Economists first flocked to Washington in large numbers in the 1930s to help President Franklin Roosevelt manage the Great Depression and implement the New Deal. By 1938, the federal government employed about 5,000 economists, most of them in Washington, according to a 1985 lecture (“The Washington Economics Industry”) delivered by the late economist Herbert Stein. Stein, chairman of the Council of Economic Advisers under Presidents Richard Nixon and Gerald Ford, had been one of those 5,000. Forty-two years later, Stein reported, the number of economists in the federal government had more than tripled, to 16,000.
Stein identified the watershed as World War II, when economists branched out into defense policy. “It has been said that the last war was the chemist’s war and that this one is the physicist’s,” Paul Samuelson observed in The New Republic in 1944. “It might equally be said that this is an economist’s war.” Samuelson himself worked on complex engineering problems arising from the use on warships of a new technology called radar. John Kenneth Galbraith worked on the United States Strategic Bombing Survey, which concluded that aerial bombardment was much less effective than the military had supposed. Friedman worked (unsuccessfully) to develop an alloy for jet engines that wouldn’t melt at high temperatures. Out west in Santa Monica, the Rand Institute, created by the Air Force immediately after the war, assigned the question of how to fight future wars, including possible nuclear war, not to military experts with battlefield experience, but rather to economists ratiocinating by the Pacific.
Economics became, Stein recalled, Washington’s lingua franca. “It was almost,” he said,
as if someone had suddenly decreed that the language of the government would be Latin. There would be a great demand for people who could speak Latin. So there was a great demand in Washington for people who could speak economics. There was also a large supply of them, who had come for the war and didn’t want to go home again.
By 1967, the Economicist army had established a beachhead at the newly created Department of Transportation, where the FHWA and, later, the National Highway Transportation Safety Administration, or NHTSA, resided. As these agencies developed various iterations of a regulation mandating strengthened underride guards (informally dubbed “Mansfield bars” in honor of Jayne), a succession of presidential administrations subjected them to analyses that weighed the cost to the trucking industry against the benefit in human lives saved. How much was each human life worth? When the Nixon administration addressed this question in 1971, human life was assigned no value at all—wasn’t that what “priceless” meant?—so of course the Mansfield bar flunked. It was, according to one of the principals, the first decision NHTSA ever made using cost-benefit analysis. Today, all major regulations in all departments of government must pass a cost-benefit test.