PRESTOPUNDIT -- "An intense brain-buzz, guaranteed" (2blowhards)

Schwarzenegger to announce decision Wednesday on the Tonight Show with Jay Leno.

Eli Noam provides some facts for the media concentration debate.

ECONOMIC BULLETIN: This is a MAJOR economic story:

The Federal Reserve is taking no half measures in its efforts to stimulate economic recovery in the US. To ward off the spectre of deflation, it is prepared to generate inflation and reflate the asset bubble. China is a silent but active partner in the Fed's pump-priming. It would not be possible for US Treasury bond yields to be at current levels were China not a willing and able supplier of savings to the US. Combined annual purchases of Treasury securities from China and Hong Kong have reached $290bn - more than those by any other creditor nation. Both China and the US are having fun at this game. The flow of Chinese savings has enabled Americans to borrow more and spend more ...

And a great deal of this spending is on CHINESE GOODS. Industrial production for export in China is experiencing double digit growth, in large part because of exports to America. Go to Sears. Take a look at where the majority of what is sold there is produced. Follow the circle of money -- and ownership in capital and money instruments -- and it's plain for anyone to see that the Federal Reserve and the Bush government are playing a deeply destructive fools game. In the long run China owns the wealth and our children own some broken toys and one giant pile of foreign debt they'll be paying off for the rest of their lives.

But we have not only the Federal Reserve, the President, and the Congress to blame for this massive act of collective financial suicide -- we can also justly blame the Keynesians (of left, right and center) who rule the roost throughout all of our major institutions. They've told us that the way to wealth is to borrow our bread and eat our seed corn, and through the magic of "consumer demand" our breadbasket will refill itself. As Hayek pointed out several generations ago, this is nothing but a lie, built on a conception of the economy which can't explain how the market could ever work, or why it would ever be broken.

Read the rest of the article. There is a good deal more to the story.

UPDATE: Here's Roger Garrison on Keynes:

... It was not difficult to establish that Keynes saw no way for the market to work. Increased saving, for instance, would not finance increased investment but rather would send the economy into recession. The attempt to save would be aborted in the face of decreasing incomes. Keynes's Paradox of Thrift was a profound denial of even the possibility that the market might coordinate the plans of producers with the decisions of savers. Hayek showed just why Keynes "saw no way": he had no capital theory. We have to add Bohm-Bawerk's capital theory, allow for differential interest-rate effects within the capital structure, and acknowledge the existence of real, live entrepreneurs. These are the amendments that make Keynesianism morph into Austrianism. With this audience, putting the Hayekian graphics through their paces as the story was told had the intended effects. It was easy to come down on the side of Hayek. The economy is sent into recession not by some ill-fated attempt by workers to save more but by an ill-advised attempt of the central bank to stimulate more growth than savers are willing to finance. Further, the central bank's attempts to re-ignite the boom after the bust has come is more likely to postpone a genuine recovery than to hasten it. If Keynes won the day against Hayek, it was because of the political popularity of his policy prescriptions and not because of the cogency of his theorizing.

Musical training boosts word power. Wonder what instrument Dennis Miller took up as a kid.

The economic and historical significance of boredom -- and those brave souls who embrace it

Futures markets are betting that Fed interst rate hikes will hit in 2004.

Stephen Moore and Phil Kerpen talk some uncommon good sense about a deeply dishonest term of art intentionally used by economists to bamboozle the public -- and themselves -- "Gross Domestic Product":

The headline number of 2.4 percent growth � immediately applauded throughout the media as strong � is about double the real rate that the private economy grew. While the private economy grew near a 1.3 percent rate, the federal government component of GDP increased by a staggering 25 percent, the largest quarterly increase in more than three decades. The increase was due almost entirely to the high cost of the war in Iraq.

The important word there is �cost.� Wars are a cost not an asset. You fight wars because you have to � because there are bad people in the world. But to suggest that the war was good for the economy would be as dimwitted as to suggest that Saddam Hussein deserves a medal of honor for helping revive the U.S. economy ...

And a modest proposal:

The conventional GDP numbers should be replaced with private-sector GDP. Private-sector GDP would omit government spending from the calculations. This would allow us to measure how much the market-based economy is expanding over time. By excluding government spending, no longer would economists and policy makers automatically assume the Keynesian theory that increasing government spending increases economic output.

Let�s measure GDP correctly. Activities that add to wealth should be included; expenditures that reduce wealth excluded. Sorry to say that when we calculate economic growth correctly, our performance is still underwhelming. We would make the case that the single most productive thing that Congress could do to revive prosperity and jobs would be to cut government spending by as much as possible. By all means, bring a chain saw.

But this advice is exactly the exactly the opposite of what the GDP calculators would tell us to do. The New York Times just published a front-page story arguing that the reduction in state and local government spending this year is having a contractionary effect on the U.S. economy. Here we have the perfect example of how statistics lie, and liars figure.

Richard Riordan is going to allow as little time as possible for Gray Davis to launch a trademark smear campaign against him -- hence his delayed announcement in the race to replace the sitting governor. So reports the NY Times:

A former top aide to Mr. Riordan said there was a fascinating dynamic playing out between him and Mr. Schwarzenegger. "Riordan is being heavily pressured by Schwarzenegger," the aide said, "to get in as early as possible," feeling that as more time passes without a commitment from either, both are made to look bad. "But nobody in the Riordan camp thinks getting in right away is a great idea. They want to wait until the 11th hour so he can't be attacked."

In other words, rather than being undecided, Schwarzanegger is simply waiting for the Riordan campaign launch before he goes before the cameras to announce that he won't be running -- and that he's back Riordan for governor. That's pretty close to what Daniel Weintraub was reporting several days ago.

California lays an egg:

Wall Street isn't taking too kindly to the notion of the state pushing off its huge budget problems to next year. California "seems to be going in the wrong direction," David Hitchcock, director of state and local government ratings at Standard & Poors, told reporters in a conference call. Hitchcock said the state is relying on "massive borrowing" and one-time fixes while ignoring the fact that shrinking revenues can't keep up with statewide spending.

.. and Bob Dole wants to be governor of California.

This is interesting:

As a teenager you are usually an ideological accident waiting to happen: You are either so eager to conform to your surroundings that you may end up supporting anything mainstream, or you are so rebellious that you are willing to advocate basically any odd-sounding idea as long as it will make your family and teachers go nuts. In my case, being a 14-year-old in the welfare state of Denmark A.D. 1981, I guess I was plenty of both.

Looking back, I probably had it coming somehow. In the big picture, Denmark in the early 1980s was � as was most of the western world � an odd mix between the remnants of ancient bourgeois values and the after-shocks of 1968. In the small picture, everyone in my family was (to cut a long story short) either extremely right wing or considerably to the left.

My father had always been a rugged individualist, who did not give a damn about what other people thought about him. If anything he seemed to almost enjoy the very outrage he could create in others. He was a fundamentally conservative, self-made industrialist, who in 1973 had been one of the early supporters of Danish tax-protester Mogens Glistrup�s populist and (then) quasi-libertarian Progress Party. My mother was largely apolitical, but liberal in a broad sense even if bourgeois in her manners. She had in the early 1970s, when she was in her mid-30s, had a late flirt with the radical chic, quit her day-job, gone back to school and experimented with her life.

Add to that that my parents were divorced and that I grew up without siblings, and then you may picture why I always had an ambivalent attitude toward authority. On the one hand, I always sought recognition from authority figures; on the other hand, there was no surer way to make me adamant than to tell me what I ought to do.

I still clearly remember a summer in the early 1970s, when my mother had moved the two of us to a hippie commune on a countryside farm. There we had to share bathrooms and kitchens and everything with everyone else, and the grown-ups applauded enthusiastically when we kids lined up and shouted "Ho-Ho-Ho-Chi-Minh!, Ho-Ho-Ho-Chi-Minh!" as we had been taught in the municipal kindergarten. I do not know how long we were there, but it seemed like years and I hated every moment of it. If there ever was a politically defining moment for me, it was when a longhaired, bearded guy scolded my mother for letting me play with a plastic toy gun. This was "aggressive, imperialistic toys, produced for profit" or something similar. We left soon after, and since then I have loved guns. Go ahead, make my day.

So in 1981, at age 14, I was a raging radical with reactionary leanings looking for a rebellious cause to join. What particular rebellion probably did not matter, as long as it was outrageous. I can still remember � to my own present embarrassment � that in the summer of 1981 I went to the offices of the youth organization of the Danish Socialist People�s Party (my mother�s favorite party that year), but the office was closed and I � fortunately � left, in search for another rebellion.

Well, not perhaps just any rebellion; I clearly had some leanings. First, many of my friends at that time belonged to the punk and mod crowds so characteristic of larger European cities in the early 1980s. With them I shared a certain disregard for "the establishment," hippies and the 1970s. Whereas the hippie types at school always were demanding more attention, more this, more that, we just wanted to be left alone. The pinkos wanted "participatory student democracy," we wanted freedom. For us, fashion wise and otherwise, the creed was "anything goes" � and so it did.

Second, in the early 1980s there was hardly anything more rebellious you could do than dress up in a blue blazer and a tie, praise Reagan and Thatcher, and attack the modern state. And so I joined the Danish Young Conservatives. This was in early December 1981, and before Christmas I was driving my 9th grade school teachers and family crazy. (Some of my mother�s leftist relatives even called a family meeting over the phone in order to discuss the matter. They finally accepted my mother�s judgment that it was not quite as bad as if I had been a juvenile delinquent.) However, in search for something truly outrageous, I initially became a rabid statist conservative of the Central-European Bismarckian persuasion. For me the ideal became something like the 1880s Europe: A strong Christian government to enforce traditional values, defend the nation, keep out the foreigners and smooth over social tensions.

So, I was, in other words, a teen, who was a punk by night, dressed in black, doing the pogo and screaming the lyrics of Sex Pistols� "Anarchy for the U.K." with my friends, while in daytime I was a conformist neo-conservative, dressed in blue, handing out leaflets for local conservative candidates and praising God, King and Country. As Dave Barry says: I am not making this up! It was a fascinating time, but clearly not a stable equilibrium ...

Peter Kurrild-Klitgaard's autobiographical essay from Walter Block's libertarian autobiography archive.

Daniel Weintraub:

Riordan had more than Gray Davis to blame for his defeat. Riordan ran last year as the candidate of leadership and vision while offering little of either. His campaign was so sloppy it left close observers questioning whether the former two-term mayor of Los Angeles had what it took to be governor.

Now, with his friend Arnold Schwarzenegger pulling back, Riordan might step forward as a candidate to replace Davis should the attempt to recall the governor succeed. But Riordan will surely fail again if he doesn't learn the right lessons from his disastrous run a year ago ...

Read it all. This is the good stuff.

Chart of the Day

(via Jeff Tucker)

Joseph Stiglitz provides some arguments against a terrorism futures market. One wonders, however, how much of this is really about Stiglitz getting psychic income from his cheerleading against markets and "the Bushies"? The tone of the article and the substance of the arguments makes one wonder.

It took two years of litigation before the Hollywood Bowl was allowed to build a new band shell replacing a ridiculously outdated shell with famously bad acoustics. Economists use the term "rent seeking" to explain how lawyers have designed the legal system for themselves -- like a protection racket the lawyers are assured a gigantic cut of the pie before anything productive can begin.

Behavioral economists go to the ball park. (via Just One Minute) It looks to me like economists are continuing to confuse the limits of knowledge problem for a rationality problem.

Gray Davis is "toast" -- Nancy Pelosi.

John Fund reports in today's Opinion Journal that state Democrats increasingly view Davis as a "goner". He goes on to suggest that the first major Dem. player to jump in may be Congressman Loretta Sanchez, who's said that if a major Democrat like Sen. Feinstein doesn't run, "I'll have to." The pressure on Democrats to join the "race to replace" is building.

Dollars, not Dinars for Iraq. (via Mises Econ Blog)

The California power elite first gave us an illegal tripling of the car tax -- now it looks like they're about to give us an unconstitutional budget:

The California Constitution prohibits the Legislature from �fixing� the deficit with long-term bonds-unless the bonds are approved by a statewide vote of the people, Pacific Legal Foundation warned today. PLF�s Board of Trustees this week gave the organization authority to file a lawsuit against any new state budget that violates the constitution�s debt-limitation provisions, in particular the voter-approval requirements.

According to news reports, the budget proposals of both parties include as much as $10.7 billion in special �deficit bonds� to be retired over five years or longer. However, Article XVI, section I of the state Constitution prohibits the state from entering into a �debt� of more than $300,000 unless voters give their OK in a statewide election.

�It�s time for a constitutional reality check,� said PLF attorney Harold Johnson. �The governor and key legislators are overlooking the electorate�s role in the process. Everyone-Democrat and Republican alike-is talking about deficit bonds, but no one is talking about scheduling a vote to let the people say yes or no to those bonds. But ignoring the constitutional requirements won�t make them disappear. If the final budget includes multi-year debt-financing, there must be a popular vote on the bonds-or the politicians are buying themselves a lawsuit.�

-- Pacific Legal Foundation Press Release

And why are they doing all this? In order to generate the immense pile of cash the legislature has committed to the rich and powerful special interests groups who essentially own the state legislature -- and the Governor.

And it was exactly this sort of situation the progressives of the last century had in mind when they reformed the state government with such measures as the recall.

Here is the SacBee article which exposes where Governor Davis and his supporters came up with the lie that the recall will cost taxpayers "$60 million" -- from a 3-page memo reporting polling which showed voter discomfort with the recall only when the cost of the election topped $60 million, twice the already artificially high official estimate of the Democrat Sec. of State. Davis was again spreading the "$60 million" lie this morning on the Today show, along with the false suggestion that 8 million people voted for him in the last election (8 million people voted for all candidates). (via John and Ken)

PrestoPundit FLASHBACK -- June 11, 2003 -- the day PrestoPundit began seriously blogging the Davis Recall:

CALIFORNIA BULLETIN:

"Our elected officials in Sacramento are facing a budget crisis unseen in this state since the Great Depression, and it was entirely avoidable .. Teachers are getting pink slips, cops are getting laid off and the taxpayers are facing an increase in taxes and California's future is in danger."
Arnold Schwarzenegger, last night before the Club for Growth in Los Angeles -- an event making the 25th anniversary of the Proposition 13 tax revolt.

Schwarzenegger at one point in the speech remarked that he'd forgotten the governor's name, but added, "I know that you will help me recall him."

More Schwarzenegger:

"There comes a point when we the people must demand more out of our elected officials than for them just showing up .. Howard Jarvis used to say it is time to show the politicians who is the boss. We are at such a point right now, ladies and gentlemen."
The two best Gray Davis recall web sites I've found is are these: RescueCalifornia.com and RecallGrayDavis.com

And who opposes the recall? -- Those who've pocketed the most cash: state prison guards, firefighters, and big business.

UPDATE: A new California polls show voters ready to lash out at politicians behind the state's budget meltdown -- and the constant drumbeat for ever higher tax increases.

Time magazine has a consultant saying this:

"The odds of the recall qualifying have increased to the point of near certainty."
The Washington Post has a long story on the Davis recall.

The LA Times has a feature story on Congressman Darrell Issa, who's leading the recall of Gov. Davis in California. Key fact: Issa has given $645,000 to the recall effort -- so far. Most of the article appears to be a bit of an early hit piece against Issa and his likely run against Davis should the recall succeed. All indications are that it will.

Meanwhile, Reuters leads with news that the Davis recall is moving ahead quickly. Key fact: recall organizers likely have 700,000 signatures already -- only 897,158 valid signatures are required. Organizers say that something like 1.2 million recall signatures should assure enough valid signers for recall success.

CALIFORNIA BULLETIN: Arnold Schwarzenegger backs Gov. Davis recall, calls for voter revolt. Tells audience he can't remember the governor's name, would like them to help him recall .. California's can join the recall at GrayDavisRecall.com

This makes sense to me:

Aides have said that [Schwarzenegger] was leaning hard against making a run because of his desire to spend more time with his four children who are aged five to 14.

(Reuters "Schwarzenegger to Terminate Governor Run" news story).

California Insider confirms this mornings CNN report:

Republican Party spokesman Rob Stutzman, speaking on Eric Hogue's radio show on KTKZ in Sacramento, says it's official: Arnold is out. "I had that confirmed late last night," Stutzman said.

