As I remarked below, "the McAuliffe/Daschle/Clinton Democrats are professionals; their opponents, in and out of the Democratic Party, are gentleman amateurs". One of the risks of professionalism is loss of human perspective, as when the Type A businessman e-mails flowers to his wife on their anniversary or the dedicated doctor expresses fascination at a friend's "interesting" cancer. Or when professional politicians turn a Senator's funeral into a political rally.

The appalling conduct of a crowd of Democratic partisans who were supposed to be mourning Senator Wellstone (Instapundit and Right Wing News have links and quotes) casts an unflattering light on the slick professionalism of the party's reaction to the Senator's death. They took advantage of a "virtual campaign" - the flood of eulogies from both liberals and conservatives - while demanding that Republicans recuse themselves from politics until after the memorial service. That period of five days was almost half of the eleven days left before the election. "Respect for the dead" was likewise a handy excuse for delaying the designation of Walter Mondale as the replacement candidate. Only today did the selection become official, shortening the campaign to almost nothing. Moreover, the Minnesota Democratic Party filed a lawsuit asking that all absentee ballots already cast be thrown out and new ballots mailed, even though its own delay in choosing a candidate makes those steps impracticable. (They are also contrary to Minnesota law, but why should the law mean anything more there than in New Jersey?) The evident hope is to disenfranchise most absentee voters, a group that in Minnesota tends to vote Republican. (For more about the lawsuit, vide Byron York, "Florida in Minnesota".)

If the Dems had been able to restrain themselves at the funeral, their maneuvers would probably have been shrugged off as ordinary "hardball" (such a handy euphemism, reducing those who object to sleazy conduct to the level of sissies who play softball with the girls). Maybe they still will be, thus showing what the public expects from the Clintonista party. Or maybe the boos rained down on Republicans who had come to pay their last respects to an honorable opponent will spark a reaction.

That reaction might extend to other Democratic activities this campaign season, such as mass submissions of phony absentee ballots in South Dakota and insinuations of homosexuality against GOP candidates in North Dakota and Hawaii (this from the party that trumpets its support of Gay Rights!).

Like most other Americans who can find it on a map, I have long thought of Chechenya as an oppressed nation whose people have been fighting heroically for their freedom. Maybe that belief is still, in some sense, true, but the events in Moscow over the past several days have made it a less important truth.

If the world is ever going to be safe from organized terrorism, all civilized nations must uphold the principle that murdering civilians or holding them hostage to political demands is a tactic that indelibly taints any cause that resorts to it as a matter of policy. Isolated atrocities can be forgiven; freedom fighters are not necessarily saints. But the Chechen movement, like the Irish Republican Army, the Basque separatists and the Palestinian Authority, has crossed the line that separates accidents of war from the deliberate infliction of terror. The American position ought to be that any cause that does that, however worthy it may otherwise be, forfeits all hope of gaining our sympathy or support.

It's hard, I'll grant, to muster much sympathy for the Russian government, which has little reason to hang onto Chechenya after freeing the other Moslem regions of the former Soviet Union and has waged war with none of the humanitarian scruples that mark our country's campaigns. The temptation is strong to explain away last week's hostage taking, as David Satter, author of a forthcoming book on connections between the Russian ruling and criminal classes, tries to do in an article posted today on National Review Online ("Death in Moscow").

Mr. Satter doesn't pretend that the Moscow theater seizure was an aberration. In fact, he argues that the government's mild response to similar incidents in the past is a reason why it should have been willing to make concessions again. He follows up with assertions that the Chechens, despite their thanatophilic pronouncements, "were not committed to taking their own lives" and didn't really intend to kill their captives. They were just seeking political dialogue. "Under these circumstances, it is at least possible that an offer to open negotiations with Maskhadov, the man with whom Russia signed a peace treaty in 1996, could have ended the crisis, particularly if it was coupled with a general cease fire which, as Boris Kagarlitsky of Novaya Gazeta pointed out, could have been implemented in less than 24 hours."

Maybe so. But if President Putin had followed that course, he would have demonstrated that, even after 9/11, terrorism works, that small bands of fanatics can bring great powers to heel by threatening to shoot women and children. Successful tactics inspire imitation.

