Trends

PLUGGING IN TO DEREGULATION

As we've reported previously (see Trends, Sept. 1981), many people are starting to talk about deregulating at least the production of electricity. But what kinds of institutions and practices might be needed in a competitive environment? That question is receiving intensive scrutiny these days at the MIT Energy Laboratory, the Rand Corporation, and other think tanks.

The basic idea is that there would be numerous buyers and sellers of electricity, in competition with one another, using the price system to allocate electricity. Today's computer and communications technologies would make possible sophisticated interactions among the participants—prices varying minute-by-minute based on changing costs, futures markets for quantities of electricity, and complex forms of interruptible service. The MIT researchers have coined a term for the "system" of participants interacting in the electricity marketplace—homeostatic control—and have produced, to date, 17 reports on the subject.

One prototypical market institution already exists in Florida. Called Power Broker, it's a computer-based system that utilities use to buy and sell surplus power. Once an hour, those utilities with excess to sell list their offerings with the computer. At the same time, utilities short of power put in bids. The computer matches up "bids" and "asks," making possible transactions that benefit both parties. According to Rand researcher Linda Cohen, Power Broker saved Florida utilities $50 million last year, cutting total electricity costs by two percent.

Increased efficiency is also the purpose of the other institutions proposed by the researchers—spot pricing, energy brokers, information consultants, and the like. Together, they would allow electricity users to get the best deal by utilizing market mechanisms instead of regulation. Even some regulators are enthusiastic about the idea. "Competitive forces would be sufficient that they alone could act as the regulators and efficiently assure cost control and responses to changing conditions and technologies," says John Bryson, president of the California Public Utilities Commission.

Even the British seem to be inching toward deregulation. The Thatcher government announced this spring that it will permit private companies to compete with the Central Electricity Generating Board in generating and selling electricity, according to the Economist (Apr. 3, 1982).

RESTRAINT OF TRADE REGULATOR

There are several signs that the Federal Trade Commission, known both for its extensive discretionary authority and for the vagueness of its statutory mandate, may have its powers cut back this year. An important reason for this is the FTC chairman, James C. Miller III. It is not a common practice for government bureaucrats to request publicly that the authority of their bailiwicks be curtailed, but Miller has done just that. The FTC has already had the scope of its powers reduced in the last few months, and Miller is advocating further reductions.

One Miller proposal with a potentially far-reaching effect would be narrowing the FTC's authority to decide what "unfair business practices" it may act against. Miller says the FTC should be permitted to act only against practices that cause substantial injury to consumers that can't reasonably be avoided, and only if the alleged unfairness isn't outweighed by benefits from the practice to consumers or competition. Consumer groups want no new restrictions on the FTC's latitude in this area, while the US Chamber of Commerce and other business interests are pressing for complete elimination of the commission's authority here.

With no visible support from advertising groups or any of his fellow commissioners, Miller has also testified before Congress that his agency's authority to challenge "deceptive" advertisements should be curtailed. "Virtually any ad can be found to be deceptive," he told a Senate committee, citing several commission proceedings in which he said the FTC had "unreasonably construed" its authority to challenge advertisers' claims. Among his examples were a claim by the California Milk Advisory Board that "everybody needs milk"; an ad claiming certain nylon socks "last forever"; and a General Motors ad citing Road & Track magazine's opinion that the Chevrolet Vega was "the best-handling car ever produced in America."

Interestingly, Miller has said that he "fully, strongly, and unalterably opposes" efforts to restrict FTC jurisdiction in one area, regulation of professionals. The FTC has already opened up the legal and dental professions to advertising, and on March 23, the Supreme Court upheld an FTC action that bars the American Medical Association from prohibiting advertising by doctors.

Miller's unwillingness to retreat from the FTC's position here has earned him the wrath of a number of professionals, most notably doctors, dentists, and optometrists who are leading a battle to remove FTC jurisdiction over professionals altogether. To that end, a bill cosponsored by Sens. James McClure (R–Idaho) and John Melcher (D–Mont.) would ban the FTC from policing any profession already regulated at the state level and would also nullify all past commission decisions governing professionals.

