Trends

OPPOSING PUBLIC SCHOOL MONOPOLY

Critics of the increasingly costly public school monopoly have been given important new information. The Hudson Institute, Herman Kahn's prestigious think tank, has recently completed a comprehensive study of U.S. primary and secondary education. The report, in a word, is devastating. It documents the soaring cost of public education—e.g., in constant dollars, the average amount spent per public school pupil in 1973-74 ($1281) approximated the average tuition for a private university student in 1965 ($1297). Total expenditures on primary and secondary education increased tenfold from 1950 ($6.7 billion) to 1974 ($61.6 billion), while enrollment increased less than twofold, from 28.6 million to 49.7 million. But what have parents and taxpayers received for this vast expenditure? Judged by objective measures of output—standardized test scores—the school system has produced ever-poorer results. The study documents the steady decline in test scores nationwide since 1962, and discusses some of the probable causes of reduced achievement: the look-say method of reading and the new math. It also provides hard evidence that class size is unrelated to student achievement levels.

Even without such empirical evidence, taxpayers across the country are asserting their dissatisfaction at being forced to pay ever-higher amounts for schools. An Associated Press survey showed that voters are rejecting proposed school budgets at a record rate this year. In New York State, the rejection rate has reached 23.4 percent, up from a previous high of 20 percent in 1969. In Washington State the rejection rate is 24 percent, up from 9 percent last year. California taxpayers are protesting increased property tax assessments and tax bills in record numbers. In several counties, including Santa Barbara County, there are organized plans for property tax strikes. In Maine, a number of towns have refused to contribute mandated tax funds to the state for redistribution to poorer school districts, under the Equal Education Funding Act. The towns of Castine and Mount Desert have put the tax funds in escrow, pending a legal battle over the issue.

Citizens in St. Louis are fighting the public school monopoly in yet another way. Organized as Parents Rights, Inc., they have filed suit against the public schools on behalf of several thousand taxpayers, on grounds that the public schools are teaching a "religion of secularism," in violation of the First Amendment, as interpreted by the 1963 Supreme Court decision in Abington v. Schempp. They have withheld some $2 million in property taxes, which has been placed in escrow until the case is settled. What they are seeking is the right to send their children to private schools without being forced to pay taxes to support public schools. Their attorney is William B. Ball, who won the landmark case in which Amish parents won the right to keep their children out of public schools.

SOURCES:
• The U.S. Primary and Secondary Educational Process, Frank Armbruster, The Hudson Institute, #HI-2308-RR, July 14, 1975. (Available for $8 from The Hudson Institute, Quaker Ridge Road, Croton-on-Hudson, NY 10520.)
• "Voters Turn Down School Fund Requests as Taxes Keep Rising," AP, July 28, 1975.
• "Maine Towns Revolt Against New Education Tax," Christian Science Monitor, June 10, 1975.
• "Legal Battle Looms on Public School Monopoly," Human Events, Sept. 20, 1975.

NEW ROLE FOR GOLD

The September IMF agreement was widely hailed in most news media as a defeat for gold, even as a "final" removal of gold from the world monetary system. Several analysts have pointed out, however, that what the agreement really did was to reestablish gold as the basis for international accounts. "Gold is dead. Long live Gold. That's the IMF agreement in a nutshell," writes Harry Schultz. "If it's finalized in January, it'll be the biggest step toward a real and free supra-national money since IMF was founded in 1944." Gold stock broker Douglas Johnston provides further illumination. "Basically," he writes, "what happened is that the IMF was shot down as manager of the world's monetary system and replaced by the Bank for International Settlements (BIS) in Basel, Switzerland. It is the most important single monetary event since the Bretton Woods agreement of 1944, which founded the IMF."

The BIS was established in 1920 to restore the economies of war-torn Europe. It still represents the hard-money, gold-oriented European central banks that are opposed to currency debasement. The recent Gold Agreement of the "Group of Ten" specified that "real control is the responsibility of the BIS." Apparently this represented a major victory in the 30-year struggle between the pro-inflation forces of the IMF and the pro-gold forces of the BIS. Johnston speculates that the BIS pulled this off by threatening U.S. officials with nonrenewal of a portion of the huge outstanding total of Treasury Bonds held by BIS members. As to what the BIS won, Johnston notes the following aspects of the Gold Agreement:

• Central banks can now buy gold for their own accounts, for the first time since FDR.