Given that the idea of indiscriminate slaughter appears to have intrinsic appeal to large segments of the Moslem world, it is vital to teach the opposite lesson: that terrorism fails to secure its short-run objectives and destroys the possibility that its perpetrators will succeed in the long run. The Chechen rebels have embraced darkness. Let them live in the remnant of the Tsarist prison house until the generation that made that choice has passed away.

A total of 73 percent of Americans do not feel they have a good basic understanding of its beliefs and tenets, and that, too, has risen, from 61 percent last winter. This suggests that any additional information people have gleaned about Islam has confused more than clarified.

Though the story raises, briefly and near its end, the possibility that Moslems may have done something to make their religion appear menacing and mysterious, its gravamen is that negative opinions can only be irrational bigotry, created by Christian spokesmen, especially Evangelicals. Franklin Graham, Billy Graham's son, is singled out for particular attention.

That comment followed a string of remarks about Islam and Muslims, as Graham promoted his new book, The Name. In the book, Graham writes that "Islam — unlike Christianity — has among its basic teachings a deep intolerance for those who follow other faiths."

Then, in an interview with Beliefnet that month, he virtually mocked Bush's stance. After the terrorist attacks, he said, "there was this hoo-rah around Islam being a peaceful religion — but then you start having suicide bombers, and people start saying, 'Wait a minute, something doesn't add up here.'"

With such an influential figure saying such things - note the not-too-subtle implication that the Rev. Mr. Graham's ulterior motive is just to hype sales of his latest tract - it isn't surprising that "evangelical white Protestants are 22 points more likely than other white Protestants to express an unfavorable opinion of Islam" and that "Some Christians came to view Islam not only as a threat to the Middle East, but also as a threat to America and a threat to the souls of millions. Efforts begun before 9/11 to convert Muslims around the world picked up steam."

That this flood of criticism was never rebutted by Bush made Christian leaders feel this is fair game. Why didn't Bush rebut them? The most common answer from Bush defenders was that it is an inappropriate role for the president to "get in the middle of an argument like that." But given his strong statements on Islam, Bush had already inserted himself into the Islam discussion. His silence, particularly as his political allies began disagreeing with him, was therefore notable.

It's important to distinguish between Graham and other Christian leaders. Unlike Robertson and Falwell, Graham is thought to represent the mainstream evangelical base, one of Bush's crucial voting blocs. Graham's comments signaled how unpopular Bush's Islam-is-peace line had become with this important political group. There was no political cost to Bush after his initial statements; they were viewed as necessary comments to win the war. A direct rebuttal of Graham, however, could have alienated some of his supporters.

On the other hand, it could be argued, a wartime leader needs to be more politically courageous. Bush had plenty of political capital to spend but chose not to. What's more, the comments from Robertson gave Bush an opportunity. While Graham is a popular figure in evangelical circles and neutral with the general public, Robertson is relatively uninfluential with evangelicals and unpopular with the general public. Bush could have disagreed with Robertson, showing his opposition to extremism on all sides, without alienating his base. His unwillingness to do even that exhibits an extreme caution, and some would say, political cowardice, on Bush's part.

There is another factor: Muslim leaders themselves. They, like Bush, asserted over and over that Islam was a "religion of peace" and that "Islam means peace." There was a cognitive dissonance between these simple assertions and a continuous stream of suicide bombings in the name of Islam. Conservative scholars and religious leaders cited verse after verse from the Koran showing a violent streak. Though many were taken out of context (and were comparable to verses in the Old Testament of the Bible), they nonetheless were effective rebuttals, at minimum, to the claim that "Islam is a religion of peace."

Though probably a mistake, the posture of Muslim leaders was understandable in one sense: American Muslims live in constant fear that antagonism would turn to harassment or violence against them. And indeed, since Sept. 11, 2001, there have been numerous instances of violence against American Muslims, so a defensive posture is not at all surprising.

The "numerous instances of violence against American Muslims" are, of course, a myth, and it is hard to imagine why patriotic, anti-extremist Moslems would feel the need to repress their true sentiments. In the aftermath of al-Qaeda's atrocities, Americans reacted enthusiastically to expressions of solidarity from their Moslem countrymen. But they didn't hear very many. After perfunctory sympathy came the litany of complaints about "profiling" and "disrespect" and "insensitivity" emanating from Islam's self-declared U.S. spokesmen. No one seriously doubts the loyalty of all but a handful of rank-and-file American Moslems, but it is easy to get the impression that their sound views are at variance with what their religion urges them to believe, that they have, in other words, become more American than Moslem.

