Trends

TRANSIT INNOVATIONS

Many of the nation's largest cities are undergoing severe fiscal crises while simultaneously planning or implementing multibillion dollar fixed-rail mass transit systems. Yet the massive new systems, despite their cost and sophistication, can meet only a fraction of the total urban traffic demand. Harvard economist John Kain notes that the annual interest costs alone for Atlanta's new rail system could cover the cost of expanding that city's bus service by 50 percent—and offering it free to riders. Fortunately, there is a considerable revival of interest in low-cost, flexible, largely-private modes of transit—a category becoming known as paratransit, which includes taxis, jitneys, car pools, subscription buses, and car rental services.

Beating the academic drum for paratransit is a major study by the Urban Institute (Paratransit: Neglected Option for Urban Mobility, 1974). The report's five authors find substantial promise in these unglamorous modes of transit, and find (not surprisingly) that the principal reason they are not more widely utilized is government regulation. In reviewing the subject of taxi regulations, the authors strongly endorse free entry, in contrast to the existing system of monopoly franchises. And they find that city regulations prohibiting cabs from adopting ride-sharing and flexible pricing "are the most serious obstacles to near-term implementation of more effective taxi, dial-a-ride, and jitney services." Further, they stress that "there is probably no other single or simpler palliative for some of our urban transportation problems which could have such a large impact as the relaxation of present day entry controls for both taxis and jitneys."

The Urban Institute's conclusions are not especially new. Previous studies by General Research Corp. (1971) and the Institute for Defense Analysis (1973) led to essentially the same conclusions, as did research by economists Ross Eckert and George Hilton. What is new, and significant, is the increasing publicity being given to such views. Consumers Union has recently endorsed the whole paratransit concept, attacking taxi regulations and urging a return of the jitney. CU approvingly cites the illegal jitney operation in Pittsburgh as a good example of "the free enterprise system in action," filling a demand (jitneys outnumber the city's 225 legal cabs) and providing needed employment.

Unfortunately, city officials are slow to get the message. Still strongly in league with existing monopoly transit operators, they continue their attempts to stamp out paratransit. In Orange County, California, a woman who operated a 10-passenger van as a car pool service was put out of business by the state Public Utilities Commission, after protests from a local bus service. The City of Los Angeles, estimating that 400 to 500 illegal cabs are defying its franchise ordinance, has set up a joint task force of police and public utility inspectors to crack down on them; two police officers are being assigned to each of five public utilities inspectors to issue citations and make arrests. Further, the Federal transit aid program of the Urban Mass Transit Administration encourages cities to stay away from paratransit, by providing funds only for forms of transit that will not reduce employment in existing transit services. Thus, although the climate for innovative, free-market transit is improving, real change may be a long time in coming.

SOURCES:
• "The Potential of Paratransit," Search, The Urban Institute, Sept.-Dec. 1974, p. 6.
• "Paratransit," Consumer Reports, Apr. 1975, p. 261.
• "The Jitneys," Ross D. Eckert and George W. Hilton, Journal of Law and Economics, Oct. 1972, p. 293.
• "Car Pool Ruled Illegal Bus Line," Los Angeles Times, Apr. 16, 1975.
• "Pact Reached for Crackdown on 'Pirate Cabs'," Ibid., Apr. 29, 1975.

ADVERTISING AND PROFESSIONALS

The spurious claim that the services of "professionals" are somehow not part of ordinary commerce, which is used to justify laws prohibiting advertisement of such services, received two more body blows in June. Hard on the heels of a California Supreme Court ruling striking down the state's ban on prescription drug advertising (see "Trends," August 1975), the Federal Trade Commission has proposed new regulations to wipe out similar laws in the 33 states where they remain in effect. Citing a 1970 study by University of Arizona professor John Cady, the FTC study estimated that price advertising could save consumers at least 4.3 percent of the $6.7 billion they spend annually on prescriptions—a saving of $288 million. FTC Chairman Lewis Engman attacked the underlying premise that such advertising is unethical: "It is a curious set of values which says that the consumer may be given full information about discretionary purchases such as deodorant and mouthwash but cannot be given information that will help him save money on nondiscretionary purchases such as drugs which a doctor has prescribed as essential to his good health." He noted that the proposed FTC rules would not compel anyone to advertise; they would merely remove the present legal barriers against such advertising—a fully libertarian approach. Public hearings will be held on the rules next fall, after which the five FTC commissioners will vote on whether to enact them.

