Trends

Oil Decontrol: There Is Good News When oil produced in the United States was fully deregulated in January of last year, the first palpable effect was a predictable increase in the price of petroleum products. Acting in combination with an OPEC price hike, the decontrol of domestic oil fueled a rapid price increase at the pumps: the average retail price of gasoline rose from $1.26 a gallon at the end of 1980 to $1.36 in March of '81 following deregulation. But after the March peak, the price fell: by the end of 1981 it averaged $1.32 a gallon and is expected to keep falling through the first half of this year. Jet fuel, too, peaked in price by March 1981 and then fell, averaging a decrease of 9 cents a gallon since the March high.

The downward stabilization of gasoline prices can be partly attributed to a decrease in the quantity demanded following deregulation—4.2 percent in 1981 and an expected further decline of 1.2 percent this year. The downturning prices are also due to additional oil production following decontrol, which resulted in additional gasoline being produced.

Some of the additional domestic crude was produced by "enhanced recovery": the rising prices made it profitable for oil companies to use comparatively expensive steam, gas, and chemical technology to flush out oil left behind by conventional drilling. It is thus feasible to recover a huge amount of oil that before deregulation was considered too inaccessible—and therefore too costly—to extract. In 1980, only $2.2 billion (just a fraction of the oil industry's exploration and production investment) was spent producing oil with enhanced recovery methods. By 1990, however, the oil industry expects to have spent nearly $40 billion on enhanced recovery to produce 1.4 to 2.5 million barrels of oil per day—a projected one-quarter of all oil produced in the United States at that time.

Decontrol also has played havoc with the synfuels plans so bullishly touted in 1980. The efforts of government-sponsored Synthetic Fuels Corporation to attract private investors now are getting a limp response. The earlier enthusiasm for synthetic fuels and a national synfuels corporation among eager investors—buoyed by surging oil prices due to the Iran-Iraq war—has been replaced by cool skepticism about the business sense of a synthetic fuels industry in light of the current oil surplus and stabilizing prices following deregulation.

Public Health Care: Prognosis Worsens Symptoms of the unhealthy condition of socialized medicine continue to surface, and two recent loci of the pathology are London and Los Angeles.

With Britain's 35-year-old National Health Service failing to fulfill its promise of free, quality health care for all—630,000 people, for example, are waiting for surgery, with delays of up to two years for some—a private care system is rapidly growing throughout the insular nation. In London, there are now more than a dozen private hospitals, and the number of private hospital beds has increased 20 percent in the last year. A US medical company, American Medical International, plans to open 10 hospitals in the British capital by year's end. A chain of private family doctors' offices has opened its first location, and in the past two years the nation's 12 private health-insurance companies have increased their rolls by one-third, to three million—6 percent of the population.

Major areas of discontent with the national service are its handling of minor surgery, the spartan public-hospital accommodations, and restrictions on the choice of one's doctor. And this dissatisfaction is not limited to the wealthy: a recent survey indicates that 60 percent of the British people favor private medicine, while only 20 percent oppose it. And part of a major trade union's recently won workers' benefits package includes private health insurance.

Across the Atlantic, a socialized medical institution may soon be administered strong medicine for a condition that appears to be otherwise fatal. Rancho Los Amigos Hospital, Los Angeles County's world-renowned rehabilitation center, is facing deep cuts in its taxpayer funding, threatening to put the facility out of operation. The county's Board of Supervisors, in an effort to find ways to save the institution, commissioned John Kasonic of Executive Consulting Group, Inc. (Bellevue, Wash.) to study ways to cut the hospital's costs. Kasonic's recommendation to the board: privatize the hospital, first through an interim board-appointed independent authority, which would subsequently turn the facility entirely over to the private sector.

The hospital's former medical director, Dr. Vernon L. Nickel, has come out in favor of the privatization plan, urging the county to "unchain" the facility and allow it to become self-supporting. Nickel believes that if this isn't done Rancho Los Amigos may be unable to get by on its pared-down budget.

Opponents of the privatization plan fear that if Rancho were made private, the poor and needy would no longer be able to get care at the center, which now charges a flat daily rate of $600. Eighty percent of the hospital's 400 patients are poor. Kasonic, in his plan, recommends that the county negotiate with the proprietors of the would-be private hospital to provide care for the poor, with the county taking responsibility for deciding which of the poor would receive care. That way, the hospital could continue to care for the poor—whose bills would be guaranteed by the county—without having to make the uncomfortable decisions about who gets admitted. Kasonic believes that the hospital could improve efficiency and increase its revenue if freed from the county's bureaucracy.