It is pleasant to think, as Mr. Waldman and Miss Caldwell so obviously do, that all religions are basically alike: benevolent, peaceful, eager to spread the word of the fatherhood of God and the brotherhood of Man, dangerous only when "twisted" by madmen. A pretty dream, and it has its element of truth. When men take the supernatural seriously and reflect on it with pious minds and hearts, they do tend in the same direction. Within Islam sufi mystics have transformed the concept of eternal war against the infidel into the "greater jihad", a spiritual war not unlike that waged by their Christian, Jewish, pagan, Hindu and Buddhist counterparts. Unfortunately, as Daniel Pipes demonstrates in the latest issue of Commentary ("Jihad and the Professors"), the "greater jihad" has no roots in Moslem history and is held only by an often-despised minority within the House of Islam.

The sad reality is that religions do not have to promote peace and universal love. The Maya and Aztecs of pre-Columbian America were fervent in their piety, which they displayed by capturing foreigners in battle and tearing their living hearts from their chests, for the sake of invigorating blood-hungry gods. It is not logically impossible for a faith to teach that its adherents have the duty to conquer the world by force of arms and the right to reduce non-believers to dhimmitude. I should like to believe - and I'm confident that Franklin Graham would like to believe - that Islam is not such a faith, but Christianity is, as I have noted elsewhere, a hard-headed, rationalistic creed. Before we can believe that Mohammed preaches the same fundamentals as Jesus, we need evidence, and that has lately been a little hard to come by.

Further reading: Charles Johnson's blog, Little Green Footballs, keeps track of what prominent Moslem clergy and laity are saying, much of it not exactly congruent with a religion of peace. For those who wish to consult original sources, the Middle East Media Research Institute has translated a wealth of revealing documents from the original Arabic.

David Frum, in his Daily Telegraph series about European misconceptions of America, has done a pretty good job of debunking the cliché that "America couldn't care less what the rest of the world thinks". While reading his piece, however, I was struck by his excessive tact. He avers, quite accurately, that the U.S. is willing to listen to rational, well-meant advice and frequently does so. Left for the subtext was the point that what we hear from the European governing classes these days is almost wholly irrational. Why should a great nation pay attention to threats and temper tantrums?

On September 12th, President Bush offered a measured explanation of why the United States believes that Saddam Hussein's tyranny over Iraq is no longer tolerable after "a decade of deception and defiance". European intellectuals and politicians instantly inveighed against "unilateral action" by the U.S. At the same time, they made it clear that, if the U.S. did not act unilaterally (defined as, "with the consent of the United Nations"), it would not be able to act at all, for France, as representative of European opinion, would block U.N. approval of any effective steps to remove Saddam from power.

The Europeans advanced no argument for inaction beyond, "Because we say so!" They did not present any reasoning or evidence to refute the President's theses that Iraq has repeatedly violated the agreements that brought about a truce in the Gulf War, has ignored a multitude of United Nations resolutions, has active nuclear, chemical and biological weapons programs, tyrannizes over the Iraqi people, and gives monetary and moral support to terrorism. Nor did they offer credible alternatives to changing the Baghdad regime by force.

Europeans' negativism can't be ascribed to doctrinaire antipathy to military action. They were delighted when the U.S. waged war (without U.N. authorization, one might note) in Kosovo, leading to the downfall of Serbia's communist government. But that was when disorder in the Balkans threatened a spillover of refugees and violence into their own territory. They are also notably unwilling to recommend that Palestinians adopt Gandhian principles (though doing so would have led to the creation of a sovereign Palestinian state years ago). But there the enemy is you-know-who - those kosher conspirators who hold American politics in their grasp.

If America's critics offered reasons why we ought to act differently, instead of demanding that we give in to their ipsi dixerunt, we would have something to take into account. As matters stand, we can only guess at the undergirdings of the opinions expressed by the sophisticates across the Atlantic, and the natural inferences from the available data are not such as to incline us to regard them seriously.

