Trends
BIG BROTHER DOWN THE TUBES
Although European newspapers are mostly privately owned, that has not been the case with broadcasting. Except for Italy (where state monopolization was ruled unconstitutional in 1976), television is virtually a government monopoly. And this has led government officials to view TV as an "instrument of national policy" rather than as part of the news media.
The days are numbered for that sort of chauvinistic paternalism. Technology is about to end the state monopolies and make European television into legitimate media. The key to this transition is the direct broadcast satellite. In 1977 most Western European governments attempted to head off this threat by assigning orbital slots for each country, the idea being that satellite coverage from each slot would be limited to the country in question—and the programming subject to its government's regulation (if not directly run by the state).
But satellite signal patterns are elliptical—they don't match national boundaries. A satellite beaming programs to Luxembourg's 340,000 people, for example, would also reach people in Belgium, France, Holland, and West Germany—another 80 million or so people. Needless to say, that's a huge market. Not surprisingly, entrepreneurs are gearing up to go after such markets. Radio-Tele-Luxembourg (RTL), to take a prime example, is investing $350 million to put up an advertiser-supported direct broadcast satellite. The investor-owned firm has operated commercial radio since 1931 and commercial TV since 1955, in both cases reaching beyond the borders of tiny Luxembourg—but not nearly as far as its new satellite will reach.
Predictably, the proponents of paternalism are beside themselves. West German Chancellor Helmut Schmidt fumes that RTL's programming will "disturb the internal order." The Dutch Ministry of Culture notes ominously that advocates of free-enterprise broadcasting "completely fail to understand the importance of the [state-run] media for the functioning of a political democracy." And a Council of Europe report warns that "there will be consequential dangers for our cultural heritage, our minority languages, and our cultural pluralism" if people all across Europe are able to watch the same programs, free of government control.
Even Britain's staid BBC is worried. Despite having grabbed both of Britain's direct satellite broadcast channels, the Beeb is worried that the all-Europe superstations will be able to bid away the most popular programs and special events from the government-owned stations. In reply to that sort of complaint, RTL's Paul Heinerscheid replies: "If they consistently put on shows that are boring, yes, they're going to lose 50 percent of their audience. What they should do to stop that is to improve their programs," not attempt to hobble the competition.
We can see it now: the antenna police fanning out through British neighborhoods, tracking down those black-market rooftop dish antennas in the name of truth, justice, and cultural preservation. Shades of 1984!
USER, LOSER PAY
Ninety percent of the nation's citizens do not—and will not ever—use the civil courts. Yet, as a "public service," the courts are taxpayer-funded. Litigants do pay their own attorney's fees and what are misleadingly called "court costs" (a nominal fee for miscellaneous paperwork), but taxpayers pick up the tab for all other costs—court personnel salaries, courthouse construction and maintenance, etc.
There are some slight exceptions. For instance, in four California counties, litigants pay for court reporters, and the Los Angeles Superior Court executive officer has proposed such a user fee for litigants in that court. The same officer has also suggested that litigants pay not only for juries for their case but for those who are interviewed as prospective jurors—that is, the entire "panel"—as well.
Advocates of user fees note that the charges would help ease court backlogs by discouraging litigation and would raise some money at a time of budget cutbacks. Opponents to the fees—lawyers' groups, for the most part—argue that the charges would be an economic obstacle to the accessibility of justice.
Accessibility of the courts, however, is precisely one of the reasons they are so clogged, with backlogs of up to several years in some instances. According to journalist Jonathan Alter ("The Case for Selling Justice" Washington Monthly, Dec. 1981), a great many cases tried in the civil courts—and particularly the lengthy, costly ones—involve private disputes between parties well able to afford paying for using the courts' services. In 1980, for instance, only 7.7 percent of all federal court cases were civil rights issues, whereas 29.1 percent involved contractual disputes. In that same year, contract and securities cases accounted for almost one-third of federal court cases running 20 days or more. Another variety of cases that occupy the courts—and cost taxpayers—is the nuisance suit, often a frivolous suit filed by the plaintiff to annoy the defendant but without reasonable expectation of winning. User fees would be effective in reducing the number of these cases going to trial.
