Reason Magazine - Staff

Location Shot

info@reason.com (RiShawn Biddle) — Thu, 15 Apr 2004 00:00:00 EDT

At first glance, Raleigh Enterprises would seem an unlikely player in the raging controversy over job outsourcing. As the owner of two studio lots, including the former home of what became Paramount Pictures, it is as much a powerhouse in Tinseltown as celebrated Ally McBeal producer David E. Kelley, whose legal drama The Practice is shot at one of Raleigh's sound stages.

Yet in a way Raleigh has joined Indian information technology outfits such as Wipro on the frontlines of the job-export battle, and the company's recent change in strategy is a significant reversal for Hollywood protectionists. While tech off-shoring and its impact on the American economy has become the headline-grabber in this year's presidential elections, the movie industry is having its own outsourcing debate, this over so-called "runaway" production or the shifting of film and television projects from Hollywood to Canada and other foreign locales.

Like tech outsourcing, this is as much about jobs as it is about cost-cutting. But in the case of the entertainment industry, it's less about free markets and more about corporate welfare and attempts to fight so-called American cultural imperialism. Canadian and European governments have used subsidies and tax breaks to lure projects such as the Civil War drama Cold Mountain as part of their own efforts to boost native film industries. That hasn't exactly sat well with independent studio operators and vendors or with big Hollywood labor unions such as the International Alliance of Theatrical Stage Employees. While the unions maintain a stranglehold over the hiring of gaffers and grips on local sets, they have little influence outside of America.

The unions have already given the major film studios the business. Recently they enlisted the help of California Congresswoman Diane Watson and 27 of her colleagues to berate director Ron Howard for shooting his latest film, Cinderella Man, in Toronto. They have also been able to co-op Congressional plans to restrict overall outsourcing. Senators Charles Grassley (R-IA) and Max Baucus (D-MT) have added a section to their "Jumpstart Our Business Strength Act" granting producers an "accelerated write-off" of film costs just for keeping projects in America.

As the nation's largest independent studio operator, Raleigh had been one of the most vocal of the opponents. It hosts the Web site of the Center for Entertainment Industry Data and Research, which puts out reports warning of the supposed consequences of film outsourcing. Raleigh Chief Executive Michael Rosenthal, who co-founded CEIDR, has even gone to Canada to criticize the country's efforts to attract film production. He has also been active on the political front: Four years ago, he successfully lobbied then-California governor Gray Davis to support a package of tax breaks and other deals that would have handed over $650 million a year to producers who kept production in-state.

But economic realities—and the possible loss of one of its studios—has forced Raleigh to adapt. In January, the company and its Canadian partner, Ingenium Group, were selected by an economic development agency, in Toronto of all places, as one of four finalists to transform a 30-acre industrial site along the city's waterfront into a studio complex. If Raleigh and its partner are designated the developers in May, it will aid the city's—and Canada's—efforts to lure big-budget American films from across the border.

Rosenthal admitted in an interview that the company finds itself in a rather tough spot being both an opponent of film outsourcing and an abettor of it. But he said that he has to grow the business. Besides having a tough time luring new film projects, it faces the possibility of losing the master lease on its 14-stage Manhattan Beach studio this summer. While Raleigh is in the middle of renegotiations, a new deal isn't a given: In March, Walt Disney Co. heir Roy Disney and his partners, who brought Raleigh on to run the studio six years ago, sold it for a reported $120 million.

"I don't want to assist in the exodus, but we have to go where our customers are going," said Rosenthal.

While tax deals have helped convince the American entertainment industry to think about foreign locales beyond the role of simple location shots, no one is sure whether there is much of an exodus in the first place. Given the entertainment industry's free-form nature and penchant for keeping secret even small line items on budgets, business metrics are difficult to come by. The Los Angeles Entertainment Industry Development Corp. for example, says that film shooting days for the first two months of this year declined 6.01 percent from the same period in 2003. But it admitted to Michael Hiltzik of the Los Angeles Times that the numbers represent merely a fraction of all film production in the city.

In truth, film outsourcing is not "runaway production," but merely part of the American entertainment industry's growth from a mere recycler of foreign cultural staples—think Lord of the Rings or Winnie the Pooh—to a truly global entity. In such a situation, issues such as foreign exchange come into play. Cheaper currency—and therefore less expensive local talent than American counterparts—helped transform Canada into Hollywood's foreign locale of choice. One factor contributing to the currency arbitrage: Hollywood unions, which have helped make filmmaking a more expensive venture thanks to onerous work rules, salary demands and unwillingness to allow producers to hire nonunion talent or let members work on projects it doesn't certify.