The principal considerations that lead the European elite to oppose American action in Iraq - and in many other arenas - appear to be economic self-interest (not an evil motive but not the highest either), fear of immigrant Moslem populations, indifference to suffering outside their own continent (or, in the case of France, their former colonies), ideological animus against American culture and values, and belief that American policy is dictated by the "Jewish lobby" solely in the interests of Israel. So long as those are the "arguments" that they bring to the forum, they can't really be surprised that George W. Bush is unresponsive.

Iraq is far from the only area where "because I said so" is the gravamen of European discourse. If there was ever a rational case for the Kyoto Treaty or the International Criminal Court, it was lost long ago in denunciations of America for refusing to go along with the rest of the world. (Never mind that Europe isn't meeting the Kyoto emissions targets or that France, just before attacking the U.S. for seeking exemption of our citizens from the I.C.C.'s claims of jurisdiction, secretly negotiated an exemption for itself.)

Needless to say, the people who insist that the U.S. must be an "other-directed" power have no qualms about being "unilateralist" themselves. America raises little or no fuss about European prohibitions against genetically modified foods and non-metric units of measure, and we go along uncomplainingly when European countries demand guarantees against death sentences before they will extradite criminal suspects. Those are much smaller matters than the War on Terror, but, then again, a disarmed and stagnant Europe has the opportunity to act unilaterally only in small ways.

Elsewhere in these musings, I have opposed the Europhobia that nowadays tempts many Americans, and, despite Gerhard Schröder's best efforts to alienate me, I haven't changed my mind. I would be happy to listen to European counsel, as would most of my countrymen, but how can we listen when Europe has nothing to say?

Most people will experience disability - either personally or through a family member or friend. Few people and employers, however, understand disability. At Universal Fatuity Corporation, mental/physical ability is a primary dimension of diversity, and understanding, appreciating, and leveraging the capabilities of all our people is our global business advantage. [emphasis in original]

Blather of this sort is not, I fear, uncommon in corporate America. It is unfair to analyze its meaning, because it surely wasn't intended to have any. The sentences emerged from a semi-computered cliché generator without the intervention of human thought. At least, one hopes that no human intelligence lies behind them.

Taken at face value, the paragraph tells us that UFC regards being handicapped in performing one's duties as a fine and beautiful thing, a contribution to all-desirable diversity. Isn't that the opposite of the concept that lies behind giving people with impairments a fair chance to prove themselves? The reason why employers should not automatically turn away handicapped applicants is that, in many instances, their handicaps are not indicative of "diversity" in the realm that matters, namely, the ability to do the job.

Is diversity of mental ability really desirable at, say, a scientific research facility? Is diversity of physical ability a sine qua non for a first-rate baseball team? Diverse talents can be valuable - spectroscopists and mathematicians, fast ball artists and home run hitters - but enlisting dullards as scientists or blind men as ball players is simple folly. I would dearly love to be an opera singer. It would be no favor to audiences - or to me - for the Met to accommodate that ambition in the name of "diversity".

By making "diversity" a desideratum in and of itself, companies like UFC lose sight of excellence. They are thus unfair to those who rely on their goods and services - and even more unfair to employees who, treated with "appreciation" and "understanding", are allowed to vegetate in positions for which they are intrinsically unsuited. The good intentions of diversity zealots are, alas, no more than paving stones on a familiar avenue.

A degree of sang froid is essential to an imperial power, even a reluctant one like the United States, but the general reaction to the news that North Korea may very well possess one or two atomic bombs - and, if not, is definitely very close to being able to produce them - demonstrates either nerves of adamantine or utter incomprehension of how seriously bad a nuclear-armed Pyongyang would be.

This is one of those moments when I am happy not to be in charge of formulating our country's foreign policy, nor do I envy President Bush, Secretary Powell, Secretary Rumsfeld and the rest of our leaders. Certainly I am not going to offer semi-informed, amateur advice on how to deal with the most serious potential menace that America has faced since the end of the Cold War.

There is one aspect of this matter, however, on which ordinary citizens are competent to speak out. North Korea developed whatever nuclear weaponry it has by duping Bill Clinton. It was Mr. Clinton who in 1994 signed onto the deal that supposedly froze the North Korean nuclear development program but in fact gave it cover to continue without Western interference. No other President in America history has committed so disastrous a blunder.

