Californians were in denial for many years about the deterioration of their state and local governments, but no reasonable person can now deny that the state is afflicted with a massive crisis of governance at all levels - one that has become, in fact, official dogma. The opening passages of a voluminous report by Gov. Arnold Schwarzenegger's California Performance Review Commission are devoted to a diagnosis of the state's governmental ills, citing a "chaotic and cumbersome" organizational structure, "outdated and ineffective" management systems, useless but costly programs, outmoded technology and other maladies. Alas, the too-wordy report itself is a disappointment,...