Remembering William Niskanen

Farewell to the most honest man in Washington.


Editor's Note: This column is reprinted with permission of the Washington Examiner. Click here to read it at that site.

William A. Niskanen, former acting head of President Reagan's Council of Economic Advisers and the longtime chairman of the CATO Institute, passed away last Wednesday at the age of 78.

In its obituary on Saturday, The New York Times summed Niskanen up as a "blunt libertarian economist," and he was all three. But he was also vastly more interesting and admirable than that dismissive description can convey.

Bill Niskanen had the kind of character that's vanishingly rare in Washington, D.C. He was a man who put principle above partisanship and personal gain.

After studying under Milton Friedman at the University of Chicago, a young Niskanen came to Washington with the Kennedy administration, as one of Defense Secretary Robert McNamara's "whiz kids."

What he saw as a Pentagon insider shocked him, Niskanen recalled later. The president and top executive branch officials "lied with sufficient regularity, that when they finally landed on the moon" he was briefly tempted to wonder if it was staged.

"That's how disillusioned I was by 1969."

He drew on those experiences to write 1971's Bureaucracy and Representative Government, a seminal work in public choice economics.

Later, in 1980, Niskanen garnered national attention when the Ford Motor Company fired him as chief economist because he opposed Ford's call for import quotas on Japanese cars.

In 1984, after serving four years as a member and acting chairman of President Reagan's CEA, Niskanen could have written his own ticket to any high-placed berth in business or academia.

Consider that Peter Orszag, former head of the Office of Management and Budget under President Obama, parachuted to a lucrative post at bailed-out financial giant Citigroup. (Still, Orzsag "keeps it real" with the occasional Bloomberg column lamenting income inequality).

But cashing in held little appeal for Niskanen. Instead, he joined the CATO Institute, then an upstart think tank operating out of a townhouse on Capitol Hill, and dedicated—as was Bill—to "the principles of individual liberty, limited government, free markets and peace."

That move "very much put CATO on the map," says CATO president Ed Crane. Bill "worked in an office about 1/10th the size of his office at the Old Executive Office Building, never complaining."

Indeed, in a town full of policy-wonk prima donnas, Bill was a class act: a gracious and generous colleague who never expected special treatment—a cheerful exponent of the "dismal science."

"For those of you with a partisan bent, I have some bad news" Niskanen began a 2006 article in the Washingtonian. That piece made the "Case for Divided Government" (one-party governments spend three times as fast, per his calculations).

"Bad news for partisans" was a common theme in his iconoclastic career. He didn't endear himself to conservatives by producing data showing that "Starve the Beast," the notion that tax cuts shrink government by depriving it of revenue, was "magical thinking" and there was no substitute for the hard work of cutting spending.

Nor did many in the GOP welcome his case against the Iraq War, made at a CATO event in December 2001, perhaps the first prominent public statement against that looming debacle. "An unnecessary war is an unjust war"—and one we would come to regret having fought, he argued.

In the pile of 70th birthday cards Niskanen received in 2001, was one from a blunt, non-libertarian economist, Larry Summers, the former Treasury Secretary and top Democratic adviser. It was addressed to "Bill Niskanen, the most honest man in D.C."

That's about right.

This is the part where you're supposed to say something to the effect that, "we won't see his like again." But I hope we do. America's future depends on others following the example Bill Niskanen set for us.

Gene Healy is a vice president at the Cato Institute and author of The Cult of the Presidency: America's Dangerous Devotion to Executive Power (Cato 2008). He is a columnist at the Washington Examiner, where a version of this article originally appeared. Click here to read it at that site.


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  1. Condolences to Niskanen’s family and friends.

  2. We could use more people like that, certainly. RIP.

  3. America’s future depends on others following the example Bill Niskanen set for us.

    Indeed. Rest in Peace.

  4. I hope that there’s a whole crop of people like him in the next generation of political top-dogs. We’ll be needing that if we’re ever to climb out of the latrine we’ve dug ourselves into over the last century. Rest in peace, Niskanen.

  5. I met him once or twice, or maybe I’m confabulating. What I do recall is that my impression of him from his “Byline” radio commentaries 30+ yrs. ago was exactly as in the obit. They were like, now you’re hearing it from the boss, pure and unadulterated.

  6. Isn’t this laissez-faire approach exactly what we tried from 1979 to
    2007, when inequality shot through the roof, according to the CBO?

    NO! What we had is government interference into free markets and when government interferes it distorts the market and bubbles are created and popped. Take Fannie and Freddie with all their just sign here and own a home loans for instance. It created a boom as homes were in demand and put a lot of people to work building them but it was a bubble bound to pop because it was created by government forcing banks out of time tested loan standards the community organizers like Obama called racist. You know its racist for a bank to require good credit, 10-15% down and ability to pay loan with one week’s pay etc…

    Many people want to blame Wall St and the removal of Glass-Steagall but the fact is if that never happened there is still a banking crisis because of sub primes loans banks were forced to come up with by government that were based on the economy.

    And another thing to consider is that if all those loans that were packed and sold were time tested loan standards before the government interfered then the Glass-Steagall thing wouldn’t have mattered much because they would have been responsible loans where mortgages were paid regardless of slowing economy.

    Pols like to have it both ways. For example Democrats are demonizing banks for not making small business loans yet require banks to have more cash on hand before making them. Dodd/Frank did that and did not address the F&F problem. Another example of government interfering into free markets is the Durbin Tax banks are now charging for debit card use. Example: Walmart and banks willfully agreed that Walmart will pay pennies per purchases using debit cards so banks didn’t charge you the customer to cover their processing cost. The Durbin Tax removed that and now banks have to charge you $5.00 a month for your debit card whether you use it or not to cover the cost while Dick Durbin demonizes banks for charging that fee he forced them into charging.

    Pols love to have both ways and its the same thing with the 70,000+ pages of tax code where pols are demonizing companies they tax for raising the cost of their product or service after pols raise their cost through higher taxes. Pols know those cost are always passed onto the consumer but its a win/win for them because they can then demonize the companies.

    Herman Cain’s 9-9-9 plan gets rid of all those hidden taxes and loopholes within the 70,000+ pages of tax code lobbyist lobby them to change etc… and when implemented 9-9-9 will result in an economic boom with cheaper products because companies will evaluate their bottom line with the money they save and lower cost trying to steal consumers from their competition. Competition is always good for the consumer and this is exactly why big corps lobby for taxes and loopholes that’ll hurt their small business counterparts and exactly the reason we need a Main St President not a Wall St POTUS like Obama has been or Romney will be.

    Basically at the root of the problem with the mortgage crisis is this noble but misguided idea that everyone deserves to own a home. Its not true! You deserve to ow a home when you can meet the free market standards for getting a loan. To pretend as pols do that banks want to loose money on their loans and need a bailout is nonsensical.

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