In a perverse way, I’m glad that there are places such as Greece and Illinois. These profligate jurisdictions are useful examples of the dangers of bloated government and reckless statism.

There also are some cities that serve as reverse role models. Detroit is a miserable case study of big government run amok, so I enjoyed a moment or two of guilty pleasure as I read this CNBC story about the ongoing decay of the Motor City. Here are some excerpts:

Detroit neighborhoods with more people and a better chance of survival will receive different levels of city services than more blighted areas under a plan unveiled Wednesday that some residents fear may pit them against each other for scarce resources.

…[T]he boundaries of the 139-square-mile city aren’t receding. The plan also backs away from forcing the redistribution of what’s left of the population into areas where people still live and where the houses aren’t on the verge of caving in.

…Detroit’s population of about 713,000 is down about 200,000 from 10 years ago, according to U.S. Census figures, and has fallen more than 1 million since 1950. Some areas have fewer occupied homes than vacant ones.

…A 2010 survey found Detroit had 33,000 vacant houses and scores of empty, weed-filled and trash-cluttered lots.

How predictable, I thought. This is what happens when vote-hungry politicians adopt policies that reward people for riding in the wagon and punish the folks who are pulling the wagon.

But there was also something about this story that rang a bell. It took a few minutes, since I’m getting old and decrepit, but then I realized that “blighted areas” was an eerily familiar term. Didn’t Ayn Rand use that term in one of her books?

Indeed, she did. Thanks to the miracle of Google Books, here is one of several passages in Atlas Shrugged that references Detroit—oops, I mean “blighted areas”:

No railroad was mentioned by name in the speeches that preceded the voting. The speeches dealt only with the public welfare. It was said that while the public welfare was threatened by shortages of transportation, railroads were destroying each other through vicious competition, on “the brutal policy of dog-eat-dog.” While there existed blighted areas where rail service had been discontinued, there existed at the same time large regions where two or more railroads were competing for a traffic barely sufficient for one. It was said that there were great opportunities for younger railroads in the blighted areas. While it was true that such areas offered little economic incentive at present, a public-spirited railroad, it was said, would undertake to provide transportation for the struggling inhabitants, since the prime purpose of a railroad was public service, not profit.

Many people say that Atlas Shrugged is not very good literature, despite the amazing sales figures. Others say Ayn Rand’s philosophy is flawed, despite the profound influence of her writings.

I’m not competent to comment on those debates, but I can say that Atlas Shrugged does an amazing job of capturing the statist mindset and it tells a compelling story of how excessive government is self-destructive.

Fifty years ago, the book was viewed as a dystopian fantasy. Today, Greece, Illinois, and Detroit are making Ayn Rand seem like a prophet.

Atlas Shrugged Comes to Detroit is a post from Cato @ Liberty - Cato Institute Blog

El Universo, the newspaper with the largest circulation and the paper that publishes my weekly column, ran a mostly blank front page today that features only this quote from Ayn Rand’s Atlas Shrugged:

When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.

This quote is from Francisco D’Anconia’s speech on “The Meaning of Money” which you can read here. (I used it in my column last month.) How did Rand’s quote get there? It’s a response to the latest and most prominent attack on freedom of the press in Ecuador and Latin America.

In less than four months the Ecuadorian courts, known for being slow, resolved the specious lawsuit President Rafael Correa filed against op-ed writer and editor Emilio Palacio, the directors of El Universo and the newspaper itself for libeling the country’s president. According to Correa, Palacio slandered him in this op-ed (in Spanish), and the newspaper and its directors “contributed” to committing the supposed crime. Incidentally, this court has had five different judges overseeing this case since February; the last one came in on Monday and issued his judgment yesterday, minutes before his authority expired.

The court’s decision sentences the directors of El Universo and Emilio Palacio to three years in jail and orders them to pay a total of $30 million to the President. The judge also ordered that the newspaper company pay an additional $10 million to President Correa.