Pyongyang's admission that it never complied with the freeze agreement came only after a U.S. envoy confronted it with overwhelming evidence. President Bush very likely had some, if not all, of that evidence in hand a year ago, when he enrolled North Korea in the "Axis of Evil". At the time, pseudo-sophisticated commentators derided his elevation of Kim Jong Il's domain to a level with Iraq and Iran. Now we know why he did it. The new Administration had needed only a few months to uncover a secret that its predecessor had overlooked for six years. The discovery may, alas, have come too late to prevent the destruction of tens of thousands of lives.

During Mr. Clinton's impeachment trial, Senator Arlen Specter, the occasionally eccentric Pennsylvania Republican (who voted "not proven"), floated the idea that a President can be impeached after leaving office. His theory was that various emoluments go with the status of former President: a pension, office and staff expenses, Secret Service protection, etc. Impeachment and conviction are the proper way to take those away, as well as pass judgement on unacceptable actions while in office.

Perverse though it sounds, the stock market slide has had one beneficial side effect. I can’t imagine that the Democratic leaders in Congress, who not long ago were droning about how President Bush “hasn’t made the case” against Saddam Hussein, would have allowed a pre-election vote authorizing action in the Middle East had they not been lured by the declining Dow. The prospect of blaming the President for the worst bear market since 1938 must have been an overwhelming temptation, much more suitable for "It's the economy, stupid" sound bites than mixed figures on unemployment claims, inventories, housing starts and retail sales. Democratic strategists had been talking for months about clearing the decks of foreign policy distractions, but only low stock prices finally moved them to overcome the inertia of their Vietnam-era Left.

“The worst bear market since 1938” can be translated loosely as “the worst economy since 1938” - hilariously far from the truth but plausible to inattentive voters. In fact, the economy shrank through most of 2001; now it is growing, albeit slowly. Stock prices are not a good indicator of what the economy is like at this instant. They represent a collective estimate of the present value of the entire future stream of profits. The recent huge change in that estimate tells us not that the economy is collapsing under our feet but that its long-term prospects are far less promising than they seemed two years ago.

In retrospect, everybody seems to agree that the bull market ended in a bubble, producing stock valuations that made sense only if the economy achieved and sustained an unprecedented rate of growth. But bubbles are not simply the epiphenomena of “irrational exuberance”. They usually stem from an exaggerated truth rather than a pandemic of lies. (Vide Peter M. Garber, Famous First Bubbles.) The truth underlying the high-tech bubble was that computer technology can make the economy immensely more efficient. The exaggeration was that those efficiencies would be realized quickly and easily.

Think about WebVan, one of the great dotcom failures. The concept was right: Time spent walking or driving to supermarkets, selecting groceries from a limited stock (which may not be the best value for the money, but effective comparison shopping consumes as much time as it saves cash) and bringing them home is a gigantic drain on the economy. Introducing effective division of labor would add tens of billions of dollars to our national wealth, from which facilitators like WebVan could reap a few billions a year.

The only hitch was that the idea was too strange to catch on with enough people to make it truly efficient and thus profitable. The day will come when the process will be as familiar and pedestrian as buying books on Amazon or knickknacks on eBay, but WebVan was unlucky enough to try to sell it before its time, and that time may be measurable in decades rather than months or years.

The disappointment of over-optimistic expectations for technological innovation was bad for the stock market, but it does not mean that the economy will not be “normally” healthy in future years. Some observers, the Wall Street Journal’'s George Melloan, for instance, were saying a couple of months ago that the market was roughly at the level that it would have reached absent the bubble. If one takes a reasonably long view, that isn’t an implausible notion. At the 1982 bear market bottom, the Dow was a bit under 800. [1] Before the last seven weeks’ slide, it stood at around 9,000, representing an average annual increase of about 13 percent, which is in line with long-term historical trends.

On the other hand, shouldn’t a “normal” market have substantially outstripped the historical trend line during a period in which the Cold War came to a victorious end, the government lost much (though not enough) of its enthusiasm for central planning, and science and technology worked wonders? The bubble effect undoubtedly took the Dow to 12,000 and the NASDAQ to 4,000 more rapidly than fundamentals would justify, but it doesn’t seem likely that the entire difference between those highs and the recent lows can be attributed to the collapse of excessive optimism about high tech. Investors looking to the future have realistic and reasonable inducements to pessimism.

