Trends

REGULATORY REFORM

Suddenly the hottest issue in Washington seems to be reform of the vast network of government regulatory agencies. Senators and Representatives of every political stripe are stumbling over one another to introduce legislation to reduce or reform the regulators, and to denounce "excessive" government control of business. Many of the proposals harken back to a suggestion made over 30 years ago by Supreme Court Justice William O. Douglas when he was chairman of the SEC: abolish every regulatory agency ten years after it comes into being, so that it does not become more of a problem than the alleged abuses it was set up to correct.

Among the specific legislative proposals being debated are the following:

• Sen. Dale Bumpers' plan would compel the courts to rule on whether agency rules and regulations are clearly within the intent set forth by Congress in setting up the agency. The burden of proof would be on the agency.

• Rep. William Whitehurst and 24 colleagues have introduced HR 7977 which would have Congress, rather than the courts, review proposed regulations before they go into effect. Under the bill, Congress would have 30 days in which to review the agency's proposed rules and strike out any provisions which do not conform to its intention in setting up the agency.

• Sen. Edmund Muskie has introduced legislation to require Congressional review of every Federal agency and program (not just regulatory agencies) every four years to determine if they should be continued or scrapped. Those not specifically reauthorized would automatically be abolished. Muskie notes that there are now 228 Federal health programs, 156 income security and social service programs, and 83 housing programs, among other things. There are 11 cabinet departments, 44 independent agencies, and 1240 advisory boards, committees, commissions, and councils. All would periodically be reexamined under his proposal.

• Rep. Abner Mikva has introduced a bill which would abolish all existing regulatory agencies that are more than 25 years old (as of July 4, 1976), and limit all newly created agencies to a seven-year lifetime.

• Finally, Sens. Charles Percy and Robert Byrd have introduced a bill to impose a rigid timetable for do-or-die reform of 35 regulatory agencies. The Regulatory Reform Act of 1976 would divide the 35 agencies into five groups and set a year of reckoning for each group—1977 through 1981. In each year of reckoning, the President would be required to submit a reform plan to Congress by March 15. If Congress had not enacted the plan by the end of the year, it would automatically become law unless specifically turned down by Congress. In that case, by the following June 30, if Congress had not enacted its own reform measure, the agencies involved would be abolished.

At the state level, the Colorado legislature is considering a "sunset" law which would abolish state regulatory agencies after seven years, unless the legislature specifically authorized their renewal. The burden of proof would be on the agencies to justify their existence. The bill was conceived and named by the Colorado chapter of Common Cause, and breezed through the Colorado House by a vote of 55-11; passage in the Senate seems likely. The national Common Cause organization has made a national "sunset" law one of its legislative priorities.

SOURCES:
• "Regulatory Agency Failings Cost the Public Billions," Jack Anderson (column), Oct. 12, 1975.
• "Proposal Aimed at Agency Power Abuse," National Health Federation Bulletin, Feb. 1976, p. 13.
• "Regulatory Control," Richard Suter, The Illinois Libertarian, Jan. 1976, p. 7.
• "Muscle-Bound—and Fat-Bound," Editorial, Los Angeles Times, Feb. 18, 1976.
• News item, Southern Libertarian Messenger, Sept. 1975, p. 1.
• "Plan Would Force U.S. to Reform or Kill Regulatory Agencies," Los Angeles Times, Dec. 18, 1975.
• "Agencies' Cutoff Proposed," Neal R. Peirce, Los Angeles Times, Mar. 7, 1976.

CHALLENGING MILK CONTROLS

The Federal and state system for supporting milk prices and limiting production (see "Milk, Money, and Monopoly," REASON, March 1976) is coming under increasing attack. At the Federal level, the Council on Wage and Price Stability is investigating the government's program of price supports, market orders, and import quotas to determine their effect on raising milk prices above free-market levels. The Council has contracted with the Public Interest Economics Center to study the issue.