This decision sets a dangerous precedent of making third parties responsible for what an individual says. It is a clear act of intimidation of all independent media outlets and of the citizens of Ecuador. Even though this is not the first blow to freedom of expression during this government, it certainly is the most radical given the context. On May 7^th, a referendum gave the President unprecedented power to essentially pack the courts. Soon, the entire judiciary will be on the long list of state institutions captured or co-opted by the executive (including the constitutional court, the electoral authority, and the national assembly, among others).

Once the judiciary is completely captured and after this historic decision, we can expect more self-censorship or more people sued/jailed for expressing their opinions, or a combination of both. It is a harsh blow against liberty in our country, but a logical outcome of Correa’s populist push to centralize ever more economic and other power in his own hands.

Ayn Rand on the Front Page of Ecuador’s Major Newspaper is a post from Cato @ Liberty - Cato Institute Blog

On NPR, Mara Liasson tells Melissa Block that we’re in a “libertarian moment” in politics:

BLOCK: And Ron Paul appears to be running. Again, he got a lot of devoted followers on the Internet last time during the 2008 bid, not so many votes in the primary. So this time around, is he a significant addition to the Republican field or more of an asterisk?

LIASSON: Well, I don’t think he’s a huge factor in terms of the nomination. In the 2008 GOP primary, he got only about 6 percent of the Republican vote. However, as you said, he does have a devoted following, lots of libertarian-leaning young people. He can raise millions of dollars online in a single day in one of his famous money bombs. So he brings energy to the party, and the Republican Party base seems to have caught up to him on the issues.

The GOP is in a real libertarian moment right now, and Paul has always been all about the debt and the deficit and taxes and spending. You could call him the godfather of the Tea Party.

Of course, Paul may have to split the libertarian Republican vote with former two-term governor Gary Johnson. Johnson also was “a Tea Partier when tea-partying wasn’t cool,” according to the Capitol Report of New Mexico. He vetoed 750 bills in eight years, not counting line-item vetoes. And since today’s libertarian moment goes beyond spending and health care to include rising support for gay marriage and marijuana legalization, Johnson might be better positioned to ride that wave and attract younger and independent voters.

Footnote: Two weeks ago NPR speculated about an Ayn Rand moment building from the financial crisis to the opening of Atlas Shrugged.

The Libertarian Moment? is a post from Cato @ Liberty - Cato Institute Blog

• DON’T FORGET: Our fiscal policy conference, “The Economic Impact of Government Spending,” featuring Senators Bob Corker (R-Tenn.) and Mike Lee (R-Utah), former Senator Phil Gramm (R-Tex.), Representative Kevin Brady (R-Tex.), and other distinguished guests, begins at 2:00 p.m. Eastern today. Please join us on the web–you can watch the conference LIVE here.
• Atlas Shrugged Motors presents the Chevy Volt.
• The parable of the Good Samaritan teaches us about the moral value of voluntary charity toward the needy–it says nothing about using coercive government programs of the modern welfare state.
• It is not the role of the Court to rewrite laws for Congress.
• The failed “war on drugs” has reshaped our budgets, politics, laws, and society–and for what?

Thursday Links is a post from Cato @ Liberty - Cato Institute Blog

• They passed the bill, and now we’re finding out what’s in it.
• We’re finding out that the war in Libya could really be about protecting European interests.
• In Atlas Shrugged, Ayn Rand described a world in which government both partly produced and partly subsidized goods; we’re finding out she wasn’t far off the mark.
• We’re finding out that “American exceptionalism” is a cloak for military adventurism.
• The longer America fights a war on drugs, the more we find out about how detrimental it is to our fiscal outlook:

Friday Links is a post from Cato @ Liberty - Cato Institute Blog

• What are Republicans doing to stop ObamaCare? Not much.
• Conflating the Taliban with al Qaeda isn’t helping our foreign policy dialogue.
• “Sitting in a Volt that would not start at the 2010 Detroit Auto Show, a GM engineer swore to me that the internal combustion engine in the machine only served as a generator, kicking in when the overnight-charged lithium-ion batteries began to run down.”
• The new issue of Regulation looks at price gouging, soda taxes, the Durbin Amendment, and more.
• Who should decide when we tap into strategic oil reserves: The president? Or market forces? 

