Communications Deregulation

"Competition and the private sector shall be relied upon to the maximum extent possible to determine the availability, variety, quality, and cost of telecommunications services, facilities, and products." That statement of policy—in marked contrast to the present "public interest, convenience, and necessity" standard—is the keystone of a deregulation bill that cleared the House communications subcommittee on a 13-1 vote this winter. The bill portends far-reaching changes in the kinds of voice and data services that will be available in the years ahead.

The new standard would make life a lot easier for firms competing with American Telephone & Telegraph in the long-distance market: MCI, ITT, Southern Pacific, and Western Union (whose new "Metro I" service is due to begin at the end of May in 29 cities). But the bill's provisions will also give AT&T something it has long desired: elimination of a 1956 consent decree severely restricting its ability to offer data processing services to its telephone customers. Perhaps because of that trade-off, AT&T chairman Charles L. Brown says the company now "recognizes that competition is a fact of life in our business." The White House is also promoting the bill, having moved telephone deregulation "from the back burner to the front burner," in the words of presidential aide Stuart Eizenstat.

In April the Federal Communications Commission enacted on its own the major provisions of the House bill. By a 5-2 vote it abolished the AT&T consent decree while deregulating entirely the market for terminal equipment—phones, switchboards, data terminals, etc. As of March 1, 1982, phone companies must charge separately for equipment rental and phone service itself, allowing customers the option of renting or buying competing equipment. FCC chairman Charles Ferris commented that the decision "remove[s] the barricades from the door to the information age.…Government will no longer be a barrier that prevents or delays the introduction of innovations in technology."

The April move followed an earlier FCC action to increase competition in data communications. Last December it allowed two new competitors—AT&T and Western Union—into the international data market, to do battle with the existing big four: ITT, RCA, Xerox-WUI, and TRT. The latter firms, in turn, are now allowed access to 18 to 21 additional US cities, instead of being limited to five gateway cities. They will thus be competing with AT&T and Western Union domestically.

Moon Treaty under New Fire

The UN's proposed treaty to prohibit private-enterprise exploitation of the moon and other celestial bodies has come under sustained attack in the United States. It is now far from clear that the Carter administration will submit it to the Senate for ratification after all.

While not a single member of Congress has endorsed the treaty, a number have spoken out strongly against it. Among them are Senators Church, Javits, Stone, Hayakawa, and Lugar—all on the Foreign Relations Committee. This kind of pressure has led Carter to appoint an interagency review committee (representing NASA and the Departments of Defense, Interior, and State) to recommend by May 30 whether or not to repudiate the treaty.

A major breakthrough for treaty opponents was the decision of aerospace giant United Technologies Corporation to go public against the treaty. A UTC ad headlined "Stranglehold on the Moon" appeared in February in the Washington Post and several New England newspapers. The ad prompted a weak defense of the treaty by Elliott Richardson, US delegate to the Law of the Sea conferences, in a March 24 letter to the Post. Richardson's argument, in essence, was that agreeing to UN regulation and taxation—in the seabed and in space—is the price that must be paid for maintaining good relations with the Third World.

The controversy led to articles in both Time and Business Week in March, as well as a Los Angeles Times editorial urging caution on the treaty. At the American Astronautical Society's Goddard Conference, March 27-28 in Washington, a debate on the treaty between NASA's Neil Hosenball (pro) and attorney Leigh Ratiner (con) was won hands-down by Ratiner, judging by audience reaction. It appears, on balance, that private enterprise has a fighting chance to make it into outer space.

Bank Deregulation Brings New Controls

What Congress has given the banking industry with one hand it has taken back with the other. That seems to sum up the financial reform bill signed into law by President Carter on April 1. While removing a number of regulations on banks and other financial institutions, it simultaneously extended significantly the power of the Federal Reserve System.

The bill emerged as a compromise between the House and the Senate. The latter, reacting to court decisions declaring that various forms of interest-bearing checking accounts offered by credit unions, banks, and savings and loan associations were not authorized by existing legislation, sought to simplify financial regulations and give the institutions considerable competitive freedom. The Senate bill called for phasing out Regulation Q (which limits savings account interest and gives a marginal advantage to S&Ls over banks), abolishing state usury laws, and allowing all types of financial institutions to offer interest-bearing checking accounts. The House bill accommodated the latter demand but not the former two.