The most palpable short to medium run depressant is concern about the war, but not the traditional concern that the military will drain resources from civilian production and consumption, as in Bastiat’s famous “broken window” parable. The nearest parallel is warfare against pirates or border thieves, which is often frustrating but rarely expensive. The rational worry is that America will gradually revert to its pre-9/11 insouciance, declining to act against terrorism except in the immediate aftermath of particularly gruesome assaults on our own people. Pinpricks like ramming oil tankers, sniping at random victims and setting off bombs here and there will not lead to the triumph of the House of Islam over the infidels, but they will retard economic progress and encourage Islamofascist fanatics to keep trying. How much will oil cost if tanker owners are willing to move their ships only in convoys under armed naval escort?

Until the major terrorist armies - al-Qaeda, Hamas, Hezbollah, the IRA, the ETA, et al. - are broken up and the states that shelter them compelled to police their territories, the threat of persistent terrorism will remain a negative for future profits and, therefore, for today’s stock averages.

A second negative, possibly more severe in the long run, is the trend back to meddlesome government regulation. Accounting scandals have been the primary impetus, and there wouldn’t be much to worry about if government actions concentrated on improving the quality of corporate audits. That goal has, however, vanished in a cloud of calumny. The governing principle behind the Sarbanes-Oxley Act and most other Enron-inspired legislation seems to be that, since existing laws against serious offenses didn’t deter corporate malefactors, the solution is to criminalize trivial or harmless misconduct. The predictable impact is analogous to that of terrorism on oil tankers. If corporate executives become willing to act only in concert with everybody else and under the protection of flotillas of lawyers, innovation and strategic boldness will be stifled. Some run-of-the-mill crime may be prevented, but overall we will wind up with more imaginative crooks and less imaginative entrepreneurs. That tradeoff is a formula for stagnation.

Finally, no forward looking investor can be reassured by the unhealthy combination of left-wing political culture and corrupt political practice that dominates, albeit not absolutely, today’s Democratic Party. Guys like Terry McAuliffe, Tom Daschle and Bill Clinton are not socialists or even serious dirigistes. The problem is that they are in thrall to parasites. Plaintiffs’ lawyers and public employee unions are useful in a secondary role, but to elevate their interests to the highest priority is like gold plating a steamship’s lifeboats while neglecting its boilers.

As a further aggravation, the McAuliffe/Daschle/Clinton Democrats are professionals; their opponents, in and out of the Democratic Party, are gentleman amateurs. Pros are not always more skilled than amateurs, but they have two important advantages: They put winning first, and their tactical choices aren’t limited by fear of bad publicity. In the end, referees and the public will forgive a thick-skinned pro for fouls that would lead to an amateur’s expulsion from the game. Contrast Bill Clinton and Newt Gingrich, the New Jersey Democrats and the Montana Republicans, Al Gore’s “no controlling legal authority” and George W. Bush’s DWI arrest.

All three of these bearish factors were absent two years ago. Back then, we complacently ignored organized terrorism; Enron was merely an energy trading company whose strategic vision won praise from Paul Krugman; and conventional wisdom assumed that Clintonian influence on the Democratic Party’s manners and morals would fade with its eponym. The Dow is now telling us that the world is riskier than we believed. As investors, we can’t help hearing its message. As citizens and voters, we would be well advised to pay attention, too.

For a couple of weeks, commentators have been explaining Tom Daschle's next play in the political football game: Give the ball on Iraq to George W. Bush, and then tackle him on the state of the economy. It takes no Knute Rockne to figure that one out, yet the Dems have taken a long time to execute. A party that doesn't believe, by and large, in the legitimacy of either military force or the Bush Presidency has been slow and grudging about voting for what it incessantly characterizes as a "blank check" on Iraq. Nonetheless, it is finally on the verge of shucking off the anti-war albatross, at least until after the election. We can be sure that the media will now be just as eager as Senator Daschle to put the War on Terror to one side and revive Bill Clinton's old refrain, "It's the economy, stupid."

That the economy is not in flourishing health is obvious. The Democrats loudly blame the President for that unfortunate fact. What they don't seem nearly so loud about is what to do about the slow recovery and floundering stock market. One has to infer, mostly from their significant silences, how the Democrats, if given the opportunity, would alter current policies. The principal elements of their program appear to be three No's:

What those add up to is approximately the same formula that Japan has been pursuing, with stunning lack of success, for almost twenty years. The Japanese government has labored to spur growth through vast public works projects (a/k/a "rebuilding infrastructure") while limiting tax relief to the modicum consistent with "responsible" budgeting. The Japanese central bank has done its best to help by driving interest rates down to almost zero. The outcome has been stagnation. While there are significant differences between Japan and America, it can hardly be said that the Japanese path is an inviting one.