Launching a Private Space Shuttle Will the space shuttle be privatized? A company to take over space shuttle operations and marketing has been incorporated and is prepared to invest $1 billion to do just that.

The firm is Space Transportation Co. (STC), of Princeton, New Jersey, a subsidiary of the investment banking firm of William Sword Co. Its founder and president is Klaus Heiss, chairman of the board of Econ, Inc., a Princeton consulting firm. Heiss and Econ played a key role in the configuration studies that finalized the shuttle design in the early 1970s, under contract to NASA.

STC announced its plans in January. What it proposes is to put up $1 billion to build the fifth shuttle orbiter (its procurement by NASA has been in doubt). In return, it would take over marketing the shuttle to commercial and foreign users and reimburse NASA for all direct launch costs of those missions. NASA would continue to maintain the launch pads at its own expense, as it does for Defense Department missions.

Presidential science advisor George Keyworth has told STC that the proposal "dovetails very well with the Reagan Administration's political and economic philosophy," according to William Sword, Jr., managing director of STC's parent company. Sword says that private enterprise involvement will lead to aggressive marketing of shuttle launch services, rather than "just playing the role of an order taker."

STC is not asking any guaranteed return on its investment and wants to avoid linking up with any of the major aerospace companies (such as Boeing, which has also expressed interest in shuttle operations). Its board includes both investment bankers and a former TWA vice-president.

If its plan is approved, STC expects to begin marketing operations by the end of the year and will make a down payment of $200–$300 million on orbiter 105 by early 1983.

Little Guys Bank on Deregulation An Abt Associates study, sponsored by the National Science Foundation, concludes that deregulation of the banking industry would benefit consumers. The study, Regulation of Consumer Financial Services, recommends free-market alternatives to state and federal regulation of branch banks, interest rates, credit opportunity, and various banking services. For example, the study shows that banks, unable to attract depositors by offering interest rates higher than those allowed by law, waste money on plush branches and advertising in order to get customers. And financial discrimination, the study suggests, would be eliminated by a more competitive banking market.

Support for deregulation from within the banking industry itself has traditionally come from large, big-city banks eager for a repeal of the McFadden Act that prohibits interstate branching. Smaller regional banks have up to now resisted deregulation, fearing that they would be squeezed out by rampant interstate branching of the big banks.

With the advent of automated teller machines (ATMs), however, small banks have made an about-face: they are now leading the drive for deregulation that would allow national electronic retail banking. Shared regional and interstate ATM networks have already evolved out of the electronic technology, and a shared national network is likely to emerge later this year; smaller banks can be hooked into a network and thus retain a competitive position even in a national network. Indeed, smaller banks now see great potential for their role in a national ATM network.

The emergence of such a network would be a de facto repeal of the McFadden Act, which has already been largely defused by the ATMs. Presently, ATMs on most regional networks can tap into out-of-state bank accounts to withdraw money, transfer funds between accounts,borrow against a line of credit, and, in some cases, perform interstate deposits.

Decontaminating Profits The antinuclear movement seems to go through cycles. It raises an issue and runs with it for awhile, until scientists and engineers catch up with their rhetoric and set the record straight. Thus, we've gone through periods of concern over meltdowns, uranium shortages, and waste disposal. The latest "unsolved problem" is that of decontaminating and decommissioning reactors that have reached the end of their 30-year useful lives. Charges of huge costs, impossible requirements, and lack of planning have circulated over the past year or so. These too, however, turn out to be unwarranted.

In the first place, the technology is apparently well in hand. While no full-scale, commercial reactor has yet been fully decommissioned, several smaller ones have—and by private-sector companies. Rockwell International's Atomics International Division has decontaminated smaller reactors in Hallam, Nebraska, and Piqua, Ohio. The 40-megawatt Peach Bottom I demonstration reactor in Delta, Pennsylvania, was decommissioned by Catalytic, Inc., a subsidiary of Air Products & Chemicals, Inc. Those are just two of the 20 or so firms with nuclear expertise that are seeking a piece of the nuclear decontamination market. Others include reactor builders such as Bechtel (prime contractor for the Three Mile Island cleanup), Westinghouse, and General Electric.