The occasion for the current debate on the FTC is a bill to reauthorize the agency. Other issues likely to arise in this debate include:

• paring back civil penalties for violation of the Federal Trade Commission Act, so that the FTC would be required to conduct separate investigations of every violator;
• restricting the FTC's antitrust authority to that of the Justice Department;
• defining more narrowly "deceptive acts and practices;" and,
• permitting a legislative veto of FTC rules.

The FTC's legislative mandate expires on September 30, but it is expected that the shape of the commission's future will have been determined in Congress this spring.

PRIVATE EYE ON SPACE

Conventional wisdom has it that one area of activity best left to the government is space exploration and research. Now, however, some enterprising scientists may be proving that wisdom wrong. Science magazine reports that "with luck and creative financing," a group of astronomers will soon be able to begin operation of Spacewatch—the first comprehensive automated search for asteroids that pass near the earth—using a small telescope on Kitt Peak in Arizona…and private funding.

The project could offer a chance to learn more of the origin and evolution of the solar system, investigate the possibility that an asteroid impact killed off the dinosaurs and other forms of life at the end of the Cretaceous period, and lead to an early-warning system in which an asteroid headed for earth could be deflected with missiles. There is even a large possibility that asteroids could be mined: the platinum-group metals believed to be present in certain metallic asteroids might make an asteroid mining expedition economically feasible in the near future.

The National Aeronautics and Space Administration has always been enthusiastic about Spacewatch but will probably not be able to fund the project because of budget cuts. As a result, Tom Gehrels, one of the two principal investigators of the project, has been looking to the private sector for funding. "We're talking with the Planetary Society in Pasadena, the Space Studies Institute in Princeton, and the Space Foundation in Houston," he told Science. "The National Geographic Society has encouraged us to submit a proposal. A Japanese foundation may come in."

Spacewatch has even run an advertisement in the Wall Street Journal. It's a far cry from traditional funding sources for space exploration—and it may work.

FEDERAL ISN'T FRUGAL

Most "public services" are, in fact, monopolies. And as economists have long pointed out, monopolists tend to extract monopoly prices. Thus, it should be no surprise to find that government-produced services—garbage collection, fire fighting, etc.—cost a lot more than comparable services produced in the private sector. And that, indeed, is what numerous studies of local public services have found.

The same thing would probably be true of services produced by federal employees, reasoned economists James T. Bennett and Thomas J. Dilorenzo of George Mason University. And when they went looking for data, that's precisely what they found. Over the past few years the General Accounting Office has carried out seven studies that compare the cost of 17 federal government services with comparable private-sector services. Among them are ship repair, hydroelectric power, weather forecasting, debt collection, railroad track repair, and day care centers.

The findings, needless to say, were striking. Although Navy oilers are at sea only about 20 percent of the time, compared with 40 to 70 percent for commercial tankers, it ends up costing four to eight times as much each year to repair and maintain the government ships. The Navy's cost to repair individual shipboard items is 17 times as great as that for commercial ships.

The comparison of federal versus private hydroelectric plants showed that the former use 48 percent more employees per plant, and their electricity costs 21 percent more to produce. Private railroad track repair crews produced nearly five times the output of Amtrak crews. Costs at federally funded nonprofit day care centers averaged $188 per child per month, compared with $102 for private-sector centers.

Moreover, these cost comparisons generally underestimate the cost advantages of many private-sector producers, note Bennett and Dilorenzo. Federal pensions, for example, are not fully vested and represent a large future tax liability. And the private firms' costs include taxes, licensing fees, and the costs of compliance with government regulations—factors from which the government agencies are exempt.

In the face of such evidence, how do our politicians respond? One group, including Reps. Toby Moffett (D–Conn.) and Pat Schroeder (D–Colo.) has introduced legislation to prohibit the departments of Defense and Energy from contracting out fire fighting and security services. According to a representative of the Private Sector Fire Association, Defense and Energy account for 80 percent of all private fire-fighting services currently provided under contract. By contrast, Sens. John East (R–N.C.) and Sam Hayakawa (R–Calif.) have introduced a bill to require that no federal agency start or conduct any commercial or industrial activity to produce needed goods and services in-house when they can be obtained from private businesses at fair and reasonable prices. It will be interesting to see which of these two approaches prevails.

