Man Without Qualities

Saturday, August 30, 2003

Davis Descending XXXVIII: Governor's Buddy Ashcroft Still Dithering

As noted in the prior post linked above, the only legally serious challenge to the October 7 recall election is pending in San Jose federal district court, where the court is essentially stymied by the Justice Department's failure to sign off on proposed election procedures under the Voting Rights Act. As of today (Saturday):

A three-judge federal panel has decided to wait a week before ruling on lawsuits that seek to postpone California's historic recall election because it might disenfranchise minority voters.

The judges on Friday also continued a temporary restraining order that prevents Monterey County elections officials from mailing absentee ballots to overseas voters. The order was first issued Aug. 15, after the lawsuits were filed. The panel said it would not rule on the lawsuits until Sept. 5. ....

Justice Department spokesman Jorge Martinez said the department was still weighing whether the government would sign off on Monterey County's plan and declined further elaboration. The department has already cleared Secretary of State Kevin Shelley's decision to set the election for Oct. 7.

While the San Jose proceeding is the only legally serious challenge to the recall, the ever-zany Ninth Circuit court of appeals will on Sept. 11 hear a non-serious challenge by the American Civil Liberties Union to the Los Angeles federal district court dismissal of the ACLU's lawsuit alleging that punch-card voting machines used in at least six counties won't accurately tally votes.

I would not be surprised to see the Ninth Circuit side with the ACLU. And I would not be surprised to see the Supreme Court immediately grant review and reverse the Ninth Circuit. But nothing here is certain.

The lower court was transparently correct, but that's no obstacle to the Ninth Circuit, which seems to know no limit in its drive to invent ever loopier and more embarrassing precedent for itself. This is a court, for example, that just held that testimony of a patient's own psychiatrist can be used in civil commitment proceedings against the patient, but cannot be used by prosecutors in a criminal case against the patient. In other words, the Ninth Circuit just held that your spouse (for example) can subpoena and use your psychiatrist's testimony based on your therapy sessions in which you discuss committing a crime for the purpose of locking you up as a threat to others, but a prosecutor cannot use that same testimony for the purpose of locking you up once you actually commit the same crime. Anyone who favors that particular policy choice should be seriously and personally concerned about civil commitment proceedings. United States Supreme Court cases are, of course, fairly contrary to the new Ninth Circuit holding - not that most of the Ninth Circuit cares.

UPDATE: As of September 3, the Justice Department has approved Proposition 53 and 54 to go on the ballot - but still no word on Monterey County.

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More On A "Do Not Spam" Registry

A clever and knowledgeable reader e-mails:

You commented about the "do not call" registry and mentioned a possible "do not spam" registry. It remains to be seen how effective the no-call list will be, but there's a few reasons why a no-spam list wouldn't just be ineffective, but would be quite likely to increase, not decrease, the burden of spam.

There are several major differences between spam and telemarketing. First, telemarketing isn't, by and large, prohibited - whereas at least in theory, the sending of unsolicited commercial emails is against the terms of service of *every* ISP. There's no such thing as "legitimate" spam, and spammers already have their connections revoked whenever they're tracked down.

Of course, as I'm sure you've noticed, this doesn't mean that you don't get spam, which brings me to the second major difference. The telephone network is extremely regulated and hierarchical. Access is strictly controlled by a tiny handful of gatekeepers, and every call is monitored and logged (for billing purposes, if nothing else). It is always possible to track a phone call back and get the number, name, and address of the caller. The internet in general (and email in particular) is much more freeform, with very little monitoring or control, and virtually no reliable "audit trail". Most spam has forged headers, and it's quite easy to make the source untraceable. What this means is that it would be trivial to identify alleged violators of a no-call list, but almost impossible to identify alleged violators of a putative no-spam list.

These two differences argue that a no-spam list would be ineffective, but there's a third difference that might make a no-spam list counterproductive. The limiting factor in the volume of telemarketing calls you receive is cost. Telemarketing is actually quite expensive, and even after you set up a call center, the marginal cost of each additional call remains relatively high, since you've got to pay an actual real live person to make it. But spam is cheap. No spammer is ever unable to afford to send one more spam. Instead the limiting factor is addresses. You just need to look in a phone book to find telephone numbers, but email addresses are much harder to come by, which is why spammers have to go to extraordinary lengths to get them (for example, spidering through websites). Even then, most addresses found aren't good. People change email a lot, or post fake addresses. For a spammer, the dream would be to find a large list of millions of valid addresses that are actually read by "real" people. Which, of course, is an excellent description of what a no-spam list would be!

If such a no-spam list was ever setup, it would be surprising if those who signed up didn't get an order of magnitude more spam, not less. And indeed, there have already been a couple of private attempts at setting up such a thing - all of them scams run by spammers. Fun fun fun...
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Why Didn't He Just Not Sign Up For The Ballot, And Not Make Any Announcement At All?

A flaccid, hand-wringing, self-pitying article in the New York Times today drags on for inches reporting stale, conventional thinking - that the Democratic presidential hopefuls are pretty pale, Dean is leading but highly problematic and the party's chances of taking the White House remote - and buries the only actual news it contains way, way down in its bowels:

[O]ver the next two weeks, the last two major Democratic candidates will go through the formality of announcing their candidacy [for the Presidency. Massachusetts Senator John] Kerry is to make his on Tuesday in South Carolina while [North Carolina Senator John] Edwards has scheduled his for Sept. 16 in North Carolina. Mr. Edwards, who was struggling with choosing between running for a second term for Senate or proceeding with a presidential campaign that so far has not taken off, is almost certain to bow out of the Senate race and run for the White House, his aides said.

"His aides said?" John Edwards announces his withdrawal from the Senate through an aside by some aide to the New York Times?

The bonds between the people of North Carolina and their senior Senator just aren't as strong as one might have hoped or imagined.

Still, the article contains a treasure of loopy quotes:

"There's at least a 90 percent likelihood right now that either Dean or Kerry will be the nominee," said Mr. Kerry's campaign manager, Jim Jordan. "And the race is as even as it can be. His advantages are purely stylistic. Kerry's are substantive and experiential."

"And experiential?" This one Jordan pearl gives a lot of insight into why Senator Kerry is in big trouble.