A study by Battelle Pacific Northwest Laboratory estimates that decommissioning will cost between five and ten percent of a power plant's original construction cost—$50 to $100 million for a $1 billion plant. Over the next 20 years, as reactors built during the 1960s and 1970s reach the end of their useful lives, that works out to a market of $300 to $500 million a year. In addition, there are some 5,000 other radioactive sites that will require some form of decontamination—nuclear subs, uranium mines, and research reactors. Far from being a crisis, the decontamination problem represents a large opportunity for capitalists out to make a buck.

The Benefits of Deregulation Move On Part of Congress's partial deregulation of the trucking industry ordered in 1980 was directed at the moving industry, and consumers are beginning to enjoy the benefits. For instance, senior citizens who move through the American Red Ball Transit Company get a 5-percent discount; customers who pay in advance get 9 percent off the bill. And North American Van Lines pays its customers $125 a day or 10 percent of the shipping charges—whichever is larger—if a guaranteed shipment is late. Binding cost estimates and guaranteed pick-up, as well as delivery, dates are becoming more common as standard practices.

These new competitive practices are now allowable due to the 1980 congressional orders, which dropped strict requirements to base charges on weight and gave movers more flexibility in setting rates and providing services. In addition, a combination of a weak housing market and a trend among Americans to hold jobs and stay put in a community longer is reducing the number of people moving and putting pressure on firms to compete for customers.

Movers are also taking advantage of the laxer regulatory climate within a sagging household-moving market to expand into new areas of business. Some are considering specialized shipping, concentrating on office equipment, computer supplies, and retail goods, for example. Contract hauling is another area movers are exploring. Many only await a green light from the Interstate Commerce Commission (ICC) before breaking into these fields.

Some moving companies, who were securely entrenched in an industry highly regulated since 1935—with tight controls on competition and rates—are finding the new competitive atmosphere tough and are hurriedly filing numerous appeals with the ICC against what they see as unfair competition and predatory practices of some firms. But the looser rules have sparked the aggressive, competitive spirit of others, and some are making out quite well.

Bekins Company of Los Angeles, for example, has adopted an ambitious marketing plan that has resulted in a 22.7-percent revenue increase in the first three quarters of 1981, a period during which Bekins's five major competitors averaged gains of only 11 percent.

One case provides an object lesson of how competitive practices spread throughout the marketplace to benefit consumers. Allied Van Lines first filed a complaint with the ICC against Bekins's innovative practice of offering its customers full-replacement insurance on goods damaged in transit. Then, when the ICC upheld the practice, Allied, along with other carriers, adopted it as well.

Catch-up Classes Leave Students Behind Since 1965, when the enactment of Title One of the Elementary and Secondary Education Act gave low-achieving poor children a legal right to supplemental instruction, the number of federal and state requirements imposed on school districts has burgeoned. The intent, of course, has been to improve the child's access to education. But a recent Rand Corporation study has found that for many, the opposite is the case: disadvantaged elementary school students who are pulled out of their regular class for multiple doses of supplemental instruction are both confused by it and left with little time for regular coursework.

Researchers Jackie Kimbrough and Paul Hill report that students receiving aid from more than one state or federal program—such as the bilingual, remedial, reading and math, or migrant programs—are called out of their classes several times a day to attend special "categorical" classes in the areas of their deficiencies. As a result, some students are in their regular classes for only one and a half hours daily; thus, core program teachers are unable to teach these students the state-mandated curriculum. And in some instances, the teaching methods and materials used in the regular and supplemental programs are so incompatible that the confused children are unable to learn in either situation.

Because many grants for other activities are conditional on compliance with these required programs, school districts are forced to find ways to respond to the pressure. But many of the required programs are unfunded or inadequately funded. For example, the federal Education for All Handicapped Children Act establishes a set of comprehensive requirements, but only about 12 percent of the cost of the services required for handicapped children is federally funded. Where this situation occurs, school officials often assign disadvantaged children to well-funded programs rather than to the ones targeted to their deficiencies. Consequently, their special needs are unmet while others who would benefit from the well-funded programs are squeezed out.

One of the more ironic consequences of the disruption of students' regular classes, according to the report, is that "low-achieving minority students in desegregated schools are often segregated in categorical program classes." And since most of these students are eligible for several programs at once, they remain in segregated classes for a large part of the day. In fact, such segregation is most pronounced in schools that use the Emergency School Assistance Act program—which was designed to reduce the harm of segregation and racial isolation.

