POSTAL MONOPOLY DOOMED?
In 1957 a three-minute New York to Los Angeles phone call cost $2.00; in 1976 it costs 54¢, a 73 percent decrease. In 1957 a one-ounce letter cost 3¢; in 1976 it costs 13¢, a 333 percent increase. The phone call is provided by private enterprise, the mail delivery by government. The growing cost and continued decline in service of the postal system are leading to renewed efforts to end the postal monopoly, opening first class mail delivery to competition.
Just such a move was endorsed in January by the Council on Wage and Price Stability. In a 68-page report the Council concluded that competition would "retard or reverse the upward rush of postal rates," leading to more prompt and efficient mail delivery. According to UPI, ending the postal monopoly is an idea receiving increasing support in Congress. The Crane-Symms bill to repeal the private express statutes has been reintroduced in Congress, this time with 20 cosponsors, including liberal representatives Patricia Schroeder of Colorado and Parren Mitchell of Maryland. Presidential hopeful Ronald Reagan has also endorsed the idea.
Even without repeal, private enterprise is making ever-increasing inroads on the Postal Service's business. Electronic funds transfer systems are being used increasingly in place of sending checks through the mail. In February the Federal government began depositing Social Security checks directly into recipients' bank accounts via EFTS, and within five years 18 million government checks will be delivered this way each month rather than by mail. (Financial mail totals over one-third of all first class mail volume.) Courier firms such as Federal Express, United Parcel Service, and Purolator Services Corp. now handle large volumes of high-priority reports and financial documents that used to go by mail on passenger trains. Utility companies are considering having meter readers deliver bills instead of mailing them. Advertisers and magazines are turning to private postal services instead of third-class mail delivery. The private firms are preferred because they offer better service, lower cost, or both. A pre-Christmas test by the Milwaukee Journal involved shipping ten identical packages to five U.S. cities, half by UPS and half by the Postal Service. "The private firm won the experiment easily, beating the Postal Service in terms of cost, travel time, and condition of the packages on arrival," reported the paper.
Proponents of the postal monopoly argue that private companies would only "skim the cream" by serving just high-volume routes, leaving costly, out-of-the-way places to the Postal Service. Supporters of repeal argue that this is an open admission that many present mailers are being overcharged to subsidize others. Rep. Schroeder estimates first-class customer overcharges at $1 billion per year. The cream-skimming argument also ignores the fact that UPS serves the entire country, not merely large urban areas.
In short, the evidence is there and the right arguments are being made. Perhaps 1976 will see the legalization of private mail.
• "Panel Urges Competition on First-Class Mail Delivery," AP (Washington), Jan. 21, 1976.
• "Momentum Is Gaining Fast for Private Postal Service," UPI (Washington), Feb. 8, 1976.
• "Electronic Communications Feared Threat to Mailman," AP (Washington), Jan. 5, 1976.
• "Courier Firms Filling In for Extinct Trains," UPI (New York), Dec. 29, 1975.
• "Big Mailers Desert Costly Postal Service," AP (Washington), Jan. 5, 1976.
• "Private Mailing Efficient," AP (Milwaukee), Dec. 1, 1975.
Ask a teachers' union representative or a public school bureaucrat what is needed to improve the educational performance of public schools and the answer is likely to be (a) more money, (b) more graduate courses for teachers, (c) smaller classes, (d) socioeconomic desegregation, or (e) all of the above. But the correct answer is actually "none of the above," according to a comprehensive new study by Harvard's Christopher Jencks and UCLA's Martha Brown. The two studied the effects of a large variety of "input" factors, such as those listed above, on a large number of possible measures of the output of schooling (test scores, acceptance to college, occupational success, etc.), for a nationwide sample of high schools.
The results of their regression analyses are devastating to the standard public school mythology. None of the standard panaceas has any significant statistical connection with improved educational output. Interestingly, large—not small—classes "appear to have positive effects on all measures…precisely the opposite of what teachers and administrators assume." Jencks and Brown conclude that "neither educators nor social scientists know how to change high schools so as to raise students' test scores, educational attainment, or occupational status." Keep these findings in mind the next time your local school board demands an increase in taxes.
• "At Home," Daniel Oliver, National Review Bulletin, Jan. 30, 1976.
• "Effects of High Schools on Their Students," Christopher Jencks and Martha D. Brown, Harvard Educational Review, August 1975.
FREEDOM ON THE FARM
Two government agricultural programs have been abolished in recent months. First, the Dept. of Agriculture has finally gotten out of the grain storage business, after 35 years. Its last storage facilities—nine 38,000 bushel capacity quonset huts—were auctioned off last August. As recently as 1959 USDA had a storage capacity of 990 million bushels. The administrator of the program noted that purchase of surplus grain once cost taxpayers a million dollars a day (in addition to the costs of storage). Now, he noted, "farmers earn their income from the marketplace, instead of selling their crops to the government."
