Trends
Pricing Airports Last April we reported that the Department of Transportation was getting a lot of flak over an eminently sensible proposal: that the scarce resource of landing "slots" at busy airports during peak periods be allocated by pricing—just like any other scarce resource. Instead of the present procedure in which airline representatives meet (under antitrust immunity) and divide up the slots by committee, an "auction" would be held, and winning bidders would be free to sell their slots to others if they chose.
The first test of this policy is likely to occur at badly congested Washington National Airport (which is owned and operated by the federal government). Late in October the Department of Transportation (DOT) issued a notice of proposed rulemaking outlining three alternatives for dealing with slot allocations at Washington National: the present airline committees, DOT allocation, or a slot auction. The decision will be made by April, and according to Aviation Week (Oct. 27, 1980), there are indications that DOT is "leaning toward the auction procedure." If so, we will see yet another step toward returning aviation completely to the marketplace.
San Diego Deregulates Cabs By unanimous vote, the city council of San Diego has voted to remove the city's price ceiling on taxi fares, thereby completing a process of deregulaton begun a year earlier. In doing so, San Diego joins Seattle as a leader in taxi deregulation nationwide.
The process started in 1979 when the council began allowing the supply of cabs to increase, by issuing 15 new permits each month. The number of cabs has climbed from 411 at the start of that year to 606 in the fall of 1980—nearly 50 percent more. Next came a law abolishing city-set fares, leaving only a ceiling considerably above the market price ($1.50 per mile—actual fares averaged between $1.00 and $1.20). The council's final action, taken in September, removed the ceiling as well, leaving only the requirement that the fare be posted in the cab's window. Cabbies will be free to charge less than the posted fare.
Elaine Balok, assistant to the city manager who has pushed for deregulation, points out that over the past year cab ridership has increased, and fares have been among the lowest in the state. Needless to say, Balok has been receiving numerous requests for information about the deregulation. Among the cities considering it are Chicago (see Trends, Sept. 1980), where a measure similar to San Diego's was due to be considered November 14 (just after this issue went to press).
Loosening the Tie of Professional Monopolies The highly regulated professions of medicine and law recently received new injections of freedom in the area of practice. The American Medical Association adopted a new code of ethics for the first time in 23 years. The new code removes all obstacles to physicians' advertising and to their working with chiropractors. The move came about partly in response to legal pressures (the AMA faces lawsuits in both areas) but also, AMA officials say, to discourage some of the paternalism of the old code. A federal appeals court recently upheld a Federal Trade Commission order barring the AMA and local medical societies from interfering with doctors' attempts to advertise.
In California, meanwhile, the state bar board of governors, pending comment from the state bar membership, repealed a rule forbidding lawyers from giving advice on specific legal problems through the news media. This step, if successful, may further the movement to demystify the law. One state bar board member, however, criticized the vote as "another step toward lowering professionalism." The battle is still uphill.
Pill Users, Take Cheer In an age when almost everything has been accused of being potentially carcinogenic, it is heartening to note the results of a study saying that contraceptive pill users do not have a higher risk of contracting certain cancers. The 10-year study was sponsored by the National Institute of Child Health and Human Development and involved over 16,000 women at the Kaiser-Permanente Medical Center in Walnut Creek, California. The final report of the study states that there is no increased "risk of death from all causes combined"—including from cancer of the breast, uterus, and ovary and from circulatory diseases often blamed on the pill—for women who use contraceptives. It did find that women who smoke cigarettes and who are on the pill may increase their risk of heart disease.
Gas vs. OPEC In the October 1978 issue of The Freeman there appeared an article titled "How to Break up OPEC," by Carlos Henkel and Robert Poole. Analyzing the economics of natural gas production and estimates of the gas available from unconventional sources (such as coal-mine methane, geo-pressurized gas, tight sands, and Devonian shale), it predicted that if price controls were abolished, this country would soon be awash in gas, and OPEC's monopoly would be broken.
