EXPLODING LIBERAL MYTHS
An abiding characteristic of grandiose government schemes to improve society seems to be the absence of any firm base of knowledge. Programs are created and huge sums expended based mostly on vague notions that can rarely be dignified by the term "theory." When finally, if ever, tested, these "theories" often turn out to be completely false. Two recent studies, one dealing with poverty and the other with mass transit, provide excellent cases in point.
Researchers at the University of Michigan's Institute for Social Research recently completed a study that knocks the props out from under much of the Great Society's antipoverty programs. Two important assumptions underlying the War on Poverty were (1) that a "culture of poverty" is responsible for trapping the poor permanently below a certain income level, and (2) that alienation and discouragement are primary factors preventing personal economic progress. To test these assumptions, the Institute surveyed 5000 families over a five-year period, interviewing them each year to determine their economic status and to define the factors associated with any changes in that status.
The researchers found that the composition of those below the poverty line changed markedly from year to year. In any given year only 9 percent of the families were below the poverty line, but some 35 percent went below it during at least one of the five years. Thus, although there may be a small group of permanent, hard-core poverty families, the general picture is one of movement into—and out of—poverty. So much for the all-pervasive "culture of poverty." Secondly, the researchers found that mental attitudes, at least those measured by conventional attitude and behavioral tests, had no correlation whatever with changes in family economic status. Thus, programs designed to fight poverty by changing attitudes (such as moving Job Corps trainees out in the country to get them away from ghetto attitudes) seem to have been doomed from the start.
A similar kind of predilection for pet theories unsupported by facts has been shown by proponents of various forms of mass transit. The "need" for such systems is generally taken for granted—without consulting the potential riders. Yet three recent studies indicate that there are good reasons why few people ride existing mass transit systems, and would be unlikely to ride new ones. The Center for Urban Transportation Studies of the University of Colorado surveyed 2500 employees of 11 Denver firms regarding their commuting habits and preferences. Those who do ride the Denver Municipal Transit System do so mainly because it is cheap, although some do find it convenient. The vast majority who use cars instead do so because cars are faster and more convenient, and because their car is often needed during the day, as well. Similar findings resulted from a study of Boston commuters by Prof. Daniel Brand of Harvard's City Planning Department. Despite Boston's extensive rail rapid transit system, only six percent of the city's commuters use it. One of the biggest reasons is that walking and waiting—which commuters particularly dislike—take up 60 percent of the total average trip time on the MBTA.
Even the supposedly "carless" poor much prefer the automobile. A study of transportation in Greensboro, NC found that, in fact, some 60 percent of the area's low-income residents own cars, and even the majority of nonowners "are more likely to go to work in a car (albeit someone else's) than to ride public transit." And that is despite Greensboro's extensive bus system, with its subsidized 20-cent fare and bus stops within six blocks of 80 percent of all employment opportunities. The point seems clear. Despite the wishes of liberal academics, most people, the poor included, prefer the convenience, flexibility, and privacy of the automobile. It's high time that those who wish to spend out money on such "needed" programs as mass transit faced the facts.
• "Survey Undermines Theories on Poverty, Self-Confidence," William Chapman, WASHINGTON POST, May 15, 1974.
• "When Transit Is Not Really Wanted," TECHNOLOGY REVIEW, Oct./Nov. 1973, p. 66.
RETURN OF THE GOLD STANDARD
The last few months have seen a number of important developments with respect to the role of gold in the international monetary system. In April the nine EEC (Common Market) finance ministers met in Holland and agreed to begin trading gold among their countries to settle balance of payments imbalances. Monetary expert Harry Schultz speculates that the price will be "a simple transaction-price related to the current open market price." Schultz goes on to state that the EEC decision "puts the world on a quasi gold standard," and quotes a London editor as saying, "For the UK and others to say they accept this EEC proposal of selling at market-related prices but are against raising the official price, is merely playing with words."
On May 1 the influential TIMES of London reversed its years-long antigold position with a strong editorial by editor in chief William Rees-Mogg advocating a return to a world-wide gold standard. Rees-Mogg's editorial cited the price stability and prosperity which existed under the 19th century gold standard: the price of bread fell from 10d a loaf in 1820 to 5d in 1895, the interest rate from 4½ percent in 1820 to 3 percent in 1910, while real wages increased 64 percent between 1820 and 1906. "Gold works, but paper, unless based ultimately on gold, does not," the editorial stated. "Paper money's value is precisely the value of a politician's promise.…Inflation is limited only when men believe there's no more money to be had. With paper money, that belief is unattainable."