The article even relies for wisdom on Walter Mondale - who recently lost a Senate race in his own state and previously lost his Presidential race in historically spectacular fashion. Mr. Mondale is true to form, especially when providing hilarious campaign insights like this:

"My impression is that Dean has been very good for Kerry — but I'm sure Kerry doesn't feel that way," Mr. Mondale said.

That's one way of describing the relationship between Senator Kerry and the man who has completely undone the Senator's hold on the nomination. Yup. Dean has been very good for Kerry. Sure. You know how to call 'em, Walter!

And the New York Times has the judgment to know you're just the guy to ask when they want to hear it from the horse's ... er ... mouth.

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Friday, August 29, 2003

There's Still Lots Of Classical Slavery In The World

In this case, it's in north east Brazil.
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Latest From The Reduced Krugman Company

Hoystory has the goods. Lots of good things on the wobbling credibility of the Krugmanian Junta from Luskin, here and also here - with terrific links.

Here's the entire substance of today's column by Herr Doltorprofessor Krugman:

The Iraq war is too expensive, everybody hates us because of it and .. O, yes, ... Bush lied.

I'll put that on the intellectual shelf along with the latest word on "abs" workouts from Men's Health. It's not that the cost of the Iraq occupation or the proper abdominal exercises are without significance, it's just that in terms of usefulness, significance, complexity and subtlety of the insight the two articles contain, the Men's Health effort is slightly more imposing.

Herr Doktorprofessor has also been active on his personal website, where yesterday's posting notes:

Nationally, state and local taxes are highly regressive, and have become considerably more regressive over time. California's system is regressive, too, but not as much so as the national average.

Among the more "regressive" state and local taxes is the real property tax. So one of the reasons California's tax system is not as regressive as it might be is that Proposition 13 seriously limits the ability of California governments to tax real property. Of course, Herr Doktorprofessor does not like Proposition 13 one bit, as he has told us elsewhere: What is true is that California's taxes are highly inequitable: thanks to Proposition 13, some people pay ridiculously low property taxes.

So there you have it: What was just a few days ago highly inequitable is now not as regressive as the national average.

It's all in Schrodinger's Raccoon's day's work foraging through economic detritus for whatever can be pulled out to service the partisan needs of the moment!
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Davis Descending XXXVII: Governor Saved By Ashcroft?

Who knew that John Ashcroft and Gray Davis were best buddies? But that seems to be the case.

While it's not getting the publicity it deserves, there is one very serious federal court challenge to the October 7 recall pending - in San Jose, of all places. It's serious because under the Voting Rights Act the federal court probably cannot allow the election to go forward in Monterey County - which, of course, would derail the whole recall statewide - unless the United States Department of Justice approves the proposed voting procedures. The court seems to have little choice if the Justice Department won't act - and it hadn't acted as of late yesterday (Thursday), and the court is meeting today:

U.S. District Judge Jeremy Fogel issued a temporary restraining order Aug. 15 preventing Monterey County from proceeding, because its plan to consolidate polling places and reduce poll workers had not been reviewed by the Justice Department.

The Justice Department Aug. 19 gave pre-clearance for the Oct. 7 date for the election to recall Gov. Gray Davis, saying it would not affect minority voting rights.

But it still has to rule on whether to allow Proposition 54 to be on the statewide ballot, a measure that prohibits state and local agencies from collecting and using racial and ethnic data that was moved from the March 2002 ballot. It also is considering approval of Monterey County's revised election plan, which reduces the number of polling places from 190 to 86 because of the expense and compressed timing.

Any changes in the voting process in Monterey, Kings, Merced and Yuba counties must be cleared by the federal government because of previous violations of the Voting Rights Act of 1965, which, among other things, is designed to prevent last-minute election changes.

As of this writing, there was no Justice Department press release suggesting any action has been taken in connection with the Monterey case.
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Do Not Spam

The National Do Not Call registry has been very popular.

Perhaps I missed it, but I am not aware of any similar National Do Not Spam Registry.

Is there some reason such a registry couldn't be set up? Wouldn't that solve or at least moderate the swelling junk e-mail problem?

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Thursday, August 28, 2003

Schrodinger's Raccoons and the Search for Economic Reality

Tom Maguire has found one - a Schrodinger's Raccoon!

Here is what that particular Schrodinger's Raccoon (aka Herr Doktorprofessor Krugman) had to intone about the Search for Economic Reality a few years ago (link thanks to astute MWQ reader):

[T]he whole "New Economy" doctrine ... is based on a misunderstanding of the relationship between measurement and reality...[!] The New Economy doctrine, sometimes called the New Economic Paradigm, may be summarized as the view that globalization and information technology have led to a surge in the productivity of U.S. workers. This, in turn, has produced a sharp increase in the rate of growth that the U.S. economy can achieve without running up against capacity limits. ...

The conventional view that the economy has a "speed limit" of around 2-percent to 2.5-percent growth does not come out of thin air. It is based on the real-life observation that when the output of the U.S. economy--as measured by real gross domestic product--is growing rapidly, the unemployment rate falls; when the output is growing slowly or is shrinking, the unemployment rate rises. Over the last 20 years, the break point--the growth rate at which unemployment neither rises nor falls--has been between 2 percent and 2.5 percent. And this break point does not seem to have changed much in recent years: Since mid-1994, GDP has grown at about a 2.7-percent annual rate, while unemployment has fallen at a steady rate, implying that the no-change-in-unemployment growth rate is closer to 2 percent than to 3 percent. (Click here to see a chart that illustrates the break point.)...

[W]hile the economy can grow faster than 2-point-whatever percent for a while if it starts from a high rate of unemployment (like the 7.5-percent unemployment rate that prevailed in late 1992), in the long run, that growth rate cannot remain higher than the rate that keeps unemployment constant. And that is where the infamous "speed limit" comes from.

Well, we're nowhere near a 7.5% unemployment rate now - the national rate is just 6.2% and even California's rate is only 6.6%. So we're right up against that "speed limit" that's based on 20 years of real-life observation of the U.S. economy right now? But - as I noted in a recent post - here's what the same Raccoon pulled from the can behind the Princeton economics department just a few days ago:

Just to stabilize the labor market in its present dismal state would probably take growth of at least 3.5 percent; it would take much more than that to return the economy to anything resembling full employment. ... The best guess is that growth in the second half of the year will be faster than in the first half, possibly high enough to create some jobs, but not high enough to make jobs easier to find. In other words, in terms of what matters most, the economy will continue to deteriorate.