Friday Links is a post from Cato @ Liberty - Cato Institute Blog

Fiscal crises have a predictable pattern.

Step 1 occurs when the economy is prospering and tax revenues are growing faster than forecast.

Step 2 is when politicians use the additional money to increase government spending.

Step 3 is that politicians do not treat the extra tax revenue like a temporary windfall and budget accordingly.Instead, they adopt policies – more entitlements, more bureaucrats – that permanently expand the burden of the public sector.

Step 4 occurs when the economy stumbles (in part because more resources are being diverted from the productive sector to the government) and tax revenues stagnate. If the resulting fiscal gap is large enough, as it is in places such as Greece and California, a crisis atmosphere is created.

Step 5 takes place when politicians solemnly proclaim that “tough measures” are necessary, but very rarely does that mean a reversal of the policies that caused the mess. Instead, the result in higher taxes.

Greece is now at this stage. I’ve already argued that perhaps bankruptcy is the best option for Greece, and I showed the data proving that Greece has a too-much-spending crisis rather than a too-little-revenue crisis. I’ve also commented elsewhere about the feckless behavior of Greek politicians. Sadly, it looks like things are getting even worse. The government has announced a huge increase in the value-added tax, pushing this European version of a national sales tax up to 21 percent. On the spending side of the ledger, though, the government is only proposing to reduce bonuses that are automatically given to bureaucrats three times per year. Here’s an excerpt from the Associated Press report, including a typically hysterical responses from a Greek interest group:

Government officials said the measures would include cuts in civil servant’s annual pay through reducing their Easter, Christmas and vacation bonuses by 30 percent each, and a 2 percentage point increase in sales tax to bring it to 21 percent from the current 19 percent. …One government official, speaking on condition of anonymity ahead of the official announcement, said…that “we have exhausted our limits.” …”It is a very difficult day for us … These cuts will take us to the brink,” said Panayiotis Vavouyious, the head of the retired civil servants’ association.

Now, time for some predictions. It is unlikely that higher taxes and cosmetic spending restraint will solve Greece’s fiscal problem. Strong global growth would make a difference, but that also seems doubtful. So Greece will probably move to Step 6, which is a bailout, though it is unclear whether the money will come from other European nations, the European Commission, and/or the European Central Bank.

Step 7 is when politicians in nations such as Spain and Italy decide that financing spending (i.e., buying votes) with money from German and Dutch taxpayers is a swell idea, so they continue their profligate fiscal policies in order to become eligible for bailouts. Step 8 is when there is no more bailout money in Europe and the IMF (i.e., American taxpayers) ride to the rescue. Step 9 occurs when the United States faces a fiscal criss because of too much spending.

For Step 10, read Atlas Shrugged.

Lessons from the Greek Budget Debacle is a post from Cato @ Liberty - Cato Institute Blog

The Wall Street Journal has an interesting column that asks whether Ayn Rand, the famous libertarian novelist and philosopher, is a net plus for the free-market movement. This seems like an odd question. After all, her books (especially Atlas Shrugged) have been hugely influential, exposing countless people to a libertarian message.

But the column’s author, Heather Wilhelm of the free-market Illinois Policy Institute, has a good point. Rand’s emphasis on individual freedom is laudable, but she makes herself an easy target by asserting that this requires über-individualism and leaves no room for altruism. Indeed, I’ll always remember being somewhat put off by the scene in Atlas Shrugged where one of protagonists rents, rather than lends, his car to a friend. And even though I’m rarely in a church, her insistence that atheism was a necessary component of her philosophy also struck me as odd (not to mention needlessly exclusionary).

From Wilhelm’s column:

Rand seems to be roaring back. Sales are surging—Brian Doherty, author of “Radicals for Capitalism” (2007), recently calculated that in one week in late August, “Atlas” sold “67 percent more copies than it did the same week a year before, and 114 percent more than that same week in 2007.” Two buzzed-about Rand biographies hit the shelves this fall, and an “Atlas” cable miniseries is reportedly in the works. Designer Ralph Lauren recently listed Rand as one of his favorite novelists, and CNBC host Rick Santelli, whose on-air antibailout rant inspired hundreds of “tea party” protests across the nation, admitted the same. “I know this may not sound very humanitarian,” he said, “but at the end of the day I’m an Ayn Rand-er.”