The Rand study, sponsored by the US Department of Education, surveyed 24 elementary schools in eight districts nationwide. All schools were implementing at least two federal programs, and most offered at least one state program. The study is expected to provide additional ammunition for those who support large-scale cutbacks in federal education programs, on the grounds that those programs are both costly and ineffective.

Smoking out Health data Since the 1960s, the use of wood as a home-heating fuel—in wood-burning stoves and fireplaces—has more than doubled in the United States and may have tripled, according to a November 1981 study by the Resource Policy Center of Dartmouth's Thayer School of Engineering. In addition, report the study's authors, Charles Hewett and William Glidden, Jr., nearly half of all industrial boilers on which construction began in 1980 were to be primarily wood-fueled.

Environmentalists hail this development as a step away from oil and coal and toward greater reliance on renewable energy sources. But several recent studies show that the chemical and particulate emissions produced by burning wood can substantially contribute to the total air pollution in areas where wood stoves and fireplaces are widely used. And, in densely populated areas where much wood is burned, this pollution can present a public health threat.

An October 1981 study by the American Council on Science and Health (ACSH) reports that, in addition to producing such noxious substances as carbon monoxide, polycyclic hydrocarbons, hydrochloric acid, and large amounts of particulate matter, "some of the pollutants released from burning wood are potential carcinogens" such as benzo(a)pyrene (a substance also found in cigarette smoke). The study also reported data from Environmental Protection Agency (EPA) research showing that, "for the same energy output, a wood-burning stove will produce at least 550 times more carbon monoxide than heating with oil, and more than 1,000 times the carbon monoxide produced by heating with gas." And although sulfur-oxides emissions from fossil fuels like coal and oil are greater than those from wood fuel, EPA data show that wood-burning stoves produce "150 times more benzo(a)pyrene and 17 times more particulate matter than oil heat."

Though the extent to which wood-burning pollution poses a health threat is not yet fully clear, the ACSH study reports that in an area of Portland, Oregon, for example, half of the respirable particulates in the air on one day in January 1978 came from residential wood burning. In a study by Brookhaven National Laboratory scientist Frederick Lipfert, data indicate that in some northern cities residential wood burning is a major source of particulate matter, which can cause cancer. (It is estimated that wood now supplies 20 to 25 percent of home heat in New England.) And in Missoula, Montana, the ACSH report notes, wood burning "has occasionally resulted in pollution levels in excess of federal air quality standards."

Antitrust on the Run The conventional "bigness is badness" wisdom in antitrust continues to lose ground (see Trends, Apr. 1981, Oct. 1981). Joining neoliberal economist Lester Thurow in the challenge is longtime Keynesian economist William Baumol.

At the annual convention of the American Economic Association in Washington at year-end, outgoing AEA president Baumol assailed antitrust dogma on the basis of empirical evidence. Markets can be free even if only a few firms are active (contrary to the Federal Trade Commission's discredited "concentration" and "shared monopoly" theories), so long as there is free entry and free exit.

The relevance of free entry is obvious: if new competitors can always get in, the possibility of their doing so tends to hold down the prices charged by existing firms. But free exit is equally important, explained Baumol. If a new entrant can resell his initial investment without a major loss, then the existing firms must contend with the threat of "hit and run entry." In other words, if the Big Three cereal makers, for example, charge exorbitant prices, new firms can rush in and capitalize on those high prices but get out again safely when the Big Three respond with price cuts. The "hit and run" threat will thus serve to keep the Big Three's prices at competitive levels in the first place.

In the past several years we've seen this theory in action, Baumol explained, in the case of trucking and airlines. In both cases the removal of legal barriers to competition has allowed for free entry. At the same time, because trucks and airliners are highly marketable items, free exit is also ensured. Thus, both industries have shifted from being government-enforced cartels to being competitive industries.

Private Campgrounds Blazing a Trail For many of those millions of Americans who regularly get out their backpacks and sleeping bags to go off and commune with nature, roughing it has become a little too tough. Many campgrounds are becoming dirty and overcrowded, and campground crime—particularly theft and vandalism—is a growing problem.

In response, a private membership–campground industry has emerged, and it's a booming business. The four major firms, all headquartered in the state of Washington—American Campgrounds, Inc., Cardinal's Recreation World, The Great American Adventure, and Thousand Trails, Inc.—together posted more than $90 million in revenue last year.