So as I did in that prior post, again I ask: Is 5% "much bigger" than 3.5%?

UPDATE: Others, including David Kelly, an economic adviser for Putnam Investments, do not share any of than Herr Doktorprofessor's apparently diverse opinions:

This week, analysts revised up its number for economic growth to 3.1 percent in the second quarter of this year. That number happens to be the break-even point on unemployment. Growth above that level creates jobs, below that level loses jobs. "We should begin to see a lift off in job growth in the next few months if we keep up this pace of economic growth," Kelly said. If the economy were to grow at 4 percent or so over the next year, as some analysts believe it will, that could create 1.5 million new jobs, not quite half the number lost since Bush took office, and enough for him to claim his economic growth package is paying off.

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About That GDP Rise

The news today is full of reports of the revised Commerce Department figures showing that the American gross domestic product grew at an annual rate of 3.1 percent in the second quarter, and that the unexpected strength is leading economists to raise their forecasts for the rest of the year. Inflation remained low.

The 3.1 percent growth rate, after adjustment for inflation, is up from the initial estimate last month of 2.4 percent growth in the gross domestic product. But that 2.4 percent growth was already well above the 1.5 percent rate of increase that most Wall Street economists had been forecasting.

In other words, the United States economy grew in the second quarter at more than twice the rate most Wall Street economists had been expecting just last month.

The upward revision is reported to have mostly been caused by higher consumer spending, stronger exports and a reduction in the estimate of imports. Personal consumption expenditures, adjusted for inflation, rose 3.8 percent and spending on business equipment and software rose 8.2 percent. Inventories fell by $20.9 billion and defense spending increased strongly. Corporate profits continued their strong recovery. Richard Berner, chief United States economist at Morgan Stanley, said third-quarter growth could be as high as 5 percent.

That last prediction is interesting because Herr Doktorprofessor Krugman opined only days ago:

Just to stabilize the labor market in its present dismal state would probably take growth of at least 3.5 percent; it would take much more than that to return the economy to anything resembling full employment. ... The best guess is that growth in the second half of the year will be faster than in the first half, possibly high enough to create some jobs, but not high enough to make jobs easier to find. In other words, in terms of what matters most, the economy will continue to deteriorate.

I wonder if an annual growth rate of 5% counts as much more than 3.5%? What's really strange is that today all these economists in the news - like Richard Berner ("Earnings are growing faster than top-line growth," Mr. Berner said, "and that is good for future profits and for the hiring back of workers.") and James E. Glassman ("The third quarter is stacking up to be a 4 to 6 percent quarter."), senior United States economist at J. P. Morgan - seem to be saying that the very same dynamics that generated that 3.1% number for the second quarter are making those economists predict rates of growth in the 5% range for the third quarter. But Brad DeLong already told everybody on August 15 - the very day Herr Doktorprofessor Krugman's "Twilight Zone" column appeared - that The betting now is that the latest GDP growth number will be revised upward to a 3.0% annual growth rate. Surely Herr Doktorprofessor Krugman was in on that betting!

Wasn't a numbers man like Paul Krugman already resetting his third quarter growth predictions for the 5% range back on August 15, when the "betting" on a second quarter number was north of 3% - or at least allowing for that likelihood? But his August 15 column says that growth in the second half will not be high enough to make jobs easier to find. So I guess that means 5% is not much more than 3.5%!

And what are we to make of the following dollop, also from Herr Doktorprofessor's August 15 column - when the "betting" was already that the GDP growth number for the second quarter would be revised upward to a 3.0% annual growth rate:

All this is, of course, an indictment of our economic policy — a policy that has managed the remarkable trick of generating immense budget deficits without giving the economy much stimulus. But that's a subject for another day.

Maybe "another day" has now arrived?

I must consult the handbook from my correspondence course materials from the Paul Krugman School of Obfuscatory Prediction Writing. Surely the answers are all there in the footnotes! But, so far, the only optimism I can find is that SARS is unlikely to have utterly destroyed our civilization by now.
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Hillary, Dillary, Doc ...

... the Senator looks at the clock:

The race for the Democratic presidential nomination in 2004 has changed totally in the past few weeks. At the beginning of the summer, Hillary could comfortably deny having national presidential ambitions, because the comfortable conventional wisdom was that it didn’t really matter who the Democratic candidate would be, because President Bush had a lock on re-election. (I’m sure that the thought has never crossed her mind that it would be better for her if Bush won in 2004, leaving her a clear field in 2008)

But now!...with Bush looking more vulnerable because there are not enough jobs at home and not enough peace abroad, Senator Clinton has to check some numbers. If a Democrat, say Kerry, defeats Bush next November and then runs for re-election in 2008, then her next chance to run would probably be in 2012, when she will be 65 years old. And who knows what the world will look like then?

Yes, indeed, the race has changed totally in the past few weeks! We must, must, must bring ourselves to believe that there was simply no way Hillary Clinton could have imagined two months ago that the economy might not soar or that President Bush's high poll ratings following his successful war in Iraq might soften as that intervention receded into the past. Anyone who points out that Bill and Hillary Clinton went through exactly that calculus with respect to Bill's run against the President's father in 1992 is just picking! That the comfortable conventional wisdom that President Bush had a lock on re-election was always challenged in many quarters - especially among the political professionals surrounding the Senator - is a mere bagatelle!

And we must also regard such developments as completely unimaginable when Hillary Clinton assured New York voters that she would definitely serve out her term to get them to elect her to the Senate in the first place. It's not that she fed the voters a line while at the same time thinking that if the opportunity availed itself she would nab it. No, no - Hillary Clinton wouldn't break faith with her New York suckers - I mean voters - like that.

And surely it is only in the past few weeks that cutting-edge research has revealed to Senator Clinton that if another Democrat is elected in 2004 then she probably wouldn't be able to run until 2012 - and that in 2012 she will be 65 years old!

Sometimes things just change completely in completely unforeseeable ways, and a politician just has to keep loose!