Heads up for Instapundit readers -- you can find all of my California recall coverage collected here. And to the right you will find a few of the best links to sources on the California recall and the California budget.

LOS ANGELES (CNN) -- Actor Arnold Schwarzenegger will not run for California's governor as part of the October vote on whether to recall incumbent Gov. Gray Davis, state Republican sources said Wednesday.

Schwarzenegger is expected to back Richard Riordan, a former Los Angeles mayor who unsuccessfully sought the GOP gubernatorial nomination in 2002. Riordan said yesterday that he would not run if the star of the Terminator movies, who turned 56 on Wednesday, entered the race.

California Insider has a rundown of the latest race to replace news. Not much new on the Riordan for Governor front at this hour. CNN still hasn't posted anything on their story that Arnold Schwarzenegger has in fact reached a decision not to run for Governor, full stop, no hedges.

James DeLong on the economics of intellectual property rights.

Is Ken Adelman suggesting that Bush & co. are essentially corrupt? It sure looks like it. Money quote:

While it's infuriating that Saudis bankroll terrorist fanatics, that's a fact about a foreign country that we must confront. But it's more infuriating that the Bush administration spikes this critical information and continues to consider -- as Secretary of State Colin Powell chummily put it -- Saudi Arabia as "a great friend to the United States for many, many years and a strategic partner." This happy face stance would surely succumb to Bush's realism and moralism, were it not for Saudi money ...

If the leaders of the Democratic Party were themselves "a little bit more on America's side", the Saudi issue is the kind they could take and run with to the White House. Don't hold your breath.

Roger Garrison's account of his important lecture series at the London School of Economics can be found in HTML format at Garrison's Auburn web site. Here is a cut from the article:

On the day after the Hayek Memorial Lecture, I received a number of e-mails, some with questions about Hayek's macroeconomics and some just expressing appreciation. Most surprising and gratifying, however, was a message from Derek Scott, who had listened to the lecture from the balcony. Mr. Scott is an LSE alum and now economic advisor to Tony Blair. I was unaware that he was in the audience. He was clearly taken by the Hayekian ideas, describing the lecture as "a breath of fresh air." "I only wish that more people looked at the world through similar eyes," he wrote. The Prime Minister's advisor inquired about further lectures in the same vein and about the possibility of meeting with me at LSE. As an alternative, he invited me to pay a visit to No. 10 Downing. I phoned him immediately and arranged for a meeting on the following Thursday morning. As plans developed, Toby Baxendale was included in the visit.

Toby and I arrived at the Whitehall gate to Downing Street just before 10 o'clock on the morning of June 12. We were admitted through the gate and then passed through a security checkpoint. Walking from security towards No. 10, we noticed a rather large gathering of photographers postioned just opposite the Prime Minister's front door. The presence of the media reminded Toby that June 12 was the day of Blair's cabinet "reshuffle"�which added a little excitement to our visit and, as things turned out, marked a significant change in the organization of the British government (SEE INSERT). Just inside the shiny black door, we waited for our host to come and collect us. He appeared shortly and led us to a spacious room on the second floor. There Mr. Scott served coffee and the three of us talked for the better part of an hour. The primary focus was on current economic conditions in the US and the aggressiveness of the Federal Reserve. The artificial quality of the Fed-led boom that characterized the late 1990s had been made clear in my lecture at LSE. But what was the Federal Reserve doing now? And what would be the likely consequences?
I had hinted in my lecture that trying to re-ignite an artificial boom is not a winning strategy. The US economy is still trying to recover from the excesses of the previous expansion. Some needed liquidation has taken place; more liquidation is undoubtedly in order. But the Federal Reserve's interest-rate aggressiveness retards the liquidation process: If a business firm has expanded his operation or otherwise committed capital to a venture that in retrospect seems marginal or even sub-marginal, why should it actually liquidate the investment if it has the option of carrying it forward at exceedingly low interest rates? The small interest costs may be more than offset by hopes�even by slim hopes�for improved market conditions. Toby could easily supply a reinforcing perspective from the business world: "Many businesses are overextended and just trying to hold on."

Given the uncertainty about future market conditions and the compounding uncertainty about Federal Reserve policy, business firms are unlikely to commit themselves to still more investment projects. Keynes's idea that businessmen don't respond to a reduction in the interest rate, though not a general truth, is actually true during a period of liquidation. Hangovers are not cured by the imbibing of more spirits. Hence, it does no good to provide more spirits at bargain-basement prices. The injections of credit by the Federal Reserve, not surprisingly, are stimulating consumption spending instead of investment spending. Cheap credit in the current circumstances also bolsters the demand for housing, creating a bubble in real estate. Homeowners refinance their mortgages and spend the windfall largely on consumption goods. (Ironically, some critics of the Mises-Hayek theory have seen this development as evidence against the Austrian view�since it seems to be consumption and not long-term investment that's getting a boost from low interest rates. Of course, the consumption binge, induced by the Federal Reserve in vain hopes of re-igniting the boom, is neither a refutation of Hayek nor a symptom of genuine recovery.)

What struck me during the visit at No. 10�and I hope it struck Mr. Scott, too�is that the story as told by an academic economist and as told by a real live entrepreneur/businessman were in perfect harmony. I've become aware over the years that this is a characteristic of Austrian economics that cannot be matched by other schools of macroeconomic thought. Hayek's ideas ring true in the financial and business community in ways that the "rational expectations" of new classicism or the "menu costs" of new Keynesianism do not. Credit expansion gives us an artificial boom. Rock-bottom interest rates after the bust forestalls a genuine recovery. The Federal Reserve's near-phobic resistance to any price or wage decreases reflect its resolve not to repeat the blunders of the 1930s. But avoiding a deep depression has gotten translated into precluding a timely correction. The Fed, in effect, is trading depth for duration. The shallow recession drags on.

We made it clear that in the final analysis the Austrian theory suggests banking reform and not just some alternative policy prescription for adjusting interest rates. The reform measure currently on the table in Britain would be a dramatic one. Britain could join the Eurosystem, the Bank of England relinquishing key powers to the European Central Bank. Mr. Scott put into perspective for us the recent choice by Tony Blair to postpone for now making any decision to abandon the pound for the euro. The implications of Austrian theory about the advisability of Britain's adopting the euro are mixed. Generally, Austrian economists favor reform in the direction of decentralization. Clearly, expanding the Eurosystem to include Britain would be a move in the opposite direction.

But, Austrian economists also favor putting monetary decisions in the hands of those least likely to use it for narrow political purposes. In recent years, the Bank of England has constrained itself to rule-following behavior�certainly more so than has the Federal Reserve. But in the past it has not been above using its discretionary powers to serve the interests of an incumbent administration. Nor is there any firm institutional check against such politicisation in the future. It is worth pointing out that relinquishing control of monetary matters to the European Central Bank would effectively eliminate political business cycles�or, at least, ones with British origins. And without an accommodating central bank, the British treasury, like the treasuries of the other euro-using countries, would be put on a shorter leash. The down side of Britain adopting the euro is the inherent problems of centralization. As is well known by seasoned Fed watchers, blunders committed by a central bank can have dramatic and far-reaching consequences. So, while the European Central bank is relatively well insulated from the narrow political interests of its euro-using members, those member nations are continuously exposed to the potential ineptness or miscalculation that tends to characterize any organization not subject to the discipline of the marketplace. In the end, this consideration, an implication of socialist-calculation debate, may be an overriding one.

A breakfast meeting between Toby Baxendale and Derek Scott subsequent to our June 12 meeting at No. 10 and after I had departed for the United States evidenced a continuing interest in Hayekian ideas and their implications for policy prescription and institutional reform.

10 Questions for Roger Garrison, America's leading macroeconomist.

An interesting analysis from Institutional Economics:

Alan Greenspan�s record is the subject of a feature in the AFR Magazine by Peter Hartcher. The article is mostly a recycling of some increasingly tired Greenspan anecdotes and factoids. But it also argues that Greenspan is responsible for America�s most recent boom and bust. The article implies that Greenspan kept policy too easy for too long, in contrast to the view that he tightened policy too aggressively, too late. Of course, these views could be reconciled by arguing that monetary policy was systematically mistimed.

There is a much bigger story here, one that most journalists miss because of their preoccupation with personalities at the expense of processes: the US operates an almost entirely discretionary monetary policy regime, unconstrained by a formal inflation target or other policy rule. But there is no suggestion amongst all the criticism of Greenspan that perhaps US monetary policy should be made subject to the rule of law. Instead, Hartcher effectively argues for an even more discretionary and activist Fed that would target asset prices:

But probably the most important reason for Greenspan's ability to drive into a $US6.5 trillion car crash and walk away unscathed is that when he erred, it was an error within the prevailing orthodoxy. The economic orthodoxy said that the only danger that a central bank should confront with restrictive monetary policy - higher interest rates - was inflation. And this refers to inflation in the commonly understood sense of inflation in consumer prices. The US was not suffering an inflationary outbreak, so, according to the prevailing wisdom, there was no need to act. There are early signs the orthodoxy is now being rethought.

The view that asset prices should be a target of policy is gaining ground, partly because of a misinterpretation of the work of the behavioural finance school, which confuses individual irrationality with informational inefficiency. But the view that any single authority or personality could determine an appropriate level or growth rate for asset prices effectively revives the wrong side of socialist-calculation debate from the 1930s. A rule-bound nominal anchor, in conjunction with other rules designed to promote market efficiency and integrity, would minimise the risk that monetary policy might destabilise asset prices. An activist monetary policy that sought to target asset prices would be a recipe for disaster.

Now the dishonest folks supporting Davis are polluting the public conversation with false claims about a "billion dollar recall". It won't be too soon that power has been taken away from Davis and his creepy political bedmates.

CNN is reporting that Schwarzenegger's ticket selling "I'd love to be Governor" teasing of California voters is finally at an end. It's about time.

"Why Africa is poor" by Douglass North and friends.

Here is the LA Times' race to replace page.

What is wrong with this picture?

There was no limit on donations in the 2002 gubernatorial election. But in the recall race, only Davis � as the target of the recall � can accept unlimited donations. Candidates to replace Davis are subject to a cap of $21,200 per donor. The donation limits favor wealthy candidates who are allowed to donate an unlimited amount to their own campaigns.

From the LA Times. Could the perversity of such restrictions on free speech rights be made any more obvious? Of course, the candidate most harmed by this assault on free speech is Tom McClintock. Folks can help even the playing field by sending a check to Tom via his web site.

I'll likely support Riordan if he enters the race, but it's just wrong that non-millionaires simply don't have a chance in any race for governor in the state of California.

The Mercury News has the latest on Riordan's race to replace plans. Among other things, Riordan wants to be sure Feinstein isn't jumping in before he decides whether or not to run. The Mercury News also has a recall news page. I've found the Merc News to be one of the better sources on recall news in the state.

Calblog takes out her crystal ball and comes up with the lowdown on Riordan, Schwarzenegger, and their joint no show at the starting gate in the race to replace.

Daniel Weintraub on the people of California vs. the ruling establishment. There's a real sense out there that the people of California need to reclaim ownership of their government, and this has sent the elite into a whining fit. Weintraub tells the ruling establishment to get over it -- this is a democracy, so enough already with the pissy whining. Read the piece and you'll get a sense of what the recall feels like on the California street.

California Insider has a Riordan - Schwarzenegger press roundup. All signs point to a Schwarzenegger endorsement of a Riordan for Governor campaign.

America's leading macroeconomist reports back from the London School of Economics -- and No. 10 Downing Street.(pdf file).

Why do folks like NRO waste so much space on the nonsense of folks like Paul Krugman when there is such solid macroeconomics coming out of the Hayek-inspired economists?

A good fact file and resource page on California's Budget Crisis.

Democratic State Senator Dean Florez is seriously considering a run for Governor, as quoted in the Mercury News.

Calblog casts her lot with McClintock:

I came to my decision today. McClintock is our best hope. He is focussed on the budget while everyone else is deciding the best time to announce whether they're running or not ...

Follow the link to read it all.

Retaining Gov. Davis will cost taxpayers money -- California Sate Constitution:

ARTICLE 2 VOTING, INITIATIVE AND REFERENDUM, AND RECALL

SEC. 18. A state officer who is not recalled shall be reimbursed by the State for the officer's recall election expenses legally and personally incurred.

(via John and Ken)

Peter Robinson at the corner has posted more California budget stats from Michael New of the CATO Institute:

I've found that if California had limited expenditure increases to the inflation rate plus population growth, then the state would have saved $58 billion since 1998. This could eliminate the $38 billion deficit and leave $20 billion for tax cuts. My calculations run as follows:

Year Population Actual spending Limited Spending Savings plus inflation

1998 0.0% $52.9 billion $52.9 billion $0

1999 3.7% $57.8 bilion $54.9 billion $2.9 billion

2000 9.0% $66.5 billion $57.7 billion $8.8 billion

2001 13.9% $78.1 billion $60.3 billion $17.8 billion

2002 17.6% $76.8 billion $62.2 billion $14.6 billion

2003 21.5% $7.81 billion $64.4 billion $13.8 billion

Total savings: $57.9 billion

ScrappleFace has the scope -- California citizens pitching in to save the state:

Citizens Come to Aid of States in Budget Crises (2003-07-28) -- Donations have begun to pour in from Americans shocked and concerned about budget crises in dozens of state governments ...

"We appreciate the contributions," said one unnamed state treasurer, "but what really gets me are the emotional notes that come with them. One factory worker said he was saving up money to buy a computer for his children, but he believes the state needs the money more. He sent $800."

As the New York Times story indicated, the hardest hit states are those with progressive tax schemes which apply higher rates to people in upper income brackets.

A California farmer sent a $75 donation, and wrote: "I know that the wealthy helped state budgets double during the Internet bubble, but their investments have tanked. Now, it's time for all good men to come to the aid of their state government."

NY Times will he or won't he watch:

Arnold Schwarzenegger is "leaning strongly against" entering the race for governor of California and will announce his decision by the end of the week, a senior adviser said today ...

The actor met with his political advisers this morning and told them that he was concerned about the effect the race would have on his school-age children, one adviser said. Mr. Schwarzenegger told his aides that his wife, Maria Shriver, a television reporter and niece of President John F. Kennedy, had concerns about a possible candidacy because of the loss of privacy and potential physical threat it might entail.

Note the bogus "$60 million" recall cost number tossed out at the end of the article by a Davis campaign hack. This is made up number, not the actual estimated cost of the recall, which will cost in the $30 - $35 million according to the Democrat State Sec. of State. Does the NY Times have a fact checker or is it just standard NY Times practice publishing inaccurate Democratic party talking points without remark? Davis himself is spreading around the "$60 million" number. And where did the number come from? It's the number which Davis polsters found voters felt uncomfortable with, when the actual Sec. of State's numbers didn't bother them. Hence the peddling of the fabricated "$60 million" number, which you will hear again and again in future days.

The California state general fund budget has increased by almost a half in six years. Here is quick breakdown of some of the outrageous numbers behind the most irresponsible government in the nation (excluding the one in Washington). The numbers come from the author of this CATO briefing paper on California's fiscal condition.

UPDATE: I had the percentages wrong in the above, so I've corrected them. How did I screw up? Well, I'm just a beginner at trying to make sense of the California taxing and spending accounts, and figuring out an IRS form is childs play compared to what the bureaucrats and politicians in Sacramento have constructed. An important distinction to recognize is that the all funds budget is in the $100 billion plus range, while the general fund budget is somewhere in the $70 - $80 billion range. If you forget this little fact, your math can go haywire.

SacBee reporter Daniel Weintraub begins regular appearances on the Hugh Hewitt show today. I caught the California Insider on The BeltwayBoys last night, and he's as good in person as he is in print. Different format, same solid reporting and analysis.What everyone wants to know is the background story on Schwarzenegger's choice not to run. Was it all a tease, or was it a late decision made on the recommendation of his wife? We'll see, and my guess is that the best source on the story will be Weintraub.

Dick Riordan will be the next Governor of California. You heard it here first.

There is a deep sense across the state of California that Davis's use of illegitimate methods cost Riordan the Governorship just a year ago. The election of Riordan to the Governor's office will have a sense of a world being made right.

And somebody tell Bill Simon to go jump in a lake.

Schwarzenegger is OUT. Riordan set to run. It's no surprise who has the scoop.