Alternatives to civil court litigation do exist. In recent years, as the courts have become inundated with cases—during the 1970s, for example, federal court cases doubled while the total population rose only nine percent—alternative methods for resolving disputes, such as arbitration and mediation, have grown in popularity, particularly in the business community. Last year, Alter reports, about 40,000 disputes were resolved out of court through private arbitration.
Alter proposes an even more radical solution to the nations' litigious obsession fostered by free courts, one that combines court user fees with a civil court rule now used in Britain: the loser pays the opponent's attorney's fees. "If we want to make sure that litigation is discouraged," Alter suggests, "we could develop a system giving judges the option of assessing actual court costs and attorney's fees to the loser." In this way, those who use the courts pay for the services, and there is sufficient risk in taking a case to trial to keep nearly all frivolous and nonmeritorious cases out of the courts.
A CREDITABLE PLAN
Writing in this magazine last month, Dale Gieringer of Stanford University proposed a plan to allow taxpayers to credit charitable contributions, dollar for dollar, against their income-tax liability ("After the Budget Axe Falls"), in order to spark private funding for particularly those social-service areas that have been trimmed of public funds. Sketching out the essentials of such a plan, Gieringer calculated that the "implementation of a tax credit limited to 10 percent of one's income-tax liability, for example, would free up approximately $30 billion for private giving—enough to cover all of the fiscal 1982 cutbacks in funding for social programs, with a huge amount left over." Under such a plan, Gieringer theorized, government programs would be eligible for tax-credited donations, thus pitting private against public programs in the contest for the public's newly unleashed dollars.
The elegantly simple plan would have multiple benefits: individuals could direct a portion of their otherwise tax dollars to specific programs of their choice; by competing with private programs, government ones would have an incentive to improve their performance; and the innovations that arise out of such private-sector activity would surely have an impact on the state of social services in this country. Thus far, Gieringer's plan remains a theory on paper.
But a similar idea occurred to San Diego businessman Donald Sammis some time ago, and in January 1981 he decided to act on it. It was then that he conceived the Human Services Option (HSO), a tax-credit plan by which individual and corporate taxpayers would have the option of contributing up to 10 percent of their income-tax liability to a certified health or human services organization of their choice. At the same time, Sammis started a political-action group—called Project Helping Hand—which he chairs, to gather grass-roots support for getting the tax-credit plan into legislation.
Many of the details left unsketched in Gieringer's plan—or to be later worked out in legislation—are filled out in Project Helping Hand's proposal. Guidelines are suggested, for example, for determining the eligibility of an organization receiving tax-credited donations. Among other aspects also worked out in detail is a provision for maintaining current giving patterns that are attributable to tax-deductible donations: "the taxpayer would be required," reads the provision, "to give up to a minimum or floor before being eligible to exercise the HSO," the minimum being "the average claimed charitable contribution to health and human services of the preceding five years," and this amount would be deductible. This last feature, not included in Gieringer's plan, is likely to attract otherwise reluctant congressional supporters for the plan.
According to Project Helping Hand's Executive Director, Albert Strong, not only have Reps. Barber Conable (R–N.Y.) and Kent Hance (D–Tex.) expressed interest in the tax-credit plan, but the organization is now working closely with the staff of Sen. William Armstrong (R–Colo.) on a bill that would incorporate the Human Services Option.
DEFENSE FROM ON HIGH
In releasing its High Frontier proposal, the Heritage Foundation has made a major contribution to rethinking the nation's defense needs. Instead of suggesting more and better offensive weapons, which would escalate the arms race to yet another plateau, the plan proposes a major commitment to defensive systems. It explicitly repudiates the morally odious policy of Mutual Assured Destruction (MAD), the basic premise of which is that our only real defense must be the capability to destroy the Soviet Union.