Surprise, surprise! The October 1980 issue of Washington Monthly has proclaimed that the energy crisis is over—based on the results of natural gas price deregulation. Although the Natural Gas Policy Act of 1978 has thus far only partially deregulated gas prices, already vast new supplies have been discovered. The principal finds have occurred simply by drilling at depths below 15,000 feet (which is economically feasible now that prices have been allowed to rise). But impressive production has now also begun in the huge geopressurized zones of the Tuscaloosa Trench, where the ultimate quantity may be as much as 60,000 trillion cubic feet (TCF). Present annual US consumption is 19 TCF, accounting for one-fourth of US energy use.
So what should Congress do to take full advantage of our new-found gas bonanza? WM recommends (1) abolishing all remaining price controls at once, rather than phasing them out by 1985, to spur immediate production, (2) "decriminalizing" natural gas usage, by repealing the 1978 Fuel Uses Act, which prohibits the construction of new gas-fueled boilers and orders present gas-using industries to stop by 1990.
Since utilities and other industries now consume 5 million barrels of oil per day (bpd) and another 4 million bpd are used to heat buildings, conversion of even half of these uses to clean-burning natural gas would eliminate 4.5 million bpd of oil use. The ongoing shift to more fuel-efficient cars is expected to save another 2 million bpd by 1990. Together, these changes could eliminate 6.5 million bpd out of the present total of 8 million bpd of oil imports, reducing OPEC's leverage to negligible proportions. And reducing the supposed need for costly US intervention in the Persian Gulf, as well.
Marijuana Medication Robert Randall, the first American allowed legally to smoke the evil killer weed marijuana since the Marijuana Tax Act of 1937, has glaucoma, a blinding disease of the optic nerve. Randall accidentally found that smoking marijuana eases the pain of glaucoma and seems to retard his eventual blindness. After police busted him for growing four marijuana plants, Randall took his case to court and in 1976 won the right to smoke marijuana. Instead of being given back his four plants and allowed to grow his own medication. however, Randall is provided—at tax-payers' expense—70 prerolled marijuana cigarettes a week from the only bureaucracy allowed to cultivate the weed, the National Cancer Institute, through a local pharmacy.
When Randall started looking into the issue, he found that the Food and Drug Administration, the National Institute of Drug Abuse, and the NCI has kept hidden away a mass of supporting data showing that marijuana does reduce eye pressure in glaucoma. Furious, he formed the Alliance for Cannabis Therapeutics (ACT) to lobby for federal (and state) legislation recognizing marijuana as a medicant. "I don't want to be a person who has his sight while others are going blind," he explains and notes that marijuana has been recognized as a medicant in 24 states (he has testified in 15 of those 24 states).
On another front, and after considerable public pressure, the federal government is looking into the use of THC (tetrahydrocannabinol) capsules, a synthetic version of marijuana's psychoactive ingredient, for nausea relief in cancer victims being treated with chemotherapy. Only the feds, Randall scoffs, "would make an oral medication for someone whose basic problem is that they can't swallow." Under a California state-run research program, both THC and marijuana cigarettes will be tested to determine their ability to lessen nausea from chemotherapy. The National Cancer Institute will supply approved pharmacies with cigarettes and capsules for the 3,000 cancer patients and 300 oncologists involved in the research program. The federal government will pay for the cost of the cigarettes, and the patient for the shipping costs, while the state government will put up $100,000 for administrative costs for the four-year project. Start-up has, naturally, been "indefinitely delayed" due to supply problems at the federal government's end. (Maybe the feds should subcontract the supply quota to local Mendocino marijuana farmers, famous for their superior quality weed.)
While California untangles its research program, however, a three-judge appeals panel in Washington, D.C., recently ordered the government to reconsider its ban on the medical use of marijuana and THC. The move stemmed from a challenge by the National Organization for the Reform of Marijuana Laws (NORML) to a 1979 Drug Enforcement Administration decision to keep marijuana and THC strictly controlled substances.