Similar views were expressed by a number of speakers gathered at a Pepperdine University conference on the role of gold the last week of May. Alfred Matter, chief economist of the Swiss Bank Corp. of Basel, said that gold will continue to rise in price, and that its elimination from the monetary system is "hardly likely." "The gloomier the times, the more brightly gold glitters as a monetary reserve or private investment." The EEC proposal was endorsed at the conference by Miroslav Kriz, a former Federal Reserve Bank of New York staffer and vice president of First National City Bank of New York. Kriz stated that the plan to bring the official price of gold in line with the market price would not eliminate the dollar's role, nor would it injure the international monetary system.
Addressing the Pepperdine conference, outgoing U.S. Treasury undersecretary Paul Volcker stated that the U.S. was "not opposed" to considering the EEC proposal. But he added that the government would oppose it if it ultimately led to a world monetary system "too much centered on gold" rather than SDR's. Volcker also noted that a repeal of the ban on gold ownership by U.S. citizens will come "at some point…but that's dependent in part on resolution of the international (monetary) scene." That, he suggested, could be a long way off. The Senate, meanwhile, passed by voice vote a bill to repeal gold prohibition as of September 1, 1974, and the price of gold jumped $6 to $8 in European markets.
• News items, THE INTERNATIONAL HARRY SCHULTZ LETTER, Nos. 316 & 317, April and May 1974.
• "Experts Debate Gold's Role in Money System," Ronald L. Soble, LOS ANGELES TIMES, May 24, 1974.
• "U.S. Not Inflexible on Gold, Volcker Stresses," Ibid., May 28, 1974.
• "Senate Approves Ownership of Gold by Private Citizens," Reuters, May 30, 1974.
• "Gold Jumps in Europe After Senate Vote," LOS ANGELES TIMES, May 31, 1974.
NO VOLUNTEER SHORTAGE
A number of die-hard military traditionalists are apparently trying to bring back conscription, on the grounds that the volunteer army is not attracting enough recruits. Indeed, a bill was recently introduced in Congress that would do just that. Yet the fact of the matter is that the military services, including the Army, are turning away qualified volunteers. Now that the Army has opened up nearly all its job classifications to women—some 434 categories—it is getting so many women volunteers that it has raised its standards for women above those for men, and still has more women volunteers than it says it can handle. Brig. Gen. Mildred Bailey of the Women's Army Corps points out that women are being accepted as truck drivers, electricians, welders, and a host of other positions. In wartime, women would be involved in such combat support functions as repair, evacuation, and medical treatment (only 30 percent of all Army jobs are directly involved in combat).
Not all military leaders are fighting the volunteer army concept, and many support full utilization of women. The Pentagon has begun a new advertising campaign aimed at increasing the number of women in uniform from the current 75,000 to 93,000 by next year. Hopefully, the Army will soon get the Pentagon's message, and reduce its entry standards for women to the same level as those for men. Aggressive, even-handed recruiting of women as well as men should solve the trumped-up shortage of volunteers and put to rest any excuse to revive the draft.
• "More Women Than Men Trying to Enlist in New Volunteer Army," Patt Morrison, LOS ANGELES TIMES, April 21, 1974.
• "Womanizing the Armed Forces," PARADE, June 2, 1974.
DOCTORS SLAM THE FDA
Several years ago the Food and Drug Administration engaged the services of the National Academy of Sciences/National Research Council to study the effectiveness of all drugs sold in the United States. This was yet another attempt to meet the requirements of the 1962 amendments to the Food and Drug Act, requiring the FDA to certify not merely the safety but also the effectiveness of drugs. NAS/NRC's mostly academic members reviewed the medical and pharmaceutical literature and drug company documentation, and two years ago the FDA began releasing lists of drugs classified into the categories of effective, possibly effective, and not effective. Recently, the FDA has ordered that drugs ruled "not effective" be withdrawn from the market.