In any case, the United States remains the home base of the entertainment industry and the center of the talent base. Hollywood professionals have actually adapted to the changes by becoming gypsies of sorts. The seven major American studios still command 90 percent of the world's box office while foreign-born stars and moguls such as Pierce Brosnan and Rupert Murdoch maintain their homes and operations here. Murdoch's News Corp., which distributes The Practice, announced this month that it would move its headquarters to New York from the Australian backwater of Adelaide.

Tax credits will likely give Hollywood more dollars from heaven. European governments surely have learned that the hard way. Three decades of tax deals and subsidy arrangements have done little to foster local filmmaking and made them saps for Hollywood instead. That factored into the British government's decision last month to ban a form of tax shelter used to defray marketing costs. The biggest potential beneficiaries of this tax break: not British companies, but American media giants such as the Walt Disney Co., which raised over $200 million through one such arrangement before the ban was handed down.

[Correction: In the original version of this article, the name of L.A. Times reporter Michael Hiltzik was misspelled.]

Sam's Curse

info@reason.com (RiShawn Biddle) — Thu, 18 Mar 2004 00:00:00 EST

"Ugly." "Devastating." "Race to the bottom." Barbs about the latest Hollywood film or reality TV show? No. Just a few choice words from opponents of Wal-Mart Stores' expansion efforts into Los Angeles' retailing market.

Like the flicks and sitcoms churned out by the major studios in the City of Angels, the retail giant's plan to build 40 so-called supercenters—jumbo versions of the stores where it peddles produce and other grocery items along with cheap Levis-Strauss "Signature" jeans and Crosman BB and Pellet Guns—has attracted its own share of powerful critics.

Nothing stirs the ire of anti-big box activists like the thought of an expansion effort by the world's largest retailer. Wal-Mart has been bashed for a variety of ills, from allegedly ruining the historic character of neighborhoods to driving out small retailers and turning downtowns into "ghost towns." That many of these trends are either a natural evolution or a result of the popularity of cars rarely comes into the reasoning of the opponents.

Leading the critics in L.A. are labor unions such as the United Food and Commercial Workers. They represent cashiers, baggers and stockers working supermarket chains such as Vons, which would have to go head-to-head with Wal-Mart's superstores. Wal-Mart employs a non-union workforce. Last month, the UCFW rsettled a five-month strike with the major local chains over wages and benefits, a contest which both sides insist was prompted by Wal-Mart's expansion plans.

The UCFW and other unions complain that Wal-Mart stores will create "poverty-wage jobs" and drive out higher-paying ones by forcing supermarkets and other retailers to lower prices or go out of business. That in turn, will hurt taxpayers and blight communities because Wal-Mart employees allegedly won't be able to afford health insurance and other benefits on their incomes. "Wal-Mart represents a giant step backwards," declares Danny Feingold, the communications director for the Los Angeles Alliance for a New Economy, a union-backed anti-Wal-Mart nonprofit.

The UCFW and its allies have in turn gained backing from L.A.'s politicians, many of whom count on unions for campaign donations. The UCFW alone gave $9,500 over the last three years to city officials including Mayor James Hahn. Copying a method used by other cities, L.A. is drafting an ordinance that would essentially cordon off the stores to a small swath along a commuter rail path in the San Fernando Valley and parts of the city's ritzy West Side. It couldn't build in other parts of the city because they are receiving economic development subsidies from the city government.

"I think Wal-Mart is one of the real ugly chapters of American capitalism," Martin Ludlow, a former union leader and one of seven city councilmen who have already lined up against Wal-Mart, told the Los Angeles Business Journal earlier this month.

Wal-Mart isn't exactly backing away. It has already hired a local lobbyist and launched a TV campaign touting the benefits of having its stores in the community. Wal-Mart's mouthpiece in its L.A. effort, Peter Kanelos, also says it could try to beat back the rules with a referendum, a tactic it recently used to beat back similar anti-Big Box ordinances in nearby Inglewood. Another possibility: Roll out smaller supercenters, which would evade the legal limits. One such store opened in Tampa, Fla. last month.

As it is, Wal-Mart is already here, with four stores in L.A. and fifteen more in surrounding cities. While these aren't the 200,000 square-foot stores with delis and bakeries that L.A. officials want to banish, you can already get cereal and other groceries there. At one store on Crenshaw Boulevard in the Baldwin Hills section of town, you can walk up to the second floor and buy milk and cheese.

These stores aren't in the nicer or easier-to-reach parts of town. The Baldwin Hills store for example, is located within South Central L.A., which is better-known for poverty and gang violence than for its array of shopping amenities. The store in Panorama City section of the Valley is 13 miles away from tony Westside enclaves, the next closest is in the gritty suburb of Paramount. With such slight penetration, Wal-Mart is hardly a threat to rival retailers.