UPDATE: New York Sen. Hillary Rodham Clinton reportedly denied that she would consider jumping into the 2004 Democratic presidential race today (Friday): "I am absolutely ruling it out," Clinton said during a visit to the New York State Fair in Syracuse, N.Y. She had insisted in recent months that she will not consider entering the race for president this year even if that is what some Democrats want.

Which means that Gallup Poll and the new economic growth numbers are still pointing to a Democratic Presidential loss in 2004.

FURTHER UPDATE: She's not stupid.
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Fight Club

In the Washington Post, Howard Kurtz's description of Al Franken's book includes this observation:

Franken doesn't merely denounce conservatives. He harasses them, provokes them, gets right up in their faces. He once called up National Review Editor Rich Lowry and challenged him to a fight in a parking garage. Lowry declined.

Gee, if Mr. Franken challenged me to a fight in a parking garage, I wouldn't decline - at least I wouldn't decline if he signed a formal, written release and consent and there were witnesses. On the other hand, I wouldn't count the results of that fight as settling anything over which we disagree.

But I wouldn't decline.

Mr. Franken? O, ... Mr. Franken? Over here, Mr. Franken! YOO - HOOOO, MR. FRANKEN!

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Wednesday, August 27, 2003

Word Magic

One of the more peculiar themes that is now developing in the California recall is the denial of the significance of the $38 Billion California state budget deficit. For example, the Daily Howler criticizes this bit of reporting by CNN’s Wolf Blitzer, interviewing Gray Davis on Late Edition:

BLITZER: At the same time your critics…are pointing to mismanagement on your point. They point out—and we’ll put some numbers up on the screen—that when you took office in 1998, there was more than a $4 billion surplus in the California, $4.4 billion California surplus, but there is now a $38 billion deficit. They say that’s extraordinary, extraordinary mismanagement that warrants your recall.

DAVIS: First of all, there is no $38 billion deficit. I signed a budget a couple of weeks ago. It is balanced in the year we’re currently in. We do have an out-year problem of $8 billion. But we’ve made great progress going from $38 billion to $8 billion.

The Howler comments: Where in the world has Blitzer been? Should major journalists be conversant with even the most basic facts? The Howler had previously cited Herr Doktorprofessor Krugman as pointing this out.

The issue here is: Why are people in California angry enough at Gray Davis to possibly recall him? That a budget has now been signed with "an out-year problem of $8 billion" rather misses the point as far as current California voter anger goes because the budget deficit was reduced by making cuts, borrowings and increasing taxes in ways that were not previously needed and which many of the now-angry voters now say they did not expect.

To get some idea of how peculiar this Howler/Krugman/Davis approach to understanding voter antipathy really is, just imagine a conversation between Gray Davis (or the Howler or Paul Krugman) and a California voter:

Gray Davis: Why are you, as a California voter, mad at me now?

Voter: Because you let the state budget go $38 Billion into deficit and lied about it when you asked for my vote when you were re-elected.

Davis: But that's all wrong! First of all, there is no $38 billion deficit. I signed a budget a couple of weeks ago. It is balanced in the year we’re currently in. We do have an out-year problem of $8 billion.

Voter: You have balanced the budget and avoided a complete state shutdown that should never have even been possible under your campaign promises - goodie! OK, then I'm mad at you because you let the state budget go into a condition that required $38 Billion in spending cuts and tax increases and lied about it when you asked for my vote when you were re-elected. What's the difference? My car registration fee just tripled - you said that would not be needed. All kinds of state benefits have been cut - you said that would not be needed. The state sales tax is going up - you said that would not be needed. The state's borrowing has trashed its credit rating - you said that would not happen. Most of the reason I was mad at you because of that $38 Billion deficit was that I realized my taxes would have to go up and my benefits go down until that gap was closed. Now you say there's no problem because you have just signed a budget raising my taxes and reducing my benefits to close that very gap. And I'm not supposed to be mad at you? ARE YOU OUT OF YOUR MIND?

Davis: But I balanced the budget. I'm a fiscal conservative.

Voter: No. You're like somebody who shows up at my door, points a gun at me and asks "Why are you mad at me?" Then, when I tell you that I'm mad because you're threatening to shoot me, you pull the trigger and ask "Why are you mad at me now, I'm not threatening to shoot you now!"

Yes, this year's budget is passed and balanced. Yes, we do have an out-year problem of "only" $8 billion - provided no additional spending is authorized and no spending cuts are restored in the coming election year, the vehicle registration fee is not rolled back (despite the desire of every major contender in the recall to do just that) and no "unexpected emergencies" arise - like the need to keep the lights on when the cost of power goes up.

But the $38 Billion number is still the right number to keep in mind when considering why voters are angry at Gray Davis' performance as governor. Blitzer may not have got the figures right in the trivial sense that instead of saying "there is now a $38 billion deficit" he should have said "two weeks ago there was a $38 billion deficit which was closed only through massive and possibly illegal tax increases, borrowings and program cuts", but he sure got the substance of the recall election right. It's the Howler and Messrs. Davis and Krugman who are missing the important point.

POSTSCIPT: The passage of the California budget is, of course, a significant event for Gray Davis and an important development in the recall process - but not for the reasons which Messrs. Krugman and Davis and others have sought to assign to it. As far as the recall is concerned, before the budget passed the fighting over it was the constant focus of California political coverage. In effect, the budget coverage was the recall campaign, or most if it. Following the budget's passage, the various players - especially the Governor - could hope to mount their own campaigns and otherwise attempt to direct public attention and opinion. That is not happening, or at least it is not happening to the extent and as quickly as the Governor and his supporters would prefer.

Budget concerns have not fully or quickly abated partially because the budget that was just passed does some of the painful things necessary, which smarts and will long linger, and partially because the budget does not do all of those things - but leaves lots of pain for next year, which is an election year for the legislature. In addition, the budget mess is a kind of mnemonic for other California messes, especially the workers compensation system, which is a major impediment to the growth needed to address the structural component of the recurring budget crisis.

MORE:Bob Somerby of the Howler e-mails the following response:

What Blitzer said was inaccurate. It was typical, know-nothing insider
journalism. If he had said something else that WAS accurate, that would
been fine. Which part of "major journalists shouldn't make factual
misstatements" don't you understand?