FTC Joins Opposition to Car Quotas Federal Trade Commission staff members have joined the US International Trade Commission (ITC) in emphasizing the drawbacks of restricting foreign car imports (Trends, Dec.) saying that Japanese car import restrictions alone could cost consumers $6.6 billion a year. Michael Lynch of the FTC's Bureau of Competition suggested that the US auto industry produce more small, fuel-efficient cars instead.
The cost to consumers would be in the form of higher prices stemming from a 20 percent increase in the current 2.9 percent tariff, proposed by the United Auto Workers union. Ford Motor Company, which joined the UAW appeal to the ITC, suggested limiting car imports to 1.7 million units. The ITC filed its report on Nov. 10, stating that imports are not the major cause of Detroit's problems and should not be restricted.
Justice Goes Private Can private lawyers and private procedures do a better and less-expensive job of dispensing justice than the public courts? REASON first raised this question in reporting on Carl Person's efforts to develop his National Private Court (Sept. 1978, p. 41). Since then, evidence has been accumulating to support the idea of privatizing certain aspects of the judicial system.
To begin with, the Los Angeles County court system is experimenting with contracting for attorney services. It has long been standard practice for the courts to hire private attorneys to represent indigents in cases where the public defender cannot serve due to conflict of interest or other problems. Paid by the hour, the attorneys had no incentive to operate efficiently. In September 1978, however, a law firm proposed to the Pomona Municipal Court that it be given a contract to handle all such indigent-defense cases for a year—with cost limits built-in. Two months later the county charter was amended to facilitate contracting for services, and the idea began being taken seriously. In August 1979 a request for proposals was issued, to which seven firms responded. And in January 1980, the winning firm signed a contract. During its first eight months the law firm completed 80 cases, at an average charge of $205 per case. During the previous year, the average cost for the 130 similar cases handled by individual attorneys was $800. Thus, the contract is producing savings of nearly 75 percent.
But contracting is only one form of privatization. Since 1976 California companies have been bypassing the crowded courts altogether by hiring private judges to hear complex cases. The advantages? Speed, competence, and low cost. Under an 1872 law, California courts can appoint anyone they deem qualified as a "referee" to try any and all issues in a civil action—a provision apparently unique to California. Accordingly, the courts are now appointing retired judges to hear complicated cases, with the consent of the litigants. Los Angeles attorney Hillel Chodos, who lost the first such case in 1976, told the Wall Street Journal (Aug. 6, 1980) that he uses a private judge "whenever I can.…It has saved 80% of the delays, 80% of the legal fees, and 80% of the aggravation" of the public courts. Another plus is secrecy—NBC and Johnny Carson used a private judge to settle their 1979 contract dispute.
Even outside California, businesses are turning to private judges—by staying outside the courts altogether. The nonprofit Center for Public Resources in New York has published a manual showing firms how to use the technique, called a "minitrial," based on cases they have studied. According to CPR, the key is to select an expert third party who acts more as an advisor than a judge, and to have each side represented by a top management official. Simplified rules of procedure are agreed to in advance. TRW and Telecredit, for example, settled a major patent dispute in this fashion in just three months, saving perhaps several years and at least $1 million in legal fees. The private settlement route has been taken in patent, antitrust, unfair competition, and contractual claims cases, according to CPR. A federal judge in Hawaii has adopted the minitrial for use in a patent case, and one attorney experienced in its use thinks that, if minitrial users adopted federal rules of procedure and evidence, the movement would really take off.
Not everyone is pleased with these developments. In an Oct. 20, 1980, editorial, the New York Times called the trend toward privatized justice "quick, secluded, efficient—and repugnant," seeing in it a threat to "the very concept of an egalitarian society." Ever the apologist for the State, the Times is quick to recognize the significance of these developments.
Expanding TV For years critics have maintained that we've been stuck with only three TV networks because of the restrictive policies of the Federal Communications Commission—beginning with its allocation of (typically) only three or four channels in many of the top 100 markets and continuing with its (until very recently) severe restrictions on cable- and pay-TV systems. And now the FCC itself agrees! In accepting the results of a three-year task force study of the television networks that reached these conclusions, Chairman Charles Ferris endorsed the findings and asked the free-market-oriented task force to list the specific changes that would get the FCC out of the way of real TV competition.
