RatcliffeBlog - Mitch Thinking Out Loud

This was not the way I wanted to get a G5

Well, having messed with the server interminably, I've gone to a new system. Ordered a new motherboard for the old server, so now I'll be able to swap if one goes down. Never did I think I'd be my own one-man IT department.

UPDATE: I've found a way to trick the old system into staying up longer, though not permanently. It'll be a while before we return to normal operation around here, as I have several projects on deadline this week. If you are reading this, I am still being tricky enough to keep the system up -- it seems to involve keeping Ethernet and at least one application active.

Power outage, server outage

Seven hours without power today, because of windstorm damage. The only system that didn't come back up was my OS X server. It seems the power management chip is fouled up, as any power-related function, like sleeping the display, puts the system into sleep. I've reset the PMU -- anyone have any other ideas?

Light Blogging

It's one of those three-deadlines-in-one-week weeks....

Bouy, Those Are Some Economic Numbers

Headlines trumpet the "best economic growth in 20 years," hearkening back to the Reagan recovery well before there is any actual sign of improvements for ordinary Americans. Just as the press wants to be patriotic during a war, they tend to be parochial about the economy. Thus, you get statements like "The U.S. economy, hitting on all cylinders for the first time in several years..." from the Washington Post when there is absolutely no sign of employment improvements, setting the stage for a dismal Christmas retail season as consumers save for hard times (less job security) and the profits generated by the recent wave of tax refunds is absorbed and spirited away to the bank accounts of the richest one percent of the nation.

If you look at the chart the Post provides, you can see that there are two factors that account for the spurts of jobless growth in recent years -- every quarter in which a tax refund was delivered to Americans (Q4, 2001, Q3 2002 and last quarter, Q3 2003), they spent more; otherwise, if you look at the quarters after the invasion of Afghanistan and Iraq (Q1 2002 and Q2 2003, when we had to build and buy more bullets, uniforms, bombs and missiles), defense spending pumped things up. But the purpose of the tax cuts was to stimulate job growth, which still hasn't materialized and I'll take economy's slower growth without the expense of American lives any day.

But the really painful medicine in the "stellar" economy reports is that every time we've had a great quarter, the following unstimulated quarter--that is, when money wasn't being pumped directly into the economy in the forms of checks from Treasury or the DoD--growth has fallen back to a dismal 1.3 percent to 1.4 percent.

Secretary of Commerce Don Evans took the occasion of today's economic numbers to reiterate the promise that "We're growing the American economy and soon we'll be growing more jobs." We won't be seeing any new jobs if, as the market seems to think, stocks are currently priced for perfection and that the Fed will soon have to raise rates, which will choke off consumer spending built in recent years on the extraction of equity from homes. This is not an environment of renewed investment, but one of economic sleight of hand, trading current spending for massive federal deficits, not to mention ever-growing consumer debt. Much of the current job "growth"--which is still 250,000 jobs lower each month than promised by the Bush Administration--is in pre-holiday temporary hiring. It happens every year, so the gain of 57,000 jobs in September should be discounted more aggressively to account for seasonal jobs. The key sentence in that employment report was: "Since November 2001, the proportion of long-term unemployed has increased by about 9 percentage points."

The problem with tracking unemployment on the Department of Commerce site is that they replace the previous month's current unemployment with the previous month's report without changing the URL, making it hard to create comparisons between months. But, these charts clearly show the lack of progress in the economy:

One hopes that Republican voters hold the President and his administration to the promise they keep repeating but on which they never deliver.

Bushies -- Who Do You People Think You Are?

What Sony Tells Us

The news that Sony is laying off 20,000 workers and redirecting its effort both to increase revenues in China and lower costs to compete with Chinese consumer electronics has only one message for U.S. technology and consumer electronics companies: China is the main competitor and main market where they must succeed in the next 20 years. Ignoring the China market will lead to corporate fatality.

Sony's president, Nobuyuki Idei says he wants to gain five percent of the Chinese consumer electronics market for Sony, which currently holds about a one percent market share. Those gains have to come while domestic Chinese companies and competitors from other countries, particularly Samsung and LG in Korea, compete for a share of the exploding Chinese market. So, Sony doesn't just have to increase its Chinese sales by 500%, it has to increase it by 5,000% over the next decade to achieve that market share target.

The layoffs, while not unprecedented in Japan, are massive. And the suggestion that the company will compete in China by outsourcing manufacturing to China is a clear sign of what happened to that headcount, half of which were "administrative" positions overseeing an already deeply automated production system. Sony will never be rehiring that 13 percent of its workforce --those jobs have gone permanently to the floating market for outsourced manufacturing and middle management associated with those product lines has been wiped out.

Rich Media Ads Increasing Market Share

Mediapost reports that DoubleClick is seeing continuing and impressive gains in the use of rich media ads. Here are the numbers:

Rich Media's Share Of Online Ads Served

Share Of Ads Served*
Q1 2002 17.3%
Q2 2002 19.3%
Q3 2002 23.2%
Q4 2002 24.9%
Q1 2003 27.8%
Q2 2003 31.7%
Q3 2003 38.6%

Source: DoubleClick Q3 2003 Ad Serving Trends Report. *By DoubleClick. Q3 2003 Base = 172 billion impressions.

How Do You Spell "Capital Flight"

I guess I am beginning to understand George Bush's statement that he looked into Vladimir Putin and believed he saw a man with whom he can do business. Mr. Bush clearly has a skewed view of reality, because Putin is a guy who only does business on his terms.

President Putin, who runs his country as a quasi-dictatorship at this point, has jailed one of "the oligarchs," the cadre of super-rich quasi-mobster businessmen who dictate most of the economic activity in Russia because he threatened to contest Putin's political power. In one of those trumped-up sounding charges of corruption, Putin has had Mikhail Khodorovsky imprisoned on corruption charges as Khodorovsky's company, Yukos, the world's fourth largest oil company, was in the midst of negotiations with foreign investors to sell part of the firm. The sale would have freed Yukos from the strict control exerted by Putin.

Russians, who have had to endure the concentration of wealth and power in the hands of a very few people in the wake of the collapse of the Soviet Union, another centralized regime, are going to pay for this kind of conceit on Putin's part with an even longer economic winter. It also suggests that, should the U.S. and Russia come to some geopolitical loggerhead, the only option will be a catastrophic showdown between Bush and Putin, neither of whom seem to understand anything other than blunt force.

The Benefit of IT Quantified Or Rationalized?

According to the Economist, a team at Harvard led by Dale Jorgenson has determined that the benefits of IT investment we have seen in the United States aren't evident in Japan and Europe because they are being mismeasured:

Mr Jorgenson uses data for Europe and Japan which are adjusted to incorporate price deflators and measures of software expenditure similar to those used in America. Unfortunately, the detailed information needed to make these adjustments is available for most economies only up to 2000. Even so, the results are striking. For instance, they suggest that Japan's GDP grew by an annual average of 2.1% in the second half of the 1990s, compared with only 1.4% according to official statistics.

