One Step Forward, One Step Back

Federal judge Mariana Pfaelzer ruled in September last year that California cannot collect unemployment insurance and disability taxes from church-operated schools (Trends, Jan.), the first time a federal judge had ruled against the Department of Labor in favor of religious schools. In May, Judge Pfaelzer broadened her injunction to include religious schools that are separately incorporated and schools that are operated either by employees of the church or an association of churches. (The original injunction had included only schools run by a church and not separately incorporated.)

The judge further criticized Department of Labor Secretary Ray Marshall for DOL's interpretation of a 1978 amendment to the Federal Unemployment Tax Act which exempts only those workers who perform "strictly church duties" for more than half of their working time. Pfaelzer said that, "The states must do what he says, and he is wrong.…It is unconstitutional." The case is being fought on First Amendment grounds by veteran constitutional lawyer William Ball of Pennsylvania, who calls it a test case that will probably end up in the US Supreme Court.

On the other hand, the state of New York has set an ominous precedent—attempting to define what constitutes a church—by suing the Life Science Church for allegedly marketing ministers' credentials as a tax-avoidance device. It is requesting that the church be prohibited from operating in the New York area and that its assets be frozen in local banks, to be used in repaying its 5,000 members. New York has further wielded the trendy accusation that Life Science is operating a pyramid scheme by telling members they can earn up to a million dollars by recruiting new members.

Congressional Scoreboard

The Council for a Competitive Economy, a free-market advocate, rated a commendatory editorial in the Wall Street Journal for its score sheet on members of Congress based on their pro- and anti-competition voting records. The CCE emphasizes that its stand is pro-competition rather than pro-business per se. This distinction is most important where, as in the Chrysler bailout, the government interferes in the free market by either regulating or subsidizing business.

In its report on members of Congress, the CCE first lists the major bills that were voted on during the first session of the 96th Congress that are relevant to economic competition and recommends a nay or yea. A separate list of representatives and senators follows, with their average voting score based on these bills.

Rep. Ron Paul (R-Tex.) scored highest in the House, with 91 percent of his votes being pro-competition; lowest scorer was Rep. Augustus Hawkins (D-Calif.), with a dismal score of 16 percent. Sen. Gordon Humphrey (R-N.H.) led the Senate with a score of 89 percent; two senators, Paul Sarbanes (D-Md.) and Paul Tsongas (D-Mass.), tied for bottom rank with scores of 17 percent each. The delegations with the best and worst scores, respectively, were: House—Idaho (72 percent), Connecticut (26 percent); and Senate—Utah (84 percent), New York (18 percent).

The Grass Is Greener…

Alaska takes pride in being rightfully viewed as one of the last frontiers of rugged individuality. And despite their solid, almost "square," image, the Alaskans have proven that their concern for the right to control one's own life extends even as far as the use of marijuana in one's home. Law enforcement agencies have a problem with this, though: determining how much marijuana a person can grow at home without being under suspicion of growing for the purpose of selling.

Two recent cases say: a lot. A grand jury in Anchorage recently refused to indict a gardener who admitted to owning 350 large marijuana plants, equivalent to a 50-pound harvest, or 45,500 cigarettes. Another jury, despite being informed that the defendant grew enough plants to make 20,000 cigarettes, acquitted him when his lawyer argued that the defendant "smokes like a chimney."

This tolerance is backed by the Alaska Supreme Court's 1975 decision that police enforcement against the possession of marijuana in homes is a violation of the constitutional right to privacy. Alaskans can now grow and smoke marijuana at home, although it is still a misdemeanor to use it in a public place and a felony to sell it. Tolerance is further supported by Anchorage superintendent of schools John B. Peper, who says that there was more drug use in the 1960s (when any possession was a felony) than there is today. The school system now relies on vigorously enforcing antidrug rules on school grounds.

Unfortunately, the state administration has introduced a bill to make possession of an ounce of marijuana anywhere a felony. If it passes, which is doubtful, it is bound to be challenged as unconstitutional. Alaska's chief prosecutor, Daniel Hickey, laments that "in Alaska there's absolutely no consensus of opinion on anything." Except perhaps individual rights.

The Real Thing—Maybe

When Trends reported in March that the Senate had passed a bill to allow private mining of seabed mineral resources, we didn't anticipate the long arm of Elliott Richardson, US ambassador to the Law of the Sea Conference, descending upon Congress to strangle the House version of the bill in April. Then, when the United Nations conference ended at yet another stalemate, Richardson made an about-face and testified before the House Foreign Affairs Committee to urge the passage of a unilateral mining bill.

