What was widely considered to be politically impossible as little as three months ago now appears to be a reality: the abolition of Administration authority to control wages and prices. In strikingly lopsided votes, both the House and Senate Banking Committees voted not to extend the Economic Stabilization Act beyond its April 30 expiration date. The Senate committee vote was 11 to 4 to let controls lapse, while the House committee voted 21 to 10 not to consider any of three bills before it dealing with extending controls. The Administration had made a compromise proposal to keep controls on only the health care and construction industries, and to keep the Cost of Living Council in existence to enforce Phase 4 rules, but this plan was unanimously rejected by the Senate committee. A further Administration plan—to keep the Cost of Living Council alive as a "monitor" without enforcement powers—was also defeated by the Senate group.

These Congressional moves followed weeks of lobbying by businessmen, doctors, and labor union leaders, all of whom have finally become convinced of the unfairness and impracticality of wage and price controls. Free market economists, of course, accurately predicted the results of the attempt to set wages and prices by government fiat—widespread shortages, distortions of production, and in the end, continued inflation. But it has apparently required the actual existence of these results over an extended period of time to convince business and labor leaders to speak out, and to convince the politicians that being against controls could be politically acceptable. It's been a costly and dangerous lesson—hopefully, one that will not need repeating.

• "Oil, Health, Labor Interests Push for Abolition of Price Controls," Paul E. Steiger, LOS ANGELES TIMES, March 17, 1974.
• "A Last-Ditch Stand to Keep Controls," BUSINESS WEEK, March 30, 1974.
• "House Panel Lets Economic Controls Die," WASHINGTON POST, April 6, 1974.


A growing number of cities, frustrated with the inefficiency of bureaucracies and unable to raise taxes much further, have found a partial answer in private enterprise. Increasingly, such services as garbage collection, and in some cases fire protection, are being contracted out to private, profit-making firms (see "Contracts: Key to Urban Rebirth," REASON, April 1974). One of the newest and fastest-growing government departments is data processing, and last August Orange County, California turned over all its data processing operations, serving some 25 County agencies, to a private firm. Winning a seven-year, fixed-price contract was Computer Sciences Corporation (CSC) of El Segundo, California.

Before turning to private enterprise, Orange County officials had projected the costs of continued government operation over the next seven years at some $38 million. CSC's winning low bid was $26.6 million, a saving of $11 million for the County's hard-pressed taxpayers. In addition to cost savings, there are other benefits as well. One is the inherently shorter decision cycle of private enterprise management. Within two months of taking over the data processing operations, CSC determined that the existing data input equipment was obsolete and placed an order for modern key-to-disk units; this problem had been under study by the County for almost three years! Another advantage is access to the full range of CSC's computer specialists for short-term consulting on difficult problems. In addition, the employees now have far more options in their career paths with CSC than they had as County employees. Some 98 percent of the County data processing staff accepted positions with CSC, and most consider the move to be a major improvement in their career development.

The impact of Orange County's experiment in contracting was summed up by LOS ANGELES TIMES correspondent Don Smith. "The truly hard part, persuading a local governmental body in a politically conservative area to give up one of its favorite status symbols is over. Private industry, which has been claiming for years that it could do government's business 'better and cheaper' has a chance to put its money where its mouth has been.…The results will be of interest throughout California, perhaps even the nation.…If other governmental agencies follow Orange County's lead, the effect could be a shift of hundreds of millions of dollars of work from the public to the private sector."

• "Profile of a Project," Computer Sciences Corporation, El Segundo, CA, 1973.


The Supreme Court's decision on April Fools' Day upholding the constitutionality of the Bank Secrecy Act of 1970 has given further impetus to a growing movement in Congress for legislation to restrict government snooping on citizens. The Act, portions of which has previously been overturned in federal district court, requires banks to keep on file the names and Social Security numbers of all depositors and to keep microfilm records of all checks over $100, most unsecured personal loans over $5000, and foreign transactions involving more than $10,000. Banks must report to the Federal Government the transportation into or out of the country of currency, checks, and securities exceeding $10,000. All provisions of the Act were upheld in a 6-3 decision (see p. 40, supra).