Without waiting for the answers, the FCC continued its efforts in that direction. In September it issued two proposed changes aimed at expanding broadcast television. The first, adopted unanimously, would permit entrepreneurs to set up low-power ministations in both VHF and UHF bands. (By operating at low power the stations would avoid interfering with conventional stations in or near the area.) As many as a thousand ministations could be set up under the proposal, bringing new service to neighborhoods in urban areas and to rural areas previously lacking TV. A week later, by a vote of 4 to 3, it decided to reduce the minimum distance required between conventional VHF transmitters (channels 2-13), so long as directional antennas or other techniques are used to prevent interference. This move would permit up to 140 additional VHF stations around the country, possibly leading to creation of a fourth TV network.
In October the FCC released for public comments yet another proposal to expand TV competition. The document is a set of staff recommendations on the subject of direct broadcast satellites—such as those being planned by Comsat's Satellite Television Corp. and by Sears, Roebuck & Co. The staff has proposed that such satellite service be exempt from FCC controls—including the "fairness doctrine," limits on advertising time, and the requirement for "public service" programming. Chairman Ferris agreed, telling reporters that the future of direct broadcast satellites "should be decided by consumer demand and the capability of the technology and not by the cost of regulation."
Direct broadcast satellites would be much more powerful than conventional communications satellites, enabling the receiving antenna to be only two or three feet in diameter and to cost perhaps $200—compared with today's 10-foot dish antennas. Just a few years ago the latter sold for well over $100,000. Today, sophisticated dishes are available for $25,000, and economy models are available for as little as $5,000 (American Value, Inc.), $3,000 (Black and White Enterprises, Ltd.) or even—according to Coop's Satellite Digest—$500. An estimated 40,000 Americans already own their own dish antenna.
This new technology hasn't escaped the notice of the public TV folks. Officials of the Corporation for Public Broadcasting (CPB) are negotiating with Comsat for a piece of its direct broadcast satellite plan. A consultant to CPB has proposed that it experiment with subscription service, rather than depending on tax money and donations. Indeed, the major public stations which produce programs—WNET, WGBH, KCET, etc.—are all talking with Home Box Office and Showtime about joint efforts in pay-TV programming. And the prestigious Carnegie Corporation recently proposed that public broadcasters set up their own satellite-based pay-TV system, called PACE, and get off the dole once and for all.
Regardless of how all these proposals turn out, one thing seems clear: five years from now, TV is going to be very different from the "vast wasteland" we've long been accustomed to.
Underground Swells in the Economy The underground economy, reports Edgar Feige, is not 10 percent of the gross national product (GNP); it is 27 percent! Feige, an economist at the University of Wisconsin, puts that at about $700 billion. But it is the growth of the underground economy, he adds, that is most impressive. In the last 10 years, according to his complicated calculations, it has expanded at roughly triple the rate of growth of the official GNP.
What are the implications of such data? First, that untaxed productivity is higher because the reward per hour of work is higher. But also, hallelujah, that the American economy is not as sick as the official government thermometer would have it. Feige further thinks that prices in the "unobserved economy may be as much as 20% to 40% lower than in the observed sector." Unemployment may similarly not be as big a problem as it appears to be on the tip of the iceberg.
Unfortunately, Feige points out, the official bleak picture often prompts government policymakers "to overstimulate the economy." Incidentally, $700 billion—the figure Feige puts on the underground economy's "GNP"—is larger than, for instance, the official GNP of France.
What about Acid Rain According to the 1979 annual report of the Council on Environmental Quality, acidity in rain has increased fiftyfold over the past 25 years. In October, Canadian officials began a $430,000 program to supply departing US tourists with literature on the theme "Stop Acid Rain." And the federal Environmental Protection Agency is considering new controls on power plant emissions aimed at curbing acid rain.
