James Buchanan (1996) explains that economics is a science with considerable public significance because its teachings touch heavily upon the qualities of the structured personal interactions through which societies are constituted. This vision of economics, which has shone through many of Buchanan’s writings, and which has been elaborated by Peter Boettke (2011), has been a significant part of Niskanen’s professional work. This public quality of economics does not mean that economic scholarship must always be aimed at some general, non-professional audience. It means only that the subject matter with which economics deals touches upon matters that are or should be of interest to people in general. Scholarship reflects a structure of production where, within the division of intellectual labor, some people focus their efforts on deepening the understanding of scholars about their subject matter while other people explain the significance of those formulations to a broader audience. Buchanan, for instance, made little effort at direct public communication throughout his career. In contrast, Niskanen aimed mostly to reach that broader audience though he also developed some significant conceptual formulations.

Bill’s career illustrates both his dominant concern with pursuing economics as a public science in the service of liberty and his ability to bridge the two domains of theoretical inquiry and topics of interest to a broader public. He spent only four years in universities, three at Berkeley (1972–1975) and one at UCLA (1980–1981). He left Berkley to join Ford Motor Company, moved to UCLA after leaving Ford, and left UCLA to join President Reagan’s Council of Economic Advisers, leaving four years later to join the Cato Institute in 1985, where he stayed the rest of his life. The bulk of Niskanen’s life was spent in organizations where his primary activity was to render economic theories intelligible to audiences more interested in implications that could be derived from those theories than in the theories themselves. In this activity Bill was a master, as interested readers can discern by perusing his many works in this genre, a good number of which are available from the Cato Institute, as exemplified by the essays in Niskanen (2008).

To speak of economics as a science with public significance leaves open the kind of economic science that addresses that public significance. Economics is a contested discipline, as Reder (1999) explains. In this vein, postwar economics at Chicago asserted the superiority of the competitive model over claims of imperfect competition, as one illustration of this contested quality of economics. Another line of controversy concerns whether economics should posit closed, equilibrated systems as the object of analysis or open and kaleidic systems. In this respect, Wagner (2010) argues that economic theory requires both types of theoretical framework: a closed framework captures social features that are invariant across time and space while an open framework captures the internally generated turbulence that is also a quality of societies.

It has often been noted that eternal vigilance is the price of liberty. Liberty is not the natural condition of humanity. It is rather an artifact that can be secured, if indeed it can ever be said truly to be secured, through the application of eternal vigilance to guard against the collectivisms that appear in many guises. Bill recognized that at base there are only two principles for societal organization: liberalism and collectivism. Either people govern themselves and societies are polycentric arrangements among self-governing entities, or some people are governed by others and societies are characterized in monocentric and hierarchical ways, as illustrated by such status relationships as superior-inferior, dominant-subordinate, or regulator-regulated. Bill was a creative and tireless warrior in the never-ending battle to expand the scope of liberal principles over the continual incursion of collectivist principles that come from many directions, including business corporations, as illustrated by Bill’s widely noted dismissal from Ford for failing to advocate protection from foreign competition for Ford.

Economic theory can be pursued from two directions, which Wagner (2010) describes as outside-in and inside-out. Outside-in is the customary direction. It is the direction characterized by the theory of competitive equilibrium that Bill embraced during his student days. It locates the observer outside the object being observed. What is observed is some equilibrium configuration, and existing public policies, along with changes in technologies or preferences, are means of shifting societies to different equilibriums. The inside-out direction of theorizing seeks to locate the theorist inside the object being theorized about. What are observed in this case are not placid equilibriums but processes of continual contestation and turbulence where each observed instant is but a snapshot of a continuing historical process. From the outside-in perspective, property rights might be characterized by the image of lines in the sand which form maps of allowable action open to the various members of a society. The economic theory of free competition examines the features of society in the presence of some such set of lines in the sand. In contrast, from the inside-out perspective those lines are continually being challenged and moved through contests within societies whose qualities are forged and modified through such contestation. In this instance, a particular line stays where it is because those who want to shift it cannot overcome resistance from those who want to keep it where it is, or possibly even move it elsewhere.

Bill’s early years were forged dealing with military issues. He worked at RAND during 1957–1962, at the Department of Defense during 1962–1964, and the Institute for Defense Analysis during 1964–1970 before joining the Office of Management and Budget for a two-year stint. Bill recognized that societies had motion, but true to his Chicago foundation insisted that simple models grounded in competitive equilibrium could allow empirically useful conclusions to be derived. Bill bridged two worlds in helping to supply the eternal vigilance that is a necessary condition for being able to live in liberty.