The core of the High Frontier defense concept is a set of five defensive systems:
- An initial system to defend existing Minuteman silos so as to prevent nuclear blackmail during the next decade while longer-term defenses are being introduced. It is based on a simple range-only radar and a set of launchers of "swarm-jet projectiles"—nonnuclear shrapnel that would destroy incoming warheads via kinetic energy. Cost: $1 billion. Time frame: 2–3 years.
- A first-generation space-based missile defense system using 432 satellites, each armed with 50 infrared homing vehicles designed to intercept ICBMs in the boost phase. One hundred of the satellites would be in position over the USSR at any given time. Cost: $13 billion. Time frame: 5–6 years.
- A second-generation space-based missile defense system designed to intercept those warheads missed by the first-generation system. It would consist of battle stations armed with laser or particle-beam weapons. Cost: not yet determined. Time frame: 10–12 years.
- A fleet of small manned space planes for use in inspecting and maintaining the satellite systems. Cost: about $1 billion. Time frame: about 6 to 8 years.
- A civil defense program to supplement the other defensive measures and protect a large fraction of the population.
The High Frontier study team was headed by Army Lt. Gen. Daniel O. Graham, former head of the Defense Intelligence Agency. Project team members included experts on weapons systems, military operations, and space technology, including Peter Glaser of Arthur D. Little Co., the originator of the solar power satellite concept. The 225-page report has been submitted to Congress, the president, and the Defense Department.
Generally, the plan appears to be based on technology that is already under development, requiring no major breakthroughs to be feasible. It would add not a single nuclear weapon, nor would it plan to kill a single Russian or violate the territory of any other nation. It might require US withdrawal from the ABM Treaty, however, which presently forbids US deployment of conventional forms of anti-missile systems.
BREAKING THE DRUG LAWS HABIT
The argument that it is the prohibition of illicit drugs such as heroin that drives the price exorbitantly high—thus making addicts resort to robbery, burglary, and other crimes to support their habit—is not a new one. But when the argument is being proffered by Arnold Bernhard—editor of Value Line financial newsletter and a businessman not particularly known for holding radical views—and when he concludes that we ought to "repeal all antidrug laws," that is worth taking note of.
Bernhard, along with Marc Gerstein, a financial analyst, argue in a recent issue of Value Line that "heroin is a very low 'value-added' product," which in a free market "would be dirt cheap." "Availability," they continue, "would be no problem. Addicts would be able to buy the drug over the counter. Since they would no longer have to raise huge sums to pay for their habit, the criminal superstructure built upon drug addiction would in time collapse."
The authors note that the two traditional solutions to the drug problem—the "hardline" approach (intensive police crackdowns and stiff penalties) and the "softline" approach (methadone treatment and rehabilitation programs)—have altogether failed. Because "the addict's demand cannot be constrained by force or price increases," they observe, "the effect of enforcement is simply to add a risk premium to the price of dope." And methadone treatment programs have not been effective, the authors report, simply because addicts "do not wish to become involved with clinics even when they are promised confidentiality."
Indeed, addicts "do not consider the risks of getting their drugs outside a clinic to be substantial," Bernhard and Gerstein contend, even when criminal activity to raise the money is necessary. They know that because the criminal justice system is so clogged, "their chances of getting caught are slim, and that, if they are caught, their chances of going to prison are negligible."
Bernhard and Gerstein's advice to government, then, is to "butt out." By lifting the prohibition on drugs, "the responsibility for avoiding drug abuse would fall on each individual, where it belongs," the authors state. "Instead of relying on the government to monitor behavior," they continue, "citizens would have to accept greater responsibility for their own actions."