To break the deadlock, House conferees prevailed upon their Senate counterparts to accept a previously unrelated House bill on Federal Reserve membership. Under the compromise measure, the Fed's reserve requirements will be extended from the 5,600 member banks to some 40,000 financial institutions, vastly extending the Fed's control over money and credit. In exchange, the House went along with the Senate on state usury laws and regulation Q.

Will consumers be better off under the new system? It's too early to tell, but whatever the outcome, the financial community is in for some major changes.

The Economics of Incentives

The idea that incentives really count—and that tax policies can significantly affect productivity—lies behind such tax-cutting measures as Kemp-Roth, Proposition 13, and Jarvis II. And the academic economists who are proponents of this view (called supply-side economics) are increasingly gaining a hearing. Several recent events demonstrate their growing influence.

• Last September economist Arthur B. Laffer unveiled the first econometric model incorporating supply-side effects: the "Prototype Wedge Model." Laffer developed it under contract to the National Council for Capital Formation. The model's equations and its supporting data base provide strong evidence of the link between increased marginal tax rates and decreased per capita output.

• In February the second such model was introduced by its developer, economist Michael K. Evans. This one was commissioned by the Senate Finance Committee. Among Evans's findings are that (1) a $10 billion tax reduction on income earned on savings would increase people's savings by $13 billion, and (2) a one-percentage-point reduction in personal income tax rates would increase labor force participation (by 0.3 percentage points), raise work effort (by 0.5 percentage points), and lower nominal wage rates (by 0.7 percentage points).

• A March conference on the economy, featuring a broad spectrum of economists and sponsored by the American Assembly, produced such supply-side recommendations as deferring taxes on savings account earnings, lowering tax rates on capital gains, increasing allowable depreciation on new plant and equipment, and steadily reducing the level of government spending as a percentage of the gross national product.

As Paul Craig Roberts summed it up in the Wall Street Journal, "supply-side economics is not about to fade anytime soon. With rising energy costs, declining productivity, and tax-flation eating into American living standards, voters and policy-makers are turning to a supply-side view in their search for a new economic policy."

Rescuing New York

No one needs to be reminded that New York State and New York City have become paradigm cases of the folly of excessive government. Since World War II both have expanded their services willy-nilly, borrowed recklessly against the future, and played games with the books to disguise their true financial condition.

None of that is news. What is news is that voices of reason are beginning to be heard in influential places, proposing marketplace ideas for rescuing the taxpayers of both the city and the state. The report of the Panel on the Future of Government in New York, appointed by Gov. Hugh Carey, is a case in point. Submitted last December 31, it makes no bones about what needs to be done to restore fiscal sanity to the state. Its major recommendations include:

• effective limits on state and local taxation,

• spending limitations that keep state spending increases below the rate of inflation,

• removal of all barriers on government contracting with the private sector for the provision of public services, and

• the organization of public services along commercial lines, with financing based on user charges rather than taxes.

Similar themes of privatization and user charges characterized the annual Richard S. Childs lecture by Prof. E.S. Savas before the prestigious City Club of New York last November. Among his specific recommendations were the following:

• contract out a host of services, from garbage collection to street and park maintenance;

• turn over certain public works—like residential streets and parks—to local civic associations which agree to maintain them in exchange for property tax rebates;

• drop all barriers to entering and operating various forms of surface transportation—taxis, jitneys, vanpools, buses, etc.;

• deregulate day care, to stimulate marketplace arrangements;

• phase out rent controls and public housing, substituting a simple form of rent voucher to aid the poor;

• switch from compulsory to voluntary building codes, along the lines of the French system;

• break the public school monopoly by instituting tax credits and/or vouchers for private school tuition, and end compulsory education for teenagers; and

• revitalize business by drastically reducing regulations and eliminating nuisance taxes.

While these proposals will come as no surprise to readers of REASON, having all been discussed in these pages, they are a breath of fresh air amidst the big-government-oriented approach generally taken by would-be city reformers. Let us hope that New York's movers and shakers take them seriously.

A Rough Draft

While Carter and Congress anxiously push for a resumption of the draft, Defense Department personnel have conceded that their problems would not be solved by conscription. The main problem, the Pentagon reports, is keeping the men and women who have been trained to do highly technical work but are fleeing the services for more-lucrative civilian jobs.

Although all four services last year failed for the first time to meet recruiting goals (the most severely lacking being the Army, which met 90 percent of its requirement), even Army officials say that retention poses more of a threat to military readiness than do mere numbers. Fewer and fewer petty officers and skilled personnel are signing up for the second and third four-year hitch. In the Navy, for instance, 45 percent of middle-level officers signed up last year for a third tour of duty, compared to 60 percent in 1975. In the Air Force, the percentage is down from 75 percent in 1975 to 60 percent last year.