So my gut instinct what right. Schwarzenegger was using the state of California for his own personal profit -- and abusing such good people as Richard Riordan, who have something serious to contribute to the state. The rich and famous invariably get away with such stuff with little or no downside or accountability. Wish this wasn't true.

Was Calblog right all along? We'll see.

The national chattering class continues to take notice that something is happening in California. As usual, most aren't all that interested in substance. Instead, most national pundits see the race to replace as a target rich environment for entertainment stories. That seems to be Howard Kurtz's angle, and certainly that is what you'd expect from such empty vessels as the NY Times' pathetic Maureen Dowd -- and that's what we got. The "campaign" of a computer programmer in the Bay area -- who's selling underwear with her name on it -- is getting a lot of national press coverage. Here is her blog. Even Instapundit has jumped on the Georgy for Governor -- and underwear salesman -- bandwagon.

The Bush administration will never win any prizes for it's understanding of how a successful economy works. This is bad news for Iraq, which is dependent on the economic thinking of those put in charge of Iraq by the Bush people. For any economy there can't be anything more important than good money. Steve Hanke explains how confused American monetary policy has been in Iraq, and what might be done to get things back on track -- if anyone in the government ever comes to realize how important such things are to the development of Iraq as a nation.

It's worth recalling how badly the Allies bungled in Germany in the years immediately after WWII -- until Ludwig Erhard outsmarted the Allies and removed a destructive scheme of price controls imposed by the economic illiterates in the occupying command. Magically, seemingly overnight, the German economy came back to life. Read short versions of the story here and here.

It's gratifying when someone gets it. None the Wiser gets it.

And the distorted quotation of the year goes to ...

The SacBee's Laura Mecoy -- Arnold Schwarzenegger, he's no Ronald Reagan. Quotable:

Schwarzenegger's supporters point to former President Reagan as evidence that a charismatic actor can leap from the silver screen to the state Capitol.

But Reagan toiled in Republican trenches for almost 15 years before he won the 1966 California gubernatorial campaign.

Schwarzenegger campaigned for the first President Bush and chaired the former president's physical fitness council.

But he has only voted in three of the last eight statewide elections, according to the Los Angeles County Registrar-Recorder's Office.

He voted in last year's primary and general elections as well as the November 1998 gubernatorial election. County voting records only date back to 1996.

Reagan not only voted but he never appeared nude, as Schwarzenegger has in his three "Terminator" movies and in photographs.

The former president did appear in Westerns, but the depiction of violence wasn't as graphic as it is today.

Reagan occasionally stumbled in his public statements. But he was never quoted with the type of impolitic remarks that Schwarzenegger has uttered.

In recent interviews, for instance, the action star used vulgar terms when referring to a woman's physical attributes and gleefully speculated about burying a woman's face in a toilet bowl during a movie fight scene.

"That kind of language is at the lowest level," said Bob Mulholland, California Democratic Party campaign adviser.

He's already suggesting Schwarzenegger would require female state workers to wear dresses because the actor once said he won't let his mother and wife wear pants when they're in public with him.

"Arnold is a movie star, and movie stars do colorful things," his consultant, Gorton, said. "But look, the experience we already have tells us that the button-down guys got us to where we are today."

On second thought .. the much hyped Boskin "windfall" story explodes. Bruce Bartlett gets credit for setting some of the charges in this unusually public academic demolition.

Junk science, a corrupt legal system and Erin Brockovich.

California Insider responds to Dowd and Panetta on the California recall. Well said, I'd say.

Talk radio and the road to recall.

Here is the Newsweek cover story on California and the Davis recall. The piece includes some choice Dan Walters quotes on Gray Davis.

FORTUNE magazine weighs in on the worst state in the union to do business:

The state government under embattled Democratic Governor Gray Davis is turning so stridently antibusiness that it threatens to inflict permanent structural damage. Since 2002 the left-leaning legislature has enacted or expanded half-a-dozen laws dealing with burdensome regulations like family leave and overtime pay. Some corporate leaders think California is becoming Sweden-on-the-Pacific. "I've never seen anything like this is 35 years," says Angelo Mozilo, CEO of Countrywide Financial, the big mortgage company based near Los Angeles. "The state is punishing business, yet it's somehow convinced that business will not leave."

Wrong: Companies�and jobs�are departing in droves. The state has lost 289,000 manufacturing jobs since 2001. "The jobs that have to stay here are ones that involve direct contact with customers," says Liam McGee, head of Bank of America in California. "The mobile jobs�in systems development, manufacturing, call centers�are moving to other states." Fidelity National, the nation's biggest title-insurance company, is shifting its headquarters from Santa Barbara to Jacksonville. Scores of the small businesses that form the backbone of California's economy are moving either jobs or headquarters out of state. Buck Knives is going to Idaho, and Coast Converters, a bagmaking company, to Las Vegas. Taylor-Dunn, a manufacturer of cartlike vehicles for airports, is expanding in Ohio and Missouri. Though Countrywide is growing rapidly, Mozilo is shrinking operations in California and shifting all expansion to low-cost states like Texas. By his estimate, the flood of new legislation will increase Countrywide's cost per worker by $4,000 to $5,000 a year.

Tyler Cowen has some nominations for the Nobel Prize in Economics:

Harold Demsetz - deserving in my view. He started contestable markets and put empirical teeth into property rights theory, industrial organization, and some law and economics. But I don't expect him to get it, somehow his reputation never became highbrow enough. His works revels in its own simplicity (which I don't mind at all).

Israel Kirzner - leader of the Austrian school but very low profile within the economics profession. Hard to see where all the votes would come from.

William Baumol - A very smart guy. No one would object if he got it. But Demsetz (among others) beat him to the key point on contestable markets, and his work on cultural economics doesn't have enough currency. What else should he get it for? I'll bet no.

Kirzner is my own choice -- a deserved one.

A little know fact -- Baumol's mathematical analysis of some models inspired by Hayek's work in the theory of capital and interest played an important role in Hayek's turn away from macroeconomics. Hayek simply had too much on his plate, and no time to go down the road of specialized mathematical analysis. Whether the Baumol's mathematical specialization road has been an intellectually productive one is an open question. Or maybe not. At this point, a respectable argument could be made that as an explanatory endevour the project has been a massive failure.

Few recall this, but Baumol was important perhaps above all for his textbook, which emphasized advanced mathematical technique.

Here is my pick for the be-all and end-all of race to replace speculation possibilities -- Jerry Brown. If you didn't know, Governor Jerry Brown's chief of staff was a fellow named Gray Davis. "Sources say" Governor Moonbeam is considering entering the race. You've got to love California. (via LA Observed)

ScrappleFace, eat your heart out!

The call was placed to the San Bruno home of William Pratt, one of California's new candidates for governor.

His mother answered.

"Could you hold on a minute?" the 18-year-old Pratt asked a reporter as he covered the receiver to shoo away his mother. "Mom, stop waving that mail in my face. I'm trying to do an interview."

The floodgates of the democratic republic opened wide Friday as Pratt and dozens of other Californians headed to their county registrars to start the process of getting on the Oct. 7 ballot to be the next governor.

They're giddy at the relative ease of it all -- especially Pratt, who lost six elections for student congress at St. Francis High School in Mountain View.

-- actual news out of San Franscisco

(thanks to PatheticEarthlings)

Blogger Pathetic Earthlings urged to run for CA governor!

Calblog comes out with an endorsement for Governor in the race to replace. She also has links to the C-SPAN broadcast of Saturday's rally to recall in Sacramento.

Could the "will he or won't he" game be a Schwarzenegger campaign ploy? The hype is good for Arnold either direction he is playing the game.

How the recall happened -- a county by country graphic, provided by Bound in a Nutshell. Unbelievably, 40 percent of those in Kern county who voted in 2002 signed the recall petition. Anybody know what Gray Davis did to Kern country?

Gray Davis has come out in support of issuing valid California driver's licences to aliens who reside in the country illegally. Davis made the announcement while campaigning in spanish speaking regions of Los Angeles. Prior to the recall, Davis would not support a bill extending driver's licences to non-citizens who live in California in violation of the laws of the United States. Polls show that Davis is doing poorly among Hispanics on the question of whether or not he should keep his job.

The LA Times continues to have serious problems in its newsroom -- this time Jill Stewart has the details on how the Times spiked poll data which undercuts the spin coming out of the Davis campaign. Sadly, we've got a party press at most major press outlets -- a return to the kind of press seen during the age of the railroad trusts. With one big difference. Today the press lies about it's role, while back in the days of old no one pretended to be anything other than party hacks.

Jill Stewart will be broadcasting live from the Recall Gray Davis Rally at the State Capital between 10 am and 2 pm Saturday on KFI 640. Listen to it here.

Majority supports California Proposition 54.

Remember the name. Proposition 54. This could be bigger than the race to replace.

Tyler Cowen on Paul Krugman.

The California recall election will be held Oct. 7. Candidates for Governor must announce by Aug. 9. Arnold can continue selling movie tickets on election speculation for another two weeks.

The catastrophe of incredibly irresponsible government continues to plague the state, with Standard & Poor's dropping the states bond rating to BBB -- near junk bond status and by far the lowest of any state. The upshot? The treasurers office guestimates that the rating downgrade will cost the state around $1 billion over a 30 year period.

It can't be to soon before we get ourselves a new governor.

Schwarzenegger: California can wait -- I have a movie to promote.

John Fund has been told by "Schwarzenegger's political advisors" (that would be George Gorton) that they believe that Schwarzenegger will be running for governor of California. Fund offers a fact filled analysis of Schwarzenegger's politics and the possible strategies of a Schwarzenegger candidacy.

We have recall. Schwarzenegger remains undecided.

PrestoPundit became a PrestoDaddy for the second time earlier today, a bit earlier than we'd expected. Mommy and baby are doing fine, and so is the new big sister. Perhaps understandably, blogging will be intermittent here at the PrestoPundit site for the week or so. In the mean time, there are lots of great blogs to read just to your right -- I'd especially recommend some of those in my "California Bloggers" category.

Or you might check out some of the articles which will be presented at the Dewey, Hayek and Embodied Cognition conference this weekend. The program includes a who's who of some of the very best people in the fields of neuroscience, economics, philosophy, the history of ideas and several other fields -- including some of my favorite Nobel Prize winners. This could easily turn out to be the most outstanding interdisciplinary academic conference of the decade.

Your tax dollars at work:

As the Senate Judiciary Committee prepares to vote on the judicial nomination of William Pryor, Bill Moyers produces a one-sided segment for his "NOW" PBS program on the nomination. On the program, which aired nationwide last night (transcript here), Senator Schumer gets in all his licks, but there is no mention of Pryor's broad, bipartisan support in Alabama, the endorsements he's received from Democratic state AGs, or his efforts to end vestiges of racial discrimination in Alabama. Worse, for a purportedly "educational" program subsidized by taxpayers, there is absolutely no effort to explain or elucidate the legal reasoning behind Pryor's positions.

-- Jonathan Alder in The Corner. What needs to be said?

Bush's anti-free trade agenda not only damages America and the world economy, the policy is now in official violation of our signed treaty obligations. And the penalties will be in the billions of dollars. Here's a suggestion for a new law -- let the Congress make these penalties the personal obligations of Bush and his staff. Then see how quickly these illegal tarrifs are removed. The costs of bad and illegal policies need to fall where where the ultimate responsibility lies.

In the cradle of liberal freedom, British citizens are ready for less socialism and more freedom a new poll shows. Quotable:

Voters are prepared to pay for health insurance if it guarantees them better and faster care, according to a ground-breaking new poll that suggests the public is far more open to radical ideas than politicians realise. The survey finds strong support among taxpayers for a range of controversial policy alternatives, including giving parents the right to choose private schools for their children ..

Say goodbye to equal protection -- Nat Hentoff.

A call for Britain to retain its position as an independent world power, and not lose it's liberal identity within an uncompetitive European bureaucratic state. Money quote:

For 300 years, the principal British interests have been the maintenance of free trade and the rule of law. They remain our interests. They are best upheld by the Anglo-American alliance (although we must be careful not to be subsumed by it). The decrepit forces of the EU, by contrast, just aren't up to the job.

So safeguarding our interests in the future could necessitate another redesign of the British state. As Iain Duncan Smith touched on in his Prague Declaration last week, this would mean shunning the European constitution and instead arguing for a free trade association of sovereign nations, including Russia, Turkey and the Balkans.

Leftist cowboys of the world unite! Blair, Schr�der, Chr�tien and other Left leaders back a policy of armed invasion in a policy seemingly contrary to the idiotic articles of the U.N Charter:

Tony Blair is expected to put his name today to a declaration justifying armed intervention against failing states. He and other Left-wing national leaders will expound the principle, which runs counter to traditional thinking about national sovereignty, at the end of a four-day conference on the subject of "progressive governance".

I'm sure there is some clause in there somewhere that says this is only ok for countries led by proper Leftist governments, and is to be strickly forbidden for the United States, at least during those periods when America is led by a Republican President -- or some such phraseology. ScrabbleFace, the story is all yours ..

The unelected rulers of Hong Kong say no to democracy now demands -- and the old four year timetable for democracy will remain in place.

Transcript -- Darrell Issa on FoxNews Sunday.

Britain's The Guardian does a "Schwarzenegger wants to be Governor" piece. Money quote:

One small, unanswered question remains: how exactly will Governor Schwarzenegger deal with California's terrifying $38bn deficit? Trust him; he's a superhero.

John Leo fisks the Clintonian Justices.

Schwarzenegger profiled in the SF Chronicle.

California Insider has some hot California recall stories this morning.

Murray Gell-Mann tells his story.

Hong Kong in crisis -- detailed coverage from The Straight Times.

The Davis campaign is set to go with personal attacks on Schwarzenegger. Quotable:

The [Democract] party's attack machine is already in second gear. Democrats unearthed a 1998 video that shows some Issa aides at a gun show where Nazi memorabilia is visible in the background. And they are interested in a 2001 Premiere magazine article depicting Schwarzenegger as a man who gropes women. Schwarzenegger did not sue. As Bob Mulholland, a state Democratic operative, says now: "We have a copying machine."

Forget about tax freedom day, what really makes a difference for our long term prosperity is cost of government day:

Today, July 11, is this year's "Cost of Government Day," the date in the calendar year when the average American worker has earned enough money to pay off his or her share of the burdens of government at all levels. Cost of Government Day falls five days later in 2003 than it did in 2002 .. This year is the third year in a row that there's been a Cost of Government Day increase, and the average American worker needed 17 additional days this year to pay for the cost of government than that worker did in 2000. .. [indeed] the increases of the past three-years have nearly wiped all the cost-declines achieved since 1992.

Virginia Postrel's latest, The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture, and Consciousness is now available for order on Amazon. Her earlier The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress was one of the more important popular political theory books of the last few years. Postrel's writing has the great virtue of including lots of very helpful examples giving content to abstract ideas, a virtue every good writers genuinely respects because they know it takes hard work. The book also had the virtue of discussing ideas from Hayek in a fresh and compelling way.

Be the first to order David Bernstein's You Can't Say That! The Growing Threat to Civil Liberties from Antidiscrimination Laws

Fred Barnes on the shaking and quaking caused by the California recall. (via California Insider)

Calblog is sifting through the Schwarzenegger archives and finding lots of interesing things.

Jill Stewart follows the fat cat anti-recall money -- and draws some obvious conclusions.

Will Schwarzenegger show up? Recall organizers plan a massive recall rally at the state capital, July 26.

Well, maybe it's 1,600,000 recall signatures. And a graphic look at the numbers, as of July 8.