Finally, say the authors, "We can ill afford to continue squandering vast sums in a vain attempt to legislate a narcotics-free society.…In the past, government policies have destroyed a number of legitimate businesses by making them unprofitable. Why not apply the same strategy to this rotten business?"
GETTING IT BACK AT TAX TIME
A General Accounting Office report released in March estimates that this year Americans—private individuals and corporations—will "cheat" on their federal income-tax returns to the tune of about $80 billion. Citing Internal Revenue Service studies that show that in 1980 Americans evaded paying about $20 billion, the GAO report stated that "growing numbers of people in this country are unwilling to comply voluntarily."
The GAO attributes this trend toward greater noncompliance to two major factors: "bracket creep"—that is, the phenomenon by which inflation raises taxpayers into higher tax brackets—and contempt for the ever-more complex tax forms. According to the IRS's studies, about 25 percent of taxpayers cheat on their returns to some degree. Methods of tax evasion range from the increasing use of overseas tax havens and illegal tax shelters to the failure to report barter transactions, gambling earnings, and other "underground" income.
Who evades paying taxes? According to the GAO, corporations will account for about one-eighth, or $10 billion, of this year's evaded taxes. Individual citizens will account for the other $70 billion. But what may be most interesting is that it is by and large middle-class taxpayers who are cheating on their taxes, not the rich.
In an article appearing in the March issue of Psychology Today, economist Shlomo Maital concurs with the GAO's conclusion that tax evasion is becoming epidemic. Maital cites various studies that show that a majority of Americans view tax evasion as a minor crime that most people would commit if they thought they could get away with it.
According to Maital's own research, tax evasion is most prevalent among "America middle-class families—those with average incomes—who pay more in taxes than they get in benefits from the government." Because the poor pay very little taxes—but are perceived as the beneficiaries of government programs—and the rich can get expert advice to avoid paying taxes legally, Maital reasons, middle-class taxpayers feel that they are being cheated by the system. And the more widespread this sentiment becomes, the greater the temptation to evade paying taxes.
Despite the abundance of evidence that it is what Maital calls the "perceived unfairness" of the tax system that pushes people to become criminals by evading taxes, the authorities are responding by beefing up enforcement, rather than changing the system. Indeed, the proposed budget for fiscal year 1983 provides for 5,225 more IRS agents and support staff and an additional $154 million for tax-law enforcement. But as long as people increasingly feel that they are being ripped off by the tax system, those 27,300 citizens who publicly refused to pay any taxes last year will surely find their ranks swelling.
STREET SALES
What's a city to do? Faced with extremely rapid growth (the second-fastest in Texas), badly deteriorated streets, and limited resources, city officials in Laredo (pop. 91,000) hit upon a creative solution: start selling off streets. Since the program was announced early this year, several dozen city blocks have already been snatched up by eager buyers—at about $32,000 apiece. Elmer Buckley, the mayor's assistant, told REASON that all streets but major thoroughfares are potential candidates for privatization. The abutting landowner is given the first right of refusal and must sign away this right before the street can be put up for open bidding. So far, he noted, that hasn't happened; all sales and negotiations have been with the adjacent landowners. In most cases, the purchasers—for example, a motel owner, a lumber yard, the Missouri Pacific railroad—are planning to use the street for expanded parking, essentially the street's primary or secondary use before the sale.
The city government's main objective is to get rid of what it considers marginal streets—those with little traffic that it must nevertheless maintain—so that it can concentrate funds on badly needed repairs and maintenance of other streets. All proceeds from street sales go into a special fund to be used only for street work. (Out of a total of 5,400 blocks, 2,000 need resurfacing, and another 2,720 need complete repaving.)
Thus far, no neighborhood association has offered to purchase any of the streets, as takes place in St. Louis (see "Getting Streetwise in St. Louis," REASON, Aug. 1981). But those skeptics at the federal Department of Housing and Urban Development who considered it too radical to privatize streets (as opposed to simply closing them to through traffic) will have to rethink their preconceptions in the light of Laredo's new program.