The problem, it seems, is money: military compensation has fallen 12 percent below the rate of inflation since 1972 while civilian pay at least kept pace until last year. Some personnel ease the crunch by moonlighting at civilian jobs; in the Air Force, some 20 percent of the enlisted persons and 6 percent of the officers have outside jobs. At the same time, increasing technology in everyday life is making highly technical skills, such as those of nuclear-rated personnel, a marketable commodity.

Pentagon officials say, however, that conscripts are even harder to keep than enlistees. Forcing a draft would then only compound the problem of keeping trained personnel, especially since conscripts don't have any say in demanding market wages.

But that's not the only problem. An internal Selective Service report predicts that half of the people who would be called to register would claim conscientious objector status if the draft were imposed. The report prepared for the Selective Service Administration by one Donald Guritz, recommends that the federal government draft emergency legislation to eliminate the CO exemption or to "at least" limit it to practicing members of religious sects; that the Selective Service system be the sole judge for CO exemption, subject to no court review; and that those who are granted CO status be severely taxed in lieu of alternate service. "This might include," Guritz proposed, "a property tax taking all property owned in any amount exceeding $500, coupled with an income tax amounting to a virtual forfeiture of all income of more than $5,000 per year for a period anywhere from five to 20 years."

Rep. Robert W. Kastenmeier (D-Wis.) exposed the report at a press conference in March, describing it as a "shocking" inside view that should be officially disavowed by the president. Selective Service claims that the report was simply the opinion of one man—not an official view—and that it was written while Guritz was serving as an Air Force major doing two weeks of reserve duty in Washington.

Congress is currently deciding on whether to appropriate the $13.3 million needed to implement Carter's demand for compulsory registration of some eight million 19- and 20-year-old men and women, and so, in effect, to open up the whole can of worms. The question is, Who's going to defend us against the Selective Service system?

Jarvis II Support

Howard Jarvis hasn't gotten over being "mad as hell," and his current campaign to cut state income taxes in half in California (Proposition 9) is garnering more friendly support than Prop. 13 ever did. Among the people appearing in an advertisement plugging the initiative are US Rep. Jack Kemp (R-N.Y.), former Treasury Secretary William Simon, financial author Howard Ruff, economist Arthur Laffer, and assorted California government officials (mostly Republicans). Democrats are keeping relatively quiet because of poll results showing that the Proposition 9 is leading two-to-one and has substantial support in black and brown communities.

An astute commentary by syndicated columnists Rowland Evans and Robert Novak pointed out the real reason for sentiment against the proposition. "It is less a question of undermining government programs because of reduced revenue," they observe; "it is, rather, the threat to undermine redistribution of income through progressive taxation by narrowing the gap between top and bottom rates. Under Jarvis II, California's top-bracket rate…would come down to 5.5 percent. That is the real bite of 'Jaws II.'"

Though anti-tax-cut forces are wary of employing the same disastrous scare tactics that backfired against Prop. 13, Governor Brown has warned of a reduction of 30 percent in the state budget if Prop. 9 passes. Even before the elections, this figure is falling into disrepute. The Los Angeles Times reported that the post-Prop. 13 boom in California's economy will add about $1 billion to the state's budget surplus, thus reducing any effects Prop. 9 could have on the budget. And a General Accounting Office report forecasts up to a billion dollars a year in new state revenue thanks to oil price decontrol.

UCLA economists confirmed these projections when they reported the results of their detailed study of Prop. 9's effects: a reduction in state and local government spending of no more than 7 percent through 1983. Larry Kimbell, director of forecasting at the UCLA Graduate School of Management, added that the spending reduction would occur toward the end of 1981 and decline in the following two years because of the projected beneficial effects of Prop. 9.

The chairman of the No on 9 committee, Mickey Kantor, said that the forecast does not influence his antagonism toward the measure, while a spokesperson for Governor Brown admitted that "we didn't understand all the [economic] complexities when we first called for the 30 percent cut." Note: Brown is no longer directing state agencies to cut 30 percent off their budget proposals for fiscal year 1980-81.

Cutting the Budget

While the bureaucrats spout lofty-sounding balderdash on the need to cut the federal budget, most of them balk at giving any specific recommendations for where it could be cut. Well, one helpful columnist, Robert J. Samuelson of the National Journal and the Los Angeles Times, has come up with a handy list of generally solid suggestions. Samuelson bases his recommendations on an esoteric document called Reducing the Federal Budget: Strategies and Examples, produced by the Congressional Budget Office.