…But in an age where hope, change and warm-hearted marketing clearly resonate, is revitalizing and glorifying Rand’s acerbic “virtue of selfishness” doing the free-market movement any good? Doubts are starting to emerge. Leonard Liggio, a respected figure in libertarian circles and a guest at Rand’s post-”Atlas Shrugged” New York get-togethers, sees value in Rand but admits she wasn’t a bridge builder. …Others, however, go further. “Rand has this extremist, intolerant, dogmatic antigovernment stance,” says Brink Lindsey of the libertarian Cato Institute, “and it pushes free-market supporters toward a purist, radical vision that undermines their capacity to get anything done.”

…How are free markets best “sold”? A more compelling approach flips Rand’s philosophy on its head, explaining how everyone, especially society’s neediest, benefits from economic liberty. It’s a compelling story about how freedom and prosperity can change lives for the better. And Ayn Rand is of little help in telling it.

As an economist, I certainly don’t pretend to be an expert, but Rand’s philosophy seems vulnerable. And her personal style apparently was less than perfect. But, returning to the main issue, surely Rand has been a net plus for the cause of liberty. I’m not a Randian (and am not even sure what that entails), but I have probably given copies of Atlas Shrugged to about 50 people over the years. Simply stated, the book is a very compelling introduction to the idea that government is corrupt, that it attracts (and benefits) corrupt people, and that redistributionism is a corrupt philosophy.

Is Ayn Rand Good for the Cause of Liberty? is a post from Cato @ Liberty - Cato Institute Blog

Cato’s new staff writer, Aaron Powell, told me he had recently seen two people on the Washington Metro reading The Road to Serfdom by F. A. Hayek. That prompted me to check the sales figures for Road to Serfdom at Nielsen’s Bookscan. And whattaya know? Sales have increased this year at an even faster pace than sales of Atlas Shrugged. (Atlas sells 10 times as many copies, but the percentage increase over last year is less.)

So far this year the most popular edition of Road to Serfdom has sold 11,000 copies. That compares with 3,000 copies at the same point last year. That’s a 263 percent increase for those of you keeping score at home.

Why? Well, no doubt huge new government spending programs and attempts to massively expand the welfare state send people looking for classic literature that makes the case for liberty and limited government. But what the Marxists call the “objective conditions” can always use a bit of help. And indeed, just as I found in investigating the sales bump for Atlas Shrugged, it looks like an op-ed in the Wall Street Journal was instrumental in boosting the sales of The Road to Serfdom.

On February 4, former House Majority Leader Dick Armey, now chairman of Freedomworks, published an op-ed in the Journal titled “Washington Could Use Less Keynes and More Hayek.” Sales of Road to Serfdom, which were in the low hundreds each week since the beginning of 2009, more than doubled over the next four weeks. It seems likely that Armey’s op-ed caused the new interest.

Armey didn’t actually mention The Road to Serfdom — he just talked about Hayek and his ideas generally — but when you go looking for Hayek, you’re going to find his most popular book. So maybe we could attribute the sales bump instead to David Henderson’s review of The Road to Serfdom — titled “Still Relevant–Perhaps More So” — in the Spring issue of Regulation. But the Wall Street Journal does have a larger circulation.

Update: This item has been edited to remove proprietary information.

Soaring Sales for “Road to Serfdom” is a post from Cato @ Liberty - Cato Institute Blog

Sales of Atlas Shrugged have risen sharply this year, and various observers from the Ayn Rand Institute to the Economist have attributed the jump to “uncanny similarities between the plot-line of the book and the events of our day,” in the words of ARI’s Yaron Brook. The Economist writes,

Whenever governments intervene in the market, in short, readers rush to buy Rand’s book. Why? The reason is explained by the name of a recently formed group on Facebook, the world’s biggest social-networking site: “Read the news today? It’s like ‘Atlas Shrugged’ is happening in real life”.