Wal-Mart's presence, admittedly, does disrupt local retailing markets. Some 30 rival supermarkets in Oklahoma City were shuttered after Wal-Mart launched seven superstores in its market, according to trade publication Retail Forward, while other chains have been forced to deal with the competition. But much of this is simply the continuation of dynamics that come into play whenever new innovations appear in the market. The rise of department stores a century ago killed off one generation of so-called mom-and-pop stores while the emergence of supermarkets after the Great Depression did the same in the grocery segment.

With so few mom-and-pops around these days, Wal-Mart's presence only threatens the businesses of other retailing giants. In L.A., it competes or will compete against an array of rival retailing giants including Kroger Co.'s Ralph's in the grocery arena, Rite-Aid and Walgreens in the drug-store arena, rival big-box retailers such as Costco, and the 7-Eleven convenience stores that dot the landscape.

And in some cases, Wal-Mart would actually be filling a need for new shopping and employment options that haven't been met by its rivals or anyone else. Take South Central, where the Baldwin Hills store is located. A 1999 Pepperdine University study determined that South Central had 65 percent fewer grocery stores and 20 percent fewer clothes shops than the rest of the L.A. county area; Federated Department Stores' Macy's division abandoned the Baldwin Hills-Crenshaw Shopping Center six years ago while the only major supermarket chain within a mile of that site is an Albertsons down the street that opened seven years ago.

This isn't exactly a problem for Wal-Mart opponents, many of whom live in parts of L.A. where the shopping choices are myriad. While driving around the Palms area of West L.A. (home to Reason's headquarters), one can run into four different supermarkets, a Smart & Final warehouse store, the Macy's and Robinsons-May department stores (located at the Westside Pavilion shopping mall with a Gap and other shops) and a Sav-on drug store.

For anti-big box types, a Wal-Mart is something they could live without. Much of the opposition likely comes from the image of Wal-Mart shoppers as hicks without enough style or taste to shop at a hipper spot such as Target. But for the poor with limited shopping options and even more limited incomes, Wal-Mart represents something else altogether.

When Wal-Mart opened its store last year, it didn't exactly devastate the neighborhood. Instead it filled the very space Macy's abandoned and brought cheaper-priced items to the area. It also brought 450 jobs; the average pay is more than $9.50 according to Kanelos, just above the $8.71 average wages earned by unionized workers in a typical Vons or Safeway. For an area with unemployment rates in the double-digits, Wal-Mart seems to many a godsend.

"For years the complaint has been that many small mom-and-pop stores often provide poor quality at high prices and in many instances with service that is not acceptable. But you go into Wal-Mart and you find the prices are good, the service is great, and the store is spotlessly clean," said former L.A. Police Chief-turned-city councilman Bernard Parks, an opponent of the anti-Wal-Mart ordinance, to the Business Journal last year.

Future poor neighborhoods could benefit from Wal-Mart's expansion as well, in part because of the land-intense nature of its superstores. Each one, which will take up 200,000 square feet in space, requires 25 acres of land. The best source of available land? Some of the abandoned buildings that dot much of South Central and East L.A.

Will any of this come into play when L.A. officials gets around to considering the anti-big box ordinance? Likely not.

Welfare Mouse

info@reason.com (RiShawn Biddle) — Wed, 10 Mar 2004 00:00:00 EST

Michael Eisner doesn't have a whole lot going for him these days. First he endured Walt Disney Co. heir Roy E. Disney's effort to push him out as Chief Mousketeer, then cable giant Comcast Corp.'s attempt to snap up the Walt Disney Co. on the cheap. Then last week came the annual meeting, where a record 43 percent of shareholders voted against keeping him as chairman of the board. He promptly resigned the post, but still maintains control of the unhappiest place on earth—for now.

Whatever eventually happens to Eisner, one thing is assured: He has helped Disney achieve a place as one of its biggest beneficiaries in the annals of corporate welfare.

Scrooge McDuck would be proud. Few have panhandled for taxpayer dollars as successfully as Disney during Eisner's reign. It has received at least $4.5 billion in subsidies, low-interest loans, land grants and "joint venture" investments from governments in Florida, Pennsylvania and Hong Kong. It even managed to get a handout from the French government—not exactly a fan of things American—which sold 4,800 acres just outside of Paris to Disney at a 90 percent discount so the company could build Euro Disneyland.

Disney has gotten even sweeter deals closer to its home base in Southern California. In Glendale, just a short trip from its Burbank headquarters, Disney's 125-acre Imagineering campus and studio development is being financed with the help of the city's redevelopment agency. Further away in Anaheim—home of Disneyland—the company got the city fathers to fork over another $550 million on new roadways and create a special tax district in exchange for building its now-floundering California Adventure park.

