William A. Niskanen

American economist (1933–2011)

William Arthur Niskanen (/n//ɪ//s/'/k//æ//n//ən/; March 13, 1933 – October 26, 2011) was an American economist. He was one of the architects of President Ronald Reagan's economic program and contributed to public choice theory. He was also a long time chairman of the Cato Institute, a libertarian think tank.

Niskanen was born and raised in Bend, Oregon. He received his B. A. 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.

After earning his doctoral degree, Niskanen joined the RAND Corporation as a defense policy analyst in 1957, using his economic and mathematical modeling skills to analyze and improve military efficiency. Among his accomplishments was developing a 400 line linear programming model of the Air Force transport system. His programmer for the model was a young William F. Sharpe, who would later win the Nobel economics prize. Because of his work at RAND, the incoming Kennedy administration appointed Niskanen director of special studies in the Office of the Secretary of Defense. There, he became one of Defense Secretary Robert McNamara's original Pentagon "whiz kids" who used statistical analysis to examine Defense Department operations. Niskanen left DOD in 1964 to become director of the Program Analysis Division at the Institute for Defense Analyses. In 1972, he returned to public service as assistant director of the Office of Management and Budget, though his internal criticisms of Nixon administration policy would make his tenure at OMB short.

Niskanen left Washington and returned to academia, becoming professor of economics at the University of California at Berkeley in 1972, where he remained until he became chief economist of Ford Motor Company in 1975. While at Berkeley, Niskanen helped establish the school's graduate school of public policy. During this time in California, he became acquainted with then governor Ronald Reagan, who appointed him to a task force on the state's economy.

In 1975, Niskanen was appointed chief economist at the Ford Motor Company under chairman Henry Ford II and president Lee Iacocca. The following year, another of Niskanen's blunt comments ultimately led to his departure from the Reagan administration. During the negotiations over legislation that ultimately became 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 the chair of the Council of Economic Advisers after Martin Feldstein left to return to Harvard. Niskanen served as acting chair for a brief period, but then resigned from the council. Niskanen later chastised Regan as "a tower of jelly" in his book Reaganomics.

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. In March 2012, a dispute broke out between Charles and David Koch and Niskanen's widow, Kathryn Washburn, over the ownership of Niskanen's ownership share in Cato.

Niskanen was a prominent contributor to public choice theory, a field of both economics and political science that examines the behavior of politicians and other government officials. Public choice eschewed the traditional 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. 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.

Niskanen had three daughters. His widow, Kathryn Washburn, had worked for the National Oceanic and Atmospheric Administration and United States Department of the Interior before entering the non profit sector. Niskanen died of a stroke on October 26, 2011, in Washington, D. C.