Indiana's Gov. Mitch Daniels flashes his libertarian literary cred at the "Five Books" website, telling Jonathan Rauch about his hankering for Hayek, fetish for Friedman, and passion for Postrel. Some excerpts:

Hayek...convincingly demonstrated what was already intuitive: namely, the utter futility, the illusion of government planning as a mechanism for uplifting those less fortunate....

....simplicity, clarity of the rules, a caution about over-prescriptiveness in how to achieve a certain outcome or prevent a certain externality from happening – I think I probably first saw a lot of that in Hayek. 

For instance, I remember my first day on this job [as governor of Indiana]....I went over to see our biggest regulatory agency – we had hundreds of people in the room or on the phone. It was an environmental management agency and I told them then, and I’ve told them since, that we did not intend to weaken or moderate a single rule that I knew of, in terms of environmental standards. But I said that what we were determined to do was to make regulation consistent, predictable and quick. We worked very hard on that. We measured to see if we were getting there. So I guess that, if you say, correctly, that this job involves overseeing necessary regulatory activity, that mentality came in some part from books like Hayek’s....

I think that [Milton and Rose Friedman's] Free to Choose...expressed best to me the moral – I hate to say superiority – but the moral underpinnings of free economics, if one starts from the premise that the highest value is the autonomy and dignity and freedom of the individual. I thought it was Friedman who best summarised why that value is best protected and promoted by property rights, by free economic voluntary exchange....

Daniels also talks of what he learned from Mancur Olson and (former Reason editor) Virginia Postrel about American politics and governance:

My entire theme for years has been about making major change in our state. It was some of the books on this list that helped me to see that the real reactionary movements in a country like ours are what we call the left. These really are the forces of status quo: they may travel under different banners or masquerade as something else but these are the folks who are more often than not trying to freeze in place arrangements that worked well for the ‘ins’. So Olson shows you how that happens, Postrel shows you how this happens, Hayek shows you how this happens....

I’ve cited [Postrel] many times in explaining to people who have looked at our approach to governance here in our little two per cent of America. They struggle to put a label on us because we look a little different and we don’t throw around the terms that are usually used in politics. I sometimes use her nomenclature – dynamism versus stasism. And you’re right, despite what I just said, there are plenty of people who we would describe as conservatives these days who are very uncomfortable with the risks and the uncertainties that come with an embrace of competition and change and simple rules. I think in general the Olson-like structures that we have to guard against in our country today tend to be those that favour the large interventionist state we built. I’m including here, by the way, the incumbent businesses who love the way in which it suppresses competition and puts up barriers to entry.

Nick Gillespie blogged on praise across the GOP spectrum for the value of a Mitch Daniels--who says he is not running for president in 2012.