Employing these revised data, Mr Jorgenson finds that in all G7 economies, not just America, a boom in IT investment helped to boost growth in the second half of the 1990s. Indeed, the contribution to GDP growth from IT capital spending was almost as big in Japan as in America—although it was offset by a fall in investment of other sorts. All of the European economies also saw a marked increase in their IT capital stock, albeit smaller than in America. As in Japan, in many European countries this was partly countered by weaker non-IT investment.

I'd say that the different perceived value of the returns on IT investment are a combination of overstatement of the value to the U.S. economy and an understatement of the European and Japanese returns.

The article goes on to talk about "deficient demand" in Japan and Europe, "The snag is that elsewhere it has been partly disguised by the poor performance of investment in other things," which is a fancy way of saying -- in my opinion -- that the benefits of IT aren't being recognized. But I'd say that is actually a failure of IT marketing and product follow-through, not some kind of fault in the populations of other countries.

This same researcher said in 1991 that IT investment would "ease the economic slowdown," which was patently wrong. It seems he expects perfect responses by the market to imperfect technology or technology marketing.

I think we have a ways to go on the understanding the economic benefits of technology front.

Time-Shifting Chat

I was on the WebTalk Guys this weekend talking about time-shifted audio content. You can listen here (it's a free MP3).

Also, I received a comment about one of my postings recently on the same topic, which bears repeating here and a full response:

This sort of Time Shifting is already available for streamed Internet radio. Check out Replay Radio here:

www.replay-radio.com

Replay Radio lets you schedule shows to record, and then it saves them as MP3 files or burns them to an audio CD automatically. The software costs $29.95, and you can try a free demo from the site to see how it works before you buy it.

Posted by: Bill Dettering at October 26, 2003 09:25 PM

Actually, no, that's not what I am describing. I'd like something far more radical than the time-shifting feature. I want to shift attention away from the mass media to the many media. Audible has had time-shifting for years, now, but the whole industry needs to go further!

Replay Radio requires there be a stream from an existing radio programming source to record in the first place, which means it is only a half-step away from today's media -- it's predicated on today's media. It's, as the site says, a VCR for the radio -- what we need isn't just TiVo, but a completely new channel for content offered outside of the streaming environment, which is still incredibly inefficient. I want to be able to subscribe to a program and have it delivered on my schedule without having to have to set a system to record from a stream.

For instance, I was on WebTalk Guys this week and the show was pre-empted on the local radio station because of a football game. I'd have missed the show using Replay Radio to record that stream.

Now, as for finding individual shows, Replay Radio does let you do that, but it doesn't provide the kind of marketing channel I think is needed to promote a show, since it funnels the entire experience through a single interface. If Replay Radio decides to be a marketer of programming the cost of getting exposure in the application interface will probably rise; if not, Replay hasn't got the incentives/resources to stretch a wide net to find new content and categorize it -- unless it embraces RSS with enclosures.

Replay Radio's Quick Capture feature is pretty nifty and probably would get the company sued if users recorded secured music from the sound card after it was decrypted. Not that I object to that, but from a pragmatist's viewpoint, it is something to consider.

Finally, the big thing is that Replay Radio isn't providing an economic model for the programmer to invest in time-shifting, whether that programmer is a ClearChannel or a single producer of content. Simply capturing audio doesn't enable any new business model to support content creation.

Clearly, I am far more concerned about how the small content player can get off the the ground. The fact that Audible, with whom I've worked for years, is embedded in most MP3 players and has a working secure delivery regime that is rational and fair to the consumer, allowing multiple copies and flexible playback options, makes it my platform of choice for the self-publishing audio efforts. They just don't do it yet and if anyone wants to see them do it, let me know and I'll pass it along to Audible as feedback.

Ballmer: Unclued

Steve Ballmer, chief executive officer of the Redmond Horde (that would be Microsoft), is saying some really stupid things about open source software. Here is the highest achievement in nonsense I've read in a while:

Why should code written randomly by some hacker in China and contributed to some open-source project, why is its pedigree by definition somehow better than the pedigree of something that is written in a controlled fashion?" he asked. "I don't buy that."

What Steve Ballmer doesn't realize is that his own company takes virtually the same approach, hiring some young coder from Kentucky or Bangalore to write a bit of code that gets appended to Word or Windows, but without the feedback of coders and users that are incorporated into the collective decision-making that produces open source software. The market decides in open source whether the code written by the hacker gets incorporated into the product or shaved off and discarded because there are better solutions available.

At the same time, Ballmer says Microsoft will pursue more consulting and services business, which is the core of the open source financial model -- but he is going to try to do it with a closed system that embeds people who don't know the source code of the tools they use as intimately as an open source service provider who might actually have written the code in question.

Bushies -- Getting a little Rummy

One cross-posting of the Bushies from Correspondences.org this week:

UPDATE: For the many of you who have asked, this is satire, not a record of actual statements.

The margin of victory is already angry

Michael Cudahy writes that the Bush coalition is already in tatters. I agree that the challenge is to get Bush out of office and stop the deconstruction of the United States, yet that is only the first step. He goes on to provide a pragmatic description of the primary process that has, in recent years, torn the Democratic party to shreds and counsels patience.

One of the changes that I think is essential in the midst of the "you are with us or against" line drawn by the Bush Administration is the end of having to hate other Americans with whom you don't agree in order to be a Good American. That needs to start with people in the various candidates' camps, as well as the candidates themselves, recognizing that the worst thing to do is attack other candidates for the opportunity to challenge Bush in 2004. A substantive discussion of policy without the abrasiveness would be a big step in the right direction.

Then, we can deal in an organized way with the potential for an unprecedented theft of the election using electronic voting machines.

Google's Web-based IPO

I've been thinking about the Google IPO, rather than joining the chorus of celebration, both of the fact it is going public and that it will do so over the web using an auction format (sorry, it's an Financial Times page).

Here is what is significant: The Net auction will distribute the shares as widely as can be achieved in this world, rather than allowing large pools of shares to be held by major institutional investors. As an anonymous source told the FT: ""They could get a $100bn" stock market value, said one person involved. "However, all the shares would end up with Aunt Agatha in Des Moines and Uncle Milt in Pittsburgh and there would be no real public market at all."

This reduces the liquidity of the stock, which will keep the share prices higher in the short- to medium-term, because there will be a shortage of Google shares for people who want to buy large quantities. In the long term, it is a promise to shareholders that they will receive value directly from the company, which is already profitable -- that is, old fashioned dividends. This is a significant change in the value proposition in stock offerings. It suggests that the Bush suspension of the dividend tax could actually make IPOs by unprofitable companies less attractive, reducing the ability of younger companies to raise money.