• The IMF will return one-sixth of its gold to the original donors, at $35 per ounce. Johnston expects this liquidation to continue until the IMF is out of gold, which he sees as de-facto dismantling of the IMF.

• The official gold price is abolished; each nation therefore has an interest in a higher free-market price, to increase the value of its gold stock.

• There will be no official gold price for two years; i.e., there will probably be a new (much higher) official price in 1977, after the U.S. elections are out of the way. Thus, there is reason to expect a higher gold price, as the metal is phased back into the monetary system.

Incidentally, recent news items concerning Vietnam serve to illustrate once more the drastic difference between gold and paper money. Vietnamese refugees in the U.S. managed to escape with significant quantities of gold, thereby ensuring their survival in a strange, new land. In July it was estimated that $40,000 per day in gold was flowing out of the refugee camps. U.S. Silver Corp. expects to buy $10 million in gold from the refugees, while Deak-Perera International had bought $2.3 million in gold at a single camp by midsummer. Meanwhile, the unfortunate Vietnamese left behind in South Vietnam have learned the ultimate value of paper money. The new communist government recently held a "currency conversion," allowing the exchange of 500 old piasters for one new one; however, even at that ratio, individuals were limited to $20 worth and families to $132 worth. The old piasters were then declared worthless, wiping out the entire wealth of the middle and upper classes—except for any gold which they might try to trade on the black market.

SOURCES:
• "The Big Picture," International Harry Schultz Letter, First. Sept. Issue 1975.
• "The IMF, the BIS and Gold," Douglas E. Johnston, Gold Newsletter (NCMR), Volume IV, 9 and 10.
• "Refugee Camps Become Gold Mines," UPI (Washington), July 27, 1975.
• "Viet Money Conversion Ruins Rich," AP (Bangkok), Sept. 30, 1975.

MORE MARIJUANA PROGRESS

Support for ceasing to treat as a crime the possession and use of marijuana continues to grow around the country. In Washington the Justice Department has dropped its opposition to proposals which would eliminate Federal criminal sanctions for marijuana possession. At a hearing in May on S.1450, a bill to substitute civil for criminal penalties, Donald Miller, general counsel of the Drug Enforcement Administration (DEA), announced that Justice was no longer in opposition to the bill. At the hearings Sen. Birch Bayh questioned whether the $600 million spent each year to prosecute marijuana cases represents a proper allocation of scarce crime-fighting resources. A month later another high Justice Department official came out for decriminalizing marijuana possession. Perry A. Rivkind, former director of the DEA's National Training Institute, strongly endorsed the 1972 recommendations of the National Commission on Marijuana and Drug Abuse that personal, private use of marijuana should not be a crime. This viewpoint was further supported in September when the 18-member Drug Review Task Force, a part of President Ford's Domestic Council, recommended that Federal law enforcement policy should "deemphasize simple possession and use of marijuana," due to the drug's "relatively low social cost" and widespread use.

At the state level, additional progress has occurred. The Michigan Commission on Criminal Justice has developed standards and goals for the state's criminal justice system. Among their recommendations are that all laws prohibiting consensual sex acts among adults be repealed, and that penalties for marijuana possession be reduced to a $100 fine, with the police given discretion to issue a citation rather than make an arrest. In July, Ohio's old marijuana law, which provided minimum penalties of 10 years for possession and 20 years for sale, was struck down by the Federal 6th Circuit Court of Appeals as imposing cruel and unusual punishment. In August, Ohio Gov. James A. Rhodes signed a new drug law, reducing penalties for marijuana possession to a maximum $100 fine. Possession of up to 100 grams (about 3½ oz.) of marijuana or 5 grams of hashish will be classed as a "minor misdemeanor" and exempted from any criminal record. Ohio thus becomes the sixth state (after Oregon, Alaska, California, Colorado, and Maine) to decriminalize marijuana possession.

SOURCES:
• "Justice Dept. Changes Stance on Marijuana," Criminal Justice Newsletter, May 26, 1975.
• "Former DEA/BNDD Training Chief Urges Reduced Penalties for Possession of Marijuana," Crime Control Digest, June 23, 1975.
• "Marijuana Importance Belittled by Ford Panel," UPI (Washington), Sept. 26, 1975.
• "Michigan Eyes Victimless Crime Standards," Criminal Justice Newsletter, May 26, 1975.
• "Move to Ease 'Pot' Laws Gains Force," Los Angeles Times, July 28, 1975.
• "Ohio Decriminalizes Marijuana," Press Release, NORML, Aug. 22, 1975.

