`Niskanen Laws'

By

YOU have heard of ``Murphy's Law'' and ``Parkinson's Law'' and the ``Peter Principle.'' I would like to introduce you to ``Niskanen Laws.'' These are not clever sayings or scholarly relationships -- but they are just as instructive. Niskanen Laws are laws passed by Congress when someone in the executive branch (until recently, Mr. Niskanen) asks a question that Congress doesn't want answered. William Niskanen, who recently left the Council of Economic Advisers for private life as chairman of the Cato Institute, was better known for his integrity and forthrightness than for his political savvy. For example, political pundits snickered when Mr. Niskanen called the comparable-worth doctrine a ``truly crazy idea.'' While his views were in line with most expert opinion on the subject, saying so was bad politics.

The pundits were wrong, though, about Mr. Niskanen's political effectiveness. He got some laws passed -- Niskanen Laws. I learned about the first one a few years ago as a member of a Cabinet council ``working group.'' Mr. Niskanen organized the group to look into rates charged for federally supplied power in the Tennessee Valley and the Northwest.

The inquiry made some important people uneasy. Many user groups, in both the public and private sectors, receive electric power at rates well below the value of the power. For example, the industrial rates of the Bonneville Power Administration (the biggest power supplier in the Pacific Northwest) had only recently doubled, to about 2.5 cents a kilowatt-hour, at a time when new plants were being built to produce power at around 5 cents a kwh. Our working group had just one meeting. Before the next one could be held, Congress had passed a budget amendment outlawing any further expenditures by the Council of Economic Advisers -- including staff time -- on this question. Congress made it illegal for the working group to meet to discuss this topic.

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A Niskanen Law, then, is a law that prohibits inquiry by a federal agency into a question felt by Congress to be inconvenient or potentially embarrassing to important special interests. As a relative newcomer in Washington at the time, I was shocked to learn that Congress could actually cut off inquiry. I knew it was the duty of Congress to enact laws establishing government policy. But I hadn't recognized that Congress also can and does blithely censor mere discussion of the effects of current policy a nd of possible alternatives.

Of course, Congress had not precisely prohibited free speech, since those of us who wanted to look into such questions were free to meet on our own time and discuss the issue. We could even, at the risk of our jobs, speak to the press. But Congress forbade the government from studying federal power rates, even though the inquiry was a logical component of the program on which Ronald Reagan had been elected President.

When I asked Bill Niskanen about this matter, he smiled and informed me that this was not the first time such a thing had happened, nor would it be the last. Indeed, he later had a role in two more aborted studies. In one case, the Justice Department began a study of retail price-maintenance (the question of whether suppliers may legally prevent retailers from selling their products at a discount). In the fall of 1983, Congress ordered it to cease studying the issue and even prohibited antitrust chief W illiam Baxter from testifying in court on the findings of the study up to that point.

At about the same time, the Office of Management and Budget tried looking into agricultural marketing orders, those federal regulations that limit the supply of certain farm products in order to keep up prices. Congress passed another ``Niskanen Law,'' forbidding the OMB from studying these orders.

So, while Mr. Niskanen may not have been a smooth manipulator of the political process, such laws show that he carried enough clout to get its attention. We can only hope that his successor on the council, Thomas Gale Moore, can follow suit.

Richard L. Stroup, professor of economics at Montana State University and research director of the Political Economy Research Center, was director of the Office of Policy Analysis in the Interior Department from 1982 to 1984.

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