Roger Kimball on Malcolm Muggeridge. Quotable:

Muggeridge was weaned on well-scrubbed attempts to set up an earthly paradise. It was a main plank of the Fabian creed: to dispense with the burdensome scaffolding of the past, its selfish institutions, its superstitions, its allegiance to outmoded vices like competition and greed. Love, harmony, brotherhood�an end to the depredations of inherited wealth, inherited � anything. Onwards, upwards, unfettered progress forever and ever. Not only was Muggeridge raised in that creed, he also married into it. Kitty Dobbs was the beautiful, freethinking niece of Sidney and Beatrice Webb; in marrying her, he noted many years later, he was marrying into �a sort of aristocracy of the Left.�

Muggeridge�s great gift as a political commentator was a nose for spurious idealism. Like nearly every right-thinking (which meant left-leaning) person, the young Muggeridge regarded the Soviet Union as the first chapter of the new utopia. When he went there as Moscow correspondent for The Manchester Guardian in the early 1930s, disabusement was almost immediate. As a leader writer, Muggeridge had tapped out �Many an uplifting sentence � expressing the hope that moderate men of all shades of opinion would draw together, and that wiser counsels might yet prevail.� In Moscow, he discovered that �moderate men of all shades of opinion had a way of disappearing into Lubinka Prison, never to be seen again.� Muggeridge saw the future, and�unlike Lincoln Steffens a decade earlier�he saw that it was hell on earth. Russia, he understood, was in the process of becoming �a huge and centrally organised slave state.� It wasn�t long before he was writing to his aunt-by-marriage Beatrice about his:

overwhelming conviction that the [Soviet] Government and all it stands for, its crude philosophy (religion if you like) is evil and a denial of everything I care for in life� . Why should uncle Sidney say � �I indignantly repudiate the slander that there is forced labour in the Soviet Union� when every single person in Russia knows there is forced labour � ?

A glimpse of Stalin�s Russia spurred Muggeridge�s political awakening. It is to his everlasting credit that he had the wit to see through his Fabian �ideals� and the courage to broadcast the horrors going on around him. In the beginning, at least, he was almost alone. Western intellectuals flocked to the workers� paradise that Stalin had created and �they were one and all utterly delighted and excited by what they saw there.� Clergymen walked serenely and happily through the anti-god museums, politicians claimed that no system of society could possibly be more equitable and just, lawyers admired Soviet justice, and economists praised the Soviet economy.

As for the Webbs and their starry-eyed ideal of universal brotherhood, Muggeridge summed it up in a dismissive BBC broadcast after their deaths. Comparing Beatrice to Don Quixote, he wrote that �she finished up enmeshed in her own self-deception, adulating a regime [the USSR] which bore as little relation to the Fabian Good Life as Dulcinea del Toboso to the Mistress of Don Quixote�s dreams.�

Rescuing the substance of philosophy from the dumbing down of the ahistorical philosophers.

Davis recall organizers will anounce there final count on Monday, California Insider reports. It looks like they've mailed in 1,400,000 signatures already, with more on the way. All reports have it that the validity rate of the signatures is running unusually high. There seems to be nothing in the way of having an election called by July 23 -- if everybody follows the law and does their job.

A long piece on Schwarzenegger in the Financial Times by an Arnold biographer. Money quote:

In the US, he took business classes at UCLA and won a business degree by correspondence course from the University of Wisconsin. His economic views were defined early: "I am more comfortable with an Adam Smith philosophy than with Keynesian theory." (Not a line you expect to hear from Conan the Barbarian. Or then again...) In 1980, the year he became an American citizen, he bombarded friends with tapes of Milton Friedman's television series Free to Choose. Arnold himself felt free to speculate in property and real estate with bewildering success, or beginner's luck, during the 1970s.

One of the classic fallacies built into the failed "science" of Keynesian macroeconomics is the fatal assumption that a national economy is somehow a closed economy -- it isn't, never was. It's a world economy, and national moneys and American producers and consumers are simply elements coordinated within that larger spontaneous economic order. Here's an example of what can go wrong when your leading shamans preach the witchcraft of Lord Keynes:

The various arms of the government continue to accumulate massive debt and pump out truckloads of inflated dollars, and meanwhile American's pump those dollars overseas. Bush and Greenspan are fueling double digit industrial growth -- in China.

The good news is that all those dollars overseas will increasingly be worth less. The bad news is -- well, the bad news always comes down the road, for someone else (our children), and in the real lost of the far better conditions of wealth that we are now sacrificing. I.e. the bad news is always relatively invisible to those who don't know sound economics. If you borrow and spend instead of invest in production goods, down the road you will have an empty bowl of grain and debts to pay, rather than crops coming in as the bounty returned from your wise use of your seed corn. It's a old story-- once taught to children -- which fraudulent economists and selfish politicians deny at the cost of our future economic well-being.

A good history of the various attempts to include money within a understanding of an open global economy is International Monetary Economics, 1870-1960 by June Flanders. Another classic on this general topic if Monetary Nationalism and International Stability by F. A. Hayek, which is going for about $400 used from Amazon. (Wow, I'm rich!).

The only conclusion one can draw is that for liberal Democrats, America's strategic interests are not just an irrelevance, but a deterrent to intervention. This is a perversity born of moral vanity. For liberals, foreign policy is social work. National interest--i.e., national selfishness--is a taint. The only justified interventions, therefore, are those which are morally pristine, namely, those which are uncorrupted by any suggestion of national interest.

Hence the central axiom of left-liberal foreign policy: The use of American force is always wrong, unless deployed in a region of no strategic significance to the United States.

-- Charles Krauthammer

Two cheers for deflation (pdf) from economist Joe Salerno.

The new age of inflation is upon us:

We've known it was coming for a while. The shift in Fed policy from promoting disinflation to fanning the flames of inflation, the outsized tax cut by Washington, the easing tensions in the financial markets were clear enough signals.

The effects of this stimulus [sic] are beginning to show up in the Federal Reserve's weekly report on the nation's money supply. Northern Trust chief U.S. economist Paul Kasriel points out that M2 (money held in currency, travelers checks, demand deposits, savings accounts and retail money market funds) has been growing at a compound annual rate of 11 percent over the past three months.

Money, it's a gas by Justin Lahart, CNN. (via Mises Econ Blog)

And here Paul Kasriel explains the Fed's wacky obsession with combating falling inflation.

Congressman & candidate for Governor Darrell Issa guest hosts the John & Ken show in Los Angeles today between 3 and 6 p.m. You can listen live here.

On the other hand .. David Horowitz is now defending Ann Coulter:

In today's LA Times, James Pinkerton takes Coulter to task for saying that Whittaker Chambers is invisible today. This too is wide of the mark. Coulter is absolutely right about this, despite the appearance of Sam Tannenhaus's worthy biography which appeared six years ago. I had lunch shortly after that with two seniors at the University of California Santa Cruz. They were both on the dean's list and I asked them if they knew who Alger Hiss was. They did. He was someone who was a victim of McCarthyism. I asked them if they knew who Chambers was. Their faces went blank. This is the large truth in Ann Coulter's book. Modern "liberalism" is really leftism and is not only soft on communism itself but has attempted to indotrinate a generation of Americans in its leftist faith.

David is one of my hero's because he believes in taking back the language -- and he acts on it. So do I (see to your right in my links column).

Brad De Long has a provocative reply to my remarks on Hayek and democracy. Check it out. Basically De Long is suggesting that Hayek would have favored an armed coup in Britain by a band of oligarchs -- which, in my humble opinion, is nonsense .. and on the edge of irresponsibility to suggest. Did Hayek in his polemical writings ever exaggerate? Yes, in his crankier moods, obviously. Did he ever advocate or favor armed overthrow of the British government and the British constitution? -- oh please!

On a brighter note, in the comments section Chirag Kasbekar has some further intelligent remarks -- which have the added advantage of having something to do with Hayek's own actual ideas and opinions.

Weintraub on the California budget -- a must read.

Dan Walters has the latest out of the legislature on the lawsuit abuse bill. And things are as ugly as ever. In a related matter, the lawyers of the Trevor Law Group have effectively disbarred themselves, avoiding formal disbarment by the California state bar. How do you say weazel in lawyer speak?

The Nevada Supreme Court orders the Nevada legislature to violate the Nevada Constitution and Eugene Volokh is stunned and appalled. (via Instapundit). California Insider is also stunned, and wonders if this constitutional revolution might jump the border.

Quotable Volokh:

I do, though, hope that Nevadans won't stand for this judicial nullification of the people's will, and that they will promptly make clear that it is they who get to add or delete portions of the Nevada Constitution.

I wonder how long Volokh has been in California -- we're pretty resigned to this sort of thing by now. And proposition 187 is exceptional only for its infamy.

I happened to catch Schwarzenegger on one of those entertainment news shows tonight -- and I was reminded again just how likable the guy is, and just how much positive energy the guy brings with him. If he runs a script writer couldn't have come up with a more exaggerated pairing of opposites than Arnold Schwarzenegger and Gray Davis. Compared to the contrast of personalities between Davis and Schwarzenegger, Danny DeVito is Arnold's lost twin.

In a FOX News appearance Susan Estrich was out spreading the story that Darrel Issa was convicted of stealing cars decades ago. When corrected off camera Estrich said that this is what she had been told by Davis staffers. Let's hope there was a miscommunication there somewhere.

California Insider has the scoop again -- and some smart analysis:

.. Ransom�s post is based on a slightly ambiguous report at YahooNews.com in which George Gorton, Arnold�s chief political adviser, is quoted saying the actor won�t make a decision until after T3 has opened in all foreign markets. I just talked to Gorton and he assures me that nothing has changed. Arnold, he says, might ultimately decide not to run, but he will certainly make a deliberate decision before the filing deadline, whenever it is. �He is going to make a decision in a timely fashion,� Gorton says. He expressed frustration at being asked to answer this question 15 times a day and noted that he might have been guilty of a slight change of wording this time that fed the latest speculation. "I'll have to remember to keep answering exactly the same way every time," he said.

Gorton didn�t say this, but one thing to keep in mind is that Arnold won�t want to announce until the election date is set. If he were to make the decision and then see the election postponed by lawsuits, he�d be out there exposed as a candidate but without a race to really run in. And the infamous Davis hit machine would train its sights on him.

California can sit and wait -- there are movie tickets to sell! Schwarzenegger pushes back his decision date on the race of Governor until August 15 -- after T3 has opened world wide. Memo to Arnold Schwarzenegger and Georg Gorton -- this may come 2 weeks after the window for filing has closed, which may be as early as July 25. Quotable:

The Austrian-born star of the "Terminator" will not announce whether he will challenge the cash-strapped US state's embattled Governor Gray Davis for the job until his latest movie has opened all over the world, an aide said. "Arnold is concentrating on his movie work right now and won't make any decision on whether to run until "Terminator 3" has opened in all foreign markets," said his political advisor George Gorton. "Terminator 3: The Rise of the Machines" is due to make its remaining overseas debuts between July 20 and August 15.

My nagging suspicion is that Schwarzenegger is doing a Donald Trump (or a Colin Powell) -- teasing folks with the prospect of an electorial run for the purpose of selling a product, but with no real intention of running for office. I rather hope I'm proved wrong. But clearly Schwarzenegger intends to make many more movies (he's recently said so), and just as clearly, there's lots more fun and money in movie making than in solving the problems of California.

Here is the friend of the court brief Randy Barnett helped write in support of Lawrence and Garner's case against Texas.

Ann Coulter on a tale of two teachers. One is a break-through historian of communist spying in America. The other wrote a book explaining how anti-communism is a mental condition. Guess which one is employable in America's universities -- and which one isn't.

Economic historian Charles Kindleberger has died. Here's the EH.NEWS posting:

Charles P. Kindleberger was born in New York City in 1910. He received his B.A. at the University of Pennsylvania in 1932 and his Ph.D. at Columbia University in 1937. He came to economic history after distinguished careers in public service (including the Federal Reserve and the Office of Strategic Services during the Second World War) and teaching international trade at M.I.T. He made his entry into the field with a book on Economic Growth in France and Britain, 1851-1950 (Cambridge, MA, 1964). Kindleberger surveyed the extensive literature on these two countries and concluded that there was no single convincing explanation for the differences between these two countries. He ended the book with the following famous words: "Economic history, like all history, is absorbing, beguiling, great fun. But, for scientific problems, can it be taken seriously?"

This ironic comment set the tone for Kindleberger's future work in economic history. His books and papers are distinguished by his command of the previous literature. His reasoning is informed by an intelligent, if skeptical, use of economic theory. His prose is sprightly. And his conclusions are clear, forcefully presented, and always worth debating.

Kindleberger's impact on economic history comes primarily from two books published in the 1970s. The first, The World in Depression, 1929-1939 (London, 1973; revised edition, Berkeley, 1986), provided a comprehensive narrative of the Great Depression from an international perspective. Instead of seeing the Depression as a succession of national stories, Kindleberger argued persuasively that it was the result of a failure of the international economic system. The economic structure built around the gold standard had allowed the pre-war industrial economies to weather various economic shocks in the late nineteenth and early twentieth centuries, but it proved unable to contain or offset the shocks arising in the period after the Great War.

Why not? Kindleberger argued that the inter-war economy lacked a hegemon, a dominant leader. The hegemonic power in the pre-war period was England, more specifically the Bank of England, which acted to contain crises wherever they started. But England was exhausted by the effort to defeat Germany in the Great War, and the Bank of England was in no shape to continue this role. Although the United States was the obvious candidate to pick up the baton, Americans were isolationist after their wartime efforts, and the U. S. declined to act. In the shortest summary: No longer London, not yet New York. Without a hegemon, the shocks to the world economy in the late 1920s were allowed to drag the world into the Great Depression.

Kindleberger generalized this argument in Manias, Panics, and Crashes: A History of Financial Crises (New York, 1978; 4th edition, 2000). He surveyed financial crises in the past two centuries that were important enough to have macroeconomic effects. He described the various irrationalities that preceded crises, as suggested in his title, and synthesized a vast literature in a small and engaging book. He concluded that stability was promoted when a world lender of last resort existed and followed the recommendations of Walter Bagehot a century earlier to lend freely at punitive rates during a crisis. This is what a hegemonic power should have done in the 1930s in Kindleberger's view; it is what the International Monetary Fund should do today.

Kindleberger was a wonderful scholar, teacher and friend. He remained active professionally as he aged, responding to letters on his ancient manual typewriter up to just before his death. Even in his nineties, Kindleberger could and would give you rapid and sharp comments on any paper you sent him. He lived a long, full life, and we will miss him very much.

Peter Temin, MIT

Wanted -- dead or alive -- the U.S. Constitution. Legal Theory Blog has a roundup on blogosphere discussions.

A correspondent wonders if I haven't overlooked the natural-law, anti-constructivist theoretical base at the root of Barnett's own acount of liberty. I replied in this manner:

In his NRO piece, it looks like Barnett missed that also. What I'd like to know is how does Barnett square this circle -- his endorsement of Kennedy's legal opinion -- based as it is on Kantian and Millian arguments, and Barnett's own natural-law, anti-constructivist theoretical base.

In his NRO piece Barnett does say this:

The problem created by the unenumerated right of privacy is that it now required the Court to distinguish unenumerated liberties (deemed by the court to be "fundamental rights" that rebut the presumption of constitutionality) from mere "liberty interests" (that do not). Eventually, the Court settled on limiting fundamental rights to those that could be grounded in our "history and traditions" or "implicit in the concept of ordered liberty."

The more specifically you define the liberty at issue, however, the more difficult a burden this is to meet � and the more easily the rights claim can be ridiculed. "Liberty" is obviously deeply rooted in our history and traditions. A right to use contraceptives is not. Nor is almost any particular exercise of liberty, especially if it was a practice unknown at the Founding. Whenever a particular liberty is specified, therefore, it is always subject to the easy rejoinder: "Just where in the Constitution does it say that?" even though the Ninth Amendment specifies that "The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people."

And this:

The response of judicial conservatives (not to be equated with all political conservatives) who are still rooted in the post-New Deal constitutional jurisprudence has been both entirely predictable and remarkably feeble. First, they argue that since all laws restrict some "freedom," requiring legislatures to justify to a court their restrictions on liberty would enable judges an unbridled power to strike down any laws of which they disapprove. But this is to equate "liberty" and "license," a mistake the Founders never made. Liberty is � and has always been � the properly defined exercise of freedom that does not violate the rights of others. Your right to liberty is not violated by restrictions on your freedom to rape and murder, because you have no such right in the first place.

With this as the baseline, the onus then falls on the government to justify the restriction of liberty. Once an action is deemed to be a proper exercise of liberty (as opposed to license), the burden shifts to the government. Though he never acknowledges it, Justice Kennedy here is employing what I have called a "presumption of liberty" that requires the government to justify its restriction on liberty, instead of requiring the citizen to establish that the liberty being exercised is somehow "fundamental."

What I'm suggesting here and below is that Barnett's argument contains an implicit leap from the tradition of ordered liberty ratified by the framers to a much more Millian account of liberty rights -- a liberty right in law which is built upon the frame of a rationally constructed morality. Perhaps there is not as much distance in this leap as I am inclined to think. But it's still a leap.