In Congress Rep. Barry Goldwater, Jr. said that the Supreme Court, by its decision, was "destroying the very liberties it was created to protect." Sen. Sam Ervin urged support of a bill introduced by Sen. Alan Cranston and Rep. Fortney Stark, called the Right to Financial Privacy Act, which would reverse many of the provisions of the Bank Secrecy Act. Goldwater noted that there are now some 207 sponsors and cosponsors of 102 privacy bills and resolutions in the House, and 62 sponsors of related legislation in the Senate.

The new mood in Congress is indicative of a growing concern, shared by libertarians and some liberals and conservatives, over the role of the federal government in collecting—and misusing—data on individuals. A recent check turned up the existence, in Washington alone, of no less than 750 computerized data systems under government control, collecting personal information on mental illness, drug use, juvenile delinquency, criminal activity, credit status, etc. Nobody knows how many additional data banks exist at state and local levels. Although President Nixon recently promised federal action to increase individual privacy (by appointing Vice President Ford to a study commission), other agencies of the federal government are positively hostile to criticism of current practices. FBI agents have visited persons who publically criticize government data banks, attempting to convince them to remain silent. Among those who have been visited are Kenneth Grubbs, a libertarian editor of the ANAHEIM BULLETIN, whose editorial page carried a syndicated column criticizing the FBI's National Crime Information Center (NCIC). Grubbs reported the incident to the LOS ANGELES TIMES, which covered it in a front-page story.

Other individuals and groups across the country are taking direct action. The 1972 Massachusetts legislature passed a law which limits access to criminal arrest records to law enforcement agencies and others required by law to use them, allows individuals to see their records and correct errors, sets up a criminal history systems board to decide questions of access to the data, and a security and privacy council to monitor the board. (In 1973 the Iowa legislature passed a similar law.) The results of the Massachusetts law have been dramatic. The criminal history systems board decided that the federal Small Business Administration (SBA), the Defense Investigation Service (DIS), and military recruiters had no business seeing arrest records. In retaliation, the SBA has threatened to hold up $30 million in loans and the DIS has refused to recommend people to fill 2400 jobs in the state. Both matters are currently in court.

Meanwhile, Governor Francis Sargent has refused to allow the state's criminal history system to interconnect with the FBI's NCIC system, due to the absence of safeguards in the latter. Interconnecting would enable law enforcement agencies in other states, which allow virtually uncontrolled access to their data banks, to obtain and misuse data on Massachusetts citizens. Gov. Sargent has also refused to comply with federal rules requiring the state to furnish personal data on drug users to the federal government, under a data collection scheme known as CODAP; as a result, $9 million in federal aid has been cut off. Massachusetts has been joined in this refusal by New Hampshire, Alaska, Pennsylvania, and South Dakota, while 30 other state governments have expressed "serious concerns" about federal demands for such information. Finally, Massachusetts officials have refused demands by the Secret Service to supply personal information on 20 individuals with mental health problems, whom the S.S. considers a threat to the life of the President. Under Massachusetts law, mental health files cannot be released without a specific court order, which the S.S. has not obtained. Gov. Sargent has recently announced that names and Social Security numbers will no longer be entered into the state's computerized mental health records, to increase the security of the system's data.

Groups calling for reform of law enforcement data banks include the National Advisory Commission on Criminal Justice Standards and Goals, whose proposals include the purging of all arrest records for which no disposition (e.g. conviction or acquittal) is listed, and limitation of access strictly to law enforcement agencies. The Church of Scientology recently announced the formation of a National Commission on Law Enforcement and Social Justice concerned with the "use of computers and unverified material fed into them by law enforcement agencies." Rev. Lawrence Wilbur, head of the Commission's research committee, notes that "the distribution of this false data has a tendency to act as a pyramid of false reports which jeopardizes individual rights." The group plans a series of studies and a national advertising program. The New Mexico Civil Liberties Union recently carried out a month-long advertising campaign alerting citizens to the dangers of data banks and the growing use of Social Security numbers as personal identifiers.

