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More critical in smaller cities: Bendigo, Ballarat and Geelong are in a much more critical situation. It is easy to drown in statistics, but one stands out: the yearly flow from all the state’s rivers from 1947 to the present has been about 63,000 megalitres, but from the drought, which began in 1997, that flow has trickled to little more than 11,000 megalitres.

Rural areas: In rural areas, people’s lives and their livelihoods are affected much more directly by lack of rain than city dwellers. They are in the front line. This position, in turn, affects perceptions about the relationship between the city and the bush.

State poll: In the lead-up to the November (State) poll, both parties will be acutely aware of this. The Age on 13 September reported resentment from the communities in Gippsland to the plan along the lines that the area was being used as a "milking cow" and "receptacle for Melbourne’s waste".

"Poowoomba" factor: The "Poowomba" factor should not be discounted. Recently Toowomba residents voted against using recycled water despite being in the grip of drought. The vote highlights a major problem: the lack of education among people about the benefits of recycled water. This is the responsibility of government, and if it "can’t guarantee the rain", as Water Minister John Thwaites quite rightly said, it can guarantee that it is doing all it can to educate the public.

Latrobe scheme "sensible": Household use, however, plays only a small part in the state’s water consumption. The Government’s plan for the Latrobe Valley power stations, handled correctly, is a move forward. It shows the kind of thinking that is necessary to tackle a diminishing resource: it is much more sensible than the proposed $220 million plan to pump water from Shepparton to Ballarat, which only moves water from one spot to another.

The Age, 14/9/2006, p.14

"When you have so much spending occurring on a couple of initiatives, you have to wonder how the voters will get information on other measures on the ballot," said Mark Baldassare, executive director of the Public Policy Institute of California in San Francisco.

Tobacco firms already have committed $40 million to defeat Proposition 86, which would raise the state cigarette excise tax by $2.60 a pack to $3.47. The money would fund emergency services, children’s health care and tobacco-prevention programs.

Oil companies since January have pumped in the bulk of about $35 million contributed to kill Proposition 87, which would impose a tax on oil producers in California. The tax would range between 1.5 percent to 6 percent, depending on the price of oil per barrel. The aim is to raise $4 billion for researching and producing alternative fuels and energy.

It’s not a coincidence that the oil and tobacco industries are out front in spending money, said Steve Swatt, a senior consultant in media relations for Porter Novelli.

"These are two of the most P.R.-challenged industries. To make up that credibility problem, they have to spend huge amounts of money," Swatt said. "When you have a wealthy, deep-pocket special interest that is at risk because of one initiative, they will write checks like there is no tomorrow because so much is at stake."

Although election day is nearly two months away, the campaign contributions on these two measures already rival such previous big expenditures as an estimated $300 million that poured in from all sides for last November’s special election.

Even more surprising than the amount of money that the forces to defeat Prop. 86 and Prop. 87 have amassed is the early media blitz, Field Poll director Mark DiCamillo said.

In the case of Prop. 87, both sides started running television commercials on Aug. 8, three months before the Nov. 7 general election. No on Prop. 86 ads have been running since mid-August and will stay on the air until Election Day.

"I think election politics in California is changing. … Some campaign consultants see the advantage to start early, but the key is whether they have the resources to keep it going," he said.

R.J. Reynolds Tobacco Co. plans to fight until the end. It warned in a quarterly profits report that its earnings might be depressed this fall as it spends $40 million in four states, campaigning against anti-smoking initiatives.

"It is in our best interest to fight the proposition," said Frank McConnell, a spokesman for R.J. Reynolds, which has contributed $9 million to date to fight the measure. "The impact to our business of Prop. 86 passing is far greater than the amount of money we will spend opposing it."

Philip Morris USA Inc. has poured $26 million into another campaign account opposing Prop. 86.

"It’s perfectly predictable — when an industry is threatened, it uses its deep pockets to fight and protect its interests," said John Matsusaka, president of the Initiative and Referendum Institute at the University of Southern California.

That aggressive advertising is making it harder for other ballot measures to find a place in the market. Unlike candidates, propositions are not guaranteed a low rate for television commercials.