Randy Barnett has an important analysis of Justice Kennedy's opinion in Lawrence v. Texas. One problem. The framers gave us a liberty right out of the tradition of British constitutionalism. Barnett and Kennedy are inserting a rationalistic post-Millian and post-Kantian liberty right -- one that imagines that "morality is the product of our reason" -- which it isn't, and a view which the framers had no part in making a part of American jurisprudence. The fantasy of constructed morality -- and constructed rights -- is a modern conceit, which the framers cannot be said to have given us as the law of the land.

Calblog has a hot race for Governor scoop. It looks like Sen. Tom McClintock is running. He's a smart, sensible and hard working man .. and he's made the case for recall better than anyone. I wish there was a place for such good people in a state as messed up as California -- but I doubt it.

And don't miss Sean's insightful remarks in Calblog's comments section.

Free speech continues to be threatened by the Republican's unconstitutional -- and unAmerican --McCain-Feingold legislation. The sort of speech this unlawful "law" would stiffle includes the sort of speech which allowed democracy to work in the Davis recall effort. (via California Insider)

I've suggested here more than once that most economists are -- deep down -- pretty terrible economists, folks who just don't understand their subject matter in all sorts of areas, especially where it matters most -- like capital theory. (Definition of modern "math jock" economics -- the economics of capitalism absent any understanding of, oh dear, capital.)

Recent Ph.D Robert Murphy illustates the problem:

I would like to conclude with a personal anecdote that illustrates the relevance of [economist] B�hm-Bawerk's critique. After I had reconciled the verbal logic of B�hm-Bawerk with the mathematical models of the mainstream, I wrote a first draft of one of my dissertation essays in which I explained away the apparent conflict by pointing out the tremendous importance of the mainstream's assumption of a single-good world. I handed in my draft to a renowned mainstream economist, just to make sure that I hadn't misunderstood neoclassical theory.

When I got my draft back, I was quite surprised to find that the professor had clipped a single piece of paper to the front. On it he had written something like, "This is the only interest theory that I, and just about everyone else, understand." Below he had drawn a simple diagram, with C(t) (i.e. consumption in period t) on the x-axis, and C(t+1) on the y-axis. There was a semicircle connecting the two axes, which denoted the production possibilities frontier (PPF) for present and future consumption through tractors.

The professor had drawn two dots on the PPF. The dot that was higher on the circle represented the tradeoff that was available through saving: By moving to the left on the x-axis, a person reduced current consumption in order to invest in tractors. By moving up on the y-axis, a person increased future consumption because of the marginal output of the tractors.

And now the crucial step: Because of the shape of the PPF, and because he had chosen points on the right side of the curve, it turned out that the leftward shift in present consumption was smaller than the upward shift in future consumption. Therefore, my professor thought that this simple diagram had shown a technological cause of interest: Because of the productivity of tractors, my professor was claiming that a small reduction in present consumption would cause a great increase in future consumption, i.e. a positive rate of interest.

What was so frustrating about this diagram was not that it was wrong per se, but that it completely overlooked B�hm-Bawerk's critique! My professor had completely overlooked the problem of pricing the tractors! Yes, the technological facts allow us to say that a given increment in future consumption (i.e. the gap on the y-axis) will require the present investment in a definite number of tractors; this is an engineering problem that does not involve subjective preferences.

However, just because we know how many tractors we need to buy in the present, we do not know how much such an investment will reduce our present consumption. In order to know this, we need to know the market price of tractors in terms of present consumption. By drawing the gap on the x-axis, my professor had just assumed that the tractors would cost less in terms of present consumption than their future output. In other words, my professor had assumed a positive rate of interest.

After several minutes of discussion, I finally got the professor to realize that he had been assuming away this difficulty. But he still refused to concede that physical facts alone could not explain a positive interest rate. No, instead he proclaimed: "Assume we can turn tractors into bananas one-for-one."

In conclusion, B�hm-Bawerk's critique of the na�ve productivity theory was a brilliant leap forward for subjectivist economics. Unfortunately, its lessons are as relevant today as they were in the 1880s.

Over 50 papers have been collected from the 2002 Popper Centenary Conference by Rafe Champion. Take a look. I particularly recommend "Popper and Hayek: Who Influenced Whom?" by Bruce Caldwell.

State GOP promises to get out the Davis recall vote. (via PatheticEarthlings). Quotable:

[California] can't afford three more years of this person.

-- State GOP chair Duf Sundheim.

And guess what, the recall has been good for the GOP:

[Sundheim] said anecdotal evidence from five of the state's 58 counties shows that 20 percent of those registering to vote as Republicans in June were changing over from the Democratic Party. He also said that in San Bernardino County, 6,300 people registered as Republican, an unusually high number for June in a nonpresidential election year.

Democratic party campaign chief Bob Mulholland remains adamant that no Democrat will appear on the ballot for governor: "There won't be any. They've all made it very clear." More good news for Schwarzenegger -- or Riordan.

Will Schwarzenegger jump in or out of the race for Governor? Schwarzenegger political consultant George Gorton shares this thought -- once an election date is set .. Arnold is in. Quotable:

Schwarzenegger adviser George Gorton said Wednesday he thinks the actor will decide to run and make a formal announcement after an election date is set.

Trial lawyers are road-testing a new form of corporate shakedown, says Robert Samuelson, and this time it threatens free speech. (via The Agitator).

The recall signature count calendar -- upshot? The recall should be certified by July 23 and the election will be be held within the following 60 to 80 days, on a date to be specified by the lieutenant governor. All bets are off if the courts decide to overrule the constitution and do whatever they want.

Dick Morris fisks the French.

What was it like at the NY Times under Howell Raines? According to Vanity Fair's David Margolick, it was like this:

Raines would not let facts get in the way of a story he had ordered up or a point he decided to make. "Howell wanted a thought inserted high in one of my stories," says a metro reporter. "The only problem was, it wasn't true. Mind you, this was on my beat, a beat he didn't really know about. I said to the editor who was the message-bearer that it wasn't true, and it didn't belong in the story, period. A while later he came back to me and said, 'Well, you're right, but Howell wants it anyway.' It became clear that the editor had not fully conveyed my arguments to Howell, because he was afraid to. I said, 'F--- that -- I'll tell him myself.' And he literally seized my arm and said, 'You don't want to do that.' And ultimately the editor-intermediary and I compromised on a version of what Howell wanted that was just vague enough not to mean much, but still close enough to a falsehood to make my very uncomfortable."

InstaPundit< is all over the Iranian freedom protest story -- and that's not all. He's also hot on the Hong Kong freedom protest story. Glenn's solution? Hong Kong should petition for decolonization and independence. Certainly Hong Kong is much more prepared for it than where the LSE socialist in Africa during the 1960s.

LA drive-time radio talk hosts John & Ken and their listeners are hammering California Sec. of State Kevin Shelley over his efforts to illegally delay the count of the recall signatures. My guess is that Shelly will [quietly] back down on this one.

Here's another unsolved California problem -- and another reason Davis will get the boot.

I'd missed this Dan Walters line quoted in Fund:

The publicity helps [Schwarzenegger] and some say the Terminator plot is tailor-made for his campaign pitch: it's about a good guy who saves the world from a robot.

John Fund's take on the California recall and the race for Governor. Quotable:

[Gray Davis] is the first politician in anyone's memory to have less than 50% support in all demographic groups.

And this:

recall organizers say their effort should be viewed as an act of political hygiene. And by 60% to 32%, Californians in the Los Angeles Times poll agreed that a recall effort to remove a bad governor was legitimate. They view a recall as akin to firing someone who's been hired for a job on a four-year contract but refuses to work.

An indecisive Arnold Schwarzenegger may drag out his ticket selling tease into August. Money quote:

[Schwarzenegger consultant George] Gorton said he expects Schwarzenegger to make a decision later this month or in early August ..

If Schwarzenegger runs and wins under Gorton's direction, the victory will also be one for the state's last Republican governor -- Pete Wilson:

Team Wilson - Gorton, former chief of staff Bob White, former communications director Sean Walsh and media consultant Don Sipple - are set to become Team Arnold.

If Schwarzenegger truly wants the job, Darrell Issa is ready and waiting for the debate to begin. Quotable.

I'm afraid to armwrestle him," Issa said. "I'm not afraid to enter into the realm of ideas with him.

Political junkies have got to hope that Arnold jumps in. Schwarzenegger in debate would be too rich.

Schwarzenegger failed to help out with the recall early on, and that failure didn't win him any friends. Quotable.

But some Republicans are openly nonplused by a potential Schwarzenegger candidacy. "I will be blunt: If Arnold wanted to run for governor through the recall, Arnold should have helped the recall," said Republican Assemblyman Ray Haynes, an early supporter of the recall. "We shopped the idea of the recall to a variety of people, including Schwarzenegger's representatives, and they chose not to get involved," said Haynes. "The person who chose to get involved and to make this recall go...was [Rep.] Darrell Issa.

Nasty, brutal and short -- Claremont-McKenna Professor John Pitney on the upcoming recall election. He also adds this:

The interesting thing will be to see if the campaign backfires on Davis. He will need to attack his opponents and raise lots of money, which will just remind Californians of why they hate him so much.

The article comes with a typical NY Times editorial-come-headline -- instead of promising to help restore sanity to a state capital out of control, the headline writer assures us that the recall will only create more "chaos". You don't suppose they've taken sides at the national news desk, do you?

Jay Leno --

They're now saying if Terminator 3 reaches $200 million at the box office, Arnold Schwarzenegger will not run for governor .. And so far, Gray Davis has seen it 380 times.

Alan Reynolds does some math on state taxing and spending. Worth quoting:

From 1991 through 2001, state taxes rose by 4.2 percent a year in real, inflation-adjusted terms, according to the Tax Foundation. Real incomes of taxpayers rose more slowly, by 3.5 percent a year. In California, real incomes grew by only 3.2 percent a year, yet tax receipts grew by 5.4 percent a year. This was an unsustainable trend: State taxes could not possibly keep rising faster than taxpayers' incomes indefinitely, or taxpayers' after-tax incomes would fall continually until there was nothing left.

From 1999 to 2001, many states and cities made lavish spending plans on the basis of a temporary revenue windfall from stock options and capital gains. Spending by state and local governments rose 4 percent in 1996, 4.4 percent in 1997, 5.4 percent in 1998, 7 percent in 1999, 8.2 percent in 2000 and 8.1 percent in 2001. That, too, was an unsustainable trend: State and local spending could not keep rising by 8 percent a year because at that rate it would double every nine years and eventually account for 100 percent of GDP.

There's lots more on California and it's utterly unsustainable spend and tax policies.

More on De Long's mischaracterization of Hayek's views on democracy from Chirag Kasbekar:

You're being a little silly, and needless to say, unfair to Hayek ...

1. I agree with Greg Ransom that you miss Hayek�s point about �liberal� (that is, limited) democracy as opposed to �majoritarian/egalitarian� democracy � a la Dahl, etc. I don�t think you would find him ever criticizing democracy, but always �unlimited democracy� and �extreme democracy�.

See Gus diZerega, �"Equality, Self-Government, and Democracy" Western Political Quarterly, now The Political Research Quarterly, Summer, 1987. (http://www.dizerega.com/equal.htm)

This is a critique of Dahl that is remarkably close to Hayek�s own critique. Gus� critique has been acknowledged by Dahl�s own students as one of the best available. But Dahl has refused to respond to it.

In fact, it�s ironic that you cite slavery against Hayek. His main point is to argue that something like slavery can come about if democracy is not limited by liberalism.

This is Hayek�s point about democracy (The Constitution of Liberty, pp.107-108):

"Democracy is, above all, a process of forming opinion. Its chief advantage
lies not in its method of selecting those who govern but in the fact that,
because a great part of the population takes an active part in the formation
of opinion, a correspondingly wide range of persons is available from which
to select... It is in its dynamic, rather than in its static, aspects that
the value of democracy proves itself... The ideal of democracy rests on the
belief that the view which will direct government emerges from an
independent and spontaneous process. It requires, therefore, the existence
of a large sphere independent of majority control in which the opinions of
the individuals are formed."

A tip for new bloggers. Don't use Google as a spell checker.

Daniel Weintraub has a must read on what a Schwartzenegger run for Governor might look like. There's a lot worth quoting, put I'll take this:

Today, when most people hear his name, they think movie star. That�s enough to create the initial excitement. But in a campaign, that buzz would be only the beginning. Voters would first be reminded of his sponsorship of last year�s successful Proposition 49, which boosted funding for after-school programs for kids. Then they�d hear about his private work for after-school programs that preceded the initiative. From there it would be a natural segue to his broader commitment to inner city youth through his charitable work. And finally would come information about his growing business empire. He might even, God forbid, enunciate a vision for the future of the state. All of this would have the effect of getting people to stop and say, oh, he�s more than a movie star. He�s a man of some depth and substance and guts ..

Read the rest, as they say. I won't give away Weintraub's punchline.

Dan Walters has his picks for the Governor's race. Worth quoting:

Riordan reportedly is telling political insiders that if he does run, it will be with the declared intention of serving just the three years remaining in Davis' term, and not running for re-election in 2006.

The Reason Institute has a website dedicated to the California budget crisis. (via Virginia Postrel)

Is it 1.4 million signatures or is it 1.5 million, as Sal Russo of recallgraydavis.com has it (on Fox News last night)? Whatever. It's time to have a vote. This must be a bit like what it feels to be British when the Prime Minister has lost a vote of no confidence, and a new election has been called. I'll admit I'm getting a some of that democracy joes you get just after you've voted.

It's now time to elect a new state Governor. My own choice is Dick Riordan. The state is in terribly serious trouble and Riordon has shown in the past that he can tackle tough problems, and improve things for the better, as he did with Los Angeles. Riordan is a talented and serious man. He works well with people. And most importantly, he's both fiscally responsible and ethical in a way that few in Sacramento understand anymore. He's a leader, and he'll lead the folks in Sacramento in the direction they must go -- or this rebellion will not be over.

Will Riordan run? Well, I think everyone is waiting to see what Schwartzenegger will do. Schwartzenegger brings a lot to the table -- including a terrific can-do spirit -- but I'm not sure they're enough of the right things for a state with such deep and serious problems. Is Schwartzenegger himself serious enough and dedicated enough to tackle these problems? It's an open question -- and an important one for folks who pay taxes and make use of the government. He certainly lacks many of the skills and most all of the experience which Riordan has in spades. Whatever Schwartzenegger plans to do, he needs to do it now. The waiting game tease -- for whatever personal reasons -- is not one that the state can long afford. Whether its in or out, Schwartzenegger needs to put his cards on the table. Otherwise, he's really f-ing with a state which can't afford to be f-ed with -- tens of billions of dollars are currently on the line with the state's bond ratings -- and he will risk destroying a tremendous amount of good will built up with the people of California. This is especially true if it becomes clear that Schwarzenegger has simply been selling T3 tickets with a phony "I'd love to be Governor" tease while California burns.

Schwarzenegger can lead the state -- and lead it in the right direction -- if he applies the sort of dedication, seriousness, and drive he applied to becoming a body building champion, actor, and good citizen. But the stakes are higher here -- and it's not just about Arnold anymore. Is he up to it? We'll see -- but the jury is out.

Is liberty under the rule of law in America a constitutional thing -- or is it "a global thing"?:

[Kennedy's] opinion referred to a ''friend of the court'' brief that described liberty as a global concept and detailed how other countries protect the privacy of gay men and lesbians. It was submitted by Mary Robinson, former United Nations high commissioner for human rights ..

(via Drudge)

The NY Times has the completion of the California recall story . Quotable:

"It's a done deal," said Jonathan Wilcox, a spokesman for United States Representative Darrell Issa ..

Compare PrestoPundit yesterday: "The Recall -- it's a done deal."

Coincidence? You decide!

Andrew Sullivan:

BUSH AND GOVERNMENT: He's no conservative in a small government sense. Spending billions we don't have, piling on regulations, burdening businesses, Bush is turning into a Nixon in domestic economic policy. He will regret it. So will we.