BOOSTING LASERS

If successful, space-based laser weapons could revolutionize US defenses, making possible a transition from offense-based nuclear deterrence to defensive dominance. But the government's present laser R&D efforts are fragmented and limited by minimal funding. Those are the conclusions of a major investigation of the subject by the General Accounting Office.

Current laser weapons research is divided among the Army, Navy, Air Force, and the Defense Advanced Research Projects Agency (DARPA). There is no laser weapons program office. Furthermore, under present funding constraints (about $150 million per year), a decision to conduct an orbital demonstration program to determine the laser system's feasibility as a weapon will not be made until 1987. A decision to deploy laser battle stations cannot be made until the feasibility demonstration is accomplished. Consequently, a full-fledged space-based laser defense system could not be operational before the year 2000.

According to recent briefings by intelligence officials, the Soviet Union is spending three to five times as much on high-energy laser efforts, including the development of an initial orbiting system. That initial demonstration system could be in place as early as 1983, and by the early 1990s the Soviets could have a large number of laser-armed satellites in orbit.

Ironically, US technology in many of the key components is far ahead of Soviet technology—including optical systems, sensors, miniaturization, and onboard computer capability. It is funding limits, not technology limits, that are restraining the US effort.

Consequently, the GAO recommends proceeding with development of a first-generation 10-megawatt space-based laser in order to prove out the technology as a complete weapons system. A 10-mw system would be effective against Soviet SS-20 intermediate-range missiles, Backfire bombers, and low-altitude spacecraft and would provide defense against limited numbers of ICBMs. To change the focus from component R&D to weapons system development, the GAO recommends creating a separate management structure for the laser weapons program. In addition, funding should be increased by several hundred million dollars a year through 1985, with larger increases thereafter, totaling $5 billion through the orbital demonstration phase. That sounds like a lot of money, but if it leads to a true defense against nuclear-armed missiles, it will be worth every penny.

INHUMANE WELFARE

A comparison of the experience of different states belies the assumption that welfare programs actually reduce poverty, according to a recent syndicated column by Warren Brookes. He argues that there is in fact a positive correlation between a state's unemployment rate and the level of welfare benefits it provides.

Brookes cites two specific examples. Texas, which has the lowest unemployment and fastest job growth of any major industrial state (and which is, not surprisingly, one of the few major states in which poverty has declined in the last five years) has the lowest welfare benefits and tax levels of the major industrial states. And Massachusetts, which at one time ranked 3rd among the states in its welfare benefits, 5th in its tax burden, and an abysmal 47th in its growth rate, has turned its economy around in the last four years in precisely the ways Brookes's figures would suggest. It held its benefits down until they declined in value to 15th place in the nation, and it cut the tax burden. Now, Massachusetts boasts a low unemployment rate second only to Texas's among industrial states; its economy is one of the five fastest growing in the country, and poverty in Massachusetts is actually decreasing.

Texas and Massachusetts are part of a larger pattern. Using federal government data, Brookes compared the 15 states with the highest welfare benefits and the 15 with the lowest benefits. He found that in 1978, the first group had a far higher percentage of their population on welfare (5.7 percent versus 3.6 percent), higher unemployment rates (7.0 percent versus 5.5 percent), and higher minority unemployment rates (12.3 percent versus 10.6 percent). Moreover, from 1970 to 1978 the average job growth in the states with highest benefits was only 10.6 percent, compared with 46.6 percent in the states with lowest benefits; and the average personal income growth was only 17.1 percent, which pales in comparison with the 57.5 percent in states with lowest benefits.

As Brookes himself says, the statistics indicate that the "states with the supposedly 'inhumane' welfare benefits are providing much more vigorous economic opportunity and 'humane economies' than those who have been more 'generous.'"

AIRPORTS: CUTTING THE APRON STRINGS

Many major airports are in trouble. With air travel continuing its rapid growth (only briefly interrupted by the recession), 15 major airports are expected to reach saturation by 1985. Some have simply run out of room. But for most of them, it is money that's the problem. And that is leading airport groups, for the first time, toward breaking free of federal control.