The second development concerns the legal profession. As anticipated in this column (see "Trends," July 1975), the U.S. Supreme Court ruled unanimously that a county bar association's state-enforced minimum fee schedules are a "classic illustration of price-fixing" that violates the antitrust laws. The ruling gave increased support to the efforts of the Justice Department and others to strike down the legal profession's bans on advertising about fees and services. The Court ruled that the service in question, a title search, is in fact a service rendered in exchange for money, and is therefore "commerce." It did not declare that all services offered by professionals (engineers, doctors, architects) are commerce, but left the door open for future litigation on these issues.

SOURCES:
• "FTC Acts to Halt Ban on Drug Price Ads," Los Angeles Times, Jun. 3, 1975.
• "Antitrust Laws Apply to Bar's Fees, Court Rules," Ibid., Jun. 17, 1975.
• "'Price Fixing' Banned," U.S. News and World Report, Jun. 30, 1975.

FREEDOM TO SMOKE

The number of persons arrested for the victimless crime of puffing marijuana has increased from 18,815 in 1965 to 420,700 in 1973. Increasingly, important public officials are questioning the value system which devotes such substantial resources to saving people from themselves, while real crimes continue to soar (see "Trends," April 1975). These concerns are now beginning to result in specific legislative proposals. The Drug Enforcement Administration (DEA) is studying ways of substituting civil fines for criminal penalties in cases of marijuana possession and use. The DEA's approach is modeled after Oregon's 1973 law, which changed minor marijuana possession to a "civil violation," whose maximum penalty is a $100 ticket. The independent Drug Abuse Council has found that a majority of Oregonians approve of the law; their survey further showed that there was no significant increase in marijuana use after the decriminalization—in fact, 40 percent of the users reported decreased usage. Lane County district attorney Pat Horton notes with approval that "decriminalization has, in fact, prioritized police work into areas of violent crime and crime against property." In addition, it has "removed approximately one-third of the total number of cases awaiting trial from the docket, thus freeing valuable space in our courtrooms."

The proposed new Federal criminal code (pending in the Senate as S.1) would reduce the maximum Federal penalty for marijuana possession from one year to 30 days. But a bill introduced by Sen. Jacob Javits and Rep. Edward Koch would decriminalize marijuana possession, along the lines of the Oregon law. Similar decriminalization measures have recently been passed in Alaska, Maine, Colorado, and California, and are under consideration in a number of other states, including Minnesota, Massachusetts, Vermont, and Washington. Most significant of all is a decision by the Alaska Supreme Court in May, shortly after that state's decriminalization bill passed. The Court ruled that citizens have a constitutional right to possess marijuana for personal use in their own homes, thereby invalidating even civil penalties. "The state cannot impose its notions of morality, propriety, or fashions on individuals when the public has no legitimate interest in the affairs of those individuals," the Court ruled, in its 5-0 decision. Although the ruling does not affect possession or use in public, the Court's decision is a welcome advance for the individual's right to be left alone.

SOURCES:
• "Justice Dept. Studying Civil Penalties for Pot Users," Crime Control Digest, Dec. 9, 1974, p. 6.
• "Oregon Adapts to Mild Laws on Marijuana, Survey Shows," Narcotics Control Digest, Jan. 1, 1975, p. 3.
• "Pressure Mounts to Decriminalize Marijuana," Criminal Justice Newsletter, Dec. 16, 1974, p. 6.
• "Marijuana: The Legal Question," Consumer Reports, Apr. 1975, p. 265.
• "Alaska Court OKs Personal Marijuana Use," AP (Juneau), May 27, 1975.
• "Legalizing Pot at Home," Time, Jun. 9, 1975, p. 10.