THE SCOTTISH SOLUTION
For 50 years, Glasgow politicians have been winning votes by building huge public-housing projects (called "council houses") and promising low rents. So aggressive has the policy been that only 4 percent of the Scottish city's housing—other than apartments—is privately owned. And, predictably, great numbers of the council houses have become so slumlike that many are simply no longer rentable.
To the city officials' credit, however, they have come up with a solution, though still limited in application, that has turned formerly squalid, boarded-up buildings into tidy, presentable homes. The solution: the city has sold a limited batch of the run-down public properties to private owners, who have renovated them to sparkling condition.
The plan started out modestly: 60 council houses in one of the most blighted areas of Glasgow were sold to private citizens. The city government found that providing each new homeowner with a loan of 3,000 pounds was cheaper than the cost of tearing the buildings down. So impressed were the officials with the remarkable transformation of the homes—and in less than one year's time—that 200 more public tenements were put on the auction block Within two weeks, all were sold.
Privatization has also been Edinburgh's answer to a bad housing situation. Neither city authorities nor private security guards could do anything about the escalation of violence and vandalism at Martello Court, a high-rise public-housing project that had put the city a half-million pounds in debt. To tear it down would have cost an additional half-million pounds, so the city agreed to sell it to a private developer. Whereas Martello Court was a place of terror only a year ago, today it is an attractive apartment house with new carpeting and windows, impressive views, and elegant ornamentation.
RESTORING NATURE—PRIVATELY
One standard claim in defense of "environmental legislation" is that the free market does not protect the environment—that it inherently tends to destroy nature. Richard McIntyre, however, is pioneering a business—yes, a for-profit enterprise—that looks to turn that claim on its head. For in 1978, McIntyre, an aquatic biologist and dedicated angler, founded the Bozeman (Montana)-based Timberline Reclamations, Inc., a small company that reclaims streams.
With $10,000 of his own money, the Wall Street Journal reported, McIntyre started what has become the first—and apparently only—successful stream-reclamation firm. So successful has Timberline been, in fact, that its 1982 revenues are estimated at about a half-million dollars.
Timberline customers, by and large, appear to be owners of private streams who are willing to pay the company's hefty fees—the preliminary study runs from $1,000 to $5,000; the detailed project proposal, from $5,000 to $50,000; and the actual labor, $500 a day. And the firm's results are impressive. In one instance, for example, the owner of a devitalized stream in Montana approached Timberline, hoping that the firm could make the stream habitable for trout that once lived there. Timberline overhauled the stream—at a total cost of about $35,000. Although it is usually one to two years before fish will repopulate a stream, Timberline's work produced a revitalized stream jumping with trout in less than six months. Contrary to environmentalists' claims, McIntyre's Timberline shows how free enterprise can work to restore nature—particularly when it's in response to private-property owners wanting to care for their resources.
FREEING THE WAVES
Further encouraging news comes in regard to the Federal Communications Commission's trend toward deregulating the airwaves. Several months ago, the FCC proposed that TV stations be allowed to broadcast informational text—stock market quotes, for example—as well as pictures, but the agency declined to recommend standards for the "teletext" (or "videotex") systems. This means that the market—the buyers and sellers—will determine what system or systems are used. To date, teletext systems (not all compatible with one another) have been developed by five different manufacturers in North America and Europe.
The FCC is similarly allowing the market to determine which stereo-transmission system AM radio broadcasters will adopt. A 1980 FCC ruling allowed the nation's 4,500 AM station to broadcast in stereo. But after issuing a preliminary decision to choose a single transmission system as the industry standard, the FCC repealed its choice and declined to give another. The FCC's refusal to specify a standard means that AM stations themselves will have to choose one of the five incompatible systems that are now available. Despite pleas from the National Association of Broadcasters for the federal agency to set a standard, the FCC appears firm in its decision to let the market prevail.