"It’s driving the rates up fairly significantly," said Paul Hefner, a spokesman for the Rebuild California Plan, which is promoting the bond package, which includes measures to improve flood protection and build new schools and highways.

Hefner said the bond campaign has had to adjust its strategy in the wake of the big expenditures.

"With the rates higher, our money doesn’t go as far as we want it to go," he said. "We’re buying time earlier than we might otherwise to try to lock in a rate."

But there is still a risk that the five bond measures, along with other campaigns without deep pockets, could get drowned out.

"In some ways, the bond measures are the really big one on the ballot, but voters might be going to go into the election without hearing much one way or the other," said Matsusaka. "They will end up voting on their instincts."

Anthony Rubenstein, a former Hollywood screenwriter and executive who is the mastermind behind Prop. 87, said his team decided to start its TV campaign early because it had heard that the opposition was about to start running television commercials. Prop. 87 seeks to reduce petroleum consumption by 25 percent by establishing an estimated $4 billion program for research and development in alternative fuels and energy.

Nick DeLuca, a spokesman for No on 87, said the campaign decided to run the ads early because the issue was complicated and the public needed to know why the initiative was a bad idea.

"Our intent was to communicate that this was a significant issue that can affect gas prices," DeLuca said.

If the money pouring into both campaigns so far is any indication, Prop. 87 could end up being a bloody fight until the bitter end.

Large oil companies have led the charge in opposing Prop. 87 — they have pumped in most of the $35 million contributed since January.

The fight is being led by San Ramon’s Chevron Corp., which has contributed $13.1 million, followed by Aera Energy LLP’s $12.6 million and Occidental Oil and Gas Corp.’s $4.75 million.

Not to be outdone, supporters also have been writing big checks, totaling $21.8 million since the beginning of the year.

The supporters are led by Stephen Bing, a Hollywood mogul who has been a generous donor to largely Democratic causes. So far he has contributed about $16.5 million.

Other big donors to the Yes on Prop. 87 campaign are from the Silicon Valley. Google co-founder and president Larry Page has plunked down $1 million, while legendary high-tech venture capitalist John Doerr and his colleague Vinod Khosla at Kleiner, Perkins, Caufield & Byers in Menlo Park have given $950,000 and $1.1 million, respectively.

Carla Hass, spokeswoman for the No on Prop. 86 campaign, said advertising early was part of their strategy as well.

"With 12 other propositions on the ballot, it is important for voters to be able to distinguish one from another," she said.

To date, supporters of Prop. 86 have aired only one television commercial in the Sacramento area, and they said they expect to get outspent 10 to 1. The proponents have put in $11 million, about 80 percent of that coming from hospitals.

"We’re never going to be able to keep up with big tobacco," said Jan Emerson, spokeswoman for the California Hospital Association. "People need to see through that — they are going to spend whatever they have trying to protect their bottom line."

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Proposition 86

A cigarette tax increase of $2.60 per pack to fund emergency services, children’s health care and other tobacco-prevention programs. The largest share of the $2 billion that is expected to be generated annually would go toward hospital emergency care services. But the funds will also be used for everything from providing health care for all uninsured California children to prostate cancer treatment to tobacco-cessation services and research.

Contributions for: $11 million, dominated by the California Hospitals Committee on Issues ($8.9 million); American Cancer Society, California Division ($1.7 million); American Heart Association ($536,000)

Contributions against: $40.5 million led by Philip Morris USA Inc. ($26.2 million); R.J. Reynolds Tobacco Co. ($9 million); U.S. Smokeless Tobacco ($1.1 million)

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Proposition 87

An oil production tax of 1.5 percent to 6 percent (depending on price of oil per barrel) to raise $4 billion a year for researching and producing alternative fuels and energy.