According to many scientists, however, these contentions may be off base. First of all, there is no sound evidence that acidity in rain has actually increased over the past few decades. Detailed pH measurements at several dozen recording stations over the past eight years show no apparent trend, according to Ralph Perhac, director of the environmental assessment department at the Electric Power Research Institute. The 25-year comparison made by the CEQ is essentially meaningless, because there were no measurements in the 1950s, only estimates. And in the 1960s, many of the readings were taken at different locations and are therefore not comparable (and hence cannot establish a trend over time). In addition, the burning of coal—considered by many as the likely source of the acidity—has remained essentially constant over the past 20 years, so it could not be responsible for an increasing-acidity trend.
But the most confounding evidence comes from two University of New Hampshire scientists. Pauy Mayewski and Barry Lyons collected 80 ice core samples from Antarctic glaciers, some dating back as far as 350 years, and another 250 samples from 16,000-foot altitudes in the Himalayas. In neither place has the ice melted for thousands of years. In both cases, the pH readings were comparable to those considered "acid rain" in the United States, averaging 5.1 in the Himalayas and from 4.8 to 5.0 in Antarctica. Apparently, something other than coal-burning has been producing acid rain for centuries.
The CEQ itself has recently begun a 10-year, $10 million research program on acid rain. It would be prudent for legislators to refrain from considering costly new regulations until the facts are all in.
Jamaica, Portugal: Socialism Loses Glamour Voters in two countries have shown their disillusionment with the impossible promises of socialism by electing free-enterprise-oriented candidates.
Jamaica's socialist People's National Party, headed by former prime minister Michael Manley, pet of what Wall Street Journal writer George Melloan calls America's "liberal cocktail circuit," was thoroughly thrashed by Edward Seaga's pro-free-enterprise Jamaica Labor Party in October. Seaga's party won 50 of the 60 seats in Jamaica's elected lower house. Despite the fact that at least 450 people from both sides had been killed in election-related violence, news reports say that a large number of Jamaican voters turned up at the polls.
Manley lost what support he had among middle-class and professional Jamaicans by publicly scorning any signs of wealth (such as owning a car or a house), raising taxes to 57 percent on personal income above $12,000, expropriating private property, and encouraging violence against more well-off "oppressors." Unemployment stood at 30 percent when the elections were held in late October, and the government was having great difficulty meeting any loan payments. Manley had also encouraged friendship with Cuba and was charged with allowing Cuban political indoctrination to go on in Jamaica. Seaga has not made any concrete proposals thus far, but he may be able to attract foreign investment and professionals back into Jamaica.
In Portugal, on the other hand, recently reelected Democratic Alliance leader and prime minister Francisco Sa Carneiro is very clear on what he intends to do. Although Sa Carneiro prides himself on being a "nonideological pragmatist," he does intend to do away with the Marxist ideology in the present Portuguese constitution, written after the revolution six years ago. He plans to redefine public and private ownership of property and to open certain currently nationalized industries (such as steel, banking, oil, and insurance) to private participation. He also hopes to eliminate the Revolutionary Council, a group of powerful military overseers, which has thus far stymied his attempts to denationalize state industries. If his candidate for president (Gen. Soares Carneiro) did not win the presidential elections in December, however, Sa Carneiro has publicly stated several times that he will step down as prime minister. The results of the Carneiro-Eanes presidential elections should be out about the time you read this issue.
The Democratic Alliance, after nine months as the majority party in Portugal's 250-seat parliament with 128 of those seats, won at least six more seats in the October parliamentary elections (47.3 percent). The Stalinist communists lost seats, while the Socialist/Republican front, once Portugal's largest party, made no gains or losses.
Regulatory Reform Legislation Three major legislative reforms were up for discussion late in 1980, and one of them actually passed.
HR 5612 allows small businesses and individuals to recover legal costs if they challenge federal rules in court and win. The bill requires the government to reimburse such private citizens if the government is unable to prove to the satisfaction of the court that it was "substantially justified" in taking its actions. Much of the impetus for the bill came from members of the US Chamber of Commerce, which also pressured President Carter into signing the bill.