Among Samuelson's suggestions:

• eliminate Amtrak (for a savings of $1 billion in fiscal year 1981),

• jettison the MX missile program ($900 million the first year),

• repeal the Davis-Bacon "prevailing wages" act ($134 million),

• abolish deficiency payments to farmers ($900 million in 1982),

• cut out subsidies of highbrow entertainment through the National Endowments for the Arts and Humanities ($500 million in 1981),

• eliminate operating subsidies of mass-transit systems ($1.6 billion), and

• stop subsidizing the operators of small planes with below-cost user fees ($1 billion).

On the touchier issue of cutting social programs, Samuelson advocates reducing child nutrition programs, pointing out that most of the 26 million children who benefit from the school lunch program come from families with incomes above 125 percent of the poverty line. The savings in this case would be $1.2 billion. Samuelson also takes on Social Security and federal pensions, noting that these benefits rise higher than the earnings of the average worker because they are tied to the Consumer Price Index. Indexing these benefits instead to the increase in average earnings would save from $4 to $6 billion.

There is only one recommendation inconsistent with a libertarian approach and that is repeal of the percentage depletion allowance for oil producers. Samuelson considers this tax break a "subsidy," failing to distinguish between (1) a grant of tax funds (a true subsidy) and (2) merely allowing taxpayers to keep a greater portion of what is already theirs. While the depletion allowance may not be "fair" (any more than deductibility of homeowners' mortgage interest), the answer is not to increase the take from these taxpayers but to reduce everyone else's taxes, also.

Educational Freedom

As public schools further deteriorate and lose their standing as one of society's sacred cows, increasing numbers of parents are choosing to set and meet their own educational standards. According to a report in the Washington Post, some 10,000 families throughout the United States are opting out of the public school system and into home education.

The latest court decision regarding home schooling was won in the small town of Dorr, Michigan, early this year. Fundamentalists Peter and Ruth Nobel had decided to take their five school-age children out of both the public school and a local Christian school because of dissatisfaction with the doctrines taught and the standards used. The Nobels derived their religious beliefs from their own Fundamentalist parents and wanted to instill the same convictions in their children.

Ruth Nobel based their case on the US Constitution, which, she notes, "says that government is there to see that citizens keep their rights. The government has no rights." After two days in jail for "contributing to truancy," and with the support of a network of religious lawyers and witnesses, the Nobels were judged to be legally exercising their religious freedom. A large factor in the favorable ruling by the district court was the results of standardized tests for learning achievement given to the children by a psychologist; all five girls tested well above grade levels, one by as much as five years.

The Nobels followed the guidelines laid out in a home study course provided by the Christian Liberty Academy in Illinois, one of several sources of such courses (see Trends, Mar. 1979). An interesting twist to the Nobels' triumph is the fact that Ruth Nobel, though qualified, refused even to obtain teacher certification (teacher certification is the only requirement for home schooling in Michigan) on the grounds that "it would have been sacrilegious, giving an honor to the state that belongs only to God. I would not have kept my rights."

The Best Protection Is No Protection

President Carter's overreaction to the Iran crisis is causing uneasiness among Middle East leaders, as well as frustration over his "profound lack of sensitivity to the interests and aspirations of the countries in the region," says a recent UPI report. "We are not afraid of any action by Russia," Kuwait Foreign Minister Shaikh Sabah al-Ahmad al-Sabah stressed. "This is something we are 100 percent sure about. Not only Kuwait, but all the Gulf. You have to know that: 100 percent."

This certainty stems from several factors. One is, except for recent American "politique de spectacle," the internal stability of the region. "They talk about the bases, they talk about sending warships to the area, they talk about the Marines, they talk about nuclear deterrent," a senior advisor to President Shaikh Zayed of the seven-state United Arab Emirates complained. "All of this creates an atmosphere of tension in a region which, in the eyes of the people here, is not going through any instability." The decision by the United States and Oman to establish a US base there was publicly denounced by the leaders of the UAE, Kuwait, and Qatar, who worry that this aggressive move may be a dangerous precedent that will only encourage Russia militarily. UAE palace officials say the base, as in the case of Iran, is being set up more to protect the shaky throne of Sultan Qaboos than to protect Oman, which has never been threatened.