So, once again, the committee approved in May, without dissent, a bill establishing the federal regulatory machinery to issue mining permits and sent it off for consideration by the full House. Rep. Jonathan Bingham (D-N.Y.) was confident that the measure would pass, especially since it postpones the actual commercial mining date to 1988.

The UN Law of the Sea Conference is mainly quibbling over a treaty being pushed by underdeveloped countries that would create a monopoly company called the "Enterprise," (which Mr. Spock would call quite illogical) to be controlled by the United Nations. Delegations from industrialized countries such as the United States have been holding out for at least parallel mining rights for private companies.

Truckers Fight California Deregulation

When the California Public Utilities Commission decided last year to abolish minimum freight rates (see Trends, Nov. 1979), it set the California Trucking Association on its ear. The rate deregulation took effect in April, and various portions of a companion deregulation measure on trucking permits have been implemented. The CTA, however, with the apparent support of Gov. Jerry Brown, appealed to the legislature to protect their industry.

A CTA-backed bill that would have blocked the PUC deregulation—and given the CTA time to come up with a less-generous alternative—passed the Assembly by 63-6 and the Senate by 29-4 but was vetoed by Brown in May. While the bill was working its way through the legislature, eight members of the CTA had filed a federal court suit seeking to block the PUC action and asking for $1 million in damages should it be carried out. This, Gov. Brown whined, showed "a lack of good faith," forcing him to veto the measure.

The CTA, not one to give up its favored position, is now seeking a veto override in the legislature. Judging by the substantial campaign contributions from the trucking association in recent months, as reported by Common Cause, it will probably clear the legislature, to the detriment of manufacturers and consumers who stand to save some $300 million a year from deregulation just in California.

Cutting Labor Costs

Gradual deregulation of the labor market seems to be easing the bite of inflation, reports the Monthly Labor Review. Labor costs were reduced last year where state legislatures voted for changes in labor laws.

Some examples of these changes are the elimination or weakening of compulsory retirement laws, the lifting of restrictions on child labor, and the repeal of minimum-wage legislation in Florida along with its moderation in Alabama, Wyoming, Connecticut, New Mexico, and Colorado. To further widen the market for employment, employers in several states were encouraged to allow more-flexible working hours and flexible employment situations.

Curbing OSHA

A bill to severely curtail the Occupational Safety and Health Administration's power to conduct safety inspections has been introduced in the US Senate by an unexpected duo—Sen. Richard S. Schweiker (R-Penna.) and Sen. Alan Cranston (D-Calif.), both long-time liberals. "The reality is that after nine years under OSHA's present regulatory scheme, we are left with no real evidence that it works, and with a bad taste all around from the experience," Schweiker was quoted—another surprise—by syndicated columnist William Raspberry in the Washington Post. Joining Schweiker and Cranston as a cosponsor is Sen. Harrison Williams (D-N.J.), author of the original OSHA legislation.

The bill would exempt approximately 90 percent of all workplaces from routine safety inspections. The lucky workplaces are those with above-average safety records, thus freeing the 1,000 OSHA safety inspectors to concentrate on problem places. There are at present about 4.3 million workplaces subject to inspection.

The AFL-CIO is objecting to the proposal. According to a spokesperson, "We feel the bill would result in needless deaths." The AFL-CIO has made defeat of this bill a high priority on its legislative "kill" list this year. The labor campaign will be matched, however, by an equally serious one waged by the US Chamber of Commerce on behalf of the bill.

While Schweiker explains his support of the bill in political terms, saying that OSHA "has become probably the most despised federal agency in existence," Cranston is allegedly cosponsoring the bill to save OSHA from extinction. "The hostility to OSHA is so great that Congress will kill it unless we can make some reforms," his administrative assistant said.

Competitive Care

The concepts of profit and efficiency are reluctantly being allowed into the health care and day care fields, and several examples demonstrate that it's a good thing.

National Medical Care, a Boston-based company, now owns 120 proprietary dialysis centers, treating 17 percent of the country's 48,000 dialysis patients. It also owns a subsidiary that does the laboratory tests on these patients. NMC has been so successful that it is branching out into obesity control centers, psychiatric care centers, and possibly overseas dialysis centers.