Among those endorsing the New Mexico program was Rep. Barry Goldwater, Jr., who is emerging as the House's leading spokesman on right-to-privacy issues. Goldwater has introduced bills to (1) restrict the use of Social Security numbers to agencies required by law to do so, and allow individuals to refuse to disclose their number to all others, (2) establish a Code of Fair Information Practices allowing individuals access to data files containing information about them, and (3) petition the Attorney General to establish security and privacy regulations for NCIC and all interfacing state systems. Senate bills to implement such provisions for NCIC have been introduced by Senators Ervin and Hruska, and a watered-down version has been proposed by the Justice Department. Without such safeguards, Goldwater points out, data banks containing incorrect data "can result in the violation of a number of basic rights, including the right to privacy, the right to due process and equal protection under the law, and the right to be free from cruel and unusual punishment."

With 1984 only ten years away, it is none too soon for strong action to protect these rights against the growing technological state.

• "Law Forcing Banks to Report Depositor Data to U.S. Upheld," Linda Mathews, LOS ANGELES TIMES, April 2, 1974.
• "High Court Ruling on Bank Record Privacy Assailed by Congressmen," Paul Houston, LOS ANGELES TIMES, April 3, 1974.
• "U.S. Facing Demands to Curb Computer Data on Individuals," Robert A. Jones, LOS ANGELES TIMES, February 3, 1974.
• "Action May Start with Arrest Files," DATAMATION, September 1973, p. 119.
• "Feds Denied Data in Privacy Issue," DATAMATION, October 1973, p. 135.
• "Big Brother's Big Eye," TIME, April 1, 1974.
• Press release, Ministry of Public Relations, Church of Scientology of California, February 15, 1974.


In a unanimous ruling the New Mexico Supreme Court has found that state regulation of private schools in that state is unconstitutional. The ruling, handed down on January 18, held that "there is no constitutional authority granted to the [State] Board [of Education] to supervise or exercise control or management over private elementary and secondary schools." The decision allows the Santa Fe Community School and the Cedar Grove Cooperative School to remain in existence, despite their failure to employ a State-certified teacher for each of 30 State-required courses. For the longer term, the decision opens the door for the growth and development of an innovative education industry in New Mexico, free of the stultifying effects of state regulation.

The class action suit was filed in February 1972 by the two schools after the State Department of Public Education threatened the parents of their children with criminal prosecution for violating the compulsory education law (on the grounds that the schools did not have sufficient "certified" teachers to qualify as schools). The case was argued through the lower courts by attorneys Mike Gross and Em Hall, with support from the Harvard Center for Law and Education, the ACLU, the Santa Fe Legal Aid Society, and educational reformers John Holt and Jonathan Kozol.

One of the outgrowths of the case is the development of the National Association for the Legal Support of Alternative Schools. NALSAS plans a variety of legal and political activities, dealing with parents and children's rights, nonpublic school accreditation, and attacks on compulsory education laws. Its primary goal is the "political survival" of nonpublic schools, whether labeled "free," "alternative," "community," or whatever. NALSAS coordinator is Ed Nagel (P.O. Box 2241, Santa Fe, NM 87501).

• "Alternative-Free School Class Action Suit Wins!" NEW SCHOOLS EXCHANGE NEWSLETTER, Issue No. 111, February 15, 1974.


• Food. The Food and Drug Administration has ordered an eight-month delay in the target date for compliance with its proposed order forcing bakers to double the iron content of white bread. This latest attempt to legislate health has been criticized by a number of doctors who point out that added iron could be a health hazard for certain persons whose systems store too much iron as it is. New hearings are scheduled for April, and the target date has been postponed "pending the outcome of the hearing." (Source: "FDA Orders Delay in Plan to Put More Iron in Bread," UPI (Washington), February 12, 1974.)