By the way, because Blitzer said something that was factually
time was wasted on Davis' answer, which didn't speak to the questions
raise. Davis didn't speak to the question you raise because Blitzer was
dumb to ask them.

For what it's worth, I think Mr. Somerby is correct that Blitzer should get his facts right, even facts which are details. However, a politician determined to avoid the substance of a question - like Governor Davis, here - has plenty of opportunities to do so. It seems a stretch to suggest as Mr. Somerby does that Mr. Davis would have said something meaningful if Blitzer's question had included the words "two weeks ago..." instead of "now ...."

The Governor's evasiveness also indicates how spectacularly out of touch he has become. He suffers from his own evasiveness in addition to the voting public because he desperately needs to address - or appear to address - the substance of questions like Blitzer's in order to increase his chances of surviving the recall. While it is technically possible for him to survive with a campaign of word magic, he sure isn't stacking the deck in his favor with responses like this. There are now plenty of reports of private polls indicating that the recent one by the Los Angeles Times that seemed to throw Mr. Davis a lifeline was not accurate. If Mr. Davis wants to remain governor, his best bet is to address the voters' concerns, not deny their reality as if the whole recall movement were some modern version of a medieval dancing mania.

STILL MORE: An astute reader correctly notes that a draft paper by Daniel J. B. Mitchell now appearing on the UCLA Anderson School web site shows that the $38 billion was a moving target, impervious to accurate classification by such terms as “deficit” “shortfall” “hole” etc. The opaque accounting that produced the $38 billion number was obsolete when Blitzer cited it, having been replaced by a new opaque accounting that produced the $8 billion number. Blitzer is hardly the issue.

The perversely obscure public reporting of California finance can also be seen in this screed from the liberal California Budget Project, which attempts the amazing feat of persuading its readers that California did not "spend it's way" into the current crisis without ever mentioning how much California actually spent, or how much revenue it received, in any year, and also misrepresents the state's General Fund as "California spending" - where California spends from many other funds, too. Indeed, the CBP's summary of the current budget notes opaquely that billions of dollars in the current budget were paid for with "fund shifts and internal borrowing." That is, the current budget moves money into the General Fund from other state funds whose very existence is never acknowledged in the screed purporting to track California spending and arguing that California did not "spend its way" into the current crisis. That's not revenue, that's accounting magic. California spending and revenue is made even harder to track by the legislature's frequent shifting of revenue and spending to localities, often just to accomodate (some would say "evade") state constitutional provisions.
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Taxing California

Is California a high tax state?

Some people, such as Paul Krugman, say that California is not a high tax state. He focuses on state and local taxes as a percentage of personal income. That measure provides some good information - but no measure provides all relevant information.

It is also important to ask:

How much will a person living in California and making a specified wage be able to buy with what is left of that wage after all taxes are paid?

That question will be important to an individual considering whether to live in California or another state. And it will be important to that individual's employer or potential employer, since that wage will tend towards one that has purchasing parity with other areas. And raising wages in a jurisdiction with a progressive income tax is largely self-defeating, as discussed below. One caveat: It is also important to keep in mind that taxes do pay for things at least some taxpayers want and use - tax money is not just value out-the-door. Nevertheless, this is an important question.

Suppose one starts with the question: What salaries have pre-tax purchasing parity between, say Miami and Los Angeles? According to one on-line service, a salary of $100,000 in Miami equates to a salary of $134,000 in Los Angeles without taking into account items such as taxes.

Suppose that the state-and-local tax burden as a percentage of personal income in Miami were exactly the same for this individual as that in Los Angeles - say, 20% just for a round number. That means a married taxpaying couple has to pay the same federal income taxes in both states after deducting the same amount for state and local taxes. The federal income tax rate is 15% for incomes between 14,000 and 56,800, and after that goes to about 35%.

If a Los Angeles employer attempts to adjust for the 34% purchasing parity ratio between Miami and Los Angeles by paying a higher salary, 20% of each marginal salary dollar goes to state and local taxes (remember, these are marginal dollars the employer has to pay over the Miami base, so it is not correct in this analysis to ignore this 20% on the grounds that Miami and Los Angeles have the sme state-and-local tax burdens) and 15% of each marginal salary dollar goes to federal taxes until the employee is making $56,800 in federal taxable income - at which point 35% of each marginal salary dollar goes to federal taxes. That's a big disincentive for an employer to locate high-wage employees in California.

Also, a major (often, the dominant) reason many important things are expensive in California is already government regulation, so even that purchasing parity differential already represents a state "tax" (in the sense of increased cost caused by regulation) that does not reveal itself in comparisons of taxation to personal income. Just by way of examples, housing - at one time relatively cheap - is now very expensive in California, and fuel, electricity and water costs are all high largely because of inefficient state intervention. One might include the state's irrational and wildly expensive workers comp program and litigation climate in that category, too.

All of these tax and state-added-expense effects are concealed by the use of the tax-as-percentage-of-personal-income measure. That doesn't mean people citing to that measure are being deceptive. But these effects will not be ignored by individuals thinking of moving to California or businesses thinking of moving out. And they are relevant to determining whether California is a high-tax state.

But just as California taxes do not exist in a vacuum free from federal tax and cost-of-living consideration, neither do they exist independently of spending considerations. At least with respect to California state and local taxes one can assume that such taxes are mostly (but not solely) spent in California. The same cannot be said of federal taxes. At the dawn of the Clintonian era, in 1992, the federal government spent 93 cents in California for every dollar it extracted from the state in taxes - but by 2002 that per-federal-tax-dollar spending had dropped by 16 cents to 76 cents. So while in real, macroeconomic terms, federal taxation of Californians is already high because of cost-of-living factors - that burden has become much heavier since 1992 if such taxation is considered in terms of federal taxation of Californians net federal spending in California. [As an aside: Many of the biggest supporters of the same high, progressive federal taxes and altered spending priorities (including reduced military spending) put in place after 1992 are California's own Congressional representatives, especially Senator Barbara Boxer.]

Does that help explain why people like Paul Krugman are so fond of that particular tax-as-percentage-of-personal-income measure of state tax burden in this context?