Rice farmers are going to have to start facing the market, thanks to a February vote by Congress to eliminate Federal marketing quotas. Under the controls program, all rice farmers had to comply with an annual national planting allotment, in order to keep prices high by limiting production. If the quotas (which are currently favored by 80.3 percent of the rice farmers) had been imposed this year, there would have been a 40 percent cutback from last year's record crop. Repeal of the quotas was supported by farmers outside the traditional rice-growing states (who are trying to expand), by consumer groups, and by the food and beer industries.
• "USDA Quits Grain Storing Business," The Lynchburg News, Aug. 31, 1975.
• "Farmers Vote Rice Curbs, But Congress Bars Quota," UPI (Washington), Feb. 6, 1976.
New support for getting the government out of commercial sex transactions has developed in four states. In Ohio the Office of Women's Studies and the College of Law at Ohio State University will spend 1976 studying the decriminalization of prostitution. An interdisciplinary project team will collect factual data on prostitution in Ohio, then study public attitudes toward the subject and towards decriminalization. Legal research necessary to prepare a decriminalization bill will also be carried out.
In Pennsylvania the 251-member Joint Council on the Criminal Justice System has recommended, after two years of study and hearings, that prostitution be decriminalized. Although the resolution has no legal force, it expected to lead to a legislative proposal sometime this year.
In California the newly-elected mayor and district attorney of San Francisco have announced that crimes of violence will receive top priority, while victimless crimes will be relegated to the lowest priority. District Attorney Joseph Freitas has announced that his office will no longer prosecute most cases of prostitution and marijuana, setting off celebrations in the city's Tenderloin district. The next day Mayor George Moscone announced that police policy will be consistent with that of the D.A., stating that given their priority on violent crimes, the police will have "very little time to worry about bordellos and peeking in public toilets."
Finally, the chief justice of the Michigan Supreme Court, Thomas G. Kavanagh, caused quite a stir by announcing on TV that he favors decriminalization of prostitution, pornography, and marijuana. Government should not impose some people's moral convictions on others, he stated. Further, such laws are invariably counterproductive. Justice Charles Levin agreed with Kavanagh, and noted that if drug addicts could get drugs at reasonable prices, street crime might be reduced by 50 percent. In response to Kavanagh's statement, the Detroit Free Press conducted a poll of its readers and found that 65.5 percent agreed with him that "it's not the government's business to legislate moral crimes."
• "Women at Ohio State Will Make Study of Prostitution," AP (Columbus), Dec. 14, 1975.
• "Decriminalization of Prostitution Urged by Panel," AP (Hershey), Dec. 16, 1975.
• "Moscone to Get Tough on Violent Crimes," Los Angeles Times, Jan. 10, 1976.
• "Chief Justice Asks Weaker Laws on Pot, Prostitution," AP (East Lansing), Dec. 19, 1975.
• "Sound Off," Detroit Free Press, Dec. 21, 1975.
PROTECTING PROPERTY RIGHTS
The full implications of recent efforts to enact sweeping land use planning laws (see "The Case Against Land Use Planning," REASON, January 1976) are finally beginning to be appreciated. The result is a new concern to prevent the destruction of private property rights. Among the most important critiques of land use controls is a study of the American Law Institute's Model Land Development Code, carried out by the Land Use Center of the Urban Institute. The study's author, Peter G. Brown, concluded that the widely-touted model law contains discretionary powers so broad that, if exercised, they "would restore private property to its pre-Magna Carta status."
The ALI's model law changes the basis for land use controls from today's limited police power approach to one based on regulating the environment in a "socially and economically desirable manner." Brown sees through this verbiage to the underlying "spectre of the tyranny of the majority, or of coalitions of interest groups (possibly short of a majority) achieving their purposes at the expense of others." Further, the ALI code provides no "explicit steps for determining when substantial costs are imposed on private individuals," nor does it provide "explicit methods for providing compensation." Instead, it operates on the presumption that government actions are justified, leaving it to owners who believe an unconstitutional "taking" of their property has occurred to go to court and fight it.
Another indicator of the new concern for property rights was a recent action by the California Senate. By a 25-7 vote this body passed a bill that for the first time would reimburse landowners if they are prevented from developing property because the state has designated it to be of "critical statewide environmental concern." Critics of the landmark legislation said that "efforts to pay reimbursement damages whenever environmentally important sections of California are zoned against development would bankrupt the state"—a telling admission of the magnitude of the rip-off contemplated by today's environmentalists. Fortunately, the Urban Institute study and the California Senate action indicate that private property rights still have defenders.