State level actions are taking place at the grass-roots level in New Jersey and California. In the former state, a family-owned dairy farm which processes and retails its own milk and milk products is defying state minimum price regulations. Farmer Gilbert Taylor, whose license has been revoked by the state, explains: "I'm tired of the State telling a farmer who produces his own milk how much he can charge. We're not concerned about minimum prices—it's our farm and our milk and we have the right to sell it for what we please." Taylor notes that farmers who produce and sell their own milk are exempt from Federal marketing orders and that this should exempt him from state regulation as well.

In California, the Consumers Cooperative of Berkeley is challenging that state's 39-year-old retail milk price law. The Coop has been charging less than the prescribed minimum price (69¢ per half gallon) for milk at its 13 Bay Area markets. The state is seeking an injunction to force the Co-op to comply with the law, which it considers unconstitutional. Wholesale price controls have been suspended in California for the past year, and an experimental suspension of retail price controls in Sacramento has resulted in a decrease to 64¢ (after an initial drop all the way to 59¢ per half gallon). A bill to abolish all milk price controls failed to pass in the 1975 legislature, but will be reintroduced this year.

SOURCES:
• "Pay-Price Unit Steps Up Study of Impact of U.S. Regulation on Firms, Consumers," Wall Street Journal, Oct. 7, 1975.
• "Long Valley Farmer Fights State to Sell His Dairy Products Below Minimum Prices," Jersey Free Press, Aug. 13, 1975.
• "Berkeley Co-op Will Challenge State Law Setting Minimum Prices for Milk," Los Angeles Times, Feb. 22, 1976.

PROTECTING MARITAL PRIVACY

In two similar cases, Arizona and New Mexico laws regulating sexual behavior between consenting adults have been declared unconstitutional. Both cases relied on the landmark case of Griswold v. Connecticut in which the U.S. Supreme Court recognized the right to marital privacy, as an unenumerated right under the Ninth Amendment. In New Mexico, the Court of Appeals ruled unconstitutional an anti-sodomy statute, on grounds that it infringed the privacy of marriage and violated the privacy of the home. Although the case in question involved the possibility that force had been used, the Court used the occasion to rule on the general constitutionality of the law, which flatly prohibited all such acts.

In the Arizona case, that state's Court of Appeals, again citing Griswold, struck down laws making buggery and oral copulation criminal regardless of consent or circumstances. The court noted that "We know of no marital 'intimacy' more intimate than that of how married partners consentually conduct their sexual activities. We are therefore drawn to the conclusion that such consenting activity indulged in in private is one of the 'fundamental' rights inherent in the marriage relationship and as such is constitutionally protected.…" Since this case, too, involved the possibility that force had been used, the court noted that nothing in its decision would prevent the legislature from enacting a statute which would prohibit either marriage partner from sexually assaulting the other.

SOURCES:
• "Privacy Rights of Marriage and Home Void Anti-Sodomy Statute," U.S. Law Week, July 29, 1975.
• "Arizona Criminal Buggery, Oral Copulation Laws Are Struck Down," Ibid., Nov. 11, 1975.

CONTRA ECONOMIC PLANNING

An impressive challenge to advocates of national economic planning has been issued by the Law and Economics Center of the University of Miami School of Law (see Spotlight, this issue). The challenge takes the form of a thick, 1750-page Catalog of Research Issues for Understanding National Economic Planning. The catalog raises a variety of questions which must be answered before "any mechanism purporting to plan intelligently for the American economy can be justified operationally." Law and Economics Center director Henry Manne says the catalog is "the thorough and most cogent set of first-level questions about the nitty-gritty stuff of planning yet produced." Despite this, the study's authors consider that their work represents merely "the tip of a gargantuan iceberg."

The point of all this is to demonstrate the futility of attempting to centrally plan for anything as complex as the U.S. economy. "There does not exist in the United States a single industry or governmental operation about which enough is known to make the kinds of decisions central planners would have to make for this country's thousands of industries, millions of firms, and numerous governing units at incredible speed and under constantly changing circumstances," says Dr. Manne. "To those who make their living proposing such studies and purporting to do them, this work must come as something of a bitter disappointment. To those politicians for whom central economic planning glitters with the promise of political power beyond its present scale, this study should return their feet—and their eyes—to the ground."