It now faces competition from a San Francisco firm, however, that started off with centrally administered psychiatric hospitals in the U.S. and is looking into acquiring a psychiatric hospital in London. The firm, Community Psychiatric Centers, owns and operates 12 psychiatric hospitals in five states with approximately 1,000 beds, and one more with 110 beds. These specialized centers do not need to maintain expensive surgical or emergency units, nor do they need to hire staff other than psychiatric specialists. Costs are therefore usually at least 10 percent less than other local facilities, which are commonly units in a general hospital. CPC has branched into hemodialysis care and is currently operating 23 kidney dialysis centers.

Three other firms offer specialized psychiatric facilities. General hospital-management companies are now looking into the obviously profitable market.

Another rapidly growing market, given the prevalence of two-career couples, is day care centers. The largest operator of private day care centers for children is Kinder-Care Learning Centers, with 500 branches in 31 states. Each center takes care of between 70 and 120 children ranging in age from 6 weeks to 12 years, and charges about $40 per child per week. Kinder-Care has recently acquired a Canadian firm with 88 day care centers. Baby food giant Gerber Products has also entered the day care field and now operates about 30 centers.

The concept of child nurseries in shopping malls, in the meantime, is slowly gaining acceptance. These provide temporary child care while the parent is shopping. Anyone who has ever tried to do intelligent shopping with a understandably bored and fidgety child in tow will certainly welcome the concept!

A Question of Pirates

Who owns the television signals that are sent out over the airwaves in coded form by pay-TV companies? According to the companies, they own these signals and have the right to charge people a monthly rate to rent the decoding device that allows them to make use of the signals.

According to Mackenzie Davis and John Sampson, once the signal is sent out into the air (Congress declared in 1934 that "the public"—that is, all of us—owns the airwaves), anyone can use it. Sampson and Davis, though not the only ones to do it, are the first to publicly advertise their decoding devices that pirate pay-TV airwave signals. They call their companies, in fact, Pirate TV and Pirate Electronics.

Sampson is quick to point out that this has nothing to with cable TV. "People who steal cable signals are stealing a signal that is the result of heavy investment, a lot of physical labor, and long-term planning," he says. The "signal people," he argues, need only some $30,000 to set up a station and have no big capital investment (because they use the publicly owned airwaves, not privately owned cables). Sampson adds that his device also offers competition to subscription TV and keeps prices relatively low, since, at a cost of about $400, the pirate decoder will not be worthwhile to the average viewer if subscription prices are kept down.

It's an interesting question. There are currently about 86 licensed pay-TV signal stations, and permits have been issued for over 130 more. Are broadcasted signals truly a part of public domain, as the pirates argue, or do the pay-TV stations have a legitimate cause for suing the pirate firms?

Gold Standard Proposed

A specific blueprint for a new US gold-based monetary system has been developed by economist Arthur B. Laffer of the University of Southern California. If adopted, says Laffer, the plan would slash inflationary expectations, boost the value of the dollar in world markets, stimulate domestic economic activity, improve the government's fiscal health, and restore the United States to being the world's central banker.

Laffer's proposal includes a three-month transition period, during which the Federal Reserve and the US Treasury would "take a vacation" while allowing the market to set the price for gold convertibility. Thereafter a specific mechanism would have the Fed buy or sell gold to maintain an average dollar value of gold reserves equal to 40 percent of the dollar value of its liabilities.

Laffer's report, "Reinstatement of the Dollar: The Blueprint," paints a key role in restoring gold convertibility for Federal Reserve chairman Paul Volcker. While Volcker is considered staunchly anti-gold by such gold bugs as Dr. Harry Schultz, Laffer notes that in the early 1970s "Volcker was reported to be the last to abandon the need for maintaining the dollar's convertibility into gold" and was later rumored to be in favor of a return to convertibility. Laffer's blueprint is designed in accordance with the general principles of the US proposals at the 1972 International Monetary Fund meetings—drafted by Volcker.

Since Laffer is one of the key economists in the Reagan camp, his plan could get a serious airing if Reagan were to become the next president. Single copies of the Laffer study are available on request from the Institute on Money and Inflation, Suite B-1, 314 E. Capitol St., Washington, DC 20003.

Freeing Telephones

As reported here in June, both the Federal Communication Commission and the Congress are moving rapidly to deregulate portions of the telephone business; the FCC deregulating the terminal equipment market as of 1982, and the House voting to deregulate long-distance communications. But the basic principle of telephone regulation—the idea that at least local telephone service is a natural monopoly and must therefore be provided by a single firm, regulated so as to achieve a specified rate of return—has remained unchallenged until recently.