Contributions for: $21.8 million led by Hollywood mogul Stephen Bing ($16.5 million); Google co-founder Larry Page ($1 million), and venture capitalists John Doerr ($950,000) and Vinod Khosla ($1.1 million)

Contributions against: $35.1 million led by Chevron Corp. ($13.1 million); Aera Energy LLP ($12.6 million), and Occidental Oil and Gas Corp. ($4.75 million)

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POURING IN CASH

The top reported donors for and against two key state ballot measures:

Proposition 86

(Tobacco tax increase)

— For: California Hospitals Committee on Issues, $8.9 million

— Against: Philip Morris, $26.2 million

Proposition 87

(Tax on oil production)

— For: Hollywood mogul Stephen Bing, $16.5 million

— Against: Chevron, $13.1 million

E-mail the writers at lgledhill@sfchronicle.com and myi@sfchronicle.com.

The philanthropy is consulting with hybrid-engine scientists and automakers, and has arranged for the purchase of a small fleet of cars with plans to convert the engines so that their gas mileage exceeds 100 miles per gallon. The goal of the project is to reduce dependence on oil while alleviating the effects of global warming.

Google.org is drawing skeptics for both its structure and its ambitions. It is a slingshot compared with the artillery of charities established by older captains of industry. Its financing pales next to the tens of billions that the Bill and Melinda Gates Foundation will have at its disposal, especially with the coming infusion of some $3 billion a year from Warren E. Buffett, the founder of Berkshire Hathaway.

But Google’s philanthropic work is coming early in the company’s lifetime. Microsoft was 25 years old before Bill Gates set up his foundation, which is a tax-exempt organization and separate from Microsoft.

By choosing for-profit status, Google will have to pay taxes if company shares are sold at a profit — or if corporate earnings are used — to finance Google.org. Any resulting venture that shows a profit will also have to pay taxes. Shareholders may not like the fact that the Google.org tax forms will not be made public, but kept private as part of the tax filings of the parent, Google Inc.

Google’s founders, Larry Page and Sergey Brin, believe for-profit status will greatly increase their philanthropy’s range and flexibility. It could, for example, form a company to sell the converted cars, finance that company in partnership with venture capitalists, and even hire a lobbyist to pressure Congress to pass legislation granting a tax credit to consumers who buy the cars.

The executive director whom Mr. Page and Mr. Brin have hired, Dr. Larry Brilliant, is every bit as iconoclastic as Google’s philanthropic arm. Dr. Brilliant, a 61-year-old physician and public health expert, has studied under a Hindu guru in a monastery at the foothills of the Himalayas and worked as a Silicon Valley entrepreneur.

In one project, which Dr. Brilliant brought with him to the job, Google.org will try to develop a system to detect disease outbreaks early.

Dr. Brilliant likens the traditional structure of corporate foundations to a musician confined to playing only the high register on a piano. “Google.org can play on the entire keyboard,” Dr. Brilliant said in an interview. “It can start companies, build industries, pay consultants, lobby, give money to individuals and make a profit.”

While declining to comment on the car project specifically, Dr. Brilliant said he would hope to see such ventures make a profit. “But if they didn’t, we wouldn’t care,” he said. “We’re not doing it for the profit. And if we didn’t get our capital back, so what? The emphasis is on social returns, not economic returns.”

Development of ultra-high-mileage cars is under way at a number of companies, from Toyota to tiny start-ups. Making an engine that uses E85 — a mixture of 85 percent ethanol and 15 percent gasoline — is not difficult, but the lack of availability of the fuel presents a challenge, said Brett Smith, a senior industry analyst at the Center for Automotive Research in Ann Arbor, Mich.

Another barrier, Mr. Smith said, lies in the batteries for so-called plug-in hybrids, which require more powerful batteries that charge more quickly than the current generation of hybrid batteries.

There are skeptics, too, among tax lawyers and other pragmatists familiar with the world of philanthropy. They wonder whether Google’s directors might be tempted to take back some of the largess in an economic downturn.

“The money is at the beck and call of the board of directors and shareholders,” said Marcus S. Owens, a tax lawyer in Washington who spent a decade as director of the exempt organizations division of the Internal Revenue Service. “It’s possible the shareholders of Google might someday object, especially if we go into an economic depression and that money is needed to shore up the company.”

And there is the question of how many of the planet’s problems can truly be addressed by a single corporate entity.

But even while expressing reservations about Google’s approach, Mr. Owens said that the structure of Google.org “eliminates all the constraints that might otherwise apply.”