In contrast to operations such as Kampgrounds of America, Inc., which charges campers rates of between $12 and $15 per night, these new private campground firms offer memberships for a one-time fee, currently ranging between $3,000 and $6,000. (The memberships can be sold or willed three times after the initial purchase.) There is an additional annual dues—now at around $180—which can be raised periodically. For these charges, a member can use any of the company-operated campgrounds on a space-available basis. Most membership campgrounds have 24-hour security guards, and many offer facilities such as saunas, tennis courts, swimming pools, clubhouses, and small grocery stores.

Despite the steep fees, demand for the private campgrounds is growing apace. Thousand Trails, the biggest of the big four, alone has sold 29,000 memberships. When it was started in 1974, a membership cost $200—the fee now is $5,795. It operates 15 campgrounds in California, Nevada, Oregon, Texas, Washington, and Canada and will typically spend $4–$4.5 million developing a single site.

Though the membership firms have not been entirely free of criticism—complaints range from high-pressure sales tactics and misrepresentation of the availability of the grounds to shoddy construction of the facilities—more and more campers are opting for membership camping: on the West Coast alone, already more than 55,000 families have bought memberships.

Milk Co-ops Sour on Federal Aid Would you believe a proposal to privatize the milk price support program? Not only has such a plan been announced, but the proponent is none other than the president of Dairymen, Inc., the nation's third-largest milk-producer cooperative.

P.L. Robinson made the proposal at the co-op's annual meeting in Louisville last November. As chairman of a national self-help committee of the National Milk Producers Federation, Robinson is concerned about the future of the federal milk price support program—a $2-billion-a-year burden on the taxpayers that has been cut back by Congress under pressure from the Reagan administration. The program has come under increasing public scrutiny because it (1) increases milk prices charged to consumers, (2) increases the federal budget, and (3) leads to the accumulation of huge dairy product surpluses in federal warehouses (the source of all that surplus cheese that was going to be dumped in the ocean a few months ago).

What Robinson has proposed is that dairy farmers themselves take over and run the support program, assessing themselves something like 50 cents per hundredweight to buy up surplus production. Another 5 cents per hundredweight would be used to promote increased dairy product consumption, thereby helping to use up the stored products. The 50-cent charge would provide more than $600 million a year, enough to run a scaled-back version of the present support program.

Whether dairy farmers will agree to give up their place at the federal udder remains to be seen. But Robinson's proposal sounds like a welcome step in the right direction.

Local Competition Getting Through Shortly after the January 1981 Federal Communications Commission (FCC) decision to allocate radio frequencies for local communications systems that would bypass local telephone companies, the initial developer of the concept—Xerox—pulled out. Not to worry, though. For in subsequent months 11 other firms applied, among them RCA, MCI, and Satellite Business Systems (SBS, the IBM/Aetna Insurance/Comsat joint venture). Now the FCC's big problem is to figure out what to do, since it allocated only enough spectrum to permit six companies to operate in each city.

RCA, for one, hopes to provide digital electronic message service in 50 metropolitan areas, at a cost of $57 million. It would have its first six systems—in Atlanta, Chicago, Houston, Los Angeles, New York, and San Francisco—up and running within 15 months of FCC approval; the entire network, in seven years.

SBS, meanwhile, is allocating part of the capacity of its second satellite, scheduled to launch next year, to local digital service. The company has also decided to go after the long-distance voice-only market, in addition to long-distance digital service. By this fall it expects to be offering a residential, discount long-distance service in competition with MCl's Execunet and Southern Pacific's Sprint, SBS also plans to compete with the Bell System's WATS lines, at 10 to 20 percent lower prices. With its entry into both long-distance voice and local data markets, it's probably just a matter of time until SBS offers local voice service as well, thereby giving local telephone systems their first real competition in 70 years.

Deep Sea Miners Ready to Dig Though no international Law of the Sea treaty has been adopted—the latest round of negotiations began on March 8 in New York—seven international consortiums filed claims in January to explore ocean mine sites; they plan to start mining by 1988. The consortiums—four of which are led by US companies: Kennecott Copper, Lockheed Missiles & Space, Sedco, and US Steel—filed for licenses under laws already enacted by the United States, France, Great Britain, and West Germany.

The United States has already made clear that it will walk out of the current talks if they produce a treaty that is tipped in favor of Third World countries, particularly on the issue of seabed mining (see Trends, Jan.). President Reagan has instructed the US delegation to hold firm on three demanded changes in the draft treaty concerning ocean mining: (1) that production of seabed minerals be unlimited; (2) that private enterprise have free access to seabed resources; and (3) that the power of the countries on the international body governing resource production be commensurate with their political and economic interests and financial contributions. An additional unnegotiable condition is that any amendments to the treaty must be approved by all participating countries, including the United States.