Sullivan is commenting on the CATO story about Bush's exploding Federal Registery -- which The Agitator was plugging this morning, and which Instapudit pugged this afternoon. Pretty typical for Sullivan -- a day behind and no "speading of the wealth" -- or credit -- around the blogosphere. I didn't pick up on the story because very clearly 9/11 needs to be factored in and I haven't seen that work done yet. The Washington Post article is here.

"businesses manipulate government for their own benefit" -- hmmm. Was Bruce Bartlett writing about LA Chamber of Commerce? The Chamber has come out in favor of Davis and against the recall.

I imagine their thinking goes something like this: Gray Davis is a really lousy governor, but he's our (the Chamber's bought and paid for) really lousy governor. We can't afford to buy and pay for him a third time -- the problems of the state aren't important enough to be worth that.

Worth quoting from the Chamber press release:

That is not to say that we agree with all that Gov. Davis has done during his five years in office. We have our policy differences with him in many areas. From workers' compensation to over regulation, from labor laws to energy, from a penchant for fund raising to a lack of leadership, Gov. Davis could have done a better job for our state.

(link via California Insider).

Brad De Long is reading Hayek -- but none too closely. Hayek distinguishes between liberal democracy bounded by the rule of law -- and unlimited democracy bounded by nothing. De Long completely ignores a distinction which is fairly easy to understand. Why? Lord knows. Anyway, here is De Long, and his "criticism" of a straw-Hayek (a criticism which ignores the central purposes which Hayek does find in democracy -- and which can be found repeatedly in Hayek's work, if the objective is scholarship, and not political demagoguary):

But last night I ran into a passage that makes me wonder whether Hayek in his inner core believed that democracy had any value -- even any institutional value -- at all. It came on pp. 171-2 of Friedrich Hayek (1979), Law, Legislation and Liberty: The Political Order of a Free People vol. III (Chicago, Il.: University of Chicago Press: 0226320901):

"Egalitarianism is of course not a majority view but a product of the necessity under unlimited democracy to solicit the support even of the worst. It is by the slogan that 'it is not your fault' that the demagoguery of unlimited democracy, assisted by a scientistic psychology, has come to the support of those who claim a share in the wealth of our society without submitting to the discipline to which it is due. It is not by conceding 'a right to equal concern and respect' to those who break the code that civilization is maintained."

Now it is certainly true that of the trio "Prosperity, Liberty, Democracy," Hayek puts prosperity first and liberty second--or, rather, that freedom of contract needs to be more closely safeguarded than freedom of speech, for if there is freedom of contract then freedom of speech will quickly reappear, but if there is no freedom of contract than freedom of speech will not long survive. But the passage above makes me wonder whether democracy has any place in Hayek's hierarchy of good things at all.

That isn't end of De Long's non sequiturs, but enough for here.

UPDATE: And here is my rather heated posting to De Long's comments section:

Balderdash. This is ridiculous Brad, and shame on you for pretending otherwise. If you want to know what purposes Hayek finds for democracy he tells you -- repeatedly in many places. But I'm not sure that is your interest or your purpose. If it were you would start at by pointing out up front that Hayek make a big deal of a distinction between liberal democracy bound by the rule of law and unlimited democracy bound by nothing. I can't believe that you've read what you claim to have read and still somehow you failed to absorb this rather simple distinction, which Hayek hammers home again and again in his work. Hayek values liberal democracy most highly and has little use for unlimited democracy -- a position shared by Madison, Jefferson, Adams, and the other folks who created America. This is fairly commonplace stuff. Why pretend otherwise -- and why smear Hayek in such a blantantly unscholarly fashion -- and in a way that mimics the worst of the worst .. false carnards against Hayek coming from the far left on the fringes of the Internet. What web sites have you been reading to get this stuff?

You see, I've run into this idiotic non-sense again and again on the internet, and there is more of it in the comments section of De Long's post. Sadly, and predictably, some of it comes out of the universities, where the Left finds it impossible to deal with either truth or the actual ideas of actual people. Smear is instead the favorite game in town -- and the appalling lack of intellectual diversity in the university make its an easy to get away with. Sad, terribly frustrating .. and more than a little pathetic.

Welcome to Plato's Republic of the United States.

We are now living in Plato's Republic -- a republic of philosopher kings -- rather than Madison's Republic -- a republic of traditionally inherited rights democratically mediated and reformed by the people themselves. Instead, we are now ruled by a committee of five according the post-founding inventions of morality constructed by Kant and Mill (read a bit of Justice Kennedy in Lawrence vs. Texas to see what I mean), and not by the democratically sanctioned yet inherited laws and traditions of British liberalism. It's been a century long revolution, but the revolution is complete. Legal Theory Blog has a useful account of how the notion of "legitimate state interest" was morphed and constructed into a tool for completing this deep change in how we rule ourselves in America. The upshot:

We are now in a position to take a very broad view of the notion of legitimacy that the Supreme Court has employed for about 100 years. We now can see a familiar pattern. Language that was initially used for one purpose (sphere of authority) is adapted to a quite different purpose (minimally sufficient weight) and then morphs into something else entirely. It is no longer clear that the Supreme Court has any coherent view of what constitutes a "legitimate state interest." And it is far from clear that the emerging new concept of a "legitimate state interest" will have any relationship to the concept of legitimacy. In all likelihood, this conceptual incoherence will not bother the Supreme Court. After all, the Supreme Court, like Humpty Dumpty, can say "When we use 'legitimate state interest,' it means just what we choose it to mean--neither more nor less."

But read it all -- lots of interesting details on the history of how all this happened, and when.

If Schwarzenegger doesn't run, here's a good reason why:

One of the guiding objectives of his life is to have fun. "The first 10 times I saw Arnold, he told me to relax and lighten up," Gorton says. "This is someone who loves to have a good time." It's not clear why anyone's idea of a good time would include a $38 billion budget deficit, a contentious legislature and a state credit rating that's plummeting toward junk-bond status ..

Just what I was thinking ..

[Democracts might] try to preempt a Schwarzenegger candidacy and perhaps catch both him and Riordan napping. Here's how: By Wednesday, July 23, Secretary of State Kevin Shelley might well have all the verified counts he needs from the counties to certify the recall as qualified for the ballot. The moment he does so, the clock begins ticking on the election, which must be held between 60 and 80 days from that date. Suppose Shelley certifies it on July 24, and Lt. Gov. Bustamante then immediately sets the election for 61 days later, on Tuesday, Sept. 23. The filing period for candidates, set by law, closes 59 days before the election. That means candidates would have just two days to decide whether to put their names on the ballot and process the paperwork to do so ..

California Insider has the scoop -- again.

David Horowitz on Coulter and "Treason".

The Stalinist crimes of Walter Duranty and the NY Times. Worth quoting:

"The Times constantly over the years makes unadulterated heroes of the victims of the blacklist. In their obituaries they always present communists in a positive light. The Times seems to have lost any critical faculty when writing about the issue of communism. They would never publish glowing obituaries for dead Nazis and fascists as they do for dead communists."

-- Ronald Radosh

America is #3. The Economic Freedom of the World: 2003 Annual Report is out today.

Meanwhile, here are some familiar laggards: Germany, 20; Japan, 26; Italy, 35; France, 44; Mexico, 69; India, 73; and Brazil, 82.

And the bottom five? Guinea-Bissau, Algeria, Zimbabwe, the Democratic Republic of the Congo and Myanmar.

Do the math. Free economy = wealth and prosperity. Unfree economy = poverty and more poverty.

When will Democrats and Socialists -- and Republicans -- learn basic math?

Calblog has some recall predictions. She's been right before.

"We're done"

The Contra Costa Times covers the completion of the drive to recall the Governor of California.

"Davis' goose is cooked"

-- Tony Andrade of the Davis Recall Committee in an AFP story titled "They Have the Signatures".

Transcript -- are petition mechanisms a good thing or a bad thing for Democracy? Dane Waters, president of Initiative and Referendum Institute, on Fox's The Big Show.

Hayek biographer Alan Ebenstein is out with his new examination of Friedrich Hayek and this ideas titled Hayek's Journey: The Mind of Friedrich Hayek. The book is a follow up to his earlier Friedrich Hayek: A Biography, the first English language biography of the great man -- which is now out in paperback.

Priorities & Frivolities takes a look at the Schwarzenegger playbook -- Arnold: The Education of a Bodybuilder, and comes away with a few strategic moves on the way to the Governor's office -- if Arnold wants it.

George Bush is no friend of free markets or the the folks who work and pay taxes. Take a closer look, for example, at Bush's drug-money-for-votes initiative -- it turns out to be all about shifting huge costs from big business to the little guy, as Bruce Bartlett explains. Quotable:

A good example of how businesses manipulate government for their own benefit is the prescription drug subsidy bill now before Congress. Although marketed as a benefit for seniors, the true beneficiaries are big businesses that would be able to greatly reduce the cost of their retiree health programs. According to a July 2 report in The New York Times, Ford Motor Co. alone would save $50 million per year.

The Times notes that the biggest companies are mainly those that still offer drug benefits to their retired workers and would save the most. In the aggregate, they would save billions of dollars per year if the federal government takes over a big chunk of their retiree health expenses by paying for prescription drugs. That is why they are lobbying very heavily for passage of the legislation.

By contrast, seniors are unenthusiastic about the new benefit that is to be showered on them. According to a Zogby poll for the Galen Institute, a significant majority of seniors are satisfied with the drug coverage they have now, and many fear that they would actually be worse off under a mandatory government plan. They are right. Many will be worse off.

In short, to increase their profits, many of our nation's largest corporations are pushing a budget-busting government spending program that eventually will lead to higher taxes on all Americans. Sadly, the Bush administration often supports policies that benefit big businesses at the expense of average people, as it did with steel tariffs and agriculture subsidies.

On top of all that, the the giant monkey wrench of government regulation gets heaved into the incredibly successful workings of the pharmaceutical industry. It's a rotten deal.

The CEO of Nokia on Old Europe -- without free, competitive labor markets it just can't compete.

Tom McClintock on Davis's illegal car tax.

Tax hero -- and recall mastermind -- Ted Costa profiled.

Recall forces claim 1,260,930 signatures collected, taking them beyond their stated goal of 1,233,572 signers by July 12 -- and giving them a huge cushion over the required 897,158 signatures for recall. The race to replace is on.

Will the Davis anti-recall campaign be a replay of the race and fear charged San Fernando anti-secession campaign? Reporter Jill Stewart ran into political hack Kam Kuwata -- who helped run that campaign -- as he left a Davis meeting, and here is her conclusion.

Lobbyists form lobby for lobbyists -- TheAgitator has the scoop -- and the must be read to be believed press release. ScrappleFace, eat your heart out.

The Recall -- it's a done deal. Daniel Weintraub, the California Insider, has the internet scoop. Snippet:

The Davis Recall campaign reports that signature gathering is complete. �We are pulling everyone out of the field this afternoon,� David Gilliard, the consultant to the Rescue California committee, tells me. �The phone calls are going out, about 1,200 of them. They are being told to stop and turn in what they�ve got.� ... Gilliard says Rescue California, the committee funded by Rep. Darrell Issa, will submit a total of 1.2 million signatures. The volunteer-based committees expect to have about 200,000 more, for a total of nearly 1.4 million.

The office of Sec. of State Kevin Shelley has put together a FAQ on the recall. (via Calblog).

Bound in a Nutshell has a regional analysis of support for the recall, as the numbers pile up in the Sec. of State's office. Also provided -- a handy county-by-county chart of the recall signature numbers. Notable -- nearly 20% of Kern county 2002 voters have signed the recall petition.

First you get the dirt published in places like the SF Chronicle -- then you run smear ads on the radio like this. It's the Davis way, and it's another reason Gray Davis will be out on the street by mid-November.

PrestoPundit last night: "Rabinowitz calls Coulter "the Maureen Dowd of the conservatives". Ouch."

Andrew Sullivan this afternoon: "RABINOWITZ ON COULTER: She's the Maureen Dowd of the right. Ouch."

Coincidence? You decide!

Bruce Batlett on Bush, Nixon and the "Gimme Generation":

.. this is the price we are paying for being in the midst of a foreign-policy crisis and having a Democratic party controlled by its most extreme elements. The former tends to make conservatives reflexively support the president, while the latter makes the White House think that the middle of the political spectrum is there for the taking. With the elderly occupying much of that middle ground, the goal is simply to buy their votes with prescription drugs.

Richard Nixon did the same thing back in 1972 when he boosted Social Security benefits by 20 percent and automatically indexed them to inflation. But while this did buy the votes of the elderly that year, it did not buy their loyalty. When Nixon got into trouble over Watergate, the elderly did not come to his defense because of the windfall he showered on them. They simply took what he gave them for granted and asked, �What else are you going to do for me?�

Political analyst Charlie Cook suggests that something similar could happen to Bush. No matter how big a prescription-drug subsidy is enacted into law, it will never meet the outsized expectations of today�s �Gimme Generation� of elderly, who feel they are owed unlimited benefits simply for living through World War II and the Great Depression. Therefore, they are guaranteed to be disappointed by the results and will chafe at any limitations on the government�s largess.

When Bush refuses to expand the program to their liking, Democrats will be more than happy to say they will. And should Republicans ever suggest anything in the future to restrain the inevitable growth of the prescription-drug program, Democrats will predictably attack them for slashing it and killing untold numbers of seniors by denying them life-saving drugs. These attacks will work, leaving Republicans as the bad guys once again, even though no prescription-drug plan would exist without Republican support.

In short, the political calculation is penny-wise/pound-foolish in the extreme. Any prescription-drug plan will be an albatross around the Republican Party�s neck for generations to come. It�s a bad deal.

A little dose of reality. The Bushes have always been Nixon Republicans -- willing to give limited government Republicans a stick in the eye and a shove-off whenever there are votes to buy or favored interests to coddle .. either through wasteful spending or deeply flawed laws and regulations. Remember -- it was Nixon who gave us racial quotas and Bush I who gave us the federally mandated wheel-chair access for handicapped strippers, alcoholism as a federally protected "disability", and other such absurdities. These weren't accidents -- they reflected deep-seated "go where the votes are" thinking, untroubled by worries of doing what is healthy for a free and liberal social order.

Dan Weintraub:

The other day I was interviewed on the radio along with Ted Costa, the man who started the campaign to recall Gov. Gray Davis. Costa, who is chief executive of the anti-tax group Peoples Advocate, was asked what he has against the governor.

"We're upset with government in general," Costa replied. "Sure, we picked him out. He's the CEO of this operation. But government in California has become utterly corrupt. Every bill that seems to go through the Legislature, it's because money was given to the political arena. We want that mess cleaned up.

"We are starting out with him," Costa said. "And this is a continuous thing that will go on. It will not stop once he's thrown out of office."

As far as I know, this was the first time Costa had so clearly stated his desire for a California political revolt. He and his allies are aiming for the head. But it's the whole body they're after.

And that, I think, is what really has the elites in this state panicked. They have no love for Gray Davis. But they fear that the recall could be the start of something over which they have little control.

But there is LOTS more of serious interest. Well, damn it, let me quote some more of it:

California, a place famous for direct democracy through the ballot initiative, our candidate elections have suffered from a distinct lack of voter engagement.

The statewide races are dominated by television commercials, with little chance for real people to see, touch and question the candidates. Debates are few and far between, and real debates are almost unheard of. Advances in political technology have allowed the campaigns to carve the voters up into little slices and then bombard them with messages meant to move them on narrow issues. Last year's campaign for governor, for example, included barely a word of serious discussion about the two problems that have brought the state to its knees: the energy crisis and the fiscal meltdown.

The Legislature, meanwhile, has engaged in a bipartisan scam to dampen political competition, first by limiting campaign contributions, which helps incumbents, and then by redrawing district boundaries in a way that determines the partisan outcome of almost all the races in advance. The voter registration of the districts is so lopsided that the victor in the party primary is almost always guaranteed to win the general election.

The result is a political class horribly disconnected from the rest of California.

Statewide leaders live in a cocoon where interest group money and political strategists are the only things that really matter. And legislators either don't have to worry about reelection at all or fear only the small chance that they will be outflanked by a candidate of their own party in the primary. Term limits, which were supposed to make the Legislature more in touch with the people, haven't helped, because a third or so of the members aren't running for reelection and the rest are concerned only about finding their next job and the money to win it.