It also raises significant issues relating to the sale of stock by insiders, who will obviously hold the vast majority of shares when the IPO is over. By tracking the sales of stock by insiders we should be able to get a very clear idea of how they are feeling about the company's performance -- and there may need to be a more explicit disclosure of reasons for sales of stock in advance. At least this is what my sojourn in investment banking tells me as I contemplate the Google IPO story.

UPDATE: Tristan Louis adds some interesting thoughts about what Google might do with the money it raises.

Tristan's point about "what would they buy?" is an interesting one. I think Google could come out of this with a $30 billion to $40 billion valuation and about $8.5 billion in cash. Of course, it is profitable, so it will keep tossing off cash to pay for more acquisitions or to pay off an acquisition of the size of Yahoo. But I think that Tristans latter thought is more likely where they will go -- the assemblage of a variety of network services that can be exposed by extending their APIs into new functionality anchored and tied together by comprehensive search functionality.

Wall Street and Bush

Why should we not be surprised about the fact Wall Street is now the largest contributor to the Bush Reelection campaign, despite the "tough new enforcement initiatives" announced to reform the financial services industry by President Bush in April 2003? Because, true to form, the Bush reforms are without teeth and the actual implementation has been lax. President Bush tells individual investors, who gave up about $2.1 trillion in market value after the corporate scandals of 2001 - 2002.

Contrast this language, offered by President Bush in April:

The misdeeds now being uncovered in some quarters of corporate America are threatening the financial well-being of many workers and many investors. At this moment, America's greatest economic need is higher ethical standards -- standards enforced by strict laws and upheld by responsible business leaders....

We've learned of some business leaders obstructing justice, and misleading clients, falsifying records, business executives breaching the trust and abusing power. We've learned of CEOs earning tens of millions of dollars in bonuses just before their companies go bankrupt, leaving employees and retirees and investors to suffer. The business pages of American newspapers should not read like a scandal sheet.....

With these campaign contributions, from a financial industry that is experiencing double- and triple-digit growth in compensation (which is scandalous, given the continuing layoffs across the economy, not to mention continued paring on Wall Street):

A study to be released today shows that the financial community has surpassed all other groups, including lawyers and lobbyists, as the top industry among Mr. Bush's elite fund-raisers. The list of those generating $100,000 and $200,000 now includes chief executives like Henry M. Paulson of Goldman Sachs, John J. Mack of Credit Suisse First Boston and Stanley O'Neal of Merrill Lynch , whose firm has already raised twice the amount for Mr. Bush's re-election that it did during the entire 2000 campaign cycle....

The 2004 election is still more than a year away, but employees of securities and investment firms and their political action committees have contributed $3.8 million to the Bush campaign through September, just $159,000 less than they gave during the entire campaign cycle in 2000, according to the Center for Responsive Politics, which tracks campaign finance.

The president has raised more from the industry than all nine candidates in the Democratic field combined. While Senator John Kerry of Massachusetts counts the industry as his second-largest contributor, at about $1 million through September, others have not done as well. Howard Dean, the top fund-raiser in the field, raised about $302,000, and Senator Joseph I. Lieberman of Connecticut raised about $639,00

While Wall Street executives say they are contributing because "President Bush is doing the right thing for the American people," the evidence of economic performance and increasing distrust and anger toward the United States internationally doesn't support the argument. The tangible results of the president's economic and foreign policy don't bear any improvements for Americans -- yes, we're more scared, but we are less prosperous and less secure than we might have been if President Bush had not lied repeatedly about the justifications for the war in Iraq.

All things being equal, the simplest explanation is that, having lined the pockets of Wall Streeters, President Bush is harvesting the resulting contributions.

And we thought banners worked

X-10 Wireless Technology, the company that pelted the Net with billions of ads for its cheap webcams, filed for Chapter 11 bankruptcy protection after losing a $4.3 million suit by three brothers who say they were gipped out of $564,000 in commissions and that X-10 stole their advertising "technology."

Two things about this: 1.) A $4 million suit wouldn't ruin a solid business, especially before the appeals process, so it appears this is yet another case of a Net company succeeding only by misleading investors and business partners -- though privately held, we now know it owns at least $10 million to creditors, and; 2.) X-10's email, pop-up and pop-under ads spawned an industry of banner and spam protection, for which some software developers must salute it as those bawdy little ads featuring "chicks with webcams" go over the horizon and into that dark night of insolvency. Good riddance, and thanks for the years of annoyance.

State budget reality: Pain

The Center on Budget and Policy Priorities says state budgets will face shortfalls through 2005. The problem is that we really don't know what will happen beyond 2005, since the Bush Administration has unglued most of the components of the federal government and has invested a ten-year deficit of at least $3.8 trillion in an economic strategy that isn't paying off in increased employment and clearly intends to continue the dismantling the social infrastructure.

The only rational thing for a citizen to conclude, faced with these facts and growing uncertainty about the future, is that the states will be running in the red and cutting programs for as long as we can imagine.

In 21 states where shortfalls have been identified, the amounts total about $32 billion to $33 billion or about 9 percent of those states’ expenditures.  As more states issue new budget and revenue forecasts over the coming weeks and months, the aggregate total likely will increase to more than $40 billion.

The new deficit amounts are on top of the estimated $78 billion shortfalls that states faced when they enacted their fiscal year 2004 budgets, as well as large deficits that were addressed in fiscal years 2002 and 2003.  The National Conference of State Legislatures estimates that over the last three years, states have had to close a cumulative budget gap approaching $200 billion.

This is no way to run a country. If George W. Bush is the "CEO of the United States" as he originally styled himself, before he became "St. George the Osama/Saddam Misplacer," he's destroyed the system he was elected to manage. He has destroyed the U.S. and now claims that the recipients of giveaways (the ultra-wealthy) will feel such gratitude that they will rebuild the entire system for a reasonable profit. At the same time, Bush's father works with The Carlysle Group, which specializes in buying companies at a low price and selling the parts at a high price, rather than starting new businesses that create American jobs.

So, can we ask the current president why his father, a former president, isn't responding to the massive incentives for investment by starting companies rather than tearing them apart? If the plan doesn't even work in one American family, why should it be applied to the nation? The comments section is open, Mr. President -- this is one citizen asking you to explain how the Bush family is responding to your tax strategy.

The Broadcast Flag in a Nutshell: Consumers are the enemy

Broadcast flag bad! Just read this statement by the FCC's Kenneth Ferree, explaining to Reuters why the broadcast flag is benign: "It will simply prevent consumers from illegal piracy, from mass distribution over the Internet, which is the problem with music file sharing."

Okay, the consumer is the enemy. The FCC is in the position of protecting the industries it is supposed to regulate, protecting their existing business models when they need to change. Somebody should remind Mr. Ferree that the FCC works for the consumers, who are also called citizens, not the companies, although companies are made up of citizens.

Here's the problem of music filesharing: Pricing and use restrictions made legal use irrational. That's not to say that acting lawfully is irrational, but that the sellers of music made a lousy offer, so people used their previous copies of music and ignored the "new" system because it was the same as the old one, to borrow a phrase from The Who. And we shouldn't get fooled again.