The only conventional part of Google.org is the Google Foundation, a nonprofit with an endowment of $90 million that is constrained in how it spends by the 501(c)(3) section of the Internal Revenue Service code.

"But I know now that there is not a chance in hell of America becoming humane and reasonable. Because power corrupts us, and absolute power corrupts us absolutely. Human beings are chimpanzees who get crazy drunk on power. By saying that our leaders are power-drunk chimpanzees, am I in danger of wrecking the morale of our soldiers fighting and dying in the Middle East? Their morale, like so many lifeless bodies, is already shot to pieces. They are being treated, as I never was, like toys a rich kid got for Christmas."

During the first six months of this year, China surpassed the United States as being the world’s largest exporter. Only five years ago, the United States exported more than double the amount of China. During the first half of 2006, Chinese exports of manufactured goods reached $404 billion compared to $367 billion in exports by the United States.

"This dramatic reversal, together with the increasingly high-tech orientation of Chinese exports, poses a serious challenge to U.S. export competitiveness and long-standing leadership in technological innovation," writes Preeg.

The composition of Chinese exports is undergoing a "structural shift" away from labor-intensive products to high tech and value-added goods. Chinese exports of textiles and apparel declined to 14.6 percent of total exports during the first half of 2006.

China’s trade surplus in manufactured goods increased to $128 billion during the first half of 2006, an increase of $43 billion over the same period of 2005. China’s trade surplus in information technology products has more than doubled from the first half of 2004 to the first half of 2006, from $18.8 billion to $44.8 billion.

China’s large and growing external trade imbalance "foreshadows what will be a difficult and potentially disruptive adjustment for the Chinese economy, again concentrated in the manufacturing sector," warns Preeg. "It will certainly be a central subject for discussion at the IMF and World Bank annual meetings in September and will trigger congressional action to impose tariffs on imports from China unless the yuan is promptly revalued."

Exports of mechanical and electrical products during the first half of 2006 reached $244 billion, "more than two and one-half times larger than the $91.5 billion of labor-intensive exports," according to Preeg. The "hi-tech products" category recorded exports of $123.5 billion, also higher than the labor-intensive category. "The highest growth sectors during the first half of 2006 were other transport equipment (68 percent), telecommunications equipment (40 percent), auto parts (37 percent), scientific instruments (36 percent), electrical machinery and parts (34 percent), and machinery, except electronics (31 percent)."

The data also reflect another fundamental change in Chinese manufacturing. For years, China imported large quantities of parts and components and its cheap labor shops were used as a platform for final assembly. But the share of imported content "is not nearly as large as sometimes reported, and the share of Chinese value added is rising steadily," writes Preeg.

Foreign firms manufacturing in China are buying more of their parts from local suppliers. Large companies are providing suppliers with training, technical support and systems for improving quality. "One Japanese automotive company is in the process of increasing Chinese value added from 75 percent to 95 percent, as a result of almost all of its Japanese parts suppliers shifting production to China," says Preeg. "The Chinese export platform issue…has been largely a myth."

If Chinese exports continue growing at their current pace, then Chinese manufactured exports will be more than double those of the United States in five years, Preeg points out. "This dramatic reversal defines the bottom line challenge to U.S. export competitiveness."

Preeg implores policymakers to be alert to the major economic consequences of such a development. "The very large and growing Chinese current account surplus, linked to other large surpluses throughout East Asia and the counterpart U.S. deficit, have created the greatest and most threatening imbalance in the global economy since the Second World War. If steps are not taken to restore greater balance, a market-induced adjustment could have serious impact on the global economy."

China’s projected current account surplus this year of $230 billion represents 9 percent of China’s GDP. Combined with other East Asian countries, Asia’s current account surplus will run about $500 billion this year, while the U.S. current account deficit will top $800 billion — or more than 7 percent of U.S. GDP. Yet despite repeated warnings, U.S. and Chinese policymakers have done nothing to address the growing imbalance.

A major revaluation of the yuan of between 25 percent and 50 percent will be painful but necessary. The IMF can no longer ignore the issue, particularly since Article IV of its charter states that "members should avoid manipulating exchange rates…in order…to gain an unfair competitive advantage." The IMF charter defines currency manipulation as "protracted large scale" purchases of foreign exchange by central banks.