In a related piece of news, the FCC in March declined to consider prohibiting the ownership of both AM and FM radio stations in the same city. The 4-to-3 vote came in response to a 1979 request from the National Association for the Advancement of Colored People to bar further dual ownerships and to break up existing ones.
DELINQUENTS LEARN A THING OR TWO
They started with nearly nothing, each buying into the business for $1.00 a share and selling other stock to friends and relatives to raise the start-up capital. Within 18 months, Universal Enterprises had done more than $50,000 worth of business. A phenomenal success? Yes—when the entrepreneurs in question are juvenile delinquent inmates at a maximum security detention facility. And how do the authorities respond to such success? Why, they shut the enterprise down, of course.
In 1979 officials at the Orange County (California) Juvenile Hall allowed a group of the facility's teen-age offenders to participate in a Junior Achievement program. Beginning with 27 participants, the enterprise rapidly became a success bigger than anyone had imagined possible. Since the juveniles are not allowed to leave the hall, the JA project—normally conducted as a door-to-door selling activity—was modified into a mail-order business: the Junior Achievers bought T-shirts, baseball caps, and pillows at wholesale, then customized them with decals for resale. During the 1981 spring semester alone, the business recorded gross sales of $28,986, while in the same period other JA programs in the Orange County area averaged only $1,100–$1,200 in sales. The business won the JA award for the best company in southern California.
But, as is their wont (see "Making Good(s) behind Bars, REASON, Mar.), the authorities closed down the program despite the inmates' intense interest in it—100 delinquents had come to participate in the business, and one called the enterprise "the best thing to ever happen to this place."
But bureaucrats do have their reasons. The county's chief probation officer explained that the program "became too production oriented and began to interfere with the operation of the institution." Some inmates, he noticed, worked overtime and on weekends at the business, thus interfering with counseling and other activities designed to instill positive social values in the delinquents—such as discipline, industriousness, perseverance, and responsibility?
For the students, however, the JA program was a singular experience. One 17-year-old girl, held at the facility for repeated drug abuse, made $750 in sales commissions one semester, becoming the top sales person. Other students made more than $100 each. More importantly, the youths were able to develop skills that could help them live non-criminally in the future.
Since the program's shut-down, officials at the hall have reconsidered and are now willing to allow JA counselors and sponsors to start up another program, but one scaled down with limits on sales and earnings. The program's former sponsor has turned down the officials' watered-down proposal, calling such a plan an undermining of free enterprise.
WHAT PRICE COAL PIPELINES?
Do two wrongs—or three or four—make a right? Or, to be more specific, does the fact that railroads and oil companies have been granted the power of eminent domain—to force people to sell their land to them—justify the grant of such power to the developers of coal slurry pipelines?
Many people have argued that because railroads (which see in coal slurry lines a serious competitive threat) would generally refuse to grant rights of way beneath their lines, justice demands equal treatment for would-be competitors. And others make the strictly pragmatic argument that "we need" more coal, so such coercion is justified.
An interesting perspective on the issue is provided by a recent Washington Legal Foundation report, "Coal Slurry Pipelines: Is Eminent Domain Necessary?" Its authors, Francis X. Murray and J. Charles Curran, point out that there is a voluntary alternative in many cases. Especially in the West, railroads frequently possess only surface ownership, leaving the pipeline operator free to negotiate with the underlying landowner for a lease, easement, or other usage right. As a matter of fact, they point out, one coal slurry pipeline company has successfully used this approach. Energy Transportation Systems, Inc. (ETSI), unwilling to wait for passage of eminent domain legislation, negotiated leases for more than 60 rights-of-way for its pipeline from Wyoming to Louisiana. The leases have been tested in court and upheld. And it turns out that the added cost of acquiring the rights-of-way without coercion "may be as high [sic] as 15 percent of the total completed cost."