The proposed legislative reforms would (1) give Congress the right to reject regulations drawn up by federal agencies and (2) transfer the burden of proof to federal agencies to justify challenged actions as proper under the law. The first proposal is known as the legislative veto and would allow both houses or the president to reject any agency regulations before they are issued by the agency. The second, the so-called "Bumpers' Amendment," after its sponsor, Sen. Dale Bumpers (D-Ark.), requires an agency to prove with "substantial evidence" the validity of its actions. Currently, agency actions are presumed valid unless shown otherwise. The White House has opposed both proposals in the past, but they were due to come up in the November session of Congress as part of omnibus regulatory reform bills S 262 and HR 3263.
Of Doctor Shortages and Surpluses Not content with manipulating the economy, the government has been attempting also to control the number of doctors who graduate from medical schools each year. In the 1960s, the government pumped money into medical schools to try to alleviate a shortage; now, it has been recommended that the government do something to stem a projected surplus.
"Something" could include less government grants to universities, stricter licensing and entry laws (particularly of foreign medical school graduates), and control of which specialists are allowed residencies. Dr. Alvin Tarlov, head of a government commission named by HEW secretary Forrest Matthews five years ago to study graduate school enrollments, recently recommended slashing medical school enrollments by one-fifth. No doubt the American Medical Association will support Tarlov's recommended barriers to entry, even though Tarlov has admitted that the presence of more doctors has helped to provide more services in inner cities and rural areas.
A Rand Corporation study, however, has taken a refreshingly different view of the situation. Published in the New England Journal of Medicine late in 1980, the study concludes that smaller towns and cities have benefited from the trebling of the number of specialists between 1960 and 1977. The authors of the report studied the five largest specialties—internists, surgeons, pediatricians, obstetrician/ gynecologists, and radiologists—and found that by 1977 all five were represented in 70 percent of communities of between 20,000 and 30,000 population. In 1960, less than 30 percent of those communities had all five specialists present. Supply and demand forces prevail in medicine as well as other fields, the authors concluded, since the increase in supply of specialists forced them to go where the demand is.
The researchers further pointed out that the supply and demand model is bolstered by the fact that physicians in metropolitan areas (over 1 million population) work 7-9 percent fewer hours and earn about 13 percent less than do their country cousins. The researchers are Dr. William B. Schwartz, professor of medicine at Tufts University in Boston, and Rand economists Drs. Joseph Newhouse, Bruce Bennett, and Albert Williams.
And Now, Bus Deregulation In a speech before the American Bus Association in October, Interstate Commerce Commission Chairman Darius Gaskins announced a proposed package of free-market-oriented reforms that he hopes to implement soon. Among these are the introduction of legislation on intercity bus service freeing entry into the bus business to more comers, giving bus companies more room to raise and lower fares, reducing state authority over bus operations (including allowing bus companies to drop money-losing lines), and working to eliminate price fixing between companies, currently protected from antitrust laws. Gaskins warned the bus company executives that they could not have more control over setting fares and abandoning routes without also conceding that entry and fare setting be open to competition.
Spilt Milk and the Dairy Lobby In 1980, government spending broke another record. The US Department of Agriculture's taxpayer-funded dairy price support program cost an unprecedented $1.3 billion; government dairy purchases had hit their highest volume since 1962. Milk production, naturally, was also expected to hit a record 127 billion pounds despite lower consumption of dairy products.
The USDA announces the price at which it will buy all surplus milk twice a year, and this price effectively becomes the floor for market prices. At the same time, regional dairy cartels pay milk-rich areas (such as Wisconsin and Minnesota) not to ship their surplus milk to milk-short areas—the money comes from the regional "standby pools" set up precisely for this reason.
But when the government announced its latest biyearly automatic price support boost of six percent, some rumblings were heard from an unusual alliance of consumer groups, restaurant chains, and more moderate farm groups. PepsiCo, Inc.'s Pizza Hut division complained, for instance, that the price support hike will cost them $3.6 million a year more for cheese. The liberal lobbying group Common Cause has met with PepsiCo but had not decided whether to support the group as of press time. Such big food users and producers as Marriott Hotels and Sara Lee are considering joining PepsiCo's fight against the formidable dairy lobby.