"Can there be any question that the Chinese purchases of $200 billion a year are not protracted and large scale?" Preeg asks in the paper entitled "China’s Surging Trade Surplus Being Driven By High-Tech Manufactured Exports; Policy Consequences of the Growing Imbalance," available for purchase by calling 703-841-9000.

Mainstream politicians and press critical of U. S. involvement in Vietnam and Iraq have always emphasized American losses in lives and treasure as the primary reason for disengaging from conflict.  George McGovern was the exception that proved the rule when he astonished the few listeners who hung on until 3 AM to hear him include in his nomination acceptance speech this reason for withdrawing from Vietnam:

There will be no more Asian children running ablaze from bombed-out schools. There will be no more talk of bombing the dikes or the cities of the North.

More typical is John Kerry’s rhetoric urging a timetable for bringing American troops home from Iraq: A few weeks ago I departed Iraq from Mosul. Three Senators and staff were gathered in the forward part of a C-130. In the middle of the cavernous cargo hold was a simple, aluminum coffin with a small American flag draped over it. We were bringing another American soldier, just killed, home to his family and final resting place.The starkness of his coffin in the center of the hold, the silence except for the din of the engines, was a real time cold reminder of the consequences of decisions for which we Senators share responsibility.

Underlying Kerry’s choice of imagery is the assumption that American lives are more precious, that Americans are exceptional.

But that dearly-held, Ameri-centric view may be fading away.  The evidence of the erosion of the idea that  Americans enjoy special privilege in this world comes from a surprising source.  The decades-long efforts of the antiwar left to get people in the U. S. to have concern and compassion for the people upon whom American bombs fall seems finally to have caught hold of the current Secretary of the Air Force, Michael Wynne.

Secretary Wynne showed a stunning preference yesterday for using new high-power microwave weapons for domestic crowd control as a way of testing the possible side effects of the devices: ”If we’re not willing to use it here against our fellow citizens, then we should not be willing to use it in a wartime situation,” said Wynne. ”(Because) if I hit somebody with a nonlethal weapon and they claim that it injured them in a way that was not intended, I think that I would be vilified in the world press.’"

This is the Secretary of the same Air Force that dropped millions of tons of Agent Orange on Vietnam and untold tons of uranium-depleted shells on Iraq.  Has Wynne been reading too much Noam Chomsky?

Michael Wynne hasn’t become  a peacenik.  He is merely the advance guard of the forces now sloshing their way across America’s constitutional and, more importantly, cultural Rubicon.

The Roman Republic barred its military leaders from bringing their legions across that watery boundary so that Roman troops would never be used against Roman citizens.  While the legionnaires were free to butcher men, women and children anywhere else in the Mediterranean world, citizens of Rome enjoyed special privilege.  They were immune until Julius Caesar brought his legion across that famous river, causing the Roman Senate to flee in fear and bringing the Roman Republic to an end.

America has now reached the point where its ruthless leaders so despise its people and its press that they feel it is safer politically to test dangerous new weapons on protestors and unruly crowds in the U. S. than in the streets of Baghdad or Ramallah.  Like Joseph Stalin and Saddam Hussein, they have complete confidence that they can do whatever they like within the boundaries of the country they rule.

Many of us have wished for the death of the myth of American exceptionalism, but few could have foreseen its end announced by an Air Force Secretary who urged his own government to "nuke" Americans first.

Nearly 58,000 Americans were killed in the Vietnam conflict along with more than a quarter million South Vietnamexe and other allied soldiers.  The Vietnamese government puts the official military death toll at 1.1 North Vietnamese and Viet Cong.  Civilian deaths are estimated at 2 million to 3.5 million.

9/11 attacks: 3,030 deaths .

More than 2,600 U. S. troops have been killed in Iraq.  Estimates of civilian deaths range from 50,000 to 150,000 plus 55,000 insurgents.  The Economist estimated that as many as 360,000 children died in Iraq prior to the war as the result of sanctions imposed at the urging of the U. S.