presidents John F. Kennedy and Lyndon B. Johnson from 1961 to 1968, during which time he played a large role in escalating the United States involvement in the Vietnam War...
's original Pentagon "whiz kids" who used statistical analysis to examine Defense Department operations.
During his time at the Pentagon, Niskanen became disillusioned with the nation's political leadership, later claiming that the president and other executive branch officials "lied with ... regularity" to the public. He frequently quipped that this disillusionment sometimes caused him to question whether the United States truly landed on the moon in 1969.
Niskanen would later hold other positions in defense policy, including director of the Program Analysis Division at the Institute of Defense Analysis, assistant director of the Office of Management and Budget, and defense analyst at the Rand Corporation.
Return to academia and move to California
Niskanen left Washington and returned to academia, becoming professor of economics at the University of California at Berkeley and later at UCLA. During this time in California, he became acquainted with then-governor Ronald ReaganRonald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
, who appointed him to a task force on the state's economy.
Ford Motor Company
In 1975, Niskanen was appointed chief economist at the Ford Motor CompanyFord Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
under chairman Henry Ford II and president Lee Iacocca
Lee Iacocca
Lido Anthony "Lee" Iacocca is an American businessman known for engineering the Mustang, the unsuccessful Ford Pinto, being fired from Ford Motor Company, and his revival of the Chrysler Corporation in the 1980s...
. He quickly became critical of Ford's corporate culture and its failure to follow consumer trends, such as the 1970s desire for more fuel-efficient cars because of rising gas prices resulting from OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
constraints on oil supply.
Foreign automakers, especially the Japanese, were quick to exploit American consumers' demand for more fuel-efficient cars, gaining a growing share of the U.S. market in the 1970s. Ford responded by asking the U.S. government to place import quotas on Japanese cars. Niskanen, a free-trade advocate, argued internally against this policy, saying that Ford needed to improve its products in light of consumer demand. In response to this criticism, Ford fired Niskanen in 1980.
Reagan administration
However, Niskanen would not be out of work for long. Incoming president Ronald Reagan appointed Niskanen to his Council of Economic AdvisersCouncil of Economic Advisers
The Council of Economic Advisers is an agency within the Executive Office of the President that advises the President of the United States on economic policy...
, which was responsible for conducting and analyzing economic research to inform executive branch policies. The appointment was surprising given Niskanen's hawkishness on deficits and concern about military spending--views that conflicted with Reagan policies.
Niskanen's blunt-spokenness both inside and outside the CEA sometimes caused problems. In a speech before a women's group in 1984, he commented that women's leaving the workforce to raise children contributed to a disparity in pay between the genders. Though broadly accepted and empirically supported today, Niskanen's comment was condemned in 1984, including criticism from Democratic presidential nominee Walter Mondale
Walter Mondale
Walter Frederick "Fritz" Mondale is an American Democratic Party politician, who served as the 42nd Vice President of the United States , under President Jimmy Carter, and as a United States Senator for Minnesota...
, who claimed it exemplified a lack of respect toward women by the Reagan administration.
The following year, another of Niskanen's blunt comments would ultimately lead to his departure from the Reagan administration. During the negotiations over legislation that would ultimately become the Tax Reform Act of 1986
Tax Reform Act of 1986
The U.S. Congress passed the Tax Reform Act of 1986 to simplify the income tax code, broaden the tax base and eliminate many tax shelters and other preferences...
, Niskanen internally criticized the administration proposal that was drawn up by the Treasury Department under Secretary Donald Regan
Donald Regan
Donald Thomas Regan ,was the 66th United States Secretary of the Treasury, from 1981 to 1985, and Chief of Staff from 1985 to 1987 in the Ronald Reagan Administration, where he advocated "Reaganomics" and tax cuts to create jobs and stimulate production.-Early life:Born in Cambridge, Massachusetts,...
, telling President Reagan in front of Regan that the proposal was "something Walter Mondale would love." Regan took offense at the comment and, after becoming Reagan's chief of staff, blocked Niskanen's ascendancy to chair the CEA after Martin Feldstein
Martin Feldstein
Martin Stuart "Marty" Feldstein is an economist. He is currently the George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research . He served as President and Chief Executive Officer of the NBER from 1978 through 2008...
left to return to Harvard. Niskanen served as acting chair for a brief period, but then resigned from the CEA. Niskanen later chastised Regan as "a tower of jelly" in his book Reaganomics.
Cato Institute
After leaving the Reagan administration, Niskanen joined the libertarian Cato Institute, where he served as chairman of the board of directors from 1985 to 2008 and was an active policy scholar. He was chairman emeritus of Cato from 2008 until his death in 2011.Scholarly contributions
Niskanen was a prominent contributor to public choice theoryPublic choice theory
In economics, public choice theory is the use of modern economic tools to study problems that traditionally are in the province of political science...
, a field of both economics and political science that examines the behavior of politicians and other government officials. Public choice eschewed the traditional, naive notion that these agents are motivated by selfless interest in the public good, and instead considered them as typically self-interested, like other agents. His chief contribution to public choice theory was the budget-maximizing model
Budget-maximizing model
Budget-maximizing model is an influential new stream of public choice theory and rational choice analysis in public administration inaugurated by William Niskanen, in 1971...
-- the notion that bureaucrats will attempt to maximize their agency's budget and authority. He presented this theory in 1971 book Bureaucracy and Representative Government.
Publications
Niskanen authored several books, academic articles, and essays on government and politics. His most noted work, Bureaucracy and Representative Government, published in 1971, made a great impact on the field of public managementPublic management
Public management is a term that considers that government and non-profit administration resembles private-sector management in some important ways. As such, there are management tools appropriate in public and in private domains, tools that maximize efficiency and effectiveness...
and strongly challenged the field of public administration
Public administration
Public Administration houses the implementation of government policy and an academic discipline that studies this implementation and that prepares civil servants for this work. As a "field of inquiry with a diverse scope" its "fundamental goal.....
in the spirit of Ludwig von Mises
Ludwig von Mises
Ludwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...
' work. The book was for a long time out of print, but was reissued with several additional essays as, William Niskanen, Bureaucracy and Public Economics (Cheltenham, UK: Edward Elgar, 1994). Niskanen's work was an early text in rational choice models of bureaucracy
Bureaucracy
A bureaucracy is an organization of non-elected officials of a governmental or organization who implement the rules, laws, and functions of their institution, and are occasionally characterized by officialism and red tape.-Weberian bureaucracy:...
. In his work he proposed the budget-maximizing model
Budget-maximizing model
Budget-maximizing model is an influential new stream of public choice theory and rational choice analysis in public administration inaugurated by William Niskanen, in 1971...
.
Another of his noted works was his 1988 book Reaganomics, which describes both the policies and inside-the-White House politics of Reagan's economic programme. Washington Post columnist Lou Cannon, author of the biography President Reagan: The Role of a Lifetime, described the book as "a definitive and notably objective account of administration economic policies."
Niskanen's final book was Reflections of a Political Economist (2008). The book is a collection of essays and book reviews on public policy and economic topics, and serves as an intellectual biography.
External link
- William A. Niskanen – Former Chairman Emeritus and Distinguished Senior Economist, profile at the Cato Institute webpage