Broadcast flag bad.

China Ch-ch-changing

Three news items that are interesting vis-a-vis the rise of the Chinese economy:

China is changing its value-added tax system to focus on collecting revenues for consumption rather than production. The Financial Times reports (sorry, it's a subscription-only page) that:

While details remain scarce, the change of VAT to a "consumption-oriented" system could prove a boon for capital- and technology-intensive industries. Currently, they pay up to 17 per cent on fixed assets such as production equipment, but the new system should clear the way for exemptions and reductions.

The policy blueprint also called for general simplification of the tax code, a harmonisation of rural and income taxes, unification of enterprise tax and greater transparency on government budgets a measure that could help rein in rampant corruption and waste. It amplified earlier support for private involvement in the economy, but also stressed the leading role of state ownership.

A shift away from taxes on production is a radical change from the communist policy of extracting revenue from companies doing business in the country. It will ease concerns about direct investment and, concurrently, will increase the tax burdens on expats who expect to live high on the hog in China.

One of the outcomes of the Asia Pacific Economic Partnership meeting this week is that the 21 countries attending agreed to increase regulatory efforts to ensure transparency in government and business activity. A coordinated effort to fight corruption is much needed, as it is virtually impossible to establish meaningful country-to-country benchmarks when assessing business opportunities because so many costs are hidden in the top drawers of corrupt officials and businesspeople.

Finally, China's minister of land and natural resources was tossed out of office for participating in real estate scandals. According to Agence France Presse: "'Tian Fengshan is no longer the minister, we don't no why he was removed,' the ministry official told AFP. 'It is not convenient to talk about this issue at the moment.'"

I would not want to be Tian Fengshan.

Meaning and Mahathir

About a week back, I pointed to a quote from outgoing Malaysian Prime Minister Mahathir and suggested this was a clear opening to a diplomatic strategy to address moderate Islamic countries. All we had to do was take the statement seriously. We also had to ignore a lot of the distasteful aspects of Mahathir's regime, which imprisons political enemies. Here are the relevant quotes from an interview with the BBC:

"A lot of people think the teachings of Islam make them confrontative (sic), but in fact, if you go to the fundamentals of Islam, we are urged to live in peace," he said.

He said that in this "true sense", he considers himself a "fundamentalist" Muslim....

He appealed to Muslims worldwide to go back to the "original, true teachings of Islam" and embrace values such as "peace, friendship, brotherhood, and tolerance of people".

Malaysia, he said, did not have a problem with Islamic militants because it had acted to stop the "teaching of the politics of hatred" in religious schools....

"It is a lack of understanding of Islam that has led to this present situation," he said.

But he admitted that there was a problem within Islam with "wrong" interpretations of Islamic teachings.

"The result is that Islam appears to be an obstruction to progress," he said, adding that he believed there was a need for better unity within the Muslim world.

Then, a few days ago, "Dr. M," as he is known in the pages of his state-controlled newspapers, went and said that "Jews rule the world" by proxy. And he refused to recant when criticized. Now, this is bad in several ways: It's anti-semitic; it's not true, and; it's incendiary. All reasons, very good reasons, to condemn such nonsense, which President Bush, among others, has done.

The president has been congratulated for his response and rightly so. Dan Gillmor also points out a Washington Post editorial that suggests Bush's own failure to respond adequately to stridently pro-Christian and anti-Islamic remark made by an American general about a Somali warlord makes his criticism of Mahathir hypocritical. This is also correct -- President Bush has demonstrated repeatedly that he oversimplifies statements by other nations' leaders in order to paint black-and-white pictures in which the United States, but more particularly, he himself, is the man in white.

The general, William Boykin, told an audience of the Somali: "I knew that my God was bigger than his. I knew that my God was a real God and his was an idol." Boykin's explanation is that he meant the Somali warlord worshipped Mammon, that he idolized money. But at another event, also taped, he told a church in Oregon:

"Ladies and gentlemen, this is your enemy," he tells the Good Shepherd audience. "It is not Osama bin Laden, it is the principalities of darkness. It is a spiritual enemy that will only be defeated if we come against them in the name of Jesus and pray for this nation and for our leaders."

And, according to Cybercast News Service, he went on to say:

"And we ask ourselves this question, 'Why do they (radical Muslims) hate us? Why do they hate us so much?' Ladies and gentlemen, the answer to that is because we're a Christian nation, because our foundation and our roots are Judeo-Christian," Boykin was quoted as saying before the Good Shepherd Church in Sandy, Ore., June 21. "Ladies and gentlemen, we will never abandon Israel, we will never walk away from our commitment to Israel, because our roots are there. Our religion came from Judaism, and therefore these radicals will hate us forever."

In other words, our fight is with Islam. And as a fundamentalist, Boykin apparently shares the belief that we have help Israel fulfill its role in Christian prophecy, which requires the rebuilding of the Temple to bring on the End Times.

However, a lot of us live in the real world, one full of greys between various views, where global famine and death aren't high on our list of things to experience in life. We have to address Islam realistically, too.

Having had the surprising experience of seeing Mahathir up close, coming to the event with an American's view of his Islamic views that were characterized as "extremist" (this was pre-9/11), I am absolutely convinced that, despite his incendiary anti-semitic remarks, U.S. foreign policy has to take this guy seriously. When he says these things about Jews, he's playing to his fundamentalist audience, just as the Bush Administration does in its public pronouncements about our "crusade" against terror.

It would be convenient to blow off Mahathir as another Islamic crank, as much of the American media does, but this is the Muslim center talking, like it or not. I've read several of Mr. Mahathir's didactic books on Islam and the state, and it is clear that he is trying to balance a variety of forces to ensure the survival of his regime, which President Bush has lauded as a force for good in the War on Terror, as well as his -- Mahathir's -- historical legacy.

Mahathir may be stepping down as Malaysia's prime minister, but he is the de facto elder statesman of the quasi-democratic middle in Islamic society and we have to deal with him. Now, we can damn him for the things he says to keep his fundamentalist constituents in the Mahathir big tent or we can take that for what it is and challenge him to live up to the statements he makes about the peaceful nature of Islam. Doing the latter requires we swallow our tendency to announce our moral superiority (it's fine to do this at home, say when an idiot like Rush Limbaugh shoots off his mouth about black quarterbacks) and acknowledging that Christianity, Judiasm and Islamism all have a right to exist and a responsibility to their peoples to co-exist.

So, instead of writing off this transaction between President Bush and Prime Minister Mahathir as a clash of extremists, it is time for Americans to call on the President to exercise some of that humility he promised us during the 2000 campaign and challenge Mahathir to use his position as elder statesman to bring about the peace he says he wants.

Give Microsoft credit

Microsoft does things thoroughly and in the case of blogging, it has gone much further than most companies. This Internetnews.com article looks into Microsoft's support of blogging by employees and among developers and customers.