The catalog is intended as a challenge to the "Balanced Growth and Economic Planning Act of 1975," sponsored by Sens. Humphrey and Javits, and to the Initiative Committee for National Economic Planning, headed by Harvard's Wassily Leontief.

SOURCE:
• "New 1750 Page 'Catalog' of Questions Challenges Economic Planning Act," news release, University of Miami, Feb. 23, 1976.

STIMULATING UNEMPLOYMENT

What many people have long suspected about government unemployment insurance (UI) programs—that they actually increase unemployment—has now been demonstrated by a Harvard economist. Based on 1971 data from Massachusetts, Prof. Martin Feldstein estimates that the present UI system adds about 1.25 percentage points to the unemployment rate, raising it, for example, from 6.25 to 7.5 percent. It does this in two ways:

• First, UI encourages benefit recipients to remain jobless longer than they otherwise would. Even though UI benefits may replace only half of the worker's gross wages, they actually replace much more of his take-home pay (in some cases nearly 100 percent) because they are tax-exempt. Consequently, since they are losing very little in real income, unemployed workers take more time in looking for another job.

• Second, the way UI taxes are levied on employers encourages them to lay off workers. This is because once an employer has laid off some workers (and is therefore paying UI taxes at the maximum rate), the extra tax cost of further layoffs is zero. In effect, the stable employers are then subsidizing the unstable employers.

What to do? Feldstein recommends reducing the net level of UI benefits, either by reducing UI benefit levels outright or by making them taxable. He also proposes the introduction of full "experience rating" of employers, to make UI taxes more directly related to the extent of layoffs. Clearly, something should be done when the problem is of such obvious magnitude that even Hubert Humphrey "has begun to question whether the UI system has been subverted into an income maintenance system far removed from its original intention of tiding workers over temporary spells of unemployment."

SOURCE:
• "Does Aid for the Jobless Create More Jobless?" Business Week, Nov. 17, 1975, p. 142.

MILESTONES

Private Property. The U.S. Supreme Court, overturning its own previous decision, has ruled that striking workers do not have a right to enter a privately-owned shopping center to set up a picket line, without permission from the center's owners. The 6-2 decision explicitly overturned the Warren Court's 1968 ruling which had permitted limited picketing on the dubious theory that the walkways of shopping centers had become the "functional equivalent" of public streets. The new majority decision relied heavily on Justice Hugo Black's dissent in the earlier case, in which he argued that the Warren Court majority had, in effect, allowed union organizers to confiscate private property for their own use. Justice Stewart, writing for the present majority, said that forcing a shopping center "to supply picketing areas for pickets to drive store customers away" totally disregarded "the constitutional basis on which private ownership rests in this country." (Source: "High Court Upholds Private Land Rights, Bars Pickets," Los Angeles Times, Mar. 4, 1976)

Due Process. Citizens of California may feel somewhat more secure in their homes, thanks to a recent ruling by the state Supreme Court. In a 5-2 decision the court held that warrantless arrests of people within their own homes are unconstitutional (in the absence of "an emergency situation requiring swift action to prevent imminent danger to life or serious damage to property or to forestall the imminent escape of a suspect or destruction of evidence."). (Source: "Warrantless Arrest in Home Ruled Invalid," AP (San Francisco), Feb. 26, 1976)

Justice. A major change in criminal sentencing policy has been urged by a liberal study group. The privately-funded Committee for the Study of Incarceration has concluded after four years of study that rehabilitation should be abandoned as the goal of sentencing because there is little evidence that it works. An offender should be sentenced on the basis of the seriousness of the crime and his role in commiting it, regardless of his background or prospects for rehabilitation, the group concluded. Violent criminals should be jailed, "because they deserve it." The Committee was headed by former Sen. Charles Goodell of New York. (Source: "Let Sentence Reflect Crime, Group Urges," AP (Washington), Feb. 28, 1976)