FREEING FOOD PRICES

During the Depression of the 1930's, farm organizations and politicians got together to restrict competition in the sale of food products. Various Federal and state "marketing orders" were enacted, setting up public "advisory boards" which amount to little more than government-sponsored cartels designed to stabilize prices at higher than free-market levels. Like most creatures of the state, these cartels have continued their unquestioned existence ever since. In recent months, however, the advisory boards have come under increasing criticism from both consumers and some legislators, especially in California.

In February, the Ralph Nader sponsored California Citizen Action Group called for repeal of the marketing orders which create the cartels. A spokesman for the group cited the Peach Advisory Board's 1970 order for destroying 26 percent of the crop (200,000 tons of fruit and 20,000 acres of trees) in order to keep prices high, and noted the similar actions of advisory boards regulating the sale of pears, grapefruit, eggs, and milk. That same month the Los Angeles Times urged the abolition of the state's controls on milk sales at both the wholesale and retail levels, citing their anticompetitive, anticonsumer effects.

In response to rising pressure, the Calif. Department of Food and Agriculture suspended wholesale milk price controls, and in April began experimentally lifting retail price controls. (In Sacramento, the move led to a nine-cent drop in the retail half-gallon price.) A state Senate bill to abolish altogether the state's power to set minimum wholesale and retail prices was defeated, after heavy dairy industry lobbying. Instead, the legislature passed a compromise bill repealing the Agriculture Director's power to set minimum prices, but preventing the retail price from dropping lower than the wholesale price plus 16.6 percent. Although the bill left intact the 38-year-old Milk Advisory Board, consumers received some consolation when the California Wine Advisory Board was abolished, effective July 1.

SOURCES:
• "Nader Group Calls for End of Farm Product Regulation," UPI (Sacramento), Feb. 5, 1975.
• "The Milk Consumers Are Cheated," editorial, Los Angeles Times, Feb. 3, 1975.
• "Nine-Cent Drop in Milk Prices Reported in Test," UPI (Sacramento), Apr. 29, 1975.
• "Senate Panel Kills Milk Bill Backed by Consumers," AP (Sacramento), May 6, 1975.
• "Bill Approved to End Minimum Milk Prices," Ibid., Jun. 28, 1975.
• "Wine Board to be Dissolved," UPI (Sacramento), May 19, 1975.

MINOR VICTORY ON VITAMINS

The Food and Drug Administration has conceded partial defeat in its attempt to substantially increase its control over vitamin supplements. Under intensive pressure from consumers, manufacturers, and Congress, the FDA has dropped its plan to classify as drugs all vitamin products containing more than 150 percent of the Recommended Dietary Allowance (RDA) of each vitamin. Instead, these products will continue to be considered as foods. Nonetheless, the FDA still intends to press forward with the remainder of its antivitamin plan, according to the National Health Federation. This includes the following measures:

• Setting rigid "standards of identity" for vitamin products, limiting the available combinations
• Prohibiting a wide variety of nutritional claims from being made in vitamin advertising, including the statement that the American diet is deficient in vitamins
• Outlawing most multiple-vitamin and vitamin-mineral combinations
• Preventing such substances as bioflavinoids from being sold in combination with vitamins
• Requiring the inclusion of certain vitamins and minerals in multivitamin products.

For these reasons, Sen. William Proxmire's bill (S.548) to prohibit the FDA from in any way restricting the potencies or combinations of vitamin and mineral supplements is still a very live issue. The Proxmire bill passed the Senate by 81-10 last year, but was bottled up by Rep. Paul Rogers in his House Subcommittee on Health and Environment, despite sponsorship by over 200 Representatives. This year the bill has been introduced again, with 38 Senate and 27 House sponsors thus far. Whether sufficient public pressure will be brought to bear to insure passage, in view of the FDA's tactical retreat on a few points, remains to be seen.

SOURCES:
• "FDA Drops Fight to Class 'Supervitamins' as Drugs," UPI (Washington), May 28, 1975.
• "Proxmire Bill Is Still NHF Goal," National Health Federation Bulletin, May 1975, p. 2.
• "FDA Vitamin Regulations Under Attack in Congress," Consumer Reports, Jun. 1975, p. 337.