It has even become adept at getting financial help from Washington in the indirect form of copyright protection. To keep Mickey Mouse, Pluto and other characters out of the public domain, it successfully lobbied Congress for the Sonny Bono Act, which extended the life of its copyrights from life plus 50 years to life plus 70—restraining free speech in the process. Funny since Beauty and the Beast and Aladdin draw heavily from works that have long ago become fodder for public use.

Disney doesn't exactly need the welfare cheese. Last year, it generated $27 billion in revenues from its sprawling collection of studios, theme parks, and television channels. But Eisner has admitted some of its projects wouldn't work out as stand-alone private sector operations. "Disney's America wasn't economically viable without government subsidies," he wrote about one such plan in Work in Progress, his 1998 biography.

The company has been able to wrangle subsidies through promises of revitalizing communities, along with the mystique that comes with being in the House of Mouse. Helping out, of course, is the penchant for city officials to hand over the treasury for any hare-brained scheme. "It's the pixie-dust factor," said Rollins College Professor Richard Foglesong, the author of the aptly-titled Married to the Mouse, which chronicles Disney's dealings in Florida.

When it announced it was looking to build a second theme park in California, Disney used promises of economic improvement to get officials in Anaheim and Long Beach to offer it sweet subsidy packages (Anaheim won.). To garner subsidies for an indoor theme park project in Philadelphia, it even convinced then-Mayor Edward Rendell, now governor of Pennsylvania, to co-star in a promotional video, in which he bounds around with Goofy. It worked.

With his penchant for micromanaging, Eisner dons the mouse ears of chief rainmaker for the big projects. During Disney's failed effort to build an American history-themed amusement park near the Bull Run battle site in Manassas, Va., Eisner worked with then-Gov. George Allen to get a $160 million package of subsidies and "tourism marketing" dollars through the state legislature. When it had to back out of the project after outcry from historians and local residents, Eisner flew to Richmond to tell the governor the bad news.

Disney had certainly done some wheeling and dealing with government officials before Eisner came along. To get Walt Disney World off the ground in 1967, it convinced Florida officials to create the Reedy Creek Improvement District under the premise that it would develop a residential community, according to Foglesong in Married to the Mouse. That concept, called EPCOT, wound up being just a golf ball-shaped attraction at the theme park. But Reedy Creek remained, shielding Disney from local land use laws enacted by Osceola and Orange counties, in which sprawls the district and Disney World.

After Eisner took over in 1984, the company began to garner more generous subsidies. In 1989, it got $57 million in bond money that was originally slated by Orange County for affordable housing projects, then got $57 million more a few years later to finance a turnpike extension that leads straight onto Disney property—and nowhere near that county's boundary line.

These deals have worked out for Disney. For the municipalities themselves? A mouse trap. Disney abandoned the Philadelphia project in 2001 after years of delays, leaving the city on the hook for $55 million, according to one estimate. In January, Osceola County issued bonds to repay $35 million to Disney's Reedy Creek for guaranteeing bonds on the turnpike extension on Disney's property.

Now with Eisner's future in question, Disney may end up losing its key tool in getting more taxpayer dollars. But it'll probably be okay in that department. Besides its name and its own group of lobbyists, it also has its new chairman, George Mitchell, to step in and help bring in more subsidies. After all, if the former Senate Majority Leader can bring peace to Northern Ireland, he can probably get Mickey more cheese.

Waste of Energy

info@reason.com (RiShawn Biddle) — Sun, 01 Jul 2001 00:00:00 EDT

When Foster Wheeler Corp. secured financing for its $400 million trash-to-energy plant in Robbins, Illinois, the engineering concern barely contained its joy. "This will be the most modern waste-to-energy installation in the world," it raved in a 1994 press release. Seven years later, the plant is in bankruptcy. Foster Wheeler lost $261 million on the misadventure. Investors who bought $321 million in bonds will be lucky to get back just 35 to 45 cents on the dollar.

Another eco-bust: the BCH waste plant in Bladen County, North Carolina. Built by a group that included three local governments, the plant was shut down after its equipment failed. Banks that lent $70 million retrieved just 4 cents on the dollar.

You can thank government for these uneconomical exercises. In the '70s, politicians in love with alternative energy fashioned laws to force garbage haulers in certain areas to participate and pay above-market trash disposal fees.

In 1994, the Supreme Court ruled in Carbone v. Town of Clarkston that governments could no longer win customers at gunpoint. The result: 37 waste-to-energy plants have been shuttered since 1993, according to Government Advisory Associates, a Westport, Connecticut, consulting group. Taxpayer bailouts keep the rest -- about 100 -- afloat. For instance, when the McKay Bay waste plant in Tampa, Florida, couldn't pay off debt service or for upgrades, the city issued $193 million in bonds to save it.