Airports have several principal revenue sources. They charge landing fees, lease terminal and hangar space, charge parking and concession fees, and receive federal aid. The latter comes from the Federal Aviation Administration's airports and airways trust fund, whose money comes from an eight percent tax on airline tickets and from various taxes on aircraft fuel and tires. The airport managers' problem is that for the past decade or so, the FAA has been handing out far less in trust fund grants than it's been taking in from taxes. And because the FAA's air traffic control system is so badly out of date, the agency is spending an ever-larger fraction of the trust fund on that, rather than on aid to airports. The Airport Operators Council International (AOCI) estimates that trust fund grants will cover only 60 percent of needed improvements in the years ahead.

Consequently, support is growing for what once seemed like a radical idea: defederalization of major airports. The basic idea is to let airports opt out of the federal aid program. Participating airports would have the ticket tax reduced from eight to six percent and would be free to levy their own "passenger facility charges" to pay for their expansion programs. Voluntary defederalization was endorsed in March by both major airport groups, AOCI and the American Association of Airport Executives. If enacted, defederalization would be an important step toward making airports businesses, rather than dependents on federal largesse.

NEW AND IMPROVED POLLUTION CONTROL

Setting up a large bureaucracy armed with vast powers to enact rules is not a very good way to control pollution. Not only does it run the risk of imposing requirements whose costs are far out of proportion to their benefits; it also denies the rights of individuals to protection of their lives and properties via the courts. A more just and more efficient approach to pollution control would be radically decentralized, with a strong emphasis on transferable property rights and direct negotiation between parties. Those, at least, were the recommendations of economist Peter Aranson in Instead of Regulation.

Two small steps in the direction of such a system have been taken, one in Washington, D.C., and the other in California. The Environmental Protection Agency announced in April a major expansion of its market-oriented bubble policy (see Trends, June 1981). The idea is to treat an entire industrial complex or region as if it were covered by a bubble and to require only that total emissions from the bubble conform to EPA standards. Factories and companies within the bubble will be free to pay each other to reduce various emissions, making it likely that the required reductions will be achieved at least cost. EPA expects the nationwide expansion of the policy to permit savings of more than $1 billion a year in compliance costs.

A more radical approach has been proposed by California Assemblyman Bill Leonard. Under a bill he introduced in January, the state's entire pollution control bureaucracy would be abolished. The bill states that a person has the right to be free from pollution and that those whose rights are violated may bring either individual or class action suits in an appropriate court. The bill would "reconfer upon our courts their common law function of defending persons and their property against harmful pollution," notes Leonard.

THE BENEFITS OF FREED TRUCKING

Back when the 1980 trucking deregulation bill was being debated, opponents charged that it would lead to dog-eat-dog competition that would squeeze out small truckers, cut service to small communities, and destroy the industry's profitability. A recent study of deregulation's first year, by Federal Trade Commission economist Denis Breen, thoroughly deflates these concerns.

What has happened, as expected, is a surge of new competition. In the first year of deregulation, 2,452 new firms entered the trucking business. The number of applications to the Interstate Commerce Commission for new grants of operating authority has soared, from as few as 6,746 in 1976 to 29,311 in the first year under the new law. And more than 95 percent of the applications were approved, compared with under 70 percent previously. In addition, the ICC has removed thousands of restrictions, allowing firms to handle two-way rather than one-way traffic, to make intermediate stops, to take the most direct route, etc.

The new entrants and greater freedom have led to extensive price competition. Discounts of between 5 and 20 percent off established rates are now commonplace. Even industry leader Roadway Express gave in last February, adding a 12 percent discount on small shipments to its established discounts on volume shipments. Lower prices have spurred trucking unions to reduce their wage and benefit demands so that their firms can remain competitive with the thousands of nonunion owner-operators now entering the market. Trucking profits have declined—but that's not surprising, given that many of the firms had virtual monopolies before deregulation.

The only problem seems to be the administrative resistance to deregulation under Reagan ICC Chairman Reese Taylor (see "Regulation Retread," REASON, Dec. 1981). Today's ICC is once again sharply limiting the number of commodities and the geographical territory in granting new operating certificates. And Taylor has asked Congress to beef up the required "fitness test" for new applicants; such firms would have to have both the financing lined up and the vehicles purchased in order to receive an ICC certificate—even though the commission could then deny the certificate. Such bureaucratic retrenchment illustrates the danger of mere deregulatory reform. If deregulation works, why keep the agency around to think up new mischief?