But the challenge has now been issued, by none other than the FCC itself. The agency's Office of Plans and Policy has issued a working paper entitled "Social Objectives and Competition in Common Carrier Communications: Incompatible or Inseparable?" The paper's authors argue that the supposed social goals of a regulated monopoly situation—"such as benefits for rural interests, the poor, or other favored groups" actually "may be unattainable without competitive forces." Noting that present policies reflect a contradiction between universal service and efficiency, they argue that "elimination of entry controls offers a potential solution."

Complete laissez-faire raises four potential problems, say the authors: interconnection problems, predatory pricing, oligopoly supply, and monopoly in smaller markets. But none of these "provides sufficient justification to maintain traditional regulation of the telephone industry. Indeed, except perhaps for the problem of pricing interconnection, price and entry controls may make the problems more severe." In fact, the authors contend that rate-of-return regulation does not curb monopoly power: "in the long run, such regulation only serves to perpetuate monopoly at the expense of cost-reducing and service-improving innovation."

About the only form of intervention the authors would tolerate is a requirement that separate subsidiaries of major telephone firms be set up for each of the principal markets—terminal equipment, local service, and long distance—and that these subsidiaries deal with one another on an arms-length basis. The idea is to prevent cross-subsidization, which they consider an abuse of monopoly power.

Just such a policy underlies the FCC's April decision to overturn the 1956 consent decree barring AT&T from offering computer services (and, in exchange, allowing computer firms into data communications on an unregulated basis). That action has now been challenged, however, by a trade group, the Computer & Communications Industry Association, which fears that the proposed AT&T subsidiary (dubbed "Baby Bell") will not be truly separate. But the FCC plans to stick to its guns, contending both that it has the authority and that the decision makes sense. The outcome will significantly shape the telecommunications industry of the future.

Tax Cuts vs. Balanced Budgets

A Heritage Foundation survey of over 70 economics professors showed the majority (43-26) preferring tax cuts over balancing the budget. The tax cuts should be designed to stimulate investment, they recommend, echoing the tenor of the suddenly popular supply-side economics.

As Tom Bethell explains in an excellent article in The American Spectator (May):

Beginning around the early 1960s, the United States became less and less a country whose business was business, and more and more a featherbed for those whose lives were spent on the demand side: consumers, taxeaters of various stripes, government payrollers, welfare recipients. No matter, the economists continued to assure us: Demand creates supply. And so the ever-growing non-productive sector continued to rest comfortably on the back of the economy, reassured by the Keynesian oracles that its weight was not a burden so much as an inducement to make more and more goods.

And then, of course, those high tax rates began to discourage investment, and supply could not meet demand.

Supply-side advocates like Bethell point out how common phraseology can mislead. We say "a tax cut of $1 million," for example, but we are actually talking about a tax-rate reduction, which may or may not cut government revenue. In the same manner, raising the tax rate does not guarantee increased revenue because people will react differently: some may stop filing forms, others may move, some may work less. And that's what economist Arthur Laffer's famous "wedge" is all about.

Some 56 percent of the university economists who responded to the Heritage survey favored the Kemp-Roth tax cut plan, which would provide a 10 percent cut in personal income taxes in each of three successive years. A similar number (55 percent) would index the income tax system. The respondents also stressed changing the focus of demand in favor of the private sector (74 percent), and many would limit the use of the budget solely to the provision of public goods and services, cutting out all economic manipulation. One of the more exasperated respondents, Prof. G.C. Wiegand of the University of Illinois, noted: "What we need is not a fiscal 'reform,' but a fiscal 'revolution.'"

Taking the Offensive

When the Emergency Highway Energy Conservation Act was passed in 1974 as a reaction to the first major halt in oil shipments from the Middle East, there was no outcry against the federal imposition of a 55 miles per hour speed limit. Legislation cut off federal funds to states that had a maximum speed limit higher than 55 mph, and the national limit was indefinitely extended one year later.

Today, six years later, there is a growing swell of opinion questioning the federal speed limit. Montana, for instance, levies only a token $5 fine on anyone driving between 55 and 75 mph. It was one of several western states to rebel against federal limits recently but backed down when the feds threatened seriously to withhold highway funds.