Brook told CNN:

“So many people see the parallels with actually what’s going on, with the government taking over the banks, with the government kind of taking over the automobile industry, a president who fires the CEO of a major American corporation. These are the kind of things that come out of ‘Atlas Shrugged.’ “

But is this story right? Do news headlines generate book sales? How did people who read about TARP or bank nationalizations know that those events were reminiscent of a novel published in 1957? Maybe their friends told them “It’s just like Atlas Shrugged,” and they ran out and bought the book.

Or maybe something more direct is required. One Atlas Shrugged fan suggested to me that the real boost came in January, with a Wall Street Journal article by my former colleague Stephen Moore. So I decided to investigate, using the sales figures in Nielsen’s Bookscan. And indeed those figures seem to point in a different direction. The boom in sales of Atlas Shrugged really took off in mid-January, after Steve Moore’s essay ”‘Atlas Shrugged’: From Fiction to Fact in 52 Years” appeared in the Journal on January 9. Steve wrote:

Many of us who know Rand’s work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that “Atlas Shrugged” parodied in 1957….

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism….

David Kelley, the president of the Atlas Society, which is dedicated to promoting Rand’s ideas, explains that “the older the book gets, the more timely its message.” He tells me that there are plans to make “Atlas Shrugged” into a major motion picture — it is the only classic novel of recent decades that was never made into a movie. “We don’t need to make a movie out of the book,” Mr. Kelley jokes. “We are living it right now.”

Here’s a chart taken from Bookscan’s data on weekly sales of the mass-market paperback edition of Atlas Shrugged:

The sales in late 2008 are very similar to those in 2007, with a Christmas bump that was higher in 2008. But sales started to diverge after January 9, suggesting that it was in fact the Wall Street Journal essay that kicked them into high gear. Then they slowly fell, and then there was an even bigger peak in early March. Why? That’s not so clear. Perhaps it’s a case of self-fulfilling prophecy and the accumulating effects of media buzz. ARI put out its press release about soaring sales on February 23, and the Economist picked up the idea five days later, as did many bloggers. Then on March 2 and 5 the popular blogger Michelle Malkin talked about the idea of “Going Galt” — pulling back on work and investment in response to projected tax increases and regulations — in her blog and syndicated column, and the New York Times picked that up. Both Malkin and the Times’s Opinionator blog linked to the original ARI story about soaring sales, giving the idea further legs, and the Freakonomics blog picked up the Economist’s story. On March 14 the Wall Street Journal ran another op-ed on the contemporary relevance of Atlas Shrugged, this one by Yaron Brook. There’s a reason that publishers put “bestseller” on their book covers — people like to read what other people are reading. And there’s no question that once this media buzz got started, the sales have remained much higher than last year.

It seems that Greenspan, Bernanke, Fannie, Freddie, Barney Frank, Bush, Paulson, Geithner, and Obama all created the objective conditions for an Atlas Shrugged sales bump, but it took Steve Moore and subsequent commentators to create the “subjective conditions” — actually talking about the relationship of Atlas Shrugged to political and economic events — to set off the actual boom.

Two other minor points: The weekly sales in late 2007 were somewhat higher than in late 2006. So if you think, as the Economist suggests, that sales of Atlas Shrugged in the United States were pushed up by the British bailout of Northern Rock and the U.S. Treasury’s pressure on banks to assist subprime borrowers, then maybe the 2007 sales figures were already reflecting the impact of economic policy events. But the total sales in 2007 were barely ahead of 2006, and obviously the real jump has come this year.

Second, the bestselling edition of Atlas Shrugged is the mass-market paperback, which is of course the cheapest. That’s the edition whose sales are tracked in the chart. But the bestselling edition on Amazon is the more expensive trade paperback, which is the one whose sales the Economist analyzes. Why? Are Amazon customers older and more affluent, so that they prefer the larger book even at a higher cost? Do many local bookstores carry only the mass-market edition?

Thanks to C. Alexander Evans and Tom Firey for help in compiling and presenting these data.

What Caused Atlas Shrugged Sales to Soar? is a post from Cato @ Liberty - Cato Institute Blog