I particularly like the sanitized account of Chris Pirillo's discovery that Outlook 2003 is Exchange-centric. He blogged: "It annoys me to the point where I believe I'm going to have to switch back to Office 2000. Outlook is not designed for POP3 users. It's only for Exchange users, especially in the new version. This sucks."

Actually, his posting headline is "Outlook 2003 Sucks Ass, Bigtime."

He was heard in Redmond. That's better than a lot of other companies' track record, for what it's worth.

Whatever you may think of Microsoft, however you might feel about their software, this is a company that is listening to customers in interesting ways. It produces bloatware as a result, but someday they may fix that, too. I'm sticking with my Macintosh, though.

When financial metrics turn down, change them?

FindWhat.com said yesterday it will stop announcing per-customer revenues and click-through revenues, according to MediaPost. Amazingly, the CEO had the temerity to say We are not discontinuing the reporting of key metrics because we fared poorly in 2003." In fact, the revenue-per-click is falling as click-through inventories increase across the Web (thank you, Google AdWords).

This isn't bad for advertisers or Net users, but it does spell trouble for the companies that, having valued inventories at unrealistic levels are confronted now with the reality of lower-than-projected revenues and the need to radically increase inventories to meet revenue goals -- it's a vicious cycle that will drive inventory values lower. Deciding not to announce one's financial performance based on the value of individual customers and the revenue-per-click is not dealing with the challenges FindWhat.com faces, it is telling investors that management isn't confident about what they measure, nothing more or less.

Sure, revenues are up 62 percent in the most recent quarter, and FindWhat says it will hit 2003 revenues of $70 million. It's easy to say revenues are up and not focus on the increasing costs that you paid to achieve those revenues. If the cost of serving those ads and acquiring inventory are rising faster than revenues (which would produce a lower revenue-per-customer and per-click), the prognosis is not good, as Google and Overture can hammer the cost-per-click down to strangle their competitors.

Unemployment unchanged

Keep in mind that the Bush Administration has been projecting vast improvements in unemployment for more than a year, based on previous tax cuts. But today's regional and state employment and unemployment release shows absolutely no change in unemployment nationally, in fact non-farm payrolls actually fell in 26 states.

So, instead of the 300,000 new jobs each month President Bush has promised (for a year), we're down about 3.2 million jobs since this man took office -- and unemployment is holding firm. Given that we have already accepted three tax cuts, which produced a $374.2 billion deficit in 2003 and will produce a deficit of $480 billion in fiscal 2004. Now, putting aside the trillions in long-term deficit spending the Bush Administration has set us up for, the cost of the deficit in the last two years -- just the deficit, not the loss of revenues -- adds up to $854.2 billion. That means taxpayers, promised economic stimulus in return for these idiotic changes in the progressive tax system that produced America's 20th century prosperity (under Democrats and Republicans), have paid $2,669 per job *lost* under Bush.

Now, if this presidency is America's CEO administration, that's a lousy return on capital invested.

Socialtext Workspace 1.0

In the shameless plug department, the first full release of Socialtext's Workspace was released today. As a user and advisor, I can say they've built something everyone at the company can be proud of and that many organizations will find extremely useful. At the Chaordic Commons, where we built a project collaboration site using Socialtext, Living Directory and Golightly Online's email management and community system, the combined tools produced an immediate result: a 30 percent increase in members of the Commons. This is more than a wiki, blending a number of working styles to create a place where people can work on ideas.

Bennett's back against the wall now....

My old debate partner, Richard "I'm no wife swapper" Bennett is back in the comments section again:

I see why you're so aggressive now - you hope you can prevent people from seeing through your lack of understanding by lashing out so violently. The table you linked yourself says that California's top bracket is 9.3%. You couldn't even type that in accurately. You also lie about he sales tax, higher in California than in Washington, and in your analysis of property tax you ignore the higher median house prices in California and what that has to do with the size of the tax bill.

Initially, I thought you were a demagogue, but looking at the desperate arguments you raise about things like cigarette taxes, while dodging the car tax, it's apparent that you're simply ignorant.

But don't be sad because I made you look so bad in the course of this lesson - I've mopped the floor with better men than you'll ever be, so you're in good company.

Happy Emergence.
Posted by Richard Bennett at October 20, 2003 07:14 PM

Happy Emergence, indeed? And you've been a real feinting flower throughout this and other debates? Aggressive? Thou dost protest too much. Actually, Richard, I'm just taking the tone you've established in every exchange between you and I or that you've had with others that has come to my attention. You are consistently abusive and insulting, totally unable to take the kind of factual arguments you think you dish out. If you were the tough guy you talk like, you'd be able to take what you serve, but what you are is an inveterate exaggerator of fact, at the least.Here, again, you try to dodge the reality that every fact I cited was backed up by government or corporate sites that can be checked. I don't make up things to fit my argument like you do, and I don't need to be polite to someone who established the tenor of our exchange when you called me a wife-swapping liberal. Now, if you'd ever met or talked to me prior to that statement, I'd have given you the benefit of the doubt, however that was the first thing you wrote in retaliation to a response to one of your innumerable attacks on Joi Ito. You never dealt with the substance of a difference of opinion in that exchange, nor have you here. Damn, though, you are an accomplished name-caller.You're still the one who has been wrong on every "fact" you bandied about in this tax discussion. I've pointed to state documents -- if you are too thick to understand the finer points of taxation, such as the cumulative marginal sales tax in two different states, it's not my fault. Calling me stupid only points out where the real blame lies: you don't ask a clarifying question or answer any of the questions I put to you in asking you to prove your point, instead you defame other people's intelligence.

I'll be glad to mop the floor intellectually with you whenever you choose, just as I've done with abusive far-right Y2K zombies who deployed the same kind of "rhetoric" to discredit well-reasoned arguments that their advocacy of a doomsday scenario was completely off base. I always found your lot are really quite docile in person, usually full of the sound of their own voice and scared of every other voice, so scared you try to drown it out. Since you live in Camas, why don't you drop by one of these days and we'll see how your name-calling works in person? I live in Lakewood. I'll buy you a beer and we'll see if you can be polite for more than two minutes.

Yes, Richard, I have baited you. I don't like your style, but I am playing according to it, since you've inverted the Golden Rule so perfectly that I rather enjoy mocking you with some of the shit-talking you do. I don't like your politics, but I'll accept your beliefs if you take even one step to support them with actual facts instead of accusations of lying absent any proof I am wrong. So far, you haven't made a single statement supported by fact -- you've got plenty of opinions, but they are unsupportable in the real world.

Your argument about Californians not being overtaxed is so broad that it betrays complete ignorance or intolerance of the fact that different states use widely divergent tax strategies that distribute the burden of taxation quite differently. If anything, Washington and California are on the same track, moving the burden onto the backs of the middle class and poor to create some voodoo economic stimulus.