And waste fuels live on. The federal government gives a tax credit of 1.5 cents per kilowatt-hour for electricity produced from poultry and wood wastes, and five senators have proposed extending the credit to other biomass fuels. California has granted $57 million since 1998 to 28 firms, and the feds spent $95 million on waste-to-energy research last year.

They haven't reached any breakthroughs yet. Turning smelly garbage into clean energy may sound terrific, but in practice, it turns out -- ironically -- to be wasteful.

The Ghost of Energy Crisis Past

info@reason.com (RiShawn Biddle) — Sun, 01 Apr 2001 00:00:00 EST

Take a ton of coal dust, spray on a binder of latex or tar, and turn it into briquettes. Then call it a synfuel and sell it for $20 to a utility. That's for less than the cost of production, but you'll still reap a fortune: The federal government will give you a tax credit that can exceed $26.

Thank Congress and the Carter administration for such a sweet deal. In the midst of the '70s energy crisis, the federal government came up with a scheme to encourage the development of synthetic fuels. Known by the bland name Internal Revenue Code Section 29, the program hands out tax credits for synfuels. It languished on the books for 20 years until companies figured out a way to mine it. Now plenty of companies are cleaning up on the credits, including General Electric, insurance broker Arthur J. Gallagher & Co., and such utilities as Progress Energy and ScottishPower. One company, the Tampa-based TECO Energy, used its two synfuel plants to reduce its income tax rate by 57 percent.

Another winner is Headwaters Inc., of Salt Lake City, a 13-year-old outfit that changed its name six times and lost money growing alfalfa and trading bank notes. Thanks to the royalties it collects on its eight synfuel patents, Headwaters experienced a sixfold gain in revenue to $46 million in fiscal year 2000, earning its first profit. Almost half of the 55 IRS-certified coal synfuel plants use Headwaters' IRS-approved process.

Resource Data International, an energy consulting firm in Boulder, Colorado, believes coal synfuel production tripled last year to 10 million tons, and expects it to increase another fourfold by 2003. Synfuel operators could gain $1 billion in tax abatements by then. One company alone estimated it could generate up to $240 million a year in Section 29 credits.

Yet Section 29 is hardly reducing the nation's dependence on oil, since it's displacing already plentiful coal. And some suspect that synfuel operators are using otherwise marketable coal instead of recovering true coal waste. "You can spray anything you want on it, so long as the facility is blessed by the IRS," notes Forrest Hill, an Annapolis, Maryland-based consultant.

But perhaps not for long. Last October, the Treasury Department, at the behest of traditional coal producers, three members of Congress, and the governor of Kentucky, suspended certification of additional synfuel plants until it could make such a determination. Defending the synfuel operators: a political A-list that includes Sens. Orrin Hatch and Robert Bennett of Utah and Sen. Bob Graham of Florida.

Police Math

info@reason.com (RiShawn Biddle) — Mon, 01 Nov 1999 00:00:00 EST

Among Bill Clinton's campaign promises in 1992 was to put 100,000 new cops on America's streets by the end of the decade. Seven years later, this plan, like many administration initiatives, rests in tatters even as the president declares it a success.

A Department of Justice audit of the Community Oriented Policing Service program (COPS) reveals that far fewer new police officers will be hired than expected. According to the report, only 59,765 officers funded by COPS will actually be on patrol by next year. Amazingly, program officials don't even pretend that they will meet their target: They only plan on processing applications for 100,000 new cops by next year. Concluded the DOJ's auditor, "This is significantly different from having 100,000 new officers...actually deployed to the streets."

Even the 59,765 number is an overstatement. The report noted numerous irregularities in COPS estimates. For instance, officials included 7,722 positions in their total even though local police departments had turned down the funding for them. And 2,526 additional positions were counted even though the grantees have not yet received formal notification.

The audit further revealed that COPS couldn't verify that the new officers were assigned to patrol duties or ensure that local police departments would retain them beyond an initial three-year grant period, the two major concerns of the program's critics. In fact, 75 percent of cities sampled by the audit could not demonstrate that they had pulled officers off desk duty and redeployed them to the street, another goal of the program. What's more, most cities have never drafted plans for paying their COPS hires once federal funding expires. Worse still, the report revealed that 60 municipalities, including Atlanta, used the grants to pay for current staff instead of new hires.

Fee Fighters

info@reason.com (RiShawn Biddle) — Mon, 01 Nov 1999 00:00:00 EST

As a law student at the University of Wisconsin, Scott Southworth had to pay $165.75 per semester to support campus groups selected by the student government. Among the beneficiaries were several political groups, including the Green Party and WISPIRG, the local arm of Ralph Nader's national network of "public interest research groups" (PIRGs). Southworth, a former chairman of the College Republicans and member of the Christian Legal Society, was not pleased.