In the event that an acceptable treaty is not achieved, the United States and seven other industrialized nations have adopted a "mini-treaty." This agreement, which was completed in Brussels in January, would govern the member-nations' seabed mining operations that may be started in the absence of an international treaty.

Milestones • Convention Calls Now at 31. On January 18, Alaska's House of Representatives voted 27 to 12 to call for a constitutional convention to draft an amendment requiring a balanced federal budget. The state senate passed the measure last June. With the house vote, Alaska became the 31st state to demand the convention, which Congress is required to call if 34—or two-thirds—of the states vote for it.

• Poker Comes Up Aces. As of January, poker clubs are legal in Cudahy, California, a suburb of Los Angeles. A December ballot measure to legalize the card parlors received a simple majority vote but failed to get the required two-thirds majority. The five-member city council, however, voted 3 to 2 to approve the clubs anyway. Only two other cities in Los Angeles County allow the card clubs. The poker parlors are required to be licensed—for a fee.

• Cereal Suit Bowled Down. The Federal Trade Commission in January dismissed a 10-year-old antitrust suit against the country's three largest cereal makers—Kellogg Company, General Mills, Inc., and General Foods Corporation. This was the government's last antitrust suit based on "shared monopoly": though the FTC did not accuse the three manufacturers of conspiring to fix prices or limit competition, they acted as a monopoly, it said, because they controlled 80 percent of the market for ready-to-eat cereals.

• Commodities Future. In an editorial last December, the Wall Street Journal suggested that Congress abolish the Commodity Futures Trading Commission. Pointing out how the CFTC is actually injurious to the futures market—specifically in delays resulting from CFTC-required authorization of new contracts—the Journal cited the nation's 10 futures exchanges as exemplary in regulating themselves and concluded, "There is…no good reason for the government to regulate the futures market." The CFTC will expire this year if Congress does not reauthorize it.

• Mortgage May Run Out on FHA. Claiming that private insurers can provide mortgage insurance more quickly and with less bureaucratic busywork than can the Federal Housing Administration, the private mortgage insurance industry is backing a proposal to phase out the FHA over the next five years. Mortgage bankers, real estate brokers, and home builders oppose the plan.

• Market Manages, Modestly. The California Energy Commission has recommended that in the event of an oil shortage in the state, the free market should be allowed to allocate resources—unless, however, the shortage reaches 6 percent. At that point, in come the controls.

• Convenient Revenue. The socialist government of the Republic of Vanuatu, the South Pacific archipelago nation once known as the New Hebrides, has come up with a source of income: flag-of-convenience shipping. Revenues to the government include registration fees for merchant vessels and an annual cut of the shippers' income, based on tonnage; the shippers get tax benefits and little regulatory pressure. Ironically, flag-of-convenience shipping had been proposed as a means of raising government revenue without taxes by rebel Jimmy Stevens, who, until arrested by the socialist government, had led a movement advocating laissez-faire for the islands (see REASON, Sept. 1980).

• Booze Ban Barred. A federal court ruled that Oklahoma's ban on advertising liquor on TV is a violation of the First Amendment right of free speech and that it denies equal protection under the law to TV companies. Traditionally, the TV industry has voluntarily limited advertising of alcohol to beer and wine.

• Taxachussetts Tea Party. Lower state income taxes may be in the offing for Massachusetts residents this year. Gov. Edward J. King has announced that instead of giving more aid to cities and towns, he may try to reduce the state's income tax. In 1980 Massachusetts became the second state (after California) to pass a property-tax reduction, Proposition 2½. Although local governments complained that severe service cuts would be required, King reports that no city or town other than Boston has resorted to laying off policemen or firemen; cuts in school service have been made, but these, notes King, correspond to declining enrollments.

• Iowa Lawyers Freed. The US District Court in southern Iowa has ruled that the state bar's disciplinary code, in prohibiting lawyers from advertising through direct mail and from advertising their fees as "reasonable" or "moderate," violates the First Amendment right of commercial speech.

• Regulations by the Billions. According to Murray Wiedenbaum, chairman of the Council of Economic Advisers, the cost of federal regulation to US consumers in 1980 was $126 billion. Wiedenbaum updated the figure from his 1976 study that put the cost at $100 billion, which, he says, was a conservative estimate.