Yet, as you would know if you read the papers in Washington state, the only thing that these moves have got taxpayers is Boeing and other companies taking jobs out of the state.

Your comic reference to the "Microsoft tax" in one of your postings is so startlingly uninformed as to betray your ignorance of how tax revenues actually are collected: In a state with no income tax and a business and occupations tax that maxes out at 1.5 percent for manufacturers (before specific deductions for business services and high technology companies), we're not living on Microsoft alone. Far, far from it.

This Seattle Times article explains the Washington B&O tax and the difference in revenues compared to Oregon, which does have an income tax:

Had Bill Gates located his company in Oregon instead of Washington, Microsoft would owe that state's 6.6 percent corporate income tax; last year, that would have amounted to $588.7 million. Instead, the company pays Washington B&O taxes, which work out to about $313.5 million.

By contrast, Seattle-based Amazon has racked up billions of dollars in sales since it went public in 1997 but has had only one profitable quarter. Last year, spokesman Bill Curry said, Amazon paid $4 million in state B&O taxes. Had Jeff Bezos chosen to start the company 170 miles to the south, in Portland, the company would have paid a $10 licensing fee.

Now, note, Richard, that Microsoft's contribution to Washington state tax revenues was only 16.9 percent of the B&O tax and only 1.52 percent of total tax revenues. Since Washington collects only 58 percent of its revenues from taxes, Microsoft, which had sales of $32.1 billion last fiscal year, accounts for less than eight-tenths of one percent of the state's revenues.Yet, at the same time, the tax burdern in Washington falls harder on the middle class and poor, through the very taxes I described and others, like the lottery, making the calls for a more business-friendly California by Arnold Schwarzenegger all the more patheticly similar to George W. Bush's claim that he is compassionate.

What you also refuse to see in California or here in Washington is that what we pay for as taxpayers -- what we invest in together -- has been decimated by the neocon attack on government as an instrument of social decision-making, beginning with Reagan and continuing with the same venal ferocity you bring to an argument. I think the people have had it with under-investment in our young, continuing education, and innumerable other programs that must be cut to support a healthy profit margin for companies. Remember, Richard, people work at those companies and they have to live in these communities, even if they are falling apart. They aren't blind to this, but you clearly are blind to the diminution of public services and attendant disproportionate increase in privately provided services, such as medical care, over the past 20 years throughout the United States.

What I am arguing in not liberal, it is simple economics. Californians' future were choked off by the Wilson administration's misguided energy deregulation policy, which promoted the looting of the state and consumers' wallets, siphoning off much need capital and a massive revenue surplus at exactly the moment it was needed to sustain public investment in education, infrastructure and other assets that have made California an attractive place to live and do business for several generations. If a people don't invest in themselves, they create a disincentive to invest in their region.

I'm tired of the accusations of treason and heresy leveled by neocons with anyone who has even a slight disagreement with them. You see taxation and state budgets through an ideological lens that distorts reality, plain and simple. If you can't understand that California got into this crisis because of a combination of factors that were amplified by the Wilson administration's energy deregulation policy, you're just willfully indifferent to reality, which is worse than being stupid.But, you made that point yourself in your latest reply: "Initially, I thought you were a demagogue, but looking at the desperate arguments you raise about things like cigarette taxes, while dodging the car tax, it's apparent that you're simply ignorant." You're a demagogue and refuse to see when you are beaten.

For a person purported, albeit only by himself, to be such a good engineer, you are remarkably inept with facts and numbers. I wonder how much of the rest of the Richard Bennett story is exaggerated? Are you like Bill O'Reilly, who claims he won journalism awards on his tabloid show that a.) he didn't win and, b.) the award the show did win -- a different award -- was given more than a year after he left, to the new staff? It'd be par for the course, based on my experience of people like you.

Friendster on steroids or just another Monster?

Ross Mayfield on the introduction of a social networking service by employment site Monster.com. The Monster execs are talking dating and alumni services as a comparison to their efforts, which I think is misguided. Finding employment is a process of introductions that can't be facilitated by semi-anonymous or anonymous connections -- yes, you can do that with dating, because dating is a process of discovery with a particularly compelling pot of gold at the end -- because when you need a job or want a job, you tend to move fast and find the most immediate source of connections, not begin a dialogue to get someone's endorsement. Jerry Michalski's piece on social networking was dead-on about this point: We guard our personal networks, rather than be promiscuous with them.

By contrast, we should be promiscuous with links precisely in order to foment discussions that lead to strong ties with other people and businesses.

Hello, sweetheart, get me re-encode

ABC Radio news reporters are using Wi-Fi to submit finished digitally recorded content from the field. If this isn't proof that the advent of time-shifted broadcasting is upon us I don't know what is. After all, in every other industry where the aggregator of content has been disenfranchised, big changes follow. The fact that ABC reporters can use Wi-Fi is merely an artifact of how simple the tools for producing audio have become -- this is the thematic equivalent of desktop publishing in radio. Dan Gillmor is experimenting with this tool for audio on his site.

Uncomfortable in ourselves?

I come down on David Weinberger's side of Virginia Postrel's comments at PopTech about our living in the Age of Aesthetics. It seems to me that mankind has always been concerned about aesthetics -- you can't explain much of any civilization without delving into its arts and crafts, the little things done to make life more comfortable, more appreciable, more special. Look at Lascaux. Look at the Parthenon. Look at Chartres Cathedral.

So, today's sales of hair color may be an indication that we are less comfortable with our human form than our predecessors, not an indication that we are more aware of aesthetics. And why are we uncomfortable in our own skins, one is compelled to ask? Yes, we've always modified and decorated our bodies, but in the context of specific cultural milieu and not in response to the need to be different, especially "different together." Maybe this is what happens when there is no frontier left? One simply begins staking out parts of their own body for aesthetic purposes.

The libertarian celebration of consumerism Postrel espouses as "choice" rings hollow, especially as a parent, because the impact of the constant need to choose is clearly visible in the eyes of our children. I'm all for appreciating change, but meaningful change takes far more patience than dying one's hair.

Fast Company on Dean Campaign

Heath Row at Fast Company has some thoughtful comments on my posting about the FC article, "Joe Trippi's Killer App."

I'm with Ratcliffe in that it's not externally explicit to supporters or the public who Trippi is, but I don't think that's wholly the point. Sure, grassroots support would have emerged around Dean regardless of the campaign's recognition of such support, but it was a conscious leadership decision to harness such activity early and often. My take is that had the Dean campaign not embraced and in some ways centralized and blessed this grassroots support, the campaign -- or the fruits of the grassroots support -- would certainly not be where it is today.

Comments ensue, including my response. ">Go see and add your two cents.

EMC's Documentum buy is no surprise

Internetnews.com says "EMC's bid to purchase Documentum earlier this week raised more than a few eyebrows, particularly among rivals in the enterprise content management (ECM) space such as Interwoven, Open Text and FileNet."