Trying to restore the 1990's may also look uninviting in retrospect. The tech boom was fun while it lasted, but it's now obvious that investors' dreams outstripped all conceivable reality. Enthusiasm for all the marvelous things that computers can do made it easy to overlook mundane questions about whether all of these Next Big Things had any hope of ever turning a profit. So another bubble bursts. It won't be the last.

The bubble is not, however, the important point about the Nineties. Leaving aside "irrational exuberance" in the stock market, there was real economic growth. The country is, in tangible terms, much richer in 2002 than it was in 1992, and we need to look carefully at the reasons why.

First, the size of government relative to the economy decreased markedly. In fiscal year 1991, federal government outlays were 22.3 percent of the gross domestic product. By fiscal 2001, which ended just after 9/11, that figure had fallen to 18.0 percent, about the level of the late 1960's. A similar pattern marked the preceding boom of the 1980's, when outlays as a percentage of GDP fell from 23.5 percent (1983) to 21.2 percent (1989).

Second, the stock market bubble had many of the same effects as cutting taxes. Unrealized capital gains are not taxed currently, but they are a real accession to wealth. Taxpayers with significant stock investments enjoyed declining effective tax rates from 1994 through 2000. This phenomenon mitigated the nominal increase in the government's tax take, though it is doubtful that it had the same incentive effects as marginal tax rate reductions. Also, when the bull market ended, effective tax rates skyrocketed, since not even realized capital losses do much to mitigate taxes on other income.

Third, the most vigorous period of expansion coincided - not perfectly but quite uncannily - with the period of Republican control of Congress. The somewhat stumbling recovery from the shallow 1990 recession took off after November 1994 and continued steadily until 2000. The economy was weakening throughout that year, then slipped into recession after the election, which produced an evenly divided Senate. One mustn't place too much emphasis on post hoc ergo propter hoc, but it isn't very daring to opine that a GOP Congress was good for the "animal spirits" of entrepreneurs.

If one looks at current circumstances in light of those fundamentals, the current weakness isn't a surprise. Congress has been on a spending binge for the past year, with both parties working vigorously to buy votes from taxpayers with their own money. Meanwhile, this year's installment of EGTRRA tax relief is the puniest of the decade: about $40 billion, or less than two percent of federal revenue. Then there is the legislative reaction to Enron and its siblings, which must have shaken the confidence of many businessmen in the ability of even Republicans in Congress to resist tides of anti-business hysteria.

1. Accept the fact that trying to balance the budget in the face of a flat economy and a burgeoning war is neither wise nor practicable. Whether or not one believes in Keynesian notions of the stimulative effect of deficits, now is not the time for trying to squeeze more government revenue out of the productive sectors of the economy. Spending restraint is desirable (unless one is a Keynesian, and, with liberal Democrats bemoaning unbalanced budgets, that school seems to have died out a while ago), but political reality limits the prospects for domestic cuts, while throttling the military is (vide infra) potentially suicidal.

2. Accelerate the EGTRAA tax reductions. The experience of the 1960's and the 1980's strongly supports the theoretical case for the stimulative impact of cutting tax rates, and there is no good reason to stretch EGTRRA's effects out to 2010. Also, of course, the bizarre snapback, which will, if left unchanged, restore the Internal Revenue Code on January 1, 2011, to the status quo 2001 should be repealed.

3. Above all, WIN THE WAR. There is no greater detriment to long-run economic vitality than a world in which terrorist groups sworn to destroy Western civilization are allowed to accumulate the means to inflict severe damage on people and property. Swatting particular enemies after they emerge will not eliminate that threat. At worst, we will teach the terrorists how to act more skillfully and with more deadly effect. If the day comes when attacks like the one earlier this week on a French oil tanker are feared every week, the cost of passive defensive measures alone will doom all hopes of prosperity. In a real sense, the War on Terror is the most important economic task that America faces. If we fail here, our decisions on taxes and spending and interest rates and accounting standards are so much trivia.