We Aim to Please
If you have any other information on the new countries mentioned in the July Trends, please either do a story on them or let readers know where to write for further data.
Susan L Culligan
New York, NY
The editors reply: Your wish is our command! See the cover story, this issue.
I enjoyed the article on alternative transit by Robert Poole (July) and hope it gets wide readership and distribution. While we as libertarians cannot be expected to be able to know and say fully how things would be done in a free society, it is clear that the examples Poole gives which exist now—despite the regulations and taxes which preempt and discourage such private enterprises—indicate the vast potential of private, voluntary alternatives if they were allowed to operate. Another indication of this can be seen in the private and competing bus companies in cities outside the United States where regulations either do not exist or are not enforced. For example, I have been told that in the city of Monterey, Mexico, there are several competing bus lines traveling on the same routes oftentimes. They are not subsidized by taxes and exist because of the lack of government regulations and controls that we have in most American cities. These bus companies are running profitable and used services in Monterey and the same could be done in this country.
While libertarians cannot predict how free people will choose to solve and handle their problems and needs, existing private alternatives—few and struggling though they may be in our regulated society—do give evidence that private transportation and other services would be taken care of in a free society.
Los Alamitos, CA
The Economic Wringer
I read Robert Ringer's preference (Interview, July) for eliminating economic restrictions before social ones, should he be forced to choose, and—perhaps because I am sliding inexorably into genteel poverty—I wanted to agree with him. Granted, the idea of making even a hypothetical choice smacks of situational ethics, but then this country is overseen by a situational government, so what the heck, I thought, let's be situational. I tested my opinion by formulating a defense of it to the "man in the street," the fellow who thinks libertarians put economics before people, as if the former were not an activity of the latter. In doing so, I arrived at two defenses not mentioned in Mr. Ringer's interview.
First, some so-called economic restrictions have a social-restriction concomitant. If it weren't illegal to sell drugs, for example, it would not be illegal to use them (assuming a modicum of consistency in the laws). Second, it is generally easier to avoid detection when exercising personal freedoms (that is, breaking restrictive laws) than to avoid detection in the economic sector, where one is more or less on public display and is working with so many levels of people who have bought into the regulatory philosophy of business. As it is, only if we could allow as much time to become acquainted with a potential business contact as we can with a potential friend, would we have a fighting chance of sidestepping government intervention.
Mr. Ringer's comments made me verbalize what I must have known for a long time—that social restrictions have a negligible effect on the life I lead (and I emphasize that I am speaking personally), while economic restrictions are severely impeding my progress toward my professional and personal goals. If I also had to choose between lifting one or the other, I would concur with Mr. Ringer.
North Hollywood, CA
Congratulations on another fine issue of REASON (July 1980). What an interesting juxtaposition of articles: the interview with Robert Ringer, and the spotlight on Ted Turner! One has the message to spread; the other, the medium and the money; both have courage and principle. I hope they know each other (or both read REASON!). Doesn't the prospect make you drool? Think what they could do by joining forces—maybe even reach the "masses"!
Many thanks for your monthly breath of fresh air, the rejuvenating effect of thoughtful, articulate reassurance that all is not wrong in the world.
Glenn E. Cripe
I enjoyed reading Robert Haisman's article, "Make the IRS Your Partner," in the June issue. However, I am unable to agree with him that a 10 percent investment tax credit is available to the purchaser of real property improvements used in trade or business. I requested our tax department to research this question. They too came to the same conclusion. Perhaps you had in mind improvements made to older buildings converted to office space. Such improvements, not part of the purchase price, are available for the 10 percent investment tax credit.
Donald H. Pickett
Salt Lake City, UT
In Mr. Haisman's June article, he says that a one-time 10 percent investment tax credit is available. That is wrong. The investment tax credit is not applicable on the purchase of buildings or land.
He is also wrong on property exchanges and depreciation. The swap takes the same basis as the original property, and depreciation can't start all over again. If you take capital gain, at 40 percent reporting, you can start depreciation over again—but watch for the new alternate minimum tax.
Absolutely incorrect statements, Mr. Haisman.
J. Alan Cross, Jr., CPA
Coral Gables, FL
Mr. Haisman replies: Both comments are correct regarding the investment credit pursuant to real property. A 10 percent investment tax credit can be had by scheduling fixtures and equipment in a new business venture over a seven-year depreciation. Again, I concede the error the way the article was written regarding exchanges. I condensed myself into a box here. What I had in mind was an upwards exchange with considerable "boot" in magnitude of more than five times, which would change the basis.