That lobby has spent over $2.3 million since 1976 to convince members of Congress to vote in their favor. In 1976, furthermore, the dairy lobby's ratio of contributions to congressional incumbents over challengers was 7.3 to 1 (labor's ratio is 2.9 to 1). For more details on the dirty doings of the dairy lobby, read Michael McMenamin and Walter McNamara's new book, Milking the Public, which grew out of McMenamin's March 1976 REASON article exposing the milk monopoly.
Election Sets Back Big Government The Reagan landslide carried over to various measures attacking big government in a number of states—but there were notable exceptions. The biggest wins were the victory of Question 2 in Massachusetts (limiting property taxes to 2.5 percent of market value, necessitating cuts of 30-40 percent), a tax and spending limit in Missouri, and full indexing of the state income tax in Montana. Minor victories included an Arkansas constitutional amendment blocking a court-ordered reassessment which would have raised property taxes, Question 8 in Nevada—the first step in repealing the sales tax on food and the personal property tax, a West Virginia measure expanding property tax exemptions, and an increase in Louisiana's homestead exemption to the first $75,000 in value of one's home.
But in six other states, measures patterned after California's Proposition 13 went down to defeat. Generally, these constitutional amendments would have rolled back assessments to 1977 or 1978 levels and limited property taxes to one percent of market value. Such measures lost in Arizona, Michigan, Nevada, Oregon, South Dakota, and Utah.
Earlier last fall Florida voters approved a mixed bag of constitutional amendments, three helping taxpayers (solar equipment exemption, local tax breaks for new industry, elimination of the business inventory tax) but two hurting them (housing bonds supported by taxes, and a complicated proposal to increase homestead exemption and reassess property to 100 percent of market value—a net tax increase in most cases).
At the local level, advocates of rent control lost two big ones when voters in San Diego and Seattle rejected their proposals by three to one and two to one, respectively. And the newly elected conservative majority on the Los Angeles County Board of Supervisors vowed a speedy repeal of that county's rent control ordinance. In Cleveland, voters rejected a 33 percent boost in the city income tax.
Finally, at the national level the election proved a rout for the big spenders. Twenty members of the House who qualified as "big spenders" according to their National Taxpayers Union ratings went down to defeat, as did six big-spender Senators.
Freeing DNA Federal control on recombinant DNA ("gene-splicing") research and production is gradually decreasing. On September 25, the Recombinant DNA Advisory Committee of the National Institutes of Health announced that it would no longer require companies to submit for review their plans to scale up their production facilities. The move gives a green light to firms such as Eli Lilly (which is producing insulin) and Genentech (planning to produce interferon) involved in producing pharmaceuticals using gene-splicing techniques. The NIH committee proposes to review only the research for which safety requirements are not clear (about three percent of all cases).
Most other federal restraints on such work—originally imposed at the suggestion of the researchers themselves, as a precaution until more was learned—were dropped earlier in 1980 (see Trends, May). And the several bills introduced in Congress to establish some sort of regulation have gone nowhere. Nevertheless, certain labor unions and environmental groups continue to agitate for controls. In response, OSHA is gearing up for a two- year study of the situation. That should give the fast-developing industry plenty of time to demonstrate that its own local biosafety committees are adequate to the task.
Blacks, Women: Privilege versus Progress Two interesting developments in the matter of those the liberals love to dub "oppressed": women and blacks.
A new study sponsored by the National Bureau of Economic Research and prepared by economists Jacob Mincer of Columbia University and Haim Ofek of Colgate University looked at women who return to work after interrupting their careers to be homemakers or raise children. They not only earn a lower real wage than before they left, but they tend never to catch up to their original career potentials. Mincer and Ofek suggest that the erosion of business skills while a woman is not working hampers her future progress more than any other cause. Their findings lend support to the hypothesis that it is less experience that leads to statistics showing women averaging lower earnings than men. Social scientist Thomas Sowell pointed out in a recent REASON interview (Dec.) that the only real difference in income is "between married women and all other persons," partly due to that difference in skills, but also because a married woman tends to support a man's career by handling most other chores for him—domestic, secretarial, and child-related, for instance—and is therefore actually also earning part of his paycheck.