It's little wonder that we have a revolt on our hands. Davis allies have tried to portray the campaign as a right-wing coup, and of course its roots are in the conservative Republican community. But the unrest goes well beyond that core group, extending to many Democrats and the state's growing number of independents. Even Peter Camejo, the Green Party candidate for governor last year, has said he will run again if the recall qualifies for the ballot.

"How to write a texbook". (via Jeff Tucker and the Mises Econ Blog)

The making of a recall. Money quote:

A few weeks after the election, Davis raised the stakes on the budget debacle. Estimates of the budget gap had zoomed past the $20 billion mark and were rising quickly to $35 billion. Democratic and Republican legislators, mired in gridlock, floated the idea of a ballot measure to give voters the choice of higher taxes or deep spending cuts. [Ted] Costa, director of People's Advocate, a tax watchdog group, saw Davis' imprint and considered it a political bailout, he said. "I figured, if the dirty bastards are going to do that, (Davis) ought to be on the ballot with them," said Costa, describing one of the first baby steps into recall talk.

And this:

California's recall provision, approved by voters in 1911, does not specify particular reasons why an official may be recalled. "Sufficiency of reason is not reviewable," it says.

"I look at the recall as a tool that's open to the people," said Costa. "It's part of our social compact in California. It's not negotiable."

Costa polled the members of his anti-tax group. The result: near unanimous support for a Davis recall effort.

He began planning.

There is lots more in this piece of very good reporting. Why isn't there more of this sort of thing in the California press? The major papers spend a good deal of their limited time sifting through dirt-ball "scandal" stories pushed by the Davis camp, but its a rare thing for one of them to tell us this BIG story of the making of the recall -- which IS news and which IS happening and which IS making history. If journalism is history in a hurry, the Contra Costa Times has written some history.

Andrew Sullivan has Ronald Radosh's heated reaction to the Ann Coulter's latest "historical revisionism" on Joe McCarthy:

"I am furious and upset about her book," me told me last week. "I am reading it - she uses my stuff, Harvey Klehr and John Haynes, Allen Weinstein etc. to distort what we actually say and to make ludicrous and historically incorrect arguments. You might recall my lengthy and negative review in The New Republic a few years ago of Herman's book on McCarthy; well, she is ten times worse than Herman. At least he tried to use bona fide historical methods of research and argument." Now Radosh has endured ostracism and abuse for insisting that many of McCarthy's victims were indeed Communist spies or agents. But he draws the line at Coulter's crude and inflammatory defense of McCarthy. "I think it is important that those who are considered critics of left/liberalism don't stop using our critical faculties when self-proclaimed conservatives start producing crap."

Ann Coulter gets a first class fisking from Dorothy Rabinowitz. An instant classic. Rabinowitz calls Coulter "the Maureen Dowd of the conservatives". Ouch.

Over the top! The recall folks are claiming 1,000,310 recall signatures submitted and 1,184,930 recall signatures received as of July 4, 2003 -- with 18,571 more "in the pipeline". If these numbers are valid, the drive to recall the governor of California has succeeded. And there is still another week of signature collecting yet to go within the timeframe deadline for a November election.

It's not only recall signatures which are rolling in, it's also cash.

At Rescue California headquarters .. a dozen volunteers busily opened and copied stacks of thick envelopes containing new petitions. Mingled with the petitions were personal checks � the group has raised more than $500,000 from individual donations averaging $29 ..

Here is Sunday's Judy Woodruff interview with Gray Davis. Worth a laugh:

And I'm convinced when people know that this is not a free ride, this special election that the proponents want will cost taxpayers $30 million -- this money is not budgeted.

Laughing out loud! The governor has programs costing $80 million dollars a day which are not budgeted -- and this is not a free ride either -- it's what's given us a $38 billion dollar deficit and train wreck of a bond rating
.
Oh, and there's more.

There is a vote today in Sacramento that will kick 110 kids out of kindergarten if the Republican budget is adopted.

Cut any bit of the 40% increase in state spending over the past four years and Gray Davis will have to kill this puppy!

The drive to recall him is nearly unprecedented, but Gov. Gray Davis has turned to a familiar formula to fight it. Just as he did when he became governor in 1998 and won re-election last year, the Democrat is seeking to shift the focus from himself and onto his Republican opponent, portraying him as too conservative for California and unfit to lead ...

The AP has the low-down on Davis's low-road politics.

TIME notices that there is some news happening in California -- and leads with the "Issa is a car thief .. or maybe not" story the San Francisco Chronicle has been running with. Pathetic. But they do come up with this bit of juice:

former Los Angeles mayor Richard Riordan tells TIME that he and actor Arnold Schwarzenegger, both moderates, have talked about running against Davis.

Anti-Subversion measure "postponed" in China's Hong Kong, after week of demonstrations.

There is a new law blog, of special interest to West Coast folks titled: The Limit of its Logic: Ninth Circuit Blog.

Will Schwarzenegger be Governator? The Mercury News does a long piece on the prospect. (via Calblog) Big question -- can Arnold take it:

Two years ago, Premiere magazine ran an unflattering profile that accused Schwarzenegger of groping three women, cheating on his wife and belittling crew members on his movie sets. Schwarzenegger dismissed the piece as trash, but it became Exhibit A for Garry South, the governor's chief political strategist, who faxed the article to scores of reporters with a snide note about the actor. The faxes sparked angry threats from Schwarzenegger's attorney, but South said the actor can expect much worse if he runs.

Pathetic Earthlings reads the tea-leaves of the LA Times poll. Quotable:

If Feinstein gets in the game, this game is over. We Republicans would do best just to toss our purple and green properties and loose cash into the pot and pretend we hear our Mother calling.

Samuel Brittan cuts through some of the deflation non-sense. Quotable:

Apart from Japan, the industrial world has not seen deflation for 70 years. Once there is a single currency and a single monetary authority, inflation and deflation refer to movements of the price level of the whole area. To raise the alarm about possible German deflation, because the rate of inflation in that country has fallen to 0.6 per cent - against a euro area rate of 1.9 per cent - is simply to ignore the advent of the new currency. To talk about German deflation makes as much sense as to talk about deflation in Texas or Cornwall, unless you believe monetary union is premature or still immature.

In any case it seems inherently absurd to believe that a � per cent annual increase in prices is satisfactory, while a � per cent decrease spells catastrophe. Very often the difference between these low rates of inflation and deflation will depend mainly on the price index used. A � per cent rate of deflation based on the European Union's Harmonised Consumer Price Index usually translates into a � per cent rate of inflation on the British Retail Prices Index.

(via Institutional Economics)

The French pension reform bill has passed. Worth noting:

Besides extending working years, the measure would remove a barrier between the public sector, which enjoys special privileges, and the private sector - a taboo in the past. Public sector workers currently have to work 37.5 years to qualify for full benefits. Under the bill, they would have to work 40 years, as in the private sector, by 2008.

Has Schwarzenegger's whole movie career been a stealth political campaign for Governor? Quotable:

I think it's safe to say that if Arnold were to be elected governor, he would be the first holder of high office in the history of the Republic whose bare buttocks have been seen by hundreds of millions of people worldwide.

Schwarzenegger and T3 are are runnaway winners at the box office.

Joseph Ellis (yes, that Joseph Ellis) gives Walter Isaacson's Benjamin Franklin a glowing review. Quotable:

Isaacson recognizes from the start that the character portrayed in the ''Autobiography'' is one of Franklin's most artful inventions. He argues persuasively that Franklin's sharpest critics, from Max Weber to D. H. Lawrence, have directed their fire more at his masks than at the man beneath them.

Isaacson's 4th of July TIME magazine piece on Franklin is worth reading. Franklin -- and Isaacson -- get at the core of American liberalism in a very few well chosen words:

At age 12, Franklin became an apprentice at the printshop of his older brother James, who tended to be quite tough as a master. "I fancy his harsh and tyrannical treatment of me," Franklin later speculated, had the effect of "impressing me with that aversion to arbitrary power that has stuck to me through my whole life."

And this:

The literary character Franklin invented was a triumph of imagination. Silence Dogood was a slightly prudish widow from a rural area, created by a spunky unmarried Boston 16-year-old who had never spent a night outside of the city. He imbued Mrs. Dogood with that spirited aversion to tyranny that he would help to make part of the American character. "I am," she wrote, "a mortal enemy to arbitrary government and unlimited power. I am naturally very jealous for the rights and liberties of my country; and the least appearance of an encroachment on those invaluable privileges is apt to make my blood boil exceedingly." It was as good a description of the real Benjamin Franklin�and, indeed, of a typical American�as is likely to be found anywhere.

InstaPundit.Com asks:

How many links between Al Qaeda and the government of Saudi Arabia are needed to justify regime change there?

Do Bush and Powell have an answer for that one?

Mark Steyn on Gray Davis and California. (via Instapundit). Worth quoting:

.. there's plenty of statistical evidence to suggest that if you sliced off California and floated it out into the Pacific there'd be no "Bush recession" at all. Shorn of LaLaLand, in May America would actually have seen a net gain in employment - an extra 4,500 jobs - but then the monthly figures from California came in - another 21,500 layoffs -and drove the national figure down again.

California Insider on the recall:

.. another way of looking at it is that elections are like job interviews. They are the people�s way of hiring our public servants. If an employer screws up and hires the wrong person, he doesn�t simply allow that person to continue to do damage to his company or organization. He removes him. In this case Davis was given a four-year contract as chief executive, subject to the pleasure of his employers�the people of California. Now we realize that the state�s problems are worse than we knew and Davis isn�t looking like he is up to the job. We�re scouting the possibilities to see if someone better might be available. This does not seem to be such a terrible thing.

Well said. Daniel Weinbraub was responding to a silly pieces by Jonah Goldberg. Warning: according to Jonah's alternative universe logic, once you begin reading his article you're required to read the whole thing -- every bit -- even after you've realize just how stupid the argument. Democracy and republicanism demand it. Really. Somehow. I'd don't know how. But trust me. I said so.

The bottom line is that Davis flat out lied to the voters of California during the election of 2002 -- hiding the true numbers on the seriousness of his gross fiscal mismanagement of the state. For Californians this is a deadly serious situation -- jobs and vital programs are on the line -- and the Governor has completely lost the trust of the people. The recall is perfectly within the bounds and purposes of the republican and democratic constitution of the state of California.

All of this seems to be simply humor foddor to Goldberg -- and like a joke or a jokester we shouldn't take Goldberg or his argument very seriously. And I'm sure that's the way he'd want it.

Quiz for Goldberg -- apply your requirements for democracy and republicanism to Canada, Britain, Italy and Australia. See how silly you are? (And I know all about the Queen).

Is Arnold Schwarzenegger doing a Colin Powell, or a Donald Trump -- using election speculation hype to sell a product? Well, if he is, it's working -- the Governor Schwarzenegger story is world-wide news, helping to sell the Schwarzenegger name -- and T3 tickets -- around the globe.

The Union-Tribune does a feature story on the Davis recall. Worth quoting:

the dump-Davis movement has become a populist prairie fire unseen since the Proposition 13 tax revolt of 1978.

And this:

"We don't know whether [Arnold Schwarzenegger] is going to run or not, but I'm pretty sure that he is," said [Schwarzenegger] political adviser George Gorton. "He seems to be pretty interested in it and pretty excited about it."

There is much speculation that Schwarzenegger's career path may be determined by the box office receipts from "Terminator 3."

"Ask me again after the July 4 weekend grosses come in," said Sherry Bebitch Jeffe, a political analyst at the University of Southern California. "If 'Terminator 3' rakes in $100 million, do you think he can or will be allowed to walk away from that? I don't think so. If, on the other hand, it tubes, he may decide it's time to gracefully find another career."

At 55, Schwarzenegger presumably has more movies left in him. But there's no conventional calculation of how many productive years lie ahead for an action hero.

"I don't see how he can make 'Terminator 22: The Revenge of the Nursing Home,' " Jeffe said.

Gorton said Schwarzenegger's star power and can-do image will be enough to carry him through an abbreviated recall campaign.

"Arnold is the message," Gorton said. "He comes across so well with such charisma that people are moved to like him."

That won't cut it, said Ken Khachigian, Issa's campaign manager.

Schwarzenegger is described as a fiscal conservative and a social liberal, but voters are going to want to know more, Khachigian said.

"If he's in the Central Valley, he's going to be asked about agriculture," Khachigian said. "If he's in Imperial, he'll get asked about water. If he's in Orange County, he'll be asked about the El Toro air base. He may have full and complete positions on all those things, but it's no longer just yukking it up on 'Late Night with Jay Leno.' "

Idler Yet has a recap (with links) of the Davis recall and the race for Governor of California. (via Instapundit --yes, he is back.)

And Idler Yet offers a movie review:

Dozens of reviews of Schwarzenegger's new movie, Terminator 3: Rise of the Machines were clearly written before anyone set foot in the theater. For your typical scum-of-the-earth movie critic, of course, pre-judging this one is a no-brainer. This is a second sequel after a long wait, like Godfather III; Arnold is getting old, time to take him down; and the California election story supplies the hook: he needs to go into politics, because with this turkey his movie career is over, blah blah blah. (And there's no downside to trashing it. No critic ever lost face by slamming an sf action movie.) Well, it's all a crock. I just saw the movie, and�don't worry, no spoilers follow�while it lacks the dark gloss Cameron gave the first two, it's not a let-down, but a good solid thriller that establishes its sympathetic characters economically, moves assuredly, and after a too-familiar first twenty minutes makes several clever additions to the overall Terminator story-line. Arnold doesn't look his age either, and made me laugh with some frumious new facial expressions for the sf humanoid he plays and is. If you like this sort of thing, as Mr. Lincoln said, this is the sort of thing you will like. I certainly enjoyed it. But I only mention it here to make the point that it's going to be a big hit despite any pissy reviews you've seen, and therefore Schwarzenegger has options. He will be able to finance five more years of movies if that's what he wants to keep doing. If the recall election gets postponed to March, if it looks like he'll have to take on the popular Dianne Feinstein, he can pass the governorship up. But if he decides to go for it regardless of opposition, he'll have a winner's momentum behind him.

With petition organizers claiming over 1,000,000 signatures, a majority in California are now ready to unseat Gray Davis -- recalling a sitting governor for the first time in state history.

Dean's campaign manager follows up on advice from emailers, and hits a jackpot on the Internet. Money quote:

Meetup.com was founded nearly a year ago as a Web site for strangers in the same area to meet and share common interests. Scott Heiferman, the chief executive, said: "We never thought it would be used for politics. We figured we would attract Lord of the Rings geeks and poodle owners."

Arnold fires up the troops in Iraq. Quotable:

"First of all congratulations for saying hasta la vista baby to Saddam Hussein. I came here from the United States because I wanted to pump you all up ... This is really wild driving around here. I mean the poverty. And you see there is no money. Disastrous financially. Then there is a leadership vacuum. Pretty much like in California right now."

"I start talking about exchange programs and they say, `Great.' And when I say they're all from France, end of conversation."

-- Mary Lou Church, student exchange family recruiter for Loisirs Culturels � L'�tranger. Perhaps it's time for the French to ask themselves, "Why do they hate us?".

This will be Schwarzenegger's best shot, says Mickey�Kaus. But even this short race may still give Davis enough time to give Schwarzenegger the full multi-million dollar Davis treatment:

If you believe the LAT poll, the current drive to recall Gray Davis is clearly Arnold Schwarzenegger's best and perhaps only chance to become governor of California. Why? a) 53 percent of registered voters are "not inclined" to vote for him. In a head-to-head matchup against a Democrat, that number would normally be fatal. In a recall "replacement" election, where there might be no Democratic opponent and where you can win with only 25 percent or so of the vote, it might not be. b) Schwarzenegger needs as short a campaign as possible to prevent all the Democrats' potential dirt on him from sinking in with the electorate. Not only would a recall election campaign be short, it would also dilute the dirt--the Democrats would have to worry about tarring all the Republican replacement candidates, not just Schwarzenegger. ... Is there enough time, even in a rushed, chaotic recall campaign, to effectively trash Schwarzenegger? The Feiler Faster Thesis says yes! ... Otherwise, Schwarzenegger could be Governor of California by Halloween. ...