• "Protecting Property Rights," Search—A Report from the Urban Institute, Vol. 5, Nos. 5-6, Winter 1975, p. 11.
• The American Law Institute Model Land Development Code, The Taking Issue and Private Property Rights, Peter G. Brown, Land Use Center, The Urban Institute (2100 M Street, NW, Washington, DC 20037), 1975.
• "Senate OKs Bill to Pay Owners of Protected Land," UPI (Sacramento), Jan. 23, 1976.
GOLD CLAUSE COMEBACK
Gold clauses in bonds may not be invalid, after all. Business Week recently pointed out that the 1974 law legalizing gold ownership "at least suggests that corporate issuers of these bonds could be forced to pay off in gold. The 1974 law repeals every prior law that prohibits 'any person from purchasing, holding, selling, or otherwise dealing with gold in the U.S. or abroad.'" The Treasury Department, although stating its opinion that the 1974 law does not restore gold clauses' legality, has given no legal basis for its conclusion.
Consequently, a bondholder of Southern Pacific 50-year first mortgage bonds (due Mar. 1, 1977) has demanded payment of the semiannual interest in gold. The company has refused and the matter is expected to be settled in court. Since the bonds were issued, the price of gold has climbed some 6 to 7 times above its 1927 price of $20.67. Legalization of gold clauses "would create, in effect, securities that are equal, if not superior, to the U.S. government's own obligations," noted Business Week.
• "The Gold Bonanza That's Up to the Courts," Business Week, Jan. 12, 1976, p. 66.
Sen. William Proxmire takes credit for helping to abolish nine superfluous Federal agencies in 1974-75. In the present Congress he has introduced legislation to abolish 13 more:
–Selective Service System
–National Selective Service Appeal Board
–Interstate Commerce Commission
–Civil Aeronautics Board
–Overseas Private Investment Corp.
–CIA's "department of dirty tricks"
–Domestic (Federal) police and internal security activities
–Small Business Administration
–Civil Defense System
–President's Council on Physical Fitness
–Occupational Safety and Health Review Commission
–Community Development Corporations and New Communities Administration of HUD.
Proxmire has called the Selective Service System "the single biggest boondoggle now going on in the government." Although the draft was abolished in 1973 and the annual lottery and draft registration requirement were both ended in January, the SSS still has 626 offices, 2000 people, and a budget of $37.5 million. Proxmire's bill is an example of "changing the terms of the debate"—from promising voters more and more new agencies and programs to promising to get agencies and programs off their backs. It's a healthy sign of changing times.
• "How Does Big Government Get That Way?" Sen. William Proxmire, Freedom, Dec. 1975-Jan. 1976.
• "Draft Registration, Lottery Cancelled," UPI (Washington), Jan. 23, 1976.
Deregulation. "The first significant reform of transportation regulation in more than 25 years" received President Ford's signature in February. The measure was the railroad portion of the administration's transportation decontrol plan, included as part of the government's $6.4 billion northeast railroad bailout. Besides making grants and loans to restructure seven bankrupt railroads, the bill permits railroads to raise and lower rates without approval from the Interstate Commerce Commission. Similar pricing freedom for truck lines and airlines is contained in other deregulation bills still pending in Congress. (Source: "Ford Signs Rail Bill; Urges Air, Motor Reforms," Washington Post, Feb. 6, 1976)
Civil Rights. A court-ordered racial quota system for school principals has been overturned as "constitutionally forbidden reverse discrimination." The 2nd U.S. Circuit Court ruled 2-1 to overturn a New York school system procedure that prevented the transfer, demotion, or dismissal of black and Puerto Rican supervisors unless the percentage of such persons on the "excess" list was less than the percentage of blacks and Puerto Ricans in the community. (Source: "Court Overturns Racial Job Quota as Discriminatory," AP (New York), Jan. 21, 1976)
Energy. A study by the Federal Energy Administration has shown that continuation of Federal price controls on natural gas until 1980 will result in higher total energy costs, even for households still able to obtain gas. The reason is that reduced gas production under the price controls will lead to a much higher level of costly oil imports, thereby raising everyone's total energy costs. The FEA's conclusions were backed up in recent Congressional testimony by Edward Cazalet of Stanford Research Institute and Dennis Meadows of Dartmouth. Cazalet said consumers are already paying higher total prices due to natural gas controls, and Meadows (author of The Limits to Growth) stated that "the American consumer is being ripped off by nature, not by the big oil companies." (Source: "Deregulated Natural Gas Cheaper in Long Run, FEA and Two Experts Agree," Los Angeles Times, Jan. 8, 1976)
This article originally appeared in print under the headline "Trends".