Soviet invasion of the oil fields is viewed as a joke in the region. "It simply can't be done," Sulaiman Mutawa, a director of the Kuwait Oil Company argues. "I don't know who dreams up such problems.…Let me tell you, taking over an oil field is not just pushing a few buttons." An American oil man who has been an advisor to the UAE for 10 years points out that the response to a Russian takeover would be widespread destruction by saboteurs. "There are miles and miles of pipeline running across the open desert," he explained. "It is the easiest thing in the world to rip a hole through some pipe with an explosive charge." The oil man adds that both time and money would be lost through such sabotage, since repairs would depend on availability of equipment. The repair of a gathering center in Saudi Arabia destroyed by accident cost $100 million alone. The oil tankers Russia would have to use to get oil back to the USSR would also be open to such harassment.

In addition, the USSR cannot fulfill its own oil industry equipment requirements and last year had to import drill bits and pipes from the West, which would presumably be less amenable in the event of a takeover. Mutawa adds that Kuwait alone has 5,000 trained personnel working on a 24-hour rotation in the oil fields. "They would not be too cooperative to a foreign occupier," he says.

Saudi Arabia is certainly doing fine on its own: donations for Afghan freedom fighters totaled more than $6.9 million in March, with some $890,000 of that coming from the public. A leading Kuwait intellectual, Abdlatif al-Hamad of the Kuwait Fund for Arab Economic Development, summed up the thoughts of most of the region's leaders: "The best thing the superpowers can do for this region is leave it alone. To get out. Because there is little margin for error."

Bad News and Good From China

As reported previously in this department (see Dec. 1979, Feb. 1980), the Chinese are trying to change their ways, particularly in the area of economics. At the same time, Chinese officials seem to be straddling the fence on free speech—at one time encouraging the expression of dissent, and then striking out when the dissent seems too threatening.

Among the more interesting developments on the economic front are the creation of an island of free trade, more state and local autonomy for factories, and the redefinition of capitalists as "working people earning their own living in the socialist society." Planning is under way to make Lang Qi, an island of 72 square kilometers just off the coast of Fujian province, into an autonomous free-trade zone. Fujian's Revolutionary Committee has been working with Bechtel Corporation of the United States and Millie's Holdings of Hong Kong to iron out the details. The government would impose no tax on materials imported for use in production and would keep its hands off all corporate earnings for the first five years; a fixed rate of 15 percent would be levied thereafter. Leases of up to one hundred years would be acceptable, with rental charges at 17 cents per square meter for the first year, increasing by 10 percent annually. The free circulation of foreign currencies will probably be allowed within the zone, as well as the establishment of branches of banks and hotels.

On mainland China, policy has begun to shift from the Soviet communist orthodoxy of mandatory State plans and quotas to a more initiative-oriented system. In Sichuan, the largest province, Communist first party secretary Zhao Ziyang has transformed its economy from bankruptcy to progress. Zhao advocates paying people in proportion to their work and has introduced the exciting new concept of income tax—instead of the State's directly taking and keeping most of the person's or factory's output, the person or factory is allowed to keep it and calculate how much is owed in income tax. One hundred factories were allowed to keep their profits last year, to set their own production quotas, and to fix prices for their products. Peasants will be allowed to till privately an increased portion of the land and to determine what they can produce rather than being assigned quotas. Zhao was recently promoted to the six-member Standing Committee—the elite group on top of the Party hierarchy—as part of a general revamping elevating the more moderate members of the Party and purging the more radical Maoist leftists.

And to help strengthen the government's efforts toward modernization, Chinese officials are turning to old enemies. Former capitalists are now being given positions of responsibility. In Shanghai, a former textile mill owner, Liu Jingji, has been allowed to set up the Patriotic Construction Company to help in the economic reconstruction of Shanghai, mainly in housing. Former capitalists "have some experience and some ability in doing business," explains Liu. "We can help improve ways of doing business…and make money year by year." Another capitalist, who has been deputized to head the quasi-governmental China International Trust and Investment Corporation, is millionaire Rong Yiren, whose personal net worth is estimated at $6 million. Rong says that there are about 100 other millionaires in China but that their acceptance into Chinese society does not signal a conversion to capitalism. "We are committed to socialist construction," Rong said, "and while profits have a place in our system, they must benefit the people and the government, not individuals. This is not free enterprise."