Three articles in car magazines have also taken the offensive against "the 55 mph myth," as one piece called it. The May issues of Car and Driver and Road and Track magazines carry similar critiques of the speed limit. The Car and Driver piece, subtitled "How the Federal Government Was Able to Legalize Blackmail," goes through the history of how the courts began to erode the constitutional mandate of state power and give the power to the federal government through the catch-all phrase, the promotion of "interstate commerce." The Road and Track report lists the supposed benefits of the 55 mph limit (fuel conservation, safety) and shows—with graphs and figures—how that limit is not providing those benefits.

But probably the most entertaining piece is a February Car and Driver article called "Jamming Police Radar," whose tone is that of a defenseless citizenry against the military. Patrick Bedard, the author, reports that the technology for jamming radar is now available, but its illegality makes it difficult to sell. Kits are available for about $300, however; when assembled and installed, the device sends out a microwave frequency that overrides the police radar's own reflective beam and tricks the radar into reading the car's speed as a perfectly acceptable 55 mph. A brief box at the end of the article suggests ways to prove that radar is not a reliable criterion as "ironclad evidence of speeding," one of the ways being to contend that amateur jammers are able to manipulate radar readings.

As Matthew C. Sielski, a traffic engineer who did extensive studies on selected midwestern highways, reports, "Most motorists drive at a reasonable and proper speed, and are capable of recognizing conditions that warrant lower speeds." Perhaps a little more rebellion from states and individuals will shake up this federal monopoly.

Nongovernmental Monitor

Who makes sure that unexpected side effects of prescription drugs are monitored and reported, to ensure the safety of patients? Most people would assume that the Food and Drug Administration takes care of this. But although "postmarking surveillance" is an FDA responsibility, it turns out that the agency isn't doing a very good job of it.

That was among the conclusions of a three-year study carried out by the Joint Commission on Prescription Drug use—a body appointed by the federal government but funded by eight private medical and pharmaceutical groups. The commission found that although the FDA has a drug monitoring program, it lacks the staff, the mechanical support, and the mandate to do its job effectively. While it can generally spot major problems with newly introduced drugs, the agency drops the ball on delayed side-effects, the interactions between drugs and combinations of diseases, unexpected therapeutic effects, and unhurried, objective study of common patterns of drug use.

What's the solution? Surprisingly, the commission did not recommend either beefing up the FDA or creating a new government agency. Instead, it proposed creation of an independent, nongovernmental institution devoted entirely to pharmacological research—and funded from a variety of sources so as to avoid undue influence from any special interest. According to study director Kenneth Melmon of Stanford University's Department of Medicine, the main reasons the new organization should be private are as follows:

  • It would be more flexible and less goal-oriented than a government bureaucracy.
  • It would be able to use the expertise of specialists who cannot work for government, under current conflict-of-interest laws.
  • Its diverse funding sources would keep it free of outside influence—for example, from consumer lobbies or industry.
  • It would have to seek out funding each year, thereby avoiding the complacency that comes with being tax-supported.
  • Because of having no enforcement powers, it would be more likely to be trusted, both as a recipient of possibly sensitive data and as a source of advice.

The commission's recommendation is a welcome change from the past few decades, when the answer to every perceived problem seemed to be a new government bureaucracy. And it's interesting to consider that the commission's arguments for a private, noncoercive entity could be applied not just to "postmarketing surveillance" but to the entire field of drug safety. Of course, that would be too radical—or would it?

Freedom in the Skies

Laissez-faire in aviation? We're getting closer, as the Civil Aeronautics Board in May removed all controls on airline fares for routes of under 200 miles and expanded "fare flexibility" for longer routes. (For routes of 200 to 400 miles, fares may be increased up to 50 percent over "standard" levels without CAB approval; over-400-mile routes may have increases up to 30 percent.) Delta Air Lines senior vice-president Robert Oppenlander says the new policy amounts to the "complete pricing freedom" the carriers have been asking for.

Congressional reaction was mixed. Some supporters of airline deregulation criticized the CAB for going too fast. Others viewed the CAB action as providing further justification for an "early sunset" for the agency. Sen. Ted Stevens (R-Alaska) introduced legislation to abolish the CAB before the current 1985 deadline.

Some deregulation critics are upset by rising air fares and the cutbacks in service by major airlines to small communities. But these criticisms fail to consider how high fares would have risen (due to soaring fuel costs) in the absence of deregulation and the accompanying growth of discount fares. The latest manifestation of discounting is Eastern Airlines' entry to the New York-Los Angeles market at a $149 daytime fare—compared with previous day coach fares of $328.