He was even less pleased when he learned he had no right to choose which groups would receive his contribution. So when the university refused to refund his money, Southworth and two classmates took the school and 18 campus groups to court. "I didn't think it was right that the university forced us to pay for student activities with which we disagreed," recalls Southworth, now a researcher for the Wisconsin state legislature. "It wouldn't matter if it was 5 or 10 cents. It's the principle."

The suit, Southworth v. Grebe, was filed in April 1996 by an affiliate of the Alliance Defense Fund, a Christian legal group. In August 1997, U.S. District Court Judge John Shabaz found in Southworth's favor, and the Court of Appeals for the 7th Circuit upheld the decision in August 1998. The judges not only supported Southworth's contention that the fees violated his First Amendment rights but struck down the university's argument that subsidizing political activities was "germane" to its educational mission.

The next stop is the U.S. Supreme Court, which will consider Southworth's case before the end of next year. If the Supremes side with him, scores of public universities will be forced either to stop such subsidies or to create check-off systems that allow students to direct where their fees will go.

The Wisconsin case is only one skirmish in a long feud over the constitutionality of using public universities' student activity fees to fund political groups.

In the late '70s, for instance, a group of students at the University of California at Berkeley challenged the use of student fees; their case, Smith v. California, resulted in a 1993 ruling by the California Supreme Court that the state university system could not fund political groups. A year after Southworth filed his suit, four students at the University of Minnesota sued to kill all funding for political groups, except a voluntary fee for that state's PIRG.

In 1998, a group of students sued Miami University of Ohio for the right to opt out of their fee system, which they say violates the equal access guidelines set by Rosenberger v. University of Virginia, the case that allowed religious groups to receive activity fees. And at the University of Oregon, Fritz Von Carp and 11 other former students have waged a four-year court battle to stop the flow of funds to OSPIRG, their local chapter of PIRG.

The Oregon case awaits the outcome of Southworth, the first such challenge to reach the Supreme Court. While most lower courts have ruled in the universities' favor, the anti-fee forces have enjoyed some victories, especially regarding PIRGs. (Many colleges have established special subsidies just for PIRGs, and these have been a popular target.)

Indeed, there's every reason to believe Southworth will win his case. Traditionally, the Supreme Court has taken a dim view of arrangements similar to student activity fees. For instance, in Abood v. Detroit Board of Education (1977), the Court told the Detroit teachers union it couldn't divert dues paid by nonunion employees to political activities unrelated to collective bargaining. "The fact that the appellants are compelled to make, rather than prohibited from making, contributions for political purposes works no less an infringement of their constitutional rights," the Court declared. "For at the heart of the First Amendment is the notion that an individual should be free to be-lieve as he will...be shaped by his mind and his conscience rather than coerced by the State." Thirteen years later, in Keller v. State Bar of California, the Court made a similar ruling regarding bar association dues.

Anthony Caso, general counsel for the Pacific Legal Foundation, the public interest law firm that handled Smith, believes Keller is a very strong precedent. All that's different, he says, "is that it's happening on college campuses. Technically, it should not be."

Administrators and subsidized activists beg to differ. They claim mandatory fees help foster the free exchange of ideas. Giving them money, they say, is no different from letting political clubs meet in classrooms or rally on campus greens. Indeed, for Ivan Frishberg, spokesman for the PIRG-allied Center for Campus Free Speech, the fees are an "essential" element of the "marketplace of ideas on campus." Eric Krauss of Associated Students, the student government for Wisconsin's Madison campus, pushes the position even further. "You can't choose to opt out," he declares, striking a communitarian note. "You come here, you accept the responsibility to be a citizen." Because "such a wide variety of ideas are subsidized by fees," he adds, Southworth's suit "really threatens the vibrancy of our student life here."

While no doubt heartfelt, such a claim is a wild exaggeration. Students have engaged in all sorts of political activity since the dawn of the republic, their efforts surviving mostly on their wits and ingenuity. They have gotten by without compulsory support before, and they can get by without it now.

But if student life will remain "vibrant" regardless of whether fees are yanked from political groups, the fears of the pro-fee forces are well-grounded on another level. While Southworth might not threaten the breadth and depth of campus speech, it could hit some specific campus groups in the pocketbook. In 1996, the University of Wisconsin gave more than $109,000 to groups at its Madison campus, including $49,500 for WISPIRG. At the University of Oregon, OSPIRG received nearly $400,000 in a three-year period. It seems highly unlikely that those groups will be able to convince students to pony up that much voluntarily.