As Murray and Curran readily admit, ETSI's approach worked:
ETSI did not achieve its success quickly or cheaply, yet the final result of its efforts—the operation of a major coal slurry pipeline—probably will be the same as if the power of eminent domain had been available to obtain all rights-of-way. The only perceptible difference will be an increase in the cost to those [who] will ultimately benefit from the operation of the pipeline.
Yet despite this modest cost, Murray and Curran opt for coercion: "Cost increases of this magnitude may adversely affect the favorable economics attributed by some to the transportation of coal by pipelines." To the pipeline operator, then, eminent domain is equivalent to a 15-percent subsidy. But it is the individuals and companies whose property rights are violated who would end up paying this subsidy. Since a voluntary alternative exists, why on earth should they be singled out for victimization?
HOW GOOD IS PRIVATE ZONING?
Prof. Bernard Siegan of the University of San Diego created quite a stir with his 1972 book, Land Use without Zoning. Despite its title, this book about land-use patterns in Houston, Texas, focused primarily on the majority of the city in which land-use patterns are controlled—but by private deed restrictions, rather than by centrally directed zoning. So what Siegan was implicitly comparing was not so much zoning versus nonzoning, but government zoning versus private zoning.
Despite Siegan's dramatic findings—that deed restrictions appear to protect residential neighborhoods just as well as zoning, that apartment rents are dramatically lower and apartment availability higher in "nonzoned" Houston than in "zoned" Dallas, and that part of Houston's economic vitality springs from the absence of comprehensive zoning—skeptics were generally unconvinced. Most homeowners, for example, cannot imagine how their property values could be protected adequately in the absence of government zoning.
That empirical question—how does private zoning compare with government zoning (and with no zoning)?—has now been addressed. Janet L. Furman devoted her 1982 Ph.D. thesis work at Johns Hopkins University to a statistical study of the relationship between the type of land-use control and the value of single-family properties. Using 1978 sales data from southwest Houston—including two zoned communities (which have been annexed to Houston), neighborhoods with deed restrictions, and neighborhoods where the deed restrictions have been allowed to expire—Furman compared prices in the three areas. Correcting for all sorts of other factors that affect the price (square footage, presence or absence of swimming pool, quality of local school, etc.) by a technique called regression analysis, she came up with two striking conclusions.
First of all, people were willing to pay significant premiums—from five to eight percent—for land-use restrictions in single-family neighborhoods. Second, the premiums paid for government zoning and private zoning were statistically indistinguishable. In other words, in the Houston area private zoning via deed restrictions seems to be considered just as effective a means of protection as conventional government zoning. And this finding is deduced from people's actual behavior in the marketplace, not merely from something they might tell a pollster. Conclusion? As a means of protecting property values, private zoning works!
PHONE DEREGULATION GOES INTERNATIONAL
Britain's Thatcher government is making some progress in introducing competition in telecommunications, reports our London correspondent, Eben Wilson. But stodgy British Telecom—the new name for the now spun-off telecommunications branch of the old Post Office—is persistently dragging its heels.
After making BT an independent entity last year, the Telecommunications Act also authorized competition in long-distance service and the private ownership of telephones—both moves modeled after US developments of the early 1970s. In short order, several new firms went into the telephone equipment business. And Cable and Wireless, a private firm long involved in overseas communications, formed a joint venture with Barclay's Bank and British Petroleum to build a long-distance network to compete with BT. Both ventures have encountered significant delays.
The long-distance system, dubbed Project Mercury, is intended as an 800-mile fiber-optics network interconnecting business customers in Britain's largest cities. It's designed to handle voice, data, and facsimile, offering faster speeds and lower rates than BT. Only one problem: BT controls access to both local phone lines and overseas links. It has taken six months for the government's Industry Department to get BT to work up a set of (high) rates to be charged for interconnection. By the time Mercury is in operation, BT hopes to have its own new high-speed data network in operation.