Throughout these procedures, however, no one has seen fit to consult those who ought to be most concerned: those who prescribe and use the drugs. For several years there have been scattered complaints from physicians alleging that the NAS/NRC classifications were inherently flawed, since they concerned only average cases, and neglected the everyday findings and experience of practicing physicians in favor of academicians. One of the biggest complaints concerns "combination" drugs, which NAS/NRC generally rated as less than effective on the grounds that the combined ingredients are no more effective in combination than separately. This academic point ignores the very real convenience—to doctors, pharmacists, and patients alike—of having drugs commonly prescribed together available in a single formulation. Yet many such combinations now face FDA prohibition.
Practicing doctors have now found a way to voice their opposition, by means of a survey conducted last fall by PRIVATE PRACTICE magazine. The magazine randomly selected 25 drugs that were classed as "possibly effective" and listed them in a questionnaire in its September 1973 issue. Responding doctors were asked to state whether they had prescribed the drug in the previous six months, and if so, whether they had found it effective. In addition they were asked nine further questions regarding the FDA's drug definitions and withdrawal orders.
The results, published in the magazine's December issue, were overwhelming: nearly 11,000 doctors responded, filling out the questionnaire and adding numerous comments of their own. Most of the 25 drugs had been recently prescribed by 50 to 60 percent of the doctors. Of those prescribing, no less than 81 percent, and for some drugs up to 97 percent, found the drug to be effective in their practice, for certain of their patients. Yet these drugs are scheduled for withdrawal by FDA order, unless sufficient pressure can be brought to bear on FDA bureaucrats. The PRIVATE PRACTICE survey provides important ammunition for doctors and patients in joining yet another battle with the FDA.
• "FDA Regulations: Are They Safe and Effective for the Patient?" Francis A. Davis, PRIVATE PRACTICE, Dec. 1973 (available free to doctors from 1414 N. Kennedy, Shawnee, OK 74801).
Education. "The coercion of compulsory school attendance is no longer working." This libertarian conclusion is the keynote of a 188-page report by the National Commission on Reform of Secondary Education, the first comprehensive examination of the American high school in 55 years. Because growing numbers of high school students find American public schools irrelevant and refuse to attend, the Commission recommends lowering the compulsory attendance age to 14, providing opportunities for better vocational training for teenagers, and removing barriers to teenage employment. In passing, the Commission noted that a recent Supreme Court decision makes it problematical whether compulsory attendance laws can survive constitutional challenge. The Court has ruled that Amish children cannot be forced to attend school beyond the eighth grade. "If Amish children cannot be compelled to go to school, it is hard to see how others can be, under a rule of law that promises equal treatment to all." (Source: "National Commission Urges Lowering of School Age to 14," Jack McCurdy, LOS ANGELES TIMES, Dec. 9, 1973.)
Federal Reserve. The House of Representatives has approved the first public audit of the Federal Reserve System since 1933. The bill to require the audit by the General Accounting Office was approved by a lopsided vote of 333-20. Unfortunately, the bill was considerably weakened from its original form by an amendment limiting it to administrative expenses, and specifically prohibiting any examination of credit extensions, securities transactions, or foreign exchange dealings—the means by which the Fed manipulates the nation's money supply and creates inflation. The amendment also allows the Fed to withhold from the GAO auditors any document which the Fed feels "would have a seriously adverse effect on the conduct of monetary policy or on relations with a foreign government or a central bank." Hence, this initial audit will probably accomplish nothing. Nonetheless, by establishing a precedent, it's an important first step in breaching the impregnability of the Fed to outside scrutiny. (Source: "House Approves First Fed Audit Since 1933," LOS ANGELES TIMES, May 31, 1974.)
Free Trade. A study by the General Accounting Office shows that government-induced "voluntary" import limits on foreign goods are costing Americans dearly. Textile curbs cause U.S. consumers to spend between $1 billion and $2.5 billion more on clothes each year, while steel quotas cause another billion in extra costs. The report documents the pressure put on foreign governments to enact the "voluntary" quotas, such as pledges of increased development loans and food assistance. Thus, the American consumer pays a second time—in taxes—for these government restrictions on trade. (Source: "Import Curbs Costing Billions, Agency Says," AP (Washington), April 20, 1974.)
This article originally appeared in print under the headline "Trends".