POSTSCRIPT: One astute reader suggests that most of the above post does nothing more than point out that California is a high cost-of-living state. That may be right. I plan to think further about that, and may revise the above post. In the mean time, I am very glad to receive the comment, and I invite any more that my generally amazingly sharp readers may offer.

MORE: From the Daily Howler.

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Tuesday, August 26, 2003

The Reduced Krugman Company


I don't refer to his physical parameters. I refer to every parameter by which a public intellectual is measured. His recent columns frequently exclude economic argument. When it is included, it's generally as small and pale as a grub. His vision - once fixed on the globe and international trade and finance - ever narrows. His tone, once aspiring to the magisterial pretensions of, say, John Maynard Keynes, is more often emitted as an insinuating whine - as with today's tiny whine from the Hudson.

The new Herr Doktorprofessor Krugman is more convenient and fits on the intellectual shelf once reserved for Redbook or Men's Health articles!

Yes, the new shrunken Herr Doktorprofessor folds up and fits anywhere, since he is without the intellectual structure that retards further shrinkage. For example, today's column goes on for the customary inches. But instead of struggling as of old to compress complex issues to such small space, one senses herr doktorprofessor is struggling to inflate the column to fill the space. But there's no denying that the entire column can be presented as follows:

It is my unsupported view that the Bush Administration gave New York less money than it deserved following 9-11, and lied to everybody about the effects of the 9-11 attacks to support that reduced level of giving, because the Bush Administration doesn't like spending on New Yorkers.

There. Did I leave anything significant out? I want to avoid Dowdification! Of course, the reduction job has been made easier by this column's repeated admissions that nothing in it is supported by actual evidence ("I suspect that there was another reason ..." and "A source told Mr. Tomasky that Mr. Gramm..." and "I can't prove that was what administration officials were thinking ..."). A pure, smear simplicitas! It is true that its admitted unsupported nature does little to distinguish this column from so many others - but we must admire the fact that here a virtue is made from an oft-repeated failing!

Maybe I left out just one little thing, which appears in this confession of the column's inflated state in its author's own hand:

That sums it up: even after 9/11, hard-line conservatives opposed any spending, no matter how justified, that wasn't on weapons or farm subsidies, while some people from America's "red states" just hate big-city folk.

O, my - herr dr. professor is so subtle in his choice of language! What might just hate big-city folk be code for? Gee, if some uberpaleopopulist politician from one of those "red states" were to go around railing that everybody should just hate big-city folk for the pernicious things they are supposedly doing to America, who do you think would probably be his elliptical target? Would one have to have a triple digit IQ to figure out who he meant? I suppose we should be grateful that he saves us the whince and doesn't accuse the Administration and Congressional Republicans of hating cosmopolitans.

Could herr dr. prof.'s entire column today really amount to a smear against of the Bush Administration along the lines of:

I, Paul Krugman, am so filled with hate that I propose seriously and publicly - but in the same deniable code used by loathsome anti-Semites all over the world - that the Bush Administration lied to and under funded New Yorkers following 9-11 because the Administration is influenced by anti-Semites who just hate big-city folk so much that they like lying to them so those hated big-city folk can't protect their health and are cheated out of their appropriate compensation.

Could that be what is doing today?

Is that what Christie Whitman, the EPA chief at the time, is like? Is that what the Administration's Middle East policies and military actions betoken? And there is that awkward, grudging admission: In the end, New York seems to have gotten its $20 billion — barely.

How much smaller can h.d.p. get?

MORE: Paul Krugman leverages his column off the legitimacy of his Princeton academic position and his academic work. But the quality of that academic work (as reflected in his columns which purport to be drawn directly from his central area of academic expertise) also appears to be increasingly questionable and questioned - as in this excellent discussion from Don Luskin's blog regarding an article by Professor Steve H. Hanke reviewing the efforts of various economists who wrote on the Argentine financial crisis. Professor Hanke cites to several columns of Herr Doktorprofessor Krugman, classifed as "faulty literature" in Professor Hanke's first footnote, which also cautions: Not all of the works on the Argentine crisis suffer from these egregious errors.


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Monday, August 25, 2003

Rollicking Good News From Merry Old England

Rupert Murdoch seems to have driven Lorraine Heggessey, the head of the BBC, completely bonkers - judging by her comments to The Independent, including her assertion that the media billionaire is a "capital imperialist" who wants to destabilise the BBC because he "is against everything the BBC stands for." That seems to be Ms. Heggessey's way of criticizing Mr. Murdoch for believing in the virtue and social benefits of private enterprise and that a public corporation that says it is entitled to public financing because it has a special duty to present the news truthfully and objectively actually attempt to present the news truthfully and objectively or lose its public financing. She goes on to explain that he does not understand that the British people "have a National Health Service, a public education system" and trust organizations that are there for the benefit of society and not driven by profit. It appears that Ms. Heggessey is an antidisestablishmentarian.

But the best news is that the BBC head and others are really concerned that the Labour government may actually soon end the television tax that subsidizes the BBC.

Of particular charm are the goading suggestions from others in her industry that seem designed to help her around the bend:

Her comments come in the wake of a speech to the country's senior broadcasting executives by Tony Ball, chief executive of British Sky Broadcasting, in which Mr Murdoch's News Corporation is the major shareholder.

Mr Ball told the Edinburgh International Television Festival last week that the BBC ought to be forced to sell its most successful programmes, such as EastEnders, Casualty and Have I Got News For You to its commercial rivals, who would screen all future episodes instead. The money raised by such sales should then be ploughed into experimental programming, he said.

Executives at the BBC and elsewhere see the plan as a Murdoch-inspired attempt to cripple the corporation by depriving it of its most popular shows - and the large audiences that go with them.

Mr Ball told a questioner at the festival that it "would not be such a disaster" if the BBC were eventually to become a marginal broadcaster.

But Ms Heggessey retorted: "It wouldn't be such a disaster for Sky because he hopes that the less successful we become, the more people will subscribe to Sky. It would be a disaster for the BBC." .... I would suspect that everybody who works for Rupert Murdoch knows what he expects of them and they know that if they don't deliver they will be booted out," said Ms Heggessey. Newspaper readers "know when they are being peddled a line," she added.

In his speech, Mr Ball proposed two further restrictions to be placed on the BBC, which he argued would prevent the corporation it from straying too far into territory he regards as the sole domain of commercial broadcasters such as his own.