A similar intransigence characterized BT's response to the telephone equipment deregulation. Of course, all private phones must meet proper standards for interconnection with BT's system. And who sets those standards? Why BT, of course, at least on an interim basis. So naturally the agency has dragged its feet. As of March, the only new models approved for service were all manufactured by…you guessed it, British Telecom.
Even Japan is cutting back on government monopolization of telecommunications. The Ministry of International Trade & Industry is expected to propose a plan to the Diet (parliament) this summer calling for selling to the public part or all of government-owned Nippon Telephone & Telegraph.
MILESTONES
Less Power to the Prez. Saying that the market—not government—would better allocate oil supplies during an emergency shortage, President Reagan in March successfully vetoed a bill that would have empowered the president to set petroleum prices and apportion supplies in time of a crisis shortage.
Ground Control. Land Resources Management, Inc., of Anaheim, California, has signed a contract with NASA to become the first private operator of a ground station authorized to receive data from the orbiting Landsat D spacecraft. The company's own Landsat station is being built in Las Vegas, New Mexico, and will be completed this summer.
High Rent? Blame Rent Control. San Diego is the only major California city without rent control. But according to an extensive study by the Institute of Real Estate Management of the National Association of Realtors, it has rents 13 to 17 percent lower than the state's other major—rent-controlled—cities.
Accepting the Cuts. In a reversal of last year's intense opposition to the very idea of cutting back so-called "entitlement" benefits, several interest groups have recently expressed openness to federal freezes and cutbacks, so long as such reductions are part of an "equitable," across-the-board effort to control spending. Among such groups are the American Association of Retired Persons, the National Retired Teachers Association, the American Legion, and the Disabled American Veterans.
Census Confidentiality Confirmed. The Supreme Court upheld the strict confidentiality of the national census when it unanimously ruled in February that local governments have no right to inspect Census Bureau data. Many cities and municipalities had demanded to examine the 1980 census address lists, claiming that these may provide evidence that their populations were undercounted—and thus will get short shrift in the doling out of federal aid.
Ads Legalized. In a unanimous decision against the state of Missouri, the Supreme Court ruled in January that the state may not restrict the content of lawyer's advertising if the claims are not misleading. It also knocked down a Missouri rule prohibiting lawyers from advertising through direct mail. The court did acknowledge the state's right to regulate professional advertising but said that such a blanket prohibition was unwarranted.
Tanks A Lot. A group of wives of the president's cabinet members and other supporters of the National Aquarium were concerned about what would happen to the national fish tank after it was cut out of the fiscal 1982 budget. So they formed a nonprofit organization to take over the aquatic concern, and are keeping it operating by charging admission to the attraction—$1 for adults, 50 cents for children.
Arresting the LEAA. On April 15, the Reagan administration shut down the Law Enforcement Assistance Administration. Created in 1968 to help local governments battle crime, the LEAA disbursed almost $8 billion during its existence, much of it on projects like the one to determine why people move away from high-crime areas.
Spirited Opposition. The Reagan administration wants to deregulate the alcohol industry but is being met with much industry opposition. The administration believes that many current regulations—such as one prohibiting suppliers from subsidizing retailers' advertising—hamper competition within the industry. But the Wine and Spirit Wholesalers of America and the Distilled Spirits Council want the regulations left intact.
Electrifying Decision. In February the US Supreme Court overturned a 1980 rule issued by the New Hampshire Public Utilities Commission—and upheld by the state supreme court—that prohibited a private company from selling hydroelectric power to customers outside of the state. The court's unanimous decision repudiated the state's exclusive claim to the benefits of its natural resources—in this case, a river.
Contracting Cuts Costs. Los Angeles County could save $18.6 million a year by contracting out the county hospitals' food preparation and serving, major billing work, and laundry—along with operation of neighborhood health centers—to private companies. This plan, which has been worked out by the Touche Ross & Co. consulting firm, would be the nation's largest venture into contracting private firms to provide services now performed by county employees.