California Insider Daniel Weintraub makes his case:

Here�s how Ransom puts it:

�Newspapers have choices to make -- if someone puts up a podium in a hotel conference room, what gets said at the podium does not automatically make it into the next days paper. It has to have news value.�

But that�s just the point. When forces working on behalf of the governor of California try to link his opponent to the Nazi party, it has news value. Not because it�s true or might be true, but because it demonstrates the character and the judgment of the man who would allow his campaign team to make such allegations. If the governor said he thought little green men had landed from Mars and launched the recall, it would be ludicrous, but it ought to be reported, because the voters would want to know that the chief executive of their state had taken leave of his senses. The same is true here in a political context. Last year, when Bill Simon accused Davis of breaking the law by taking political donations in a state building, reporters were pretty sure the allegation was false before the papers went to press that night. The photo Simon supplied to back up his allegation was clearly not taken in the office he said it depicted. But we ran the story anyway, because it demonstrated that Simon was prone to making reckless allegations, and it told us (and voters) something about the way he manages a team of people. It is most definitely news when public officials lie or attempt to grossly mislead the voters, especially in a malicious way. Sometimes you have to report the lie in order to expose the lie.

It's hard not to be persuaded by any argument that says -- let the people know and let them decide. I remain uncomfortable with the idea of playing the political hacks' game when it gets this off-the-wall and this dirty. The hacks shouldn't have a media audience with this stuff -- they should be wandering the streets like a homeless men, videotapes in hand, ranting to the birds and clouds.

More bad advice for Japan from American economists.

Test your senses -- and find out what is going on, when things go wrong. Maybe this is why I missed those shots in high school ... The color tile example is a great illustration of a point about words and colors taught by Ludwig Wittgenstein in his refutation of both British empiricism and mainstream analytic philosophy of language. Believe it or not! (See, for example, Wittgenstein's Remarks on Color).

Who says they don't like America? Stuff yourself with one of these 4th of July recipes from the BBC -- and celebrate America the way American's do! This seafood gumbo looks especially good. I'll be having lobster -- and a beer or two. Bet John Adams and Ben Franklin did something of the same.

Hayek-L'er Rafe Champion fisks George Orwell.

Don't tax you. Don't tax me. Tax that man -- and his tree. Dan Walters almost has me convinced:

Taxation is, almost by definition, an arbitrary and wholly political act. Politicians decide what's to be taxed and what's not and much of tax policy is, therefore, nonsensical -- such as the disparate sales tax treatment of hot and cold foods. In that vein, it's irrational to levy property taxes on cars in the form of vehicular license fees -- treating them like land and houses -- while exempting other tools and pieces of personal property, such as computers or lawn mowers, or even other forms of wealth, such as shares of stock or jewelry.

That said, it's perfectly logical, and even morally correct, for California's vehicle license fee (VLF) ... to be fully reinstated now that the state is experiencing its worst-ever budget crisis. The history of the VLF tax cut explains why ...

Personal note. While puting in my lawn, it struck me that the very dirt in my yard was taxed. Dirt. It seemed like taxing water or air or sunshine. But depending on how you go about getting them, I suppose those things are taxed as well.

Race to recall -- on target for well more than 1.2 million signatures by July 12. (graphic).

Worth reading -- Charles Krauthammer. Snippet:

I once worked in government. On my first day, I raised my right hand and swore to uphold the Constitution. I thought I knew what that meant. Recently we have gone to war in Afghanistan, Iraq and a few other places, at least in part to advance democracy and promote our kind of constitutionalism. A foreigner might then ask: What exactly is your Constitution? Now we know the answer. The Constitution is whatever Sandra Day O'Connor says it is. On any given Monday. That modifier is crucial, because she does change her mind, and when she does, so does the Constitution. Seventeen years ago, she ruled anti-sodomy laws constitutional. Now she thinks otherwise ...

Darryl Issa responds to the Davis dirt on the John and Ken Show, KFI 640, 6/26/03 (audio).

Arnie vs. Issa -- California Split? Quotable:

If the recall succeeds, Arnold Schwarzenegger will be the next governor.

-- LA & Orange County Congressman Dana Rohrabacher.

Schwarzenegger wins at the box office.

California Insider Daniel Waintraub posts the following comments on an entry below discussing the SacBee's news story on how the Davis camp has sought to link Issa with Nazis whackos:

Should newspapers spread lowly allegations leveled by state politicians? Prestopundit takes the Bee to task for reporting the allegation of Davis allies that Rep. Issa was somehow linked to Nazi sympathizers because he had a table outside a gun show at which Nazi memorabilia was shown at one booth among thousands of exhibitors. Aside from the fact that Prestopundit is guilty of the same crime of which he is accusing the press, I'd suggest that we are all correct in reporting the tactic. That's because I think the story here isn't the accusation but the accuser. This is the governor, not some two-bit nobody. And when the governor is willing to do this kind of stuff, you're actually protecting him by ignoring it. Voters need to see the depth of his desperation so they can use that to weigh other claims they hear from him. And by the way, Issa's Rescue California site posted the story, so I assume they agree.

Weintraub has a legitimate point -- up to a point. As we've known since at least Daniel Boorstin's The Image: A Guide to Pseudo-Events in America, many political news stories are based on manufactured events -- such as the staged press conference. Anyone can manufacture news -- if you can get the news media to cover it. The LA Times has given several pages of coverage today to two guys who collected a total of four signatures (half their own) for a "petition" calling for Schwarzenegger not to run for Governor. The article is essentially an entertainment article, but when you are talking political personalities, the dividing line is very thin here. Two guys, a piece of paper, and four signature -- and you've manufactured "news" in the LA Times.

Newspapers have choices to make -- if someone puts up a podium in a hotel conference room, what gets said at the podium does not automatically make it into the next days paper. It has to have news value.

The question becomes -- does wild innuendo from a source of power qualify as news content, and if so, how should it be covered? This was the problem the press faced with the wild and false charges of Joe McCarthy (although McCarthy was in part working with word of mouth insider information that history has proved roughly true, in some instances -- lots else was grossly exaggerated or simply made up stuff).

On the side of making headlines and news stories out of this sort of stuff is the compelling argument that more information is better than less information (a very strong argument in my view). A second, related argument is that we should know about what sort of people these are who would do and say such things.

But this all becomes a chicken and egg problem -- if the press wouldn't put grossly false and out of the ballpark stuff from a manufactured "press conference" in the papers -- and in the headlines -- then the professional political people wouldn't throw this stuff against the wall, hoping to see what sticks. And it does stick. The lies and the innuendo become legend -- and then, for many, the fact. And you know what they say about legend -- when the legend becomes fact, print the legend. And as we have seen in case after case, eventually this is what the press does -- it prints the legend -- or some hazy cloud of legend, image, reputation, public perception -- and the facts gets lost, and damned.

If a story is simply false, silly, empty -- a nothing story, why make it a story at all. It's all fake news manufactured out of hot -- and poisonious -- air. Why let this fakery see the light of day -- why play the fake news game at all? The problem is that the press is part of the team building the news story out of thin air -- it wouldn't exist without their cooperation, even if the press intends not to cooperate by attempting to turn the story around on the political hacks pumping on the fake news pump. Many times what the political hacks deserve is simply for the press to walk away -- or not show up in the first place. A press conference on "Issa and the Nazis" should be one large empy hotel room with nobody present but a political hack or two dialing on his cell phone, trying to get a reporter on the phone .. or a date for dinner.

NBC News has a new blog/daily memo called First Read with lots of links to the days breaking news stories.

BusinessWeek on California -- the Un-Golden State.

The Davis recall team says they have their 1.2 million signatures.

Calblog has looked into the laws covering the California recall.

Virginia Postrel has an interesting little blog note on the magical -- and deeply selfish "progressive" thinking of Californians. But there is also this note of (shocking!) good news:

On a positive note, Steve [Postrel] dropped by UCLA today and a former colleague told him that California's energy crisis disappeared as soon as consumer electricity prices rose. Now peak prices are very high, and people are careful about what they use. The price system works! It must be magic!

Why do they even put this shameful stuff in the newspaper? The SacBee is spreading the vicious innuendo of the Davis camp about Darrel Issa. This time Davis sinks to a new low with an ugly effort to associate Issa with Nazis. Shame on Davis. And shame on the SacBee for not keeping this rotten garbage in the dump where it belongs.

DDT and the human tragedy of PC environmentalism. Money quote:

there are 300 to 500 million malaria cases worldwide. Thousands of people die of the disease every day .. In 2000, South Africa started spraying tiny amounts of DDT in homes in its province with the most malaria cases, and rates of the disease dropped there by almost 90 percent, from a high of 60,000 a year. Sadly, other African countries would like to follow suit but can't do so on their own. They need funds from the World Health Organization or the U.S. Agency for International Development - and neither organization, though they know better, has the political guts to buck the international environmental lobby and allow funding for the spraying of DDT.

(via Reductio Ad Absurdum)

The Japanese government bond auction is a dud. What the rise in Japanese bond prices might mean for Americans.

Jobless rate rise to 6.4% -- employers cut 30,000 jobs.

When will economists admit that Keynesian economics is a fraud? Keynes + the kitchen sink -- and all we get is more bad economic news, even as the economists keep forecasting good economics news, based on the failed and utterly unscientific "models" of Keynesian economics. It's time to call them what they are -- witch doctors, not social scientists. But here and there, you find glimmers of common sense and sound reasoning -- when the economists abandon their witch doctors reliance on the astrology of Keynes:

"Business spending is the Achilles heel of the economy," said Sung Won Sohn, chief economist at Wells Fargo & Co. "The economic baton needs to pass from consumers to businesses."

Ronald Hamowy remembers Friedrich Hayek and Murray Rothbard.

"Diversity Training" -- it's a racket and a jobs creation program, and it's utterly counter-productive. So argues Peter Wood, who suggests " a 12-step program for Corporate America.

But in his opinion for the Court, Justice Anthony Kennedy preferred a far more grandiose approach. He said the case "involves the liberty of the person both in its spatial and more transcendent dimensions." He then made clear how transcendent he considered these dimensions by quoting his own paean to liberty from the case that reaffirmed Roe in 1992, a dictum that Justice Scalia called the "sweet-mystery-of-life passage": "At the heart of liberty is the right to define one's own concept of existence, of meaning, of the universe, and of the mystery of human life." This passage has been properly ridiculed by lower court judges for the past decade because of its melodramatic implications. If carried to its logical conclusion, it seems to read the libertarian harm principle of John Stuart Mill into the Constitution, preventing the state from forbidding individuals from engaging in behavior that the majority considers immoral but that poses no harm to others. But in Lawrence, Kennedy, joined by four of his colleagues, made clear that a majority of the Rehnquist Court does in fact mean to read the "sweet mystery" passage for all that it's worth. He said that states and courts should not attempt to "define the meaning of the [intimate sexual] relationship or to set its boundaries absent injury to a person or abuse of an institution the law protects." As Scalia correctly observes, "This effectively decrees the end of all morals legislation."

Stanley Rosen.

I'd suggest as a slight correction -- Justice Kennedy is actually making Kant's moral philosophy (not his legal philosophy) the law of the United States -- e.g. he appeals in crucial ways to the concepts of individual "autonomy" and "dignity" in ways familiar from Kant. Andrew Sullivan's blogging expresses more of the thinking of a Mill man than does Justice Kennedy's opinion, althought there is surely doses of Mill in the new law. Students of the philosophy of law will well understand that it is a sophomore's mistake to conflate law and morality. What is law is not always of a moral character, and what is moral is not always of a legal character, to put things simply enough to explain the point to sophomores. Has Kennedy forgotten this? These folks on the court are so old it does raise important questions about how far each of them are along in the process of cognitive decline -- which science tells us is a universal fact measurable in every one of us as we get past 40.

Who owns SPAM�? And get a load of SPAM� toys! SPAM� shorts, earrings, fishing lures, socks, snowdomes, candle scents, postcards, snow sleds, etc.

Congo will attempt a coalition government in a bid to end the fighting. This comes on news that India will be sending a force to assist the French, who have yet to fully succeed in their effort to bring security to the people of Bunia. Pakistani replacements are due in September.

Edmond Phelps is still a bonehead and he still doesn't know his field of research -- i.e. he gets the ingredients -- and the history -- all wrong on the Hayek-Mises explanation of the boom-bust cycle.

Gene Callahan is inspired to make this short reply:

Phelp's response is very strange. He writes: "If solid old-economy investments were being crowded out in the late 1990s, corporate interest rates net of inflation would have been elevated, which they were not." Well, they would have been elevated, unless, of course, someone in the economy was artificially holding rates down, heh? And it's clear that he still doesn't get the malinvestment idea, and can only think of capital as an aggregate.

Recall leaders to Sec of State Kevin Shelley -- we'll see you in court.

Fatcats, no, make that Republicans Against the Recall.

Trouble abrewing? Send in the French!

More powerful than any law, executive order or court decision is the culture of equality fashioned by the words to be found in that Declaration. It is that culture of equality � a belief that all Americans are not only equal in the eyes of God but equal in the eyes of the government � that binds us and unites us as one people "indivisible." Should a significant segment of the people lose faith in the principles contained in the document that represents the social contract we have with each other, that culture of equality will erode and America will cease to be a nation that promises and delivers "liberty and justice for all." It is not the law that unites people; it is trust. Friendships are forged, marriages are sustained, currencies are valued, and governments survive on the basis of trust. The Court's UM decisions tear at our sense of trust in our government. The time for America to break free from its obsession with classifying and dividing her citizens by "race" has come. And the popular revolt will begin in the state of Michigan where a national effort must be mounted to prohibit the university and all other entities of government from discriminating against or granting preferential treatment to any American citizen because of "race," ethnic background, sex or national origin. It must begin in California where Americans are blending at an astounding rate and defy the rigid categories of "race" imposed by the government. And the battle must be waged in every other state where the people have the right to petition their government and to enact laws through such a process. We must strain every sinew and muster every ounce of courage to negate this unjust decision. Let us declare anew our devotion to equal treatment and defend that principle against those � even the Supreme Court of the United States � who would deprive us of it.

Connerly is the founder and chairman of the American Civil Rights Institute and the author of the autobiography Creating Equal: My Fight Against Race Preferences.

Ward Connerly will announce an initiative outlawing racial descrimination in Michigan on Tuesday. Let's Roll.

My thought? There's nothing like a little democracy to the cure the arbitrary abuse of power.

The Issa for Governor campaign has gone drive-time with radio spots. This thing is getting serious folks.

Mark Glaser has a really interesting piece on California Insider blogger Dan Weintraub. Oh, yah, Dan is also a veteran political reporter for the SacBee. Lots of the best stuff on the Davis recall and the California budget crisis is coming out of the SacBee -- and Weintraub's blog gives you the feel of the "inside" of these major news stories (to coin a word).

Recall Watch has a good collection of constantly updated articles on the Davis recall and the campaigns of Issa, Schwarzenegger, and Simon.

Recall Watch has the who's who of donors -- and the how much -- on the cynically named "Taxpayers Against the Recall -- a murderers row of cash cows sucking big-time off the government's teats. Chart the flow of money -- Davis takes the money from you, Davis passes it off to these folks, and these folks hand it back to Davis, in exchange for hundreds of times more in big time government loot. It's a suckers game, and you, the taxpayer, are the sucker.

O'Connor's incoherent mush means a giant victory for the race industry:

Because Gratz v. Bollinger bars the formulaic use of race in admissions decision, schools that get lots of applications will have to expand their admission staff in order to conduct the "holistic, individualized" review Grutter demands of schools that take account of race.

Jobs and power is where it's at, baby. And the lawyers and law schools have got to love this sort of word-splitting mess -- a sort of full-employment act for folks who produce nothing but bogus rationalizations and other endless streams of words, all aiming to make white folks feel morally good about themselves. There's some irony there ...

Brad De Long fisks Lawrence Kudlow not once but twice, using this helpful graffic showing month-to-month base money growth rates:

Scientists discover a five quark particle.

"Return rule to the people" -- chant of hundreds of thousands marching in the Chinese province of Hong Kong.

Meanwhile, the Chinese Communist Party celebrates it's 82 birthday, with party chief Hu Jintao saying,"Power should be used for the people. Concern should be shown for the people and benefits sought for the people." Contrast that with what the people of Hong Kong are chanting in the streets.

I imagine Hu's statement reflects the private sentiments of many members of the powerful committee in control of the laws of the United States. If the people of America had not lost the true spirit of democracy and liberty which was their inheritance, perhaps we'd have hundreds of thousands outside the Supreme Court chanting, ""Return rule to the people".