In the realm of personal liberty, there is little freedom to be covered up with such rhetoric. China's leading dissident, Wei Jingsheng, was sentenced to 15 years in prison in November 1979. In addition, some 30 to 40 dissidents were arrested for selling transcripts of the Wei trial next to "Democracy Wall." April Fifth Forum editor Liu Qing, who also published the transcript, was then arrested when he went to the police station to inquire about the arrests.

Rong was one of the officials who voted to close down Beijing's "Democracy Wall" in February, because, he says, it was diverting attention from economic development. The move was publicly endorsed by the national Central Committee, which further urged the National People's Congress (the Chinese legislature) to delete from the constitution the clause guaranteeing the right of citizens to "speak out freely, air their views fully, hold great debates, and write big character posters." The government is also abridging civil liberties with its massive campaign to limit population growth, using forced sterilization to limit families to one child each.

Despite all this, there may be some political moderation ahead. A new election law mandates 1980 elections of the National People's Congress and of law-making bodies on the county level and below. And in local elections, non-Communists have even been winning. Out of 350 seats in Beijing last year, non-Communists won 130. Democracy is hardly flourishing in China, but it has not been totally eliminated.


Hour Power. Two days after the popular television program "60 Minutes" reported on it, the Food and Drug Administration decided to give priority to testing of the drug DMSO. The drug has been barred from approval in the United States despite claims that it can ease symptoms of such ailments as arthritis and shingles.

A Public Nuisance. The Supreme Court has struck down state "public nuisance" laws that allow local authorities in Texas, Idaho, North Carolina, Washington, and Arizona to close down movie theatres showing "obscene" films. Calling such bans a prior restraint of the right to freedom of speech, the Supreme Court indicated that theatre owners may still be prosecuted in a criminal case, although only after the movie has been shown.

HEW Blues. Although Grove City College in Pennsylvania does not receive federal funds, the Health, Education and Welfare Department insisted that it must comply with federal sex discrimination rules. Not so, decided a federal judge in March, chiding HEW for overstepping its bounds.

Zipping through Permits. Land use in Marina del Rey, California is governed by the California Coastal Commission, which is charged with "protecting" California's coastline. The commission rejected a developer's request to build two luxury hotels on the Marina, on the grounds of discrimination against the poor. So the developer changed the plan to provide one moderately priced hotel and another offering a weekend discount to low-income people, selected on the basis of their zip codes. That led to an uproar in the legislature—which in turn caused the Coastal Commission to back down. And the hotels remain unbuilt.

Saccharin No Risk. A study by researchers at the Harvard School of Public Health failed to establish any evidence that the use of saccharin significantly increases the risk of bladder cancer. More than a thousand people were studied, half of whom were afflicted with cancer of the bladder. The study concluded that either: (1) saccharin doesn't cause cancer; (2) it causes cancer to people whose numbers are too insignificant to show up in a study; or (3) not enough time has elapsed since artificially sweetened products were introduced in the 1960s for carcinogenic effects to show up.

Steeling Their Bases. United Steelworkers of America locals 1330 and 1307 sued US Steel for planning to shut down plants in Youngstown and McDonald, Ohio. The suit contended that US Steel made an oral commitment to keep the facilities open. A federal judge has ruled that US Steel can close its works but must keep them in operable condition for 60 days to enable workers to look into the possibility of buying the plants themselves. Youngstown's newly elected mayor George Vukovich lamented: "When you believe in the free enterprise system, it's difficult to have the government interfere and take over." A wiser worker scoffed, "They didn't owe me a job. I made a good living but it was never guaranteed."

Sunset for CAB. The Civil Aeronautics Board is due to self-destruct in 1985, when its few remaining functions will be taken over by the Department of Transportation. It may not be that long, however. Responding to a speech by TWA president C.E. Meyer in which Meyer asked for an earlier sunset, assistant secretary of Transportation William Johnson said "We not only heard you, we think you may be right." Johnson added that a possible sunset date is 1982, after the scheduled implementation of the essential air services program.

Price Fixing Booted. The US Supreme Court ruled that California's fair-trade laws permitting minimum-price levels to be set for alcoholic beverages violate the Sherman Antitrust Act. Thirteen other states have laws permitting the use of price schedules that will be affected by the March ruling.

Tomato Protectionism. A decision by the Commerce Department cleared Mexican growers of charges that they were "dumping" tomatoes and other winter vegetables into the United States below production costs. This convoluted claim was made by Florida vegetable growers, who charge that political motivations (immigration problems and Mexico's oil fields) influenced the Commerce decision and have appealed the decision to the US Court of Customs.