Tom Firey: The loss of a friend you didn't know

December 21, 2011|By TOM FIREY

Americans lost one of their few true friends in Washington this fall when economist William Niskanen shuffled off this mortal coil at age 78. You probably don’t recognize his name, and that’s unfortunate; he worked hard to get Washington to work for you.  

Niskanen stood an imposing 6-foot-4, with the head and ears of an even larger man. His imposing size and gravelly voice compelled attention, though he often delivered messages that people (Republicans and Democrats alike) didn’t want to hear. His comments’ unvarnished nature is Beltway legend.

He came of age at a fortunate time, earning his bachelor’s degree from Harvard and his doctorate from the University of Chicago in the 1950s. Niskanen studied under some of the best economic minds of the 20th century, including Nobel Economics Prize winner Milton Friedman, and he did so at the dawn of the computer age, when it became possible to analyze massive amounts of data to test the merits of economic ideas.

Armed with those analytic tools and a commitment to honesty about the results, Niskanen went to work in Washington after grad school. He was one of the original Pentagon Whiz Kids, who used statistical analysis to examine defense policy. His experience in Washington was sobering, as he discovered that presidents and other government leaders “lied with regularity” to the American people. Years later he would tell friends — jokingly, perhaps — that when he watched the 1969 moon landing, he wondered if it was all a government hoax.

Niskanen left the Pentagon later that decade, ultimately finding his way to the University of California, Berkeley. There, he began work on “Bureaucracy and Representative Government,” the book that established his reputation. At the time, many people assumed that bureaucrats were motivated solely by concern for the public good; the idea that they were motivated by self-interest just like private-sector workers was considered radical. His book presented evidence for the self-interest theory and offered ideas for bureaucratic reforms that would better align government operations with the public interest.

He returned to Washington in 1970, working as assistant director of the Office of Management and Budget under George Shultz. While there, he repeatedly disputed Nixon officials’ claims of being budget- and regulation-cutters. Shultz fired Niskanen before the end of Nixon’s first term.

Niskanen returned to Berkeley where, in 1975, the Ford Motor Co. recruited him to become its chief economist. In Detroit, he discovered just how out of touch auto executives were with the desires of American consumers. The gasoline price spikes of the 1970s had Americans demanding fuel-efficient, dependable cars, but U.S. automakers offered poor products in response. Niskanen pushed for Ford to change its products, but the corporate culture was unyielding. When Americans began buying what they wanted from Japanese automakers, U.S. automakers demanded tariffs and other anti-trade protections. Niskanen argued against those policies, saying that consumers shouldn’t be punished for the car companies’ failures. So Ford fired Niskanen and he returned to California, this time going to UCLA.

He wouldn’t stay for long. President-elect Ronald Reagan brought him back to Washington as a member of the Council of Economic Advisers. Niskanen continued his frank talk at the CEA, but ultimately he would make one blunt comment too many. In the run-up to the landmark 1986 tax reform, Niskanen criticized a proposal assembled by Donald Regan’s Treasury Department as “something Walter Mondale would love.” When Regan later became Reagan’s chief of staff, Niskanen saw the writing on the wall and resigned from the administration in 1985.

He then became chairman of the Cato Institute, a position he would hold for nearly a quarter-century. At Cato, he continued his blunt ways, sharply criticizing the George W. Bush administration’s push for war in Iraq. He also chastised Bush’s fiscal policy, saying the administration’s desire to cut taxes while ramping up spending was unsustainable big government on the cheap — a criticism that would prove all too accurate.

Such candor burnished Niskanen’s reputation for honesty among serious policy thinkers. A few years ago, on his 75th birthday, he received a card from Larry Summers, a top economic adviser to both Bill Clinton and Barack Obama. The card began, “To the most honest man in Washington.”

It is especially sad to lose Niskanen now, at Christmastime. A devout Christian, he had a renowned singing voice and would have been preparing for his church choir’s Christmas program. Instead, he has gone to meet his Savior. No doubt, Niskanen will offer him a few blunt observations.

Thomas A. Firey is senior fellow for the Maryland Public Policy Institute and a Washington County native.

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