Clay Shirky may not agree with me, but this is a literal no-brainer because content is what makes channels of communication useful and valuable. EMC is prepping a strategy for beginning to extract the value from massive amounts of data stored by its corporate customers. The mistake made by many people talking about "content as king" is thinking that content is just what we think of as a creative product that is a cost center and potential revenue source. Here's what Clay Shirky wrote recently:

People want to believe in things like micropayments because without a magic bullet to believe in, they would be left with the uncomfortable conclusion that what seems to be happening -- free content is growing in both amount and quality -- is what's actually happening.

The economics of content creation are in fact fairly simple. The two critical questions are "Does the support come from the reader, or from an advertiser, patron, or the creator?" and "Is the support mandatory or voluntary?"

The internet adds no new possibilities. Instead, it simply shifts both answers strongly to the right. It makes all user-supported schemes harder, and all subsidized schemes easier. It likewise makes collecting fees harder, and soliciting donations easier. And these effects are multiplicative. The internet makes collecting mandatory user fees much harder, and makes voluntarily subsidy much easier.

Actually, the question is not who pays for the content, but what the creator intends to do with it; today, a lot of people are giving away their stuff because there is no way to find a new business model without some experimentation. But there are many enterprise examples that can provide the framework for a content-based strategy for conducting business. For example, an open source strategy in biopharma or at a software company could become self-supporting by integrating outside innovation with internal discoveries to create revenue-producing products more quickly. The open source intellectual assets of companies can also lower customer support costs and sales and marketing burdens by creating a legion of evangelists. In this case, the question of who pays isn't relevant at all -- it's who receives the ultimate value and even if the open source company has to share revenue with outside contributors, its investment in a content management system to extend its massive database of unstructured information is a logical step to turning those assets from sunk costs into revenue.

Not all the data will be profitable, but that is the nature of publishing itself, and that "hit-driven" environment will continue, albeit more robustly -- ultimately in publishing, you have to have a lot of dogs ("mistakes," if you must focus on the negative) to find the few pure breed winners. You let the content out and see what works and focus additional resources on increasing that business. Who needs micropayments? We need contractual relationships and long-term partnerships to extract value from corporate data.

In IT, most big things start with the corporate market. I've seen a little revenue from blogging, but it is the ability of a publishing company to package and sell "stuff" that turns into a living. The company actually adds value, but the creator's share of value is rising because they can do so much more than in the day when they had to work for a large company to have access to the data and distribution capabilities they do today. Once companies that have decided to approach the layers of data in their massive storage systems as assets to be mined for profit, the larger question of how the "content market" will change will come into focus, because the cost of the tools will fall over generations of enterprise tools and straightforward business models for collecting revenues will become more apparent.

Power investing

Not many markets are going to need to raise a trillion dollars in the next 30 years, but the power industry will in order to build the infrastructure of the 21st century. If I were going to build something today, it would be high-efficiency power components for tomorrow. See the Financial Times for the story (sorry, subscription required). Here are several key excerpts:

Private investors and governments will have to invest $10,000bn in the world's power sector in the next 30 years, according to a study from the International Energy Agency to be released early next month....

Fatih Birol, the agency's chief economist and author of the report, said: "The myths were destroyed. When you talk about investment you think of oil and natural gas. But in the next three decades the most investment will have to go to electricity."

Indeed, electricity makes up more than 50 per cent of the overall investment needed in energy, with oil and gas making up the second largest need and coal occupying a small slice.

Now, one of the findings in the report is that seven companies currently own more than 60 percent of electricity production capacity. That's a market ripe for entrepreneurial activity, tearing off local production and creating self-supporting micro-grids that have the larger grid as a fall back and normally sell power to the grid because of over production in the "local loop."

About 12 years ago....

When I was an editor at MacWEEK, Bruce Schneier, then a research guy at Bell Labs, called and asked how to become a writer. I gave him his first assignment, and second. His excellent new book is reviewed by the Economist this week.

Why Biotech will stumble, then rise

The movement to allow cross-border prescription deliveries is going to break the pharmaceuticals market in the United States. States are lining up to begin a protracted fight against the arbitrarily high prices paid by Americans for their prescriptions.

This is going to hurt Big Pharma in the short-run, as price pressure will redefine the life cycle of the "blockbuster drug," taking some of the early high margins out of the equation but replacing it with a much larger initial customer base. Why? Because if you can price for U.S. use at a lower price, the relative price around the world will fall, as well, bringing new drugs and therapies into the reach of many more people.

But Big Pharma won't go easily. It will be like the record industry, fighting this change every step along the way. American drug retailers, too, are going to fight this. So, it all comes down to: Are we going to legislate reimport of American-made drugs at lower prices or is the pharmaceutical channel going to recognize the inevitable and change its strategy? Since drug companies are run by humans, my bet is that they will fight change. That's why I would not want to be a short-term investor in pharmaceutical development; long-term, though, this is potentially the biggest wave of global technology adoption yet to come along.

Audible's pragmatic strategy

I've worked with Audible for years, since it was a business plan in Don Katz's head, and it is good to see the company getting the coverage it deserves for having been the first to deliver digital audio content, always at a lower price than physical media and with the ability to make multiple uses of the programming. Lisa Napoli of The New York Times, says:

Reasonably priced secure downloads. Compensation for writers and artists. Peaceful alliances between publishers and online distributors.

A utopian vision for the music industry? Perhaps. But that approach, which appears to be the goal of Apple Computer's iTunes music store and others like it, is already a reality for delivering audio books and other spoken word offerings over the Internet, as created by Audible, a small company in Wayne, N.J.

Audible pioneered all this and can still teach the music industry a lot -- it may finally show up radio, as well, since most of the schlock on the dial today could be programmed out of existence by individuals choosing their own listening schedule. This would open the door to many micro-production efforts -- not audioblogs, necessarily, though I would not rule them out, but also productions out of the 200,000 or so home studios in the U.S. Time-shifted opinion, talk and news programming will eventually wipe away the distinction that makes radio valuable: urgency. With so much more information to take in and having the content available when driving through Wi-Fi hotspots, the few extra minutes it takes to produce and upload a file for Audible's audience will also force the producer to reflect more on what they are going to say. Likewise, broadcast, which will be carrying data, will be able to flag important stories and interrupt recorded content with news alerts, like traffic reports or breaking news.

Think what some journalists could do with their audio if they had a direct channel to an audience. What about delivering sermons or educational material, already huge physical media businesses that are time- and resource-intensive to deliver on CD or tape? With Audible's new-found support from Apple, its recent funding from Bertelsmann and Apax Partners, as well as its long relationship with Microsoft, this is a serious channel development opportunity for a number of audio-intensive industries.

While a lot of new companies, like Simple Devices, are trying to solve this problem, Audible has the edge. Just one fact to point to in conclusion: Audible is embedded in iTunes for Windows, which has been downloaded more than a million times since Thursday.