Another of Sowell's bêtes noires—affirmative action quotas—has come under fire from civil rights leader Bayard Rustin. Calling admissions and employment quotas "basically undemocratic," Rustin advised blacks and other minorities fighting discrimination to depend on individual court suits rather than across-the-board government guidelines. He pointed out that the black person, contrary to popular myth, does not want to be granted special privileges—"He wants to pass the test and meet the standards." Rustin made his remarks at the Washington Hebrew Congregation's Sunday Scholar Series.
Milestones • Swiss End Restrictions. All restrictions on holding and earning interest on Swiss francs in Switzerland were revoked on August 31. This was after the negative interest penalties on nonresident Swiss franc accounts of over 100,000 SwF had been lowered from 40 to 10 percent and then removed (Trends, Mar.).
• Government Game. The object of a new controversial board game called "Public Assistance" is for players ("able-bodied welfare recipients") to avoid the "working person's rut" (taxes, dental bills, car repairs) by stealing hubcaps, having illegitimate children, gambling, prostitution, and the like. An NAACP official, Carl Snowden, has called it "overtly racist"(?) and may lead a boycott of stores that carry the game.
• Taiwan Trade. Amidst all the official brouhaha and agonizing over "recognizing" China versus Taiwan or vice versa, private trade and unofficial relations have gone on quite satisfactorily—up, in fact, by 23 percent in 1979, to $9 billion. An informal, unofficial American Institute maintains quarters in Taiwan to iron out trade and diplomatic problems, and it has been so successful that the French and Belgians have opened similar offices, and West Germany is reportedly planning the same.
• Noise Is Nuisance. The US Supreme Court left standing a ruling that grants residents of Westchester, California, an award of $86,000 for nuisance damages caused by noise from the Los Angeles International Airport, to be paid by the city. The decision opens the way for progress on similar suits either filed or contemplated in San Diego, San Francisco, Burbank, and Orange County. The suit was filed in 1968. Who says you need regulators?
• Polish Reforms. Nine government trade unions have pulled out of the official government umbrella Central Council of Trade Unions, and 14 more have indicated they will also withdraw from the 23-member Council. Government unions have been losing members to the new independent unions, so the withdrawals may be an attempt to reform government unions and thereby keep their members, who are unhappy also with the hard-line, government-controlled Council. The Warsaw Provincial Court has granted legal status thus far to 12 of the new unions (Trends, Dec.).
• Protection for Reporters. The new Privacy Protection Act of 1980 prohibits unannounced searches of newsrooms by federal, state, and local law enforcement authorities except in four situations: when there is reason to believe the reporter is the criminal; when seizure is necessary to prevent death or serious injury; if the materials would be destroyed, concealed, or altered if a subpoena were issued; and if subpoenaed materials have not been produced.
• Business Most Trusted. A Los Angeles Times poll showed that those polled have more confidence in business (41 percent) than in labor (32 percent) or government (15 percent). The group with the highest standards of honesty and integrity, the respondents believe, is labor (31 percent), business (24 percent), and lastly government (17 percent). Respondents also agreed that government should have its power cut back for the good of the country (43 percent), while 20 percent thought labor's power should be cut back, and only 17 percent pointed at business. The Times commented that these and other responses show a public unlikely to support government planning as a substitute for business decisionmaking.
• Gold Standard Bill. Sen. Jesse Helms (R-N.C.), with cosponsors Sens. Barry Goldwater (R-Ariz.) and James McClure (R-Id.), introduced legislation late in 1980 to provide for a US gold standard. Helms said he is "indebted to Prof. Arthur Laffer…for his work outlining the way that a new gold standard would be…adopted by our nation." The Helms bill is based on Laffer's gold standard plan (Trends, Aug.).