The Oregon case, incidentally, doesn't turn on ideology, and it undercuts activists' claims that the anti-fee movement is a right-wing plot to defund the campus left. The mover behind the case, student Fritz Von Carp, is no conservative. Indeed, he defines himself as a "moderate" and is a former editor of OSPIRG's newsletter. Von Carp resigned after he decided the organization was dedicating too much student money to off-campus activities, such as its annual report on toy safety. In another campus newspaper, Von Carp and fellow student Owen Rounds wrote a series of exposés detailing irregularities in OSPIRG's financial reports, complaining that the group rarely spent money on campus issues, and alleging that it and another PIRG had formed a virtual slush fund.

When they couldn't convince the University of Oregon's administration and student government to end OSPIRG's subsidies, Von Carp, Rounds, and 10 other students sued the university and the two PIRGs. The case, filed in 1995, now lingers in the 9th Circuit, awaiting the Supreme Court's Southworth decision. Von Carp says he's not as interested in eliminating the fees as he is in letting students make donations based on their own interests. "I'm offended," he explains, "by the fact that I don't get to choose."

But supporters of activity fees insist that choice should not be an issue. After all, they argue, every activity--from the campus women's rights center to the chess club--might entail an ideology to which one may raise objections. Says Krauss, the student government member at the University of Wisconsin, "People can be opposed to the chess club because it advocates a strategy of war."

Things have reached a strange impasse indeed when a chess game is compared to lobbying for specific legislation such as a clean water bill. Until the Supreme Court makes its ruling, all the various participants in this debate can do is wait. For his part, Scott Southworth maintains that there's nothing wrong with supporting political groups. But which groups will receive an individual's money, he adds, should be "something that each student decides for him or herself."

Equal Slime

info@reason.com (RiShawn Biddle) — Fri, 01 Oct 1999 00:00:00 EDT

A scandal broke last May when WGBH-TV, the Boston affiliate of the Public Broadcasting Service, admitted to sharing donor lists--a common nonprofit practice --with the Democratic National Committee. The scandal grew after a series of exposés by The Boston Globe revealed the extent of the practice, the possible violations of federal tax laws, and the fact that the station was disregarding its own ethics code. The scandal spread as several other public stations admitted to similar practices.

Such revelations came at the worst possible time for the PBS gang, which was all but assured of receiving a 40 percent increase in federal funding and an extra $749 million to buy digital broadcasting equipment. The events left Rep. Billy Tauzin (R-La.), chairman of the committee that proposed the hike and the funds for the digital upgrade, and other congressional Republicans red-faced and furious. Not only did the scandal kill all hopes of increased funding for public broadcasters, but Republicans are set to prohibit future list swapping.

But wait. After the scandal broke, PBS affiliates in New York and Washington admitted to sharing their donor lists not only with Democrats but with Republican-backed groups as well. It turns out that only the Boston station, whose board includes a DNC official, didn't share their donors with the GOP.

Gun Spree

info@reason.com (RiShawn Biddle) — Fri, 01 Oct 1999 00:00:00 EDT

After the Columbine High School shootings last spring, conventional wisdom had it that there was no way to stop the U.S. Congress from passing new gun controls; the only question was how draconian the laws would be. While the drive for federal regulation remains under debate, gun owners shouldn't relax yet: Since May, three states have passed new gun restrictions and a fourth is poised to do so by year's end.

California passed both a ban on "assault weapons" and a "gun a month" law that limits handgun purchases to one every 30 days (multiple sales to individuals are now a felony). A Connecticut measure allows police to seize firearms from anyone accused of threatening "imminent personal injury" by two "credible persons" (a phrase not yet defined by the courts). And Illinois passed a law penalizing parents for having unlocked guns out at home.

New Jersey may require gun makers to sell "smart" guns that allow only their owners to fire them--even though these may not be available for years. The law, which awaits final passage by state legislators this November, will go into effect as soon as two firms bring them to market.

On the other hand, four states have taken pro-gun moves. Maine rejected a bill similar to the one passed by Illinois. Officials in Louisiana and Texas took action to stop product liability lawsuits against gun makers (blocking a suit against manufacturers filed last October by New Orleans). Texas also rejected a bill requiring background checks at gun shows. And Nevada approved a measure allowing concealed weapons to be carried in public buildings, except airports and schools.

Personal Soundtracks

info@reason.com (RiShawn Biddle) — Fri, 01 Oct 1999 00:00:00 EDT

It's been 20 years since Sony started selling the Walkman, rescuing us from the sounds of the '70s. How it used to rankle, to be forced to listen to "Stayin' Alive," "Disco Duck," or whatever else someone nearby wanted to hear. Until 1979, there was no way to reconcile his need for bad music with your need to be free of it. If you wanted a stereo system you could carry while biking, skateboarding, or shopping, your only option was the boombox, better known in my old neighborhood as the "ghettoblaster." And blast it certainly did.