REASON had better-than-average baloney in the "Special Financial Issue" (June), but…An economist is just like a caterer; both fix up baloney fancy so it sells at a higher price (to quote myself!)
Why, oh why, do even the best financial writers use such abstract terms? Do they actually think in those terms, do they try to sound erudite, impress their former profs and each other, or what? If economics were written by businessmen, instead of writers, it would make more sense because they would use different language.
A filling-station operator would say: "Last week the company billed me X dollars for a tank full of gas; this week it is more so I raise my prices or lay off Joe there and make my living pumping less gas. I don't just invent prices."
A banker would say: "The car dealers don't borrow enough money to keep our staff paid, what with layoffs at the factory worrying folks so much they won't even consider a new model car, at least at the high rate of interest we have to charge over our cost of money. So naturally we had to drop the interest, whether we want to or not."
An honest politician (know any?) would say: "I'm not so dumb as not to know all these tax increases are killing the country, but if I don't give the voters what they want, I'm out! Everyone seems to have someone who gets a government check, nowadays."
If some market-letter writer wants to do a good turn for the country and become an instant millionaire, let him write a book on real-world economics in real-world language. It should sell well, Nell.
Walter H. Carnahan
I'd like to say a few words about John Chamberlain's review of Economics in One Lesson (July). I take it you are equating the vandal in this fable with the federal government? If so, vandalism means the intentional wrecking of capitalism (in this case, the shopkeeper). Do you mean, then, that the government tries to wreck the small capitalist intentionally? Sometimes I think so!
Of course, the shopkeeper will repair his window quickly and forgo the new suit. But isn't this done to prevent some thefts of goods from his store, and isn't the cost of a new pane minimal, compared with loss he might sustain? Suppose he delayed the repair and bought the suit anyway?
I take it you mean by the term transfer payment the forcing by necessity to make one person buy something for another, such as taxes going to support perhaps our political opponents? In that case it would be vote buying wouldn't it? How does the federal government get around the proviso in the fifth clause of the Fifth Amendment, which states, "Nor shall private property be taken for public use without just compensation"? More should be written about this ignominious notion of redistribution of the wealth or the have nots vs. the haves.
William A. Mathews
Your mention in the July issue that a comprehensive listing of libertarian periodicals will appear in The Next Whole Earth Catalog was exciting to read. So what if the REASON crowd is referred to as having "the air of a slightly stiff suburban Rotarian loosening his tie while he excitedly discusses abolishing the income tax." Rotarians are involved in a number of worthwhile projects, such as sponsoring young students from foreign countries with educational stipends. Furthermore, it's perfectly proper to unwind with a correctly mixed martini now and again.
John C. Elmer
I was surprised to find REASON echoing the statist claim that government solves problems instead of creating them. Your implied agreement (Editor's Notes, June) with the FAA that it has upgraded air safety procedures by establishing a Terminal Control Area (TCA) at San Diego places you in just such a position.
Of course you are correct that government forces tend to mobilize after a major disaster as opportunistic meddlers see a chance to sell the public more intervention. Such is the case in San Diego as a direct response to the PSA-Cessna collision and crash on September 25, 1978; however, the following points disenfranchise any claim that increased airspace control by the feds enhances safety.
It is well known by aviators and flying buffs as well as openly admitted by the FAA that, had a TCA been in effect at the time of the aforementioned crash, no different procedures would have been followed by either aircraft. The causal factors were not technical but political—or, more precisely, bureaucratic. Taxes, extracted mainly from general aviation users and airline passengers (the airlines themselves contribute little), have not been allocated as originally promised. Instead of fulfilling promises to the taxpayers and spending the almost $4 billion in the Airport and Airway Trust Fund to expand and improve facilities to meet increased demand, many of the funds have been inappropriately siphoned off to cover overspending by the FAA for operations (paying air traffic controllers' and bureau "supervisors'" wages—controllers are paid as a function of how many aircraft they can control; if the spider builds a bigger web and traps more flies, he gets fatter!).
Specifically in San Diego: improved precision landing systems were delayed being installed at general aviation airports such as Montgomery and Gillespie. Consequently, the small planes had to go to Lindbergh Field and be subjected to conflict with larger aircraft in order to satisfy required (by the FAA, of course) training and currency in these precision approaches. The misdirection of funds and general foot-dragging by the Department of Transportation set up the conditions at San Diego that precipitated the tragedy.