The BBC should be banned from buying any foreign-made material, he said. This would prevent the BBC from pushing up the price of American sitcoms, Hollywood movies and Australian soap operas, the staples of many commercial channels. "I really cannot see why public money is being diverted to those poor struggling Hollywood studios," he said.

MORE: The Wall Street Jounal notes:

In e-mails that surfaced last week (and which had been withheld by the BBC), Mr. Gilligan provided two members of the Foreign Affairs Select Committee investigating the dossier with background information on Mr. Kelly, and gave leading questions for them to ask the scientist. Hardly appropriate behavior for a supposedly objective reporter.

Mr. Gilligan, of course, is the BBC reporter who produced the now-discredited reports that the Blair government had "sexed up" Iraq intelligence dossier by now-deceased analyst David Kelly, who was not a senior intelligence officer, as claimed by the BBC; nor was he involved in drafting the dossier, as implied by the BBC.

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Sunday, August 24, 2003

Big Mo And Azimi

Maureen Dowd is off the wagon and tippling in testosterone rage again - that is, raging against those she thinks have more of it than she does (Big Mo has never, to my knowledge, acknowledged that her body produces considerable quantities of the stuff) - and she again confuses her full self immersion in sexual stereotyping for disagreement with the President's political positions:

Shouldn't real men be able to control their puppets? The Bush team could not even get Ahmad Chalabi and the Iraq Governing Council to condemn the U.N. bombing or feign putting an Iraqi face on the occupation. The puppets refused because they didn't want to be seen as puppets.

Shouldn't real men be able to admit they made a mistake and need help? Rummy & Co. bullied the U.N. and treated the allies like doormats before the war, thinking they could do everything themselves, thanks to the phony optimistic intelligence fed to them by the puppet Chalabi. No wonder they're meeting with a cold response as they slink back.

Shouldn't real men be reducing the number of Middle East terrorists rather than increasing them faster than dragon's teeth?

Could the real men please find some real men?

Well, no, Big Mo.

Real men (who, of course, need be neither heterosexual nor male - and in the case of this Administration, sometimes aren't on both counts) would neither appoint puppets to help run another country under a pretext of their independence or strike out at the good faith independence of the people they do install when they act within their agreed zone of independence. Ahmad Chalabi and the Iraq Governing Council do not seem to be "puppets" - although they do depend on the United States for their position in that country. It appears that the real men in the Administration have had the confidence to put in (some) power people who are not afraid to differ with the Administration - at least on some significant things. That seems about right.

The cold response "Rummy & Co." are now experiencing from the UN looks exactly the same as the cold response they received from the UN before any of the actions Big Mo mischaracterizes as "bullying the U.N." and "treating the allies like doormats" occurred. So those actions don't seem to have caused the cold response "Rummy & Co." are now experiencing from the UN

Shouldn't real men be able to admit they made a mistake and need help? Of course they should. So should everybody - including female columnists who invert the meaning of the President's quotes by deleting keys words and replacing them with little misleading dots, although that doesn't always happen. But the idea that "Rummy & Co." were misled by "phony optimistic intelligence fed to them by the puppet Chalabi" is quite a novel take, to say the least. It is also a little strange that Big Mo seems to be taking a holiday from suggesting that "Rummy & Co." have lied about Iraq intelligence just to suggest they were duped by the uber-mind of their own "puppet." It seems that not all puppets are created equal. Big Mo and the New York Times have old and very big chips on their shoulders for Mr. Chalabi, as Christopher Hitchens writing in Slate has noted:

Denounced only last month by yet another anonymous "report" from the CIA and sneered at on a daily basis by the New York Times, he has either failed to be sufficiently biddable by the puppet-masters or (how simple it all seems when you think of it) has cleverly arranged to be the object of his own disinformation campaign.

If it's the latter, then his stomach must be unusually strong. Maureen Dowd writes, displaying either an immense insider knowledge of day-to-day Baghdad or else no knowledge at all, that the American forces assigned to protect Chalabi would have been enough on their own to prevent the desecration of the National Museum. Since Chalabi was in Nasiriyah, far to the south, when the looting occurred, and since up until now he has provided his own security detail (I'd want my own bodyguards, too, if I'd been on Saddam's assassination list for a decade), and since we don't know by whom the actual plunder of the museum was actually planned or executed (or at least I don't), Dowd might wish either to reconsider or to offer her expertise to Gen. Garner. Dowd's bias was redressed in the New York Times on April 23, when Dilip Hiro expressed scorn for Chalabi's presence in Baghdad at all, informing him that he should really have been on the Shiite pilgrimage to Karbala but apparently "couldn't be bothered." Had Chalabi doubled back on his tracks and gone south for a self-scourging, and thus been in several places at once, we would no doubt have had Thomas Friedman or Nicholas Kristof accusing him of pandering to fundamentalism and to Iran. (And how well I remember Dilip Hiro, all those years ago, trying to reassure me that, appearances to the contrary, the Ayatollah Khomeini was just the Mahatma Gandhi of Iran.)

Shouldn't real men be reducing the number of Middle East terrorists rather than increasing them faster than dragon's teeth? Well, they should try - but as Israel's experience indicates, that isn't easy. Fortunately, there is no evidence that the number of Middle East terrorists is increasing - and the inflow of such terrorists into Iraq and continuing resistance from Saddam's remaining supporters is not to the contrary.

But there is one thing real men indisputably should do: Real men do what they can to ensure that women are treated right, and that includes accepting considerable costs to make sure that happens. That's why Big Mo might want to read an article appearing elsewhere in her own publication, an article concerning the results of another anti-terrorist war she and her publication opposed:

Until this morning, Lima Azimi of Afghanistan had never stepped onto a track, much less run 100 meters. ...

Running in her heat of the first round of the women's 100 meters at the world track and field championships, Azimi lined up at Stade de France alongside Kelli White, the United States champion, and Merlene Ottey, a winner of multiple Olympic medals for Jamaica who is now a citizen of Slovenia. ... She was the first Afghan woman to participate in a major international event in any sport, according to the International Association of Athletics Federations, track and field's world governing body.

"This was important for my country, for me, for my family," the 23-year-old Azimi said at a news conference. ....

