Reflections of a Political Economist: Selected Articles on Government Policies and Political Processes

378 Pages·2008·1.28 MB·English

by  William A. Niskanen

WASHINGTON, D.C.
Copyright©2008byCatoInstitute.
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LibraryofCongressCataloging-in-PublicationData
Niskanen,WilliamA.,1933–
Reflectionsofapoliticaleconomist:selectedarticlesongovernmentpolicies
andpoliticalprocesses/WilliamA.Niskanen.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN978-1-933995-20-5(alk.paper)
1.UnitedStates—Economicpolicy—2001– 2.UnitedStates—Economic
conditions—2001– I.Title.
HC106.83.N572008
330.973--dc22 2008029684
CoverdesignbyJonMeyers.
PrintedintheUnitedStatesofAmerica.
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Contents
INTRODUCTION 1
PARTI: POLICYANALYSIS
1. Oil Is Not Worth a War 7
2. R&D and Economic Growth: Cautionary 13
Thoughts
3. Too Much, Too Soon: Is a Global Warming Treaty 29
a Rush to Judgment?
4. Next Steps toward Health Policy Reform 41
5. The Economic Basis for Military Capability 49
6. Creating Good Jobs and Good Wages 61
7. Should the Ex-Im Bank Be Retired? 77
8. On the Death of the Phillips Curve 83
9. The Economic Burden of Taxation 91
10. Increasing Individual Responsibility Would 99
Improve Retirement Security
11. An Unnecessary War Is an Unjust War 107
12. Major Policy Lessons from the Corporate 113
Scandals
13. An Unconventional Perspective on the Greenspan 119
Record
14. The Several Costs of Responding to the Threat of 123
Terrorism
15. The Failure to Starve the Beast 131
v
PARTII: PUBLICCHOICE
16. Autocratic, Democratic, and Optimal 139
Government: A Sketch
17. A Vote for Perot Was a Vote for the Status Quo 167
18. On the Constitution of a Compound Republic 175
19. Bureaucracy: A Final Perspective 189
20. Bringing Power to Knowledge: Choosing Policies 207
to Use Decentralized Knowledge
21. On the Origin and Identification of Government 221
Failures
22. The Intellectual Case for a Free Market Economy 229
23. U.S. Elections Are Increasingly Biased against 237
Moderates
24. Advice from a Friendly American on the 243
Proposed Constitution for the European Union
25. A Case for Divided Government 251
26. Alternative Political and Economic Futures for 255
Europe
27. On Wisconsin: Some Friendly Constitutional 267
Advice
28. A Reformulation of Voting Theory 281
PARTIII: BOOKREVIEWS
29. Pop Internationalism by Paul Krugman 293
30. Everything for Sale: The Virtues and Limits of 297
Markets by Robert Kuttner
31. Perspectives on Public Choice: A Handbook 301
edited by Dennis C. Mueller
32. Power and Prosperity: Outgrowing Communist and 305
Capitalist Dictatorship by Mancur Olson
vi
33. In Defense of Free Capital Markets: The Case Against 309
a New International Financial Architecture
by David F. DeRosa
34. Virginia Political Economy: The Selected Works 313
of Gordon Tullock, Volume 1, edited by
Charles K. Rowley
35. Pay Without Performance: The Unfulfilled Promise of 317
Executive Compensation by Lucian Bebehuk and
Jesse Fried
36. The Market for Virtue: The Potential and Limits of 321
Corporate Social Responsibility by David Vogel
37. Why I, Too, Am Not a Conservative: The Normative 327
VisionofClassicalLiberalismbyJamesM.Buchanan
38. The Age of Turbulence: Adventures in a New World 331
by Alan Greenspan
PARTIV: PERSONALREFLECTIONS
39. A Reflection on the Major Developments in the 337
World, 1951–2000
40. Policy Proposals from the Libertarian Right 345
41. A Personal Reflection on the Trinity 349
ABOUTTHEAUTHOR 353
INDEX 355
vii

Introduction:
On Maturing as a Political Economist
This book is a selection from the articles, reviews, and speeches
that I have written beginning in 1997. One prior article, on ‘‘Oil,
War,andtheEconomy’’(heretitled‘‘OilIsNotWorthaWar’’)was
presented at a Cato Institute conference eight days before the start
of the Gulf War in 1991 and is included because of its relevance to
thesubstantialcontinuedU.S.militarypresenceintheMiddleEast.
The other selections are reproduced in chronological order and
reflect what I thought about these topics at the time. In some cases
Ihaveaddedaprescriptorapostscripttoputthearticleincontext,
but I have not revised or updated the selections even though my
views and the data on some of these topics may have changed
somewhat over time.
IhavebeenprivilegedtoserveasthechairmanoftheCatoInstitute
sinceApril1985,followingfouryearsasamemberandactingchair-
manoftheCouncilofEconomic AdvisersunderPresidentReagan.
My Cato position involves a variety of responsibilities and is the
longest that I have served in any position. And I am now 75 years
old. So the selection of papers in this book probably represents the
focus,diversity,andqualityofanythingImightwriteinthefuture.
The past 10 years have been a very productive period, both for
Cato and for me. Cato has developed into one of the nation’s most
effective policy institutes and has maintained a consistent commit-
ment to the principles of individual liberty, free markets, limited
government, and peace—principles that have led us to be increas-
inglycriticalofthepoliciesoftheBushadministrationandcongres-
sional Republicans. The sad prospect is that these same principles
willprobablyleadustobeincreasinglycriticalofthecomingDemo-
cratic administrationand congressionalmajority. Cato’smajor new
activityhasbeentobroadenthereachofourmessagetotheworld.
In addition to our long-standing Spanish-language website, for
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