Dance, monkeyboy, dance

Well, this is about the end of the dialogue, because Bennett is contradicting himself now and I have to prepare for a trip out of town (to California, in fact). Bennett writes (indicated by block quotes):

This is hilarious:

As for the structural issues, the long-term attack on taxation that started with Prop 13 in California has resulted in these problems. So, while we may disagree with the optimal structure of a tax system -- which we haven't even touched on, so it isn't relevant to the conversation at hand -- the issue is that in California the cumulative impact of the electricity crisis and following debacle and the mismanagement of domestic and foreign policy by the Bush Administration is the source of immediate problem, a deep decline in state tax revenues.

In the first place, there hasn't been a decline in state tax revenues in California to speak of. There was a sharp rise in 2000, but after that things leveled off to the same regular rate of revenue growth as before. That's myth number one.

Well, get ready to laugh, because Richard Bennett's really dissembling now. According to the state of California's Department of Finance: "As the economy slowed over the last year, the decline in the StateХs revenues was even more pronounced than what was expected at the time the 2001 May Revision was prepared. Since enactment of the 2001 Budget Act (Chapter 106, Statutes 2001), the General Fund revenue forecast for major taxes and licenses has decreased by $5.4 billion for the past and current years combined. Revenue growth should resume in 2002-03 and be up $6.3 billion, or 9.3 percent, from 2001-02, reaching $74 billion. However, this is still $1.6 billion below the 2000-01 level."

That is clearly not what Mr. Bennett suggests the facts to be. In fact, let's break it down:

Year Sales/Use Tax Personal Income Tax Corporation Tax
1999 $21 billion $30.8 billion $5.7 billion
2000 $23.4 billion $39.5 billion $6.6 billion
2001 $24.2 billion $44.6 billion $6.9 billion
2002 $23.6 billion $38.4 billion $5.2 billion
2003 $25.4 billion $42.6 billion $5.9 billion

The key is not just that in 2002 the government of California collected $9.3 billion less in tax revenues from sales tax, personal income tax and corporate taxes in than in 2001. In 2003 (the fiscal year ended on June 31), the state collected $1.8 billion less than in 2001.

More importantly, however the cost of everything government does had risen for all the usual reasons (inflation and pre-negotatiated contracts or bonds that are often built on lower early costs and balloon payments) while the state simultaneously faced substantially increased costs for borrowing due to the lowered bond ratings issued by credit rating agencies, not to mention the direct cost of floating a $12 billion bond offering (approximately $80 million, or about 2.1 percent of the current deficit) to bail out energy retailers and a host of other increased costs relating to the budgets established years earlier (in both the Wilson and Davis administrations) that projected increased revenues and were then confronted with lower or slower-growing revenues.

It's the lack of growth, the fact the states bought into the bubble mentality in their budgeting that built much of the $38 billion shortfall into California's budget and the deficits in other states. Bennett talks about the revenue side dishonestly, while completely ignoring the realities of budgeting processes. Unlike a company, a state can't lay off citizens to whom it has promised services. Many of those promises are the furthest thing from extravagant; they are basic services that have to be delivered regardless of the cost -- and the Wilson-era privatization movement contributed to these costs rising, as well.

Finally, what Bennett refuses to acknowledge is that the state took on $10,675.4 million for the Deficit Financing Bond in 2003 that has to be paid back. Last year, by issuing bonds, California increased its revenues, but that is actually is a cost the people of California will bear long into the future.

Second, I didn't say other states weren't in a bind - I said they're not nearly in the same kind of a bind as California, where 15% of the nation's population has incurred 51% of the nations state deficits.

Actually, what Bennett said was: "I haven't noticed any states going bankrupt. California's budget deficit exceeded the total deficits of all other states, and you clearly can't blame that on Bush."

According to CBS News, since they summarize this nicely, the majority of states are in the same kind of trouble as California: "According to the National Association of State Budget Officers, 37 states reduced the budgets they enacted last year by a total of $14.5 billion, the biggest combined cut in 24 years. Governors in 29 states asked for tax increases totaling $17.5 billion, to offset plummeting tax revenues: sales taxes were down 2.5 percent, income taxes off 8.6 percent, and corporate taxes lower by 8.3 percent. Thirty states missed their revenue targets, NASBO reported."

While the scale of the California budget deficit is huge, it is largely due to the forces I have described in this series of postings and the impact of a deficit where it is unconstitutional is the same, regardless of the magnitude of the deficit.

Third, Californians are not under-taxed. Their state sales tax is higher than Washington's, their state income tax is higher than Oregon's, and the property taxes are comparable to most states.

Well, gee, but remember what California used to have? The worlds best educational system, for example? Californians used to get something for their money, not just the opportunity to pay for the scams of power companies. But, let's look at Bennett's false claims.

According to taxadmin.org, the people of California pay a rate of between 1.0 percent and 6.5 percent in state income tax, depending on their tax bracket. Oregon, by contrast, pays between 5.0 percent and 9.0 percent, higher than California by factors of between two and five -- as substantial difference, I'd say. You can also see here how Oregon taxes much more of a person's income.

Regarding Washington, which does not have an income tax, we (I write as a resident of Washington) pay for government in many different ways, not just sales tax. For example, as of 2001 California's fuel tax was $0.18 a gallon (33rd in the nation) compared to Washington's $0.23 per gallon (13th in the nation). Here are the statistics.

How about cigarette taxes, which Washington uses to bolster revenues. As of January 1, 2002, our cigarette tax was $1.425 per pack while Californians paid $0.87 -- we recently increased the cigarette tax.

Sales taxes? They are roughly even, but Bennett's statement that California's sales tax is higher than Washington's is only true when you don't account for the wider use of local sales taxes in Washington. California's sales taxes is 7.25 percent plus local taxes of between 0.125 and 0.5 percent for a total of up to 8 percent, while Washington's was 6.5 percent, plus an average of about 1.9 percent additional local sales tax, or 8.4 percent. Oregon doesn't have a sales tax.

Both Oregon and Washington's property tax rates are higher than California's by about a nickel per thousand dollars of value. A $200,000 home in California would cost the owner $206 a year in property taxes; in Washington, a home of the same value would cost $220 a year and in Oregon it would cost $264 a year.

Fourth, the de-reg split wholesalers from retailers and capped retail prices on power. The retailers went backrupt when the couldn't pass costs on to consumers, and the legislature squelched the plan. To assert that the power crisis was the cause of the deflation of the Internet bubble, as you've done, is to engage in some very creative activity.

I didn't say the Internet bubble burst because of the the energy crisis, and suggesting I did is an act of intentional distortion. I said the rising cost of energy increased costs for all California business at a time when prices for technology and other products were falling globally. That has impacted many industries, as evidenced by the fact that California's 2003 corporate tax revenues were 15 percent below 2001 revenues. Companies are selling less and laying off workers, which has consequences up and down the California economy and for state revenues.

Why don't you try writing about something you actually understand?

Ah, Richard. Let me call you Dick, okay? Dick, you oug