Male athletes from Afghanistan competed in the 1996 Atlanta Olympics around the time the repressive Taliban regime came into power, prohibiting women from attending school and participating in sports. In 1999, the country was banned from participation by both the International Olympic Committee and by the international track federation. Afghanistan was reinstated once the United States routed the Taliban from power and restored a fragile democracy after the terrorist attacks of Sept. 11, 2001.

According to The Associated Press, Afghanistan entered a woman in the 100 meters at the 1983 world championships in Helsinki, Finland, but she did not show up to compete. An Afghan man named Mohamed Ismail Bakaki did run the 100 at the same meet, according to the I.A.A.F., but Afghanistan did not participate in the world track championships for the next 20 years. Until today. ....

While the Taliban was in power, Azimi said, she was essentially quarantined in her house, never leaving alone. ... Once the Taliban was ousted, Azimi ... was chosen to participate in the world track championships when she beat six or seven others in an audition inside the university gym. .... Eventually, she agreed to fly to Paris when the officials told her they were not interested in her coming here to perform well. "What is important, they said, was that I took part," Azimi said. ....

"The time didn't matter," Azimi said. "My participation was more important."

Real men try to make that kind of story happen. Why can't Big Mo understand what is so transparent to Azimi?
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Davis Descending XXXVI: More California Dreaming

Members of the liberal media such as the Los Angeles Times and Paul Krugman have a bit of a problem with the economics of the California recall. Generally speaking, such media would prefer to trumpet problems with the economy, and lay those problems at Washington's door. But with the recall coming to a head, that is an awkward approach because incumbent Gray Davis gets caught in the cross fire. The recent response has been to deny that California is really doing worse than the country as a whole. For example, the Los Angeles Times today runs an article headlined Gloomy Portraits of State's Job Market Are Misleading that starts out in a rather sunny, "it's all a big mistake" mode:

To hear Arnold Schwarzenegger and other gubernatorial hopefuls tell it, the California job market is totally in the tank. Last week, Schwarzenegger advisor George P. Shultz branded jobs the campaign's "new four-letter word." Fellow Republicans Sen. Tom McClintock of Thousand Oaks and Bill Simon Jr., who dropped out of the race Saturday, have spotlighted California's recent steep employment losses as a reason to sack Gov. Gray Davis and bring in new leadership. .... Yet the picture being painted by those in the recall race — that California is suffering disproportionately on the employment front — is in many respects misleading. As a percentage of its job base, California's statewide employment losses aren't any more severe than those of the nation overall. Since employment peaked in March 2001 at the height of the technology boom, California has shed 293,600 jobs, or 2% of its nonfarm payroll positions — the same percentage loss as the United States as a whole.

In July, California's unemployment rate stood at 6.6%, up a hefty 1.9 percentage points from the state's pre-recession low of 4.7%. But the national increase in the jobless rate has been even greater — up 2.3 percentage points to 6.2% last month from its December 2000 trough.

Well now, that seems awfully rosy. Very much like Herr Doktorprofessor Krugman's picture. Who would want to kick out an incumbent who presided over all that. Of course, not many readers will know what the "job base" is - but the whole passage has an awfully reassuring sound.

Of course, that passage rather obscures that for more than a decade - even during the boom of the 1990's - the California unemployment rate has been consistently and substantially higher than that of the nation as a whole - and that remains the case. Moreover, it is only much later that the Times article mentions the deterioration of the type of job available in California - exactly the kind of deterioration one would expect to be exacerbated or even caused by over-taxation - has been dreadful:

Much of California's pain stems from the types of jobs that have disappeared — tens of thousands of lucrative high-tech positions. The San Jose area, in the heart of Silicon Valley, has lost more than 200,000 jobs, or a stunning 19%, of its nonfarm payroll positions since December 2000. The fat bonuses, stock options and capital gains from stock sales that went along with such slots also have evaporated. ....

"We lost proportionately more high-paying jobs" than other states, said Howard Roth, chief economist with the state Department of Finance. "That's why we're in the fix we're in." ....

Beyond that, job creation is suffering because of the state's badly broken workers' compensation system — a popular target for denunciation on the campaign trail. With medical costs spiraling, employers have seen their insurance premiums soar. And because prices for the mandatory coverage are based on the size of a company's payroll, many employers have frozen their hiring or cut their staffs to reduce costs.

In the face of this kind of economic picture Cruz Bustamante, Herr Doktorprofessor Krugman, the liberal media and others persist in thinking that the state government can fix its financial problems by just raising taxes. The Times refers to next year's deficit as "$8 Billion" - the lowest estimate and one that assumes that the odious car registration tax will remain in place (although all of the major candidates want to repeal it and it's poison with the voters), that all spending cuts made so far will stick (although they were violently opposed by the Democratic majority in the legislature), that no new unexpected spending "needs" will develop (despite the recent power crisis that triggered huge state spending, and despite possible governor Cruz Bustamante and the legislature having lots of things they would like to spend money on in an election year). In fact, the deficit over revenue from current sources could easily be way north of $20 Billion - as Wall Street keeps reminding Sacramento. And that ignores local government deficits - which are worsening in many cases.

But it gets worse for California relative to the rest of the country. The Times also reports: Adjusted for inflation, personal income in California plunged 3.4% from January 2001 through July 2003, compared with a decline of 0.1% nationwide, according to estimates from the state Department of Finance. By its count, no other state did worse.

So, tell me again: Exactly how is it that a picture of California suffering disproportionately on the employment front is in many respects misleading?

Where is the odd "what-me-worry" economic spinning originating? Well, the Times article goes back to the same source on which Herr Doktorprofessor Krugman relied: Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. "There is nothing fundamentally wrong with the California economy.... We have a good set of industries," said Levy, noting that other states would love to have California's technology, bioscience and entertainment clusters. "We wouldn't even be having this discussion if we had a healthy national economy."

What Mr. Levy misses is that judging from the spectacular loss of high-end jobs and income in California, not only would other states love to have California's technology, bioscience and entertainment clusters - but are well on their way to getting them.

MORE: Terrifc Don Luskin, with terrific links to Hogberg and Hinderaker and lots more. It seems to be at least as hard for Herr Doktorprofessor to get the California situation right than it was for him to get the Iraq situation right.

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