Critics of service cutbacks tend to ignore the rapid growth of replacement service by commuter airlines. Between Youngstown, Ohio, and Pittsburgh, for example, United formerly provided two jet flights per day, averaging 120 daily passengers. The replacement carrier, Crown Airways, is providing seven daily round-trips in smaller turboprop planes. In its first month, April, the average daily passenger count was 204. In the Northeast, one "certificated" carrier—Air New England—is on the verge of bankruptcy, despite large-scale subsidies. But some 20 unsubsidized commuter carriers are poised to serve the carrier's routes, in many cases at lower fares, according to CAB analyst William C. McCamant.

Thus, contrary to the fears of opponents, airline deregulation seems to be working.


If Only He'd Campaign. None of the Above captured one-third of the vote versus Kennedy and Carter in the Nevada Democratic primary in late May. We knew those Nevada folks had sense!

The Slippery Slope to Bankruptcy. In March, President Carter magnanimously raised the Federal Deposit Insurance Corporation's coverage of bank accounts from $40,000 to $100,000, instantly lowering the ratio of FDIC coverage from the 1979 level of $1.22 per $100 to $1.11 per $100 of deposits. Officials reassured worriers by noting that the Federal Reserve Board is committed to create whatever money is needed to keep a major bank afloat. The FDIC is also asking Congress to allow "emergency" acquisitions of banks across state lines, to give support to its policy of merging a failing bank with a healthy one.

Transit Sense. The House Surface Transportation Subcommittee voted to approve a bill letting states provide special services to the handicapped rather than mandating full access to all transit systems. The vote softens Transportation Department regulations issued late in May requiring subway, rapid transit, commuter rail, and bus systems to refit their cars and stations for access by the handicapped. The DOT passed the buck on to HEW, saying that HEW guidelines had forced them to require the expensive changes.

Smash the State. The Citizens Against Taxation group in Gregory, Michigan, is fielding an initiative to amend the state constitution to stop all taxes. The amendment states that "no tax shall be imposed by the state or any of its political subdivisions" and that state revenue would come from gifts, lotteries, interest, criminal fines, and the sale of public assets, among others.

Auto Correction. Responding to US accusations of unfair trade practices, the Japanese government has tentatively decided to eliminate tariffs on imported auto parts. So said the Kyodo news service on April 29. The current tariffs are 10.4 percent on chassis and 5.3 percent on the other parts. Repeal would take place in April 1981.

Interferon Update. Life Sciences, Inc., a small biological research company, has said it will begin selling interferon to Florida cancer specialists who submit an application to the company describing the potential patients. Interferon is classed as an experimental new drug by the FDA and cannot be shipped across state lines. Florida, however, has given approval to its sale within the state. Interferon is a protein that has recently been cloned and may be valuable in helping the body fight cancer cells and viruses (Trends, May).

Interdistrict Desegregation. The US Supreme Court upheld a lower court decision to bar "interdistrict" desegregation of area schools. The case arose when advocates of a metropolitan school system in Atlanta wanted to combine the heavily black city public school system with the mostly white system of the neighboring suburbs.

Statehood USA. Dick Collver, former leader of Saskatchewan's Progressive Conservative Party, resigned in order to lead a movement to make four Canadian provinces—Manitoba, Saskatchewan, Alberta, and British Columbia—American states.

Capitalists Unite! Socialist Prime Minister Michael Somare of Papua New Guinea was voted out of office after five years and replaced with Julius Chan, leader of a business-oriented party.

A Cable Fable. The Bell System can no longer forbid cable television operators from using its utility poles, a federal appeals court ruled. The decision stated that Bell itself had recognized cable television as a competitor, particularly in the development of the picture phone, and was therefore violating the antitrust laws by refusing to let other firms use its poles.

Liquor Price Controls. The situation in New Jersey is classic: its attorney general and Alcoholic Beverage Control board have been trying to eliminate price controls on alcoholic beverages for more than a year, but a group of small liquor retailers has challenged the deregulation. In February, the state supreme court finally ruled that the ABC could deregulate prices; two days later, the court agreed to delay the decision while the liquor groups appealed to the US Supreme Court. But it may be pending for some time, according to a source in New Jersey.

Political Freedom Defended. The California Supreme Court ruled that city council members could not be prevented from voting on projects on the grounds that they had received campaign contributions from developers. A flat prohibition, said the court, threatened the constitutional right to freedom of speech and association; other laws already protect against corruption and bias.