Niskanen (1971) is the work that Bill is most widely known for among public choice scholars. That book reflected a conceptual architecture that he employed throughout his professional work: simple models grounded on competitive equilibrium under different institutional conditions are used to generate significant empirical implications. In Bureaucracy and Representative Government, Bill treated bureaus as being able to face their legislative sponsors with all-or-nothing offers, thereby transforming consumer surplus into supra-competitive output under the presumption that the desires of bureau officials were promoted in direct proportion to the sizes of their budgets. Under certain conditions this generated the striking empirical implication that bureau output would be twice the competitive output. Almost immediately, Bill’s formulation came under strenuous criticism, as illustrated by Earl Thompson (1973) and Jean-Luc Migué and Gerard Bélanger (1974), the latter of whom advanced maximizing the discretionary component of a bureau’s budget in place of Niskanen’s model of maximizing output.

These critics pointed to the implausibility of Bill’s presumption that bureau officials had the ability to advance all-or-nothing offers to legislative sponsors. In consequence, the literature shifted to a deeper consideration of knowledge and monitoring in the relation between bureaus and their legislative sponsors. While Niskanen’s original framework has been abandoned in light of subsequent examination, his central theme regarding the unique problems regarding knowledge and incentive that pertain to bureaus and their legislative sponsors remains strongly in play in contemporary public choice. Niskanen (1975) is an early reconsideration of his formulation in light of the original criticisms while Niskanen (2001: 258–270) provides a later review of that literature. While Bill’s original formulation of output maximization has given way to other models, Bill’s original formulation set in motion the scholarly activity that subsequently demolished any rote application of public interest theory to bureau activity, at least without running those theories through ancillary arguments grounded in claims about the knowledge and incentives possessed by the relevant participants.

A recurring theme in Bill’s work has been the constitutional arrangements of good government and the many ways in which those arrangements can be eroded. Niskanen (2003) brings Bill’s interest in using simple models to generate empirical implications to bear on a comparison of constitutional frameworks. In my judgment, this book illustrates nicely both the virtues and the vices of Bill’s approach to his material. The subject he treated there was the economic properties of different constitutional arrangements. This was a work in comparative constitutional systems, approached from within the analytical framework that Bill chose to embrace from his student days: a simple model capable of generating specific implications about the equilibrium properties of different constitutional regimes. He starts by positing three types of constitutional frameworks, which he labels autocratic, democratic, and optimal government. He recognizes that there can be variation among instances of each category, but dismisses such variation as second-order considerations that he didn’t want to let obscure his focus on what he regarded as the first-order differences.

To develop specific empirical implications, Bill adapted a new Classical macro framework to his interest in comparative constitutional analysis. True to orthodox macro theory, this framework involved making statements about macro entities without being concerned about how those macro entities might have been generated through interaction among micro-level entities. Bill performed his analysis as an exercise in comparative statics with respect to three different equilibriums. Following standard macro theory, he posited a common Cobb-Douglas production function where some natural level of aggregate output was modified by taxes and spending, in contrast to macro models where a natural rate of employment is modified by monetary shocks. Within Bill’s framework, natural output is independent of regime, which is a necessary presumption for the application of comparative statics across regimes. Similar to real business cycle theorizing, Bill calibrated his model with US data for 1966. Within this aggregative framework, the difference among regimes arose from the different maximization problems which led to different budgetary policies that were applied to the common aggregate production function. Bill defined an autocratic government as one that maximizes the difference between the revenue it extracts from the population and its expenditures on public services; an autocratic regime is treated as maximizing net worth for a ruling clique. Facing the same production function, a democratic regime maximizes the net disposable income of the median voter, which in Bill’s framework is the person with the median income. In contrast, an optimal government is one that maximizes average disposable income.

What results from Bill’s application of this framework has a reasonable quality while also being disturbing in the quiescent posture it portends. With regard to his comparative statics, the democratic regime generates aggregate income that is about 85% of what an optimal regime would generate. In contrast, an autocratic regime generates only about 55% of what an optimal regime would generate. These results have plausibility behind them, in that it’s easy to point to migration patterns that generally run from autocratic to democratic regimes. It’s also easy to recognize that democratic regimes contain room for improvement. What I find disturbing about this formulation is the quiescent or complacent quality that it counsels: democratic regimes always have some room for improvement, but on the whole they are pretty good and, moreover, must always be so because his framework has no room for internally generated metamorphosis.

Yet in earlier work (Niskanen 1977), Bill cited favorably the 18th century Scot historian Alexander Tytler to the effect that democracy was transitory and not permanent due to the clash between the private property necessary for liberty and the collective commons that democracy creates by converting private property into political property. At other places in Niskanen (2003), Bill speaks of constitutional drift and erosion, as well as citing Tytler again and also de Tocqueville on democratic despotism. In doing this, however, Bill is speaking outside the framework of his model, for his model has no space for the transformation from basically liberal to significantly collectivist regimes that has been underway throughout the western world for a century or so.