No statistical data supports the assumption that TCAs improve aviation safety. It certainly has been demonstrated that the airspace immediately adjacent to, and sometimes through, TCAs is more prone to midair accidents. My assessment is that TCAs redistribute safety to the benefit of the air carriers and to the detriment of general aviation. Even though I agree with your basic evaluation that the FAA and DOT are doing a poor job of meeting their responsibilities, I submit that a larger FAA may not result in an overall improvement in safety. It may, in fact, very well induce accident-causing factors as a consequence of growth-limiting policies.
John W. Forbrick
Mr. Poole replies: Mr. Forbrick may be correct about the lack of data on TCA effectiveness. And his points about FAA's misplaced priorities are well taken. I certainly did not mean to give the impression that I favor larger FAA budgets. The urgent need is to transfer the agency's vital functions from the present political hacks to competent private-sector organizations, as stated in my original article (Jan. 1979).
Nuclear is Spoiled
Years ago, before I learned more about nuclear power, I was against it. After I learned more about it, I found I could be neither for nor against it. The more I have thought about the nuclear issue, the more I have affirmed a conclusion that one misses the point by even discussing nuclear power in terms of being "for" or "against" it. The nuclear debate is misdefined. It is not a question of its being good or bad. It is a question of how one determines it—or, more accurately, whether in our present political context we even can determine the value of nuclear power.
Look at the essence of the popular nuclear debate. On the one side are those who say nuclear power is too dangerous—with their line-up of experts. On the other side are those who say it is plenty safe—with their line-up of experts. Most laymen—to their credit—can make little sense of it. The emotionalism and non-contextual nature of the nuclear debate only add to the danger of making a wrong decision about nuclear power. Technical arguments are virtually meaningless in a climate where objectivity is necessarily undercut. Under those conditions, I would hate to see either side "win."
We have "free enterprisers" who see nothing wrong with maintaining subsidies and other government involvement. We have the socialists who want to nationalize the industry. And we have those who, for various reasons, just want to close it down. Clearly, it is not possible to rely on the government to objectively determine the course or safety of nuclear power; it is too involved in promoting it. Neither can we trust the centralized, government-subsidized industry to be objective; it relies too much on government for its present form of existence. It is a cozy relationship which resists change. And, of course, if we just kill the industry, we will never determine its worth. To keep the present system, to socialize it, or to stop it cold all share an ancient common denominator: fear of freedom.
There is only one recourse, the open market. Nuclear operators and the government need to be separated. Government should end subsidies and protection and artificial safety-mongering. The industry must accept full costs and liability for operations. It is a tall order for the entrenched statist mentalities of policy-makers and industry heads. But only under a free market will we truly "know" nuclear power. Now, we are like parents of a spoiled son, wondering whether he will ever reach maturity—while we continue to coddle and chide him, spoil him even more, and ask why we find a prediction of his future ever less certain.
The nuclear power issue requires further discussion in the libertarian media, provided that it is based upon a firm understanding of libertarian philosophy. John Gofman's emotionally charged and somewhat irrelevant letter (June) has forced me to question his philosophical premises.
Dr. Gofman, an eminent chemist and physician, has made many genuine contributions to the sciences, and I greatly sympathize with some of his conclusions regarding the nuclear power controversy. I have heard him speak on several occasions and have read many of his writings. Because of his considerable influence in some libertarian circles which reject privatization of the nuclear industry, his comments must be examined more thoroughly.
For example, in National Forum, Gofman wrote that "nuclear power is unacceptable even if a catastrophic accident would never occur." Describing nuclear power as "premeditated murder" and "a crime against humanity," he concluded that "there should be no future permitted for nuclear power," while denouncing "the grotesqueness of a cost-benefit approach to energy options."
As a scientist, Dr. Gofman should recognize that uncertainty underlies technological assessment. This uncertainty requires cost-benefit and risk-return analysis through the market mechanism. In this respect, the question of low-level radiation is analogous to the use of potentially carcinogenic nitrite food additives as well as the agricultural use of pesticides. Would Dr. Gofman conclude that "there should be no future permitted" for these technologies which help prevent botulism and feed the hungry?
Dr. Gofman has also written about "our responsibility to prevent genetic degradation." Would Dr. Gofman "permit" somewhat risky recombinant DNA research which has now been used for the natural synthesis of insulin, somatostatin, and beta-endorphin?
Dr. Gofman must also recognize that the nuclear industry could potentially survive, even in the absence of government subsidies and the Price-Anderson Act. Will he "permit" the free market to reach conclusions which may be contrary to his own? If not, then he is no libertarian.
New Fairfield, CT
This article originally appeared in print under the headline "Letters".