GUN CONTROL SHIFT

Since 1959 the Gallup organization has been asking people regular questions about gun control. Despite over a decade of strong anti-gun propaganda from most of the news media, support for gun control has this year dropped to its lowest level yet. The percentage of Americans favoring some form of control on gun ownership is still a majority—67 percent, in fact—but it was 71 percent in 1959, and reached a high of 78 percent in 1964, after the JFK assassination. Thus, the size of the majority is steadily declining, perhaps due to continually rising rates of crime and people's desire for self-defense.

Even more dramatic is the clear majority that opposes a ban on handguns. In 1959 the Gallup Poll showed 59 percent in favor of banning handguns, while only 35 percent were opposed to such a ban. But this year, these figures have largely reversed, with a 55 percent majority opposing any handgun ban and only 41 percent favoring it. (Interestingly, most newspaper accounts of the 1975 poll virtually ignored this aspect of the results, and the shift in sentiment from earlier polls.)

SOURCE:
• "Big News That All News Media Missed," The American Rifleman, Aug. 1975.

TRUTH IN BORROWING

New York City's massive fiscal problems have prompted new concern about the soundness of municipal bonds as investments. A.A. Sommers, an SEC commissioner, recently announced that his agency may sue cities that fail to disclose risks involved in buying municipal bonds. "There are serious gaps in the way in which municipalities maintain their books and account for their monies," he told a convention in Montreal. Recent securities law amendments have been made, requiring increased disclosure by cities, but the SEC says it is prepared to sue in cases where there is a "serious deficiency in disclosure."

As if to illustrate the point, several days after Sommers' speech a state audit of New York City finances revealed that the city had been deluding investors into buying $380 million in notes backed by taxes the city knew it had no chance of collecting. The city carried on its books $502 million in unpaid real estate taxes, of which it pledged $380 million to repay the tax anticipation notes issued last June. But the city expected to collect only $94 million of these taxes. City Comptroller Harrison Goldin admitted that the audit results were correct, and that "this procedure, though unrealistic, has been followed for many years." The audit chairman of the Municipal Assistance Corp. (Big MAC) noted that "if the city switched to real bookkeeping it would be $2 billion worse off than city officials purport to be."

It is refreshing to see unpleasant truths such as these brought to light, exposing municipal frauds.

SOURCES:
• "Warning Issued on Bond Sales," AP (Montreal), Aug. 12, 1975.
• "New York City Deludes Investors, Official Says," AP (New York), Aug. 18, 1975.

MILESTONES

Entertainment. Topless dancing is protected by the First Amendment's guarantee of freedom of expression, the U.S. Court of Appeals for the 2nd Circuit has ruled. In upholding a U.S. District Court decision that threw out a Hempstead, NY ban on such dancing, the Court held, "However much topless dancing may be regarded by some to be in the teeth of good taste, it is, on the record here, a harmless form of entertainment, by way of communication from one human being to another. That interchange of communication is subject to constitutional protection as long as some legitimate interest of the state or community or others is not infringed upon." (Source: "Topless Dancing Ban Held Unconstitutional," AP (New York), Aug. 29, 1975.)

Inflation. Rep. Philip Crane has introduced legislation to restore the legality of contracts requiring payment in gold as a protection against inflation. The bill, HR 8324, is currently before the House Banking Committee (Rep. Reuss, Chairman). It would repeal 31 U.S.C. 463 and provide that "nothing shall prohibit any contractual provision which gives the obligee the right to require payment by the obligor in gold, in gold coin, or in an amount of currency measured by the value of gold or gold coins." (Source: "Crane Introduces Bill to Legalize Gold Clauses," The Gold Bug, Aug. 1975, p. 3.)

Bureaucracies. Citing the recent outbreak of sleeping sickness in Chicago, incidences of malaria in California, massive losses of timber to insect infestations, and economic hardship of farmers due to pesticide regulations, Rep. Steve Symms has introduced legislation to abolish the Environmental Protection Agency, whose policies have led to these results. The proposed legislation would transfer the administration of existing environmental laws to other Federal agencies and authorize a review and modification of all regulations effected to date by the EPA. (Source: "Symms Initiates Drive to Abolish EPA," Press Release, Sept. 19, 1975.)