With the Sony Walkman and its clones, we could tote around our own music without imposing it on everyone else. For teenagers everywhere, this was the best thing since blue jeans and vending machines. Tiny, lightweight, and portable, the Walkman could destroy their eardrums without annoying anyone with more taste or common sense. It's also been coach, concert hall, and personal reader for millions of workout warriors, housewives, and retirees. For travelers, it is a trusty companion, something to ward off talkative salesmen and grandmothers loaded with wallet-size photos. Anywhere you go, you can tune in to joyful noise and kick boredom to the curb.

The Walkman has personalized such mass media as radio and records. Headsets create a sense of intimacy; the stereo sound lets listeners feel like they're in a studio or a concert hall, no matter what environment actually surrounds them. The Walkman expands our choices, lets us remake the world around us without impinging on our neighbors' ability to do the same. You can stand in Grand Central Station during the afternoon rush hour and have one foot in Lilith Fair; or in a studio session with Mingus, Monk, or Miles Davis; or in a shouting match with Rush Limbaugh.

My conservative friend Marty Dekom can ignore Bill Clinton just by putting on his headphones. "I can watch CNN and listen to Tom Petty," he reports happily. "I can attend tree-hugging rallies for eco-bozos and enjoy AC/DC." Michael Marsden, co-editor of The Journal of Popular Film and Television, calls this a metaphysical form of personal space. "It's your personal space that you've created, in a world in which we don't have a lot of personal space," he explains. "It's a totally private world."

The Walkman lets you merge the scenery around you with the soundtrack of your choice. Deroy Murdock of the Atlas Economic Research Institute found this out while touring Europe, fusing the Old World with the dancing bears and tie-dyes of the Grateful Dead. "I learned those songs," he recalls, "while peering out the windows of trains and buses across the continent. Even as I hear those songs today, I associate them with the mountains, plains, and castles of the Old World."

You don't have to travel that far toexperience this. It worked for me in my own back yard. I wore my Walkman on a recent Saturday afternoon, walking up Westwood Boulevard in Los Angeles. Latin music pumped through the headset. A woman in a tiny black T-shirt and tight red shorts jogged past me, her Husky-Saluki mutt in tow. The sun, the woman, and the music made a luscious combination, blocking out the roar of traffic rushing toward the Santa Monica Freeway.

Some don't like the Walkman. In The Closing of the American Mind, cultural critic Allan Bloom wrote that the Walkman-tugging teen reduces centuries of Western cultural progress into "a nonstop...masturbational fantasy" celebrating libertinism. The neo-Luddite writer John Zerzan, for whom art itself prevents people from truly experiencing nature, says the Walkman is part of an "ensemble of technologies" that cause a "protective sort of withdrawal from social connections." And any card-carrying member of the hand-wringing morals brigade would lump those magic earphones in with video games and TV violence as abettors of aberrant and abhorrent teen behavior.

Then there's Thomas Lipscomb, chairman of the Center for the Digital Future. He thinks the Walkman is the electronic equivalent of soma, the happiness drug in Brave New World. "It closes you in an airtight bubble of sound," he complains. "It's a sensory depressant." What's more, he says, it prolongs adolescence, stifles social contact, and keeps people from expanding their intellectual horizons.

But why should wearing a headset be more dangerous than any other activity one might do with oneself, from fishing to watching a movie? It is as innocuous as raindrops. In fact, the Walkman is less of a barrier to social contact, because it is so flexible and portable. You can always take off your earphones, listen to street musicians, talk to a neighbor, or flirt with the person across the hallway. Cracks writer David Horowitz, "I've never sat in a living room of people who are listening to their Sony Walkmen instead of talking to each other."

The Walkman is neither hi-fi Prozac nor a perpetual alienation machine. If anything, it makes listening more interactive. We can mix and match our music like clothes, creating our own playlists and carrying them with us wherever we go. This has subtly changed our expectations in the marketplace, forcing the music industry to accept our eagerness to rearrange their products. Now CD-ROMs such as Xplora 1: Peter Gabriel's Secret World let consumers assemble sampled beats and film clips into personalized versions of their favorite tunes and music videos. And Web sites such as CDNow allow you to buy individual songs and create a customized compact disc.

The new interactivity extends to other cultural activities. We can all be pundits and wordsmiths now. With talk radio, every loudmouthed listener in town can take a turn at the microphone. Some writers now post their work on Web sites like Bubbe's Back Porch, where the line between reader and writer becomes blurry. With hypertext fiction, a form of storytelling similar to games like Myst, that line almost disappears: the reader participates in creating the story, which takes a different form each time it is read. Even cuisine is becoming interactive: There are restaurants now where the diners join the chefs in making meals.

Sony's little music machine didn't start all of the above. But it paved the path, by giving us a taste of privacy, interaction, and choice. The Walkman saved us from hearing "I Will Survive" another 10,000 times. It deserves our thanks.