Producers on Strike

The Wall Street Journal wisely warns against drawing too many conclusions from one month's job data, but they also point out that the economy is much weaker than the White House claimed - in large part because of a series of public policy decisions that have rewarded sloth and punished production. Is anyone surprised that the economy's performance has been tepid?

The private economy—that is, the wealth creation part, not the wealth redistribution part—gained only 41,000 jobs, down sharply from the encouraging 218,000 in April, and 158,000 in March. The unemployment rate did fall to 9.7% from 9.9%, but that was mainly because the labor force contracted by 322,000. Millions of Americans, beyond the 15 million Americans officially counted as unemployed, have given up looking for work. Worst of all, nearly half of all unemployed workers in America today (a record 46%) have been out of work for six months or more. ...Whatever happened to the great neo-Keynesian "multiplier," in which $1 in government spending was supposed to produce 1.5 times that in economic output? ...The multiplier is an illusion because that Keynesian $1 has to come from somewhere in the private economy, either in higher taxes or borrowing. Its net economic impact was probably negative because so much of the stimulus was handed out in transfer payments (jobless benefits, Medicaid expansions, welfare) that did nothing to change incentives to invest or take risks. Meanwhile, that $862 billion was taken out of the more productive private economy. Almost everything Congress has done in recent months has made private businesses less inclined to hire new workers. ObamaCare imposes new taxes and mandates on private employers. Even with record unemployment, Congress raised the minimum wage to $7.25, pricing more workers out of jobs. ...The "jobs" bill that the House passed last week expands jobless insurance to 99 weeks, while raising taxes by $80 billion on small employers and U.S-based corporations. On January 1, Congress is set to let taxes rise on capital gains, dividends and small businesses. None of these are incentives to hire more Americans. Ms. Romer said yesterday that to "ensure a more rapid, widespread recovery," the White House supports "tax incentives for clean energy," and "extensions of unemployment insurance and other key income support programs, a fund to encourage small business lending, and fiscal relief for state and local governments." Hello? This is the failed 2009 stimulus in miniature.

The Enduring Influence of Ayn Rand and Atlas Shrugged

In a review of two new biographies about Ayn Rand, Charles Murray explains what made her books - particularly Atlas Shrugged - so powerful and persuasive:

In 1991, the book-of-the-month club conducted a survey asking people what book had most influenced their lives. The Bible ranked number one and Ayn Rand's Atlas Shrugged was number two. In 1998, the Modern Library released two lists of the top 100 books of the 20th century. One was compiled from the votes of the Modern Library's Board, consisting of luminaries such as Joyce Carol Oates, Maya Angelou, Edmund Morris, and Salman Rushdie. The two top-ranked books on the Board's list were Ulysses and The Great Gatsby. The other list was based on more than 200,000 votes cast online by anyone who wanted to vote. The top two on that list were Atlas Shrugged (1957) and The Fountainhead (1943). The two novels have had six-figure annual sales for decades, running at a combined 300,000 copies annually during the past ten years. In 2009, Atlas Shrugged alone sold a record 500,000 copies and Rand's four novels combined (the lesser two are We the Living [1936] and Anthem [1938]) sold more than 1,000,000 copies. And yet for 27 years after her death in 1982, we haven't had a single scholarly biography of Ayn Rand. Who was this woman? How did she come to write such phenomenally influential novels? What are we to make of her legacy? These are the questions that finally have been asked and answered splendidly, with somewhat different emphases, in two new biographies published within weeks of each other: Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns, an assistant professor of history at the University of Virginia, and Ayn Rand and the World She Made by Anne C. Heller, a former executive editor at Condé Nast Publications. ...Why then has reading these biographies of a deeply flawed woman—putting it gently—made me want to go back and reread her novels yet again? The answer is that Rand was a hedgehog who got a few huge truths right, and expressed those truths in her fiction so powerfully that they continue to inspire each new generation. They have only a loose relationship with Objectivism as a philosophy (which was formally developed only after the novels were written). Are selfishness and greed cardinal virtues in Objectivism? Who cares? Does Objectivist aesthetics denigrate Bach and Mozart? Who cares? Objectivism has nothing to do with what mesmerizes people about The Fountainhead or Atlas Shrugged. What does mesmerize us? Fans of Ayn Rand will answer differently. Part of the popularity of the books derives from the many ways their themes can be refracted. Here is what I saw in Rand's fictional world that shaped my views as an adolescent and still shapes them 50years later.

Greetings from Curacao

As you can tell from my last couple of posts, I'm getting increasingly upset with politicians who do the wrong thing and make our lives worse off. I'm especially bitter about how so much of what government does is for the benefit of powerful insiders and has a negative impact on the less fortunate in society.

So the time has come for me to take a deep breath and appreciate the fact that I'm on a beautiful Caribbean island. I'm in Curacao for a speech to a Wealth Preservation conference, where I'll be talking about the importance of fighting international bureaucracies (such as the OECD) that are trying to hinder the flow of jobs and capital from high-tax nations to low-tax jurisdictions. To put it bluntly, I want to make it easier for people to "Go Galt" and protect themselves from rapacious politicians. Given what has happened in Europe, this battle is getting more important every day.

The Real-World Version of Atlas Shrugged

John Stossel's show tomorrow on Fox Business News will discuss how modern events are eerily similar to what happened in Ayn Rand's Atlas Shrugged. Writing about the show in his column, Stossel asks which political figure from today would be akin to the evil Wesley Mouch in the book. That's a challenging question. During the Clinton years, Ira Magaziner or Robert Reich would have been obvious choices. But who is the statist Rasputin of the modern era? You can vote at this link. Geithner, Frank, and Obama currently lead the voting:

Even though Rand published "Atlas" in 1957, her descriptions of intrusive and bloated government read like today's news. The "Preservation of Livelihood Law" and "Equalization of Opportunity Law" could be Nancy Pelosi's or Harry Reid's work. The novel's chief villain is Wesley Mouch, a bureaucrat who cripples the economy with endless regulations. This sounds familiar. Reason magazine reports that "as he looks around Washington these days," Rep. Paul Ryan "can't help but think he's seeing a lot of Wesley Mouch". Me, too. I also saw a lot of him under George W. Bush. So I'm conducting this unscientific poll: Who is our Wesley Mouch? Hank Paulson? Tim Geithner? Barney Frank? You can vote here. Personally, I think Chris Dodd's ridiculous financial proposals ought to win him the honor. But he isn't among the choices on Fox's list. As I write this, Geithner, President Obama and Barney Frank lead the voting. ...Rand brings out ferocious hatred in some people. ...Had today's bureaucrats been in charge decades ago, they would have banned things like aspirin, cars and airplanes. Sadly, they are in charge now. That makes the "Atlas" message important today. Although Rand idolizes businessman in the abstract, "Atlas Shrugged" makes clear that she (like Adam Smith) understood that they are not natural friends of free markets. They are often first in line for privileges bestowed by the state. That's called "crony capitalism," and that's what Orren Boyle practices in "Atlas."

Is Ayn Rand Good for the Cause of Liberty?

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 author has a good point. Her philosophy'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).

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 (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.