MILESTONES

Communications. A leading business group has called for the elimination of all restrictions on cable TV and pay-cable. The recommendation is the result of a two-year study by the Committee for Economic Development, a group of 200 leading business executives. The study found that the FCC's regulations on cable TV serve only the interests of the established broadcasting industry, not those of consumers. (Source: "Marketing Observer," Business Week, Apr. 14, 1975, p. 50)

Taxes. A Quaker conscientious objector has taken the IRS to court over his nonpayment of taxes—and won. Robin Harper has refused to pay income taxes for the past 17 years, because the use of tax money for war violates his beliefs. In 1966, the self-employed carpenter was presented with a bill for $26,159 in back taxes, which he refused to pay. The tax court upheld the IRS, but Harper's appeal dragged on so long that the U.S. District Court now says the statute of limitations has run out, and the IRS can't collect. Further, the District Court ruled that the IRS could not force Harper to disclose his assets and sources of income. (Source: "Quaker Wins Court Case Over Nonpayment of Taxes," AP (Philadelphia), May 22, 1975)

Busing. The man whose 1966 report led to large-scale forced busing to achieve "racial balance" has changed his mind. Sociologist James S. Coleman told the National Observer, "I think the country would have been better off if the report had not led to busing," and accuses big-city busing of "accelerating the very racial isolation we are trying to overcome," by inspiring flight to the suburbs. Coleman has recently been studying the effects of busing in 12,000 school districts, in research sponsored by the Urban Institute. (Source: "Busing Aim Fails, Sociologist Thinks," AP (Washington), Jun. 1, 1975)

Deregulation. The public would receive "the benefits of lower fares and more appropriate levels of service" if the CAB were to "relax substantially its control over fares and entry." Thus concluded a recent Brookings Institution study of domestic airlines. Deregulation would be preferable to other means of solving the industry's problem of excessive rivalry on trivial details of service features, such as increased CAB regulation of these matters, the study noted. (Source: "Airline Deregulation," Aviation Week, May 19, 1975)

Advertising. Even if untruthful, corporate image ads are exempt from regulation under the free speech guarantees of the First Amendment, the FTC has ruled. The FTC decision came in response to a petition asking the agency to require substantiation data for ads relating to energy and the environment. (Source: "Highlights," Antitrust and Trade Regulation Report, May 6, 1975)

Gold. "Ironically, however, the removal of gold from the international monetary agreements and the end of its official price open the door for its return as a monetary asset. Central bank gold reserves have been virtually useless since 1968 when the market price moved appreciably above the official price because IMF rules have prohibited the transfer of gold at anything but the official price. With that price abolished, however, there will be nothing to stop central bankers from revaluing their gold reserves and using them to settle international payments at a negotiated, market-related price. Such a mechanism is already provided for in an agreement among Common Market governments reached last year in Zeist, the Netherlands." (Source: "Meeting Halfway on the Role of Gold," Business Week, Jun. 16, 1975, p. 20.)

Self Defense. The police chief of one of the country's largest cities has urged citizens to protect themselves with guns. Edward M. Davis, chief of the Los Angeles Police Department, admitted recently that "today's law enforcement cannot protect you." Addressing the annual convention of the National Rifle Association, Davis said self-defense "becomes your responsibility" when the police can't do the job. Citing the Constitution's guarantee of the right to keep and bear arms, Davis called on the attendees to match in opposition the organized efforts of the "would-be tyrants" who are urging gun control. (Source: "Police Cannot Protect Public, LA Chief Tells NRA Meeting," AP (San Diego), Apr. 23, 1975.)

Medicine. A survey of doctors in private medical practice indicates much stronger opposition to compulsory National Health Insurance (NHI) than had been thought previously. Some 93 percent of the 26,000 doctors responding to a survey said they do not believe the Federal Government should pay the medical bills of all their patients, 80.5 percent would advise a son or daughter not to go into medicine if NHI came into being, and 27 percent said they would refuse to participate in NHI. Of those who would take part in NHI, 77.5 percent believe care under NHI would be poorer and 75 percent believe it would be more expensive. If the survey figures could be extrapolated to all U.S. office-based physicians, it would mean that 57,820 doctors would refuse to participate in NHI. (Source: "197,480 Doctors Send a Message to Congress on NHI: NO!" Private Practice, March 1975, p. 13.)