JAPANESE SELF-DEFENSE

Among the beneficiaries of the gargantuan US military budget has been Japan. Since World War II, Japan's so-called self-defense force has been severely restricted in its size and activity, with most of Japan's defense provided by the United States.

The relationship between the two countries, formalized in the 1960 US-Japan defense treaty, has been a mixed blessing (or mixed curse) on both sides. On the one hand, the US military sphere of influence is kept wide, and the United States has access to bases only 700 miles from Vladivostok; on the other hand, we devote huge amounts of money to defend a prosperous country fully capable of paying its own way (this coming year, the United States is spending $216 billion on defense, around seven percent of its GNP, while the Japanese are spending only $11 billion, under one percent of their GNP). Small wonder that, when Defense Secretary Caspar Weinberger recently asked Japanese Defense Agency Director Soichiro Ito that within this decade Japan assume responsibility for defense of its own sea lanes out to 1,000 miles, Ito rejected the proposal and maintained that the Japanese are already doing quite enough on their own behalf.

But in fact, some Japanese are dissatisfied. They suggest that their country's arrangement with the United States relegates Japan to being an American protectorate. In the last few months, a group of prominent Japanese politicians, businessmen, and academics have formed a group named the Committee of 100 (although it already has more than 180 members) that calls for revision of the 1960 US-Japanese treaty so that Japan might strengthen its own military.

As new as the Committee of 100 is, the Economist reports that the group is already proving an embarrassment for the Japanese government. The chief cabinet secretary, Kiichi Miyazawa, has already said that the government is well satisfied with existing defense arrangements and has no intention of proposing a revision of the security treaty. Prime Minister Zenko Suzuki has said the same in parliament.

The Economist asks, "Will Japan ever move?" Meanwhile, REASON asks, "Will the United States ever move?"

LICKING THE POST OFFICE

The demand for quick, reliable postal service is steadily increasing, which is why the United States Postal Service is losing more ground to private competitors. The long lines endemic to most post offices and the USPS's erratic, unreliable performance are making the postal business more and more attractive to entrepreneurs.

Among recent noteworthy developments in private postal service is the Paseo Mail Center in Camarillo, California. Angered and frustrated by having to wait in long lines at the post office, an electrical engineer named Scott Adler decided to start his own "post office" last November. In addition to selling stamps and renting out mail delivery boxes, the Paseo Mail Center, for a small fee, accepts first- through fourth-class mail, parcel post, and registered and certified mail, as well as packages for United Parcel Service, Federal Express, and Trans-box. Paseo then delivers this mail to the appropriate service, saving customers the hassle of multiple destinations or waiting in line.

The center has evidently been a resounding success. It was turning a profit after only three months of operation, and within the next four months, Adler plans to open similar mail centers in three more California locations. He hopes to franchise centers in 1,500 cities over the next three years.

A big reason for Adler's success is the use of a computerized Orbitron scale, which calculates the rates for sending a package via each of the four carriers Paseo handles, so that a customer can weigh his alternatives. Paseo has also virtually eliminated long lines through the use of back-up personnel to service customers when business gets brisk.

The private air-express delivery business is also thriving. Market analysts point to the growing need for speed and reliability in package delivery, particularly of items in fast-growth industries such as medical products, high technology, optics, and robotics, as a major reason for the current boom. Two companies already well established in the market are Federal Express, which led the competition last year with net profits of $59.3 million, and Purolator Courier; but there is a flock of newcomers, including Airborne Freight, Burlington Northern Air Freight, Emery Air Freight, Flying Tigers, United Airlines, and United Parcel Service.

Western Airlines went into the overnight delivery business in February as a sort of modern-day Pony Express. Like the horseback-rider system of the 1860s, Western issues its own private stamps. Affixed with a Western $1 stamp and a USPS 20-cent stamp, small packages and envelopes can be posted at a drop-off office from which they are transported to a Denver sorting center, then conveyed to their final destination. Unlike other express services, Western transports the mail only to the destination city, where it is turned over to the local post office for ultimate delivery (hence the USPS stamp).

The Postal Service, observing a tradition of doing too little too late, is setting up a system called ECOM, which stands for electronic computer-originated mail. The system consists of 25 post offices with equipment that can receive electronic data and then transmit letters via private or commercial telecommunications systems to the post office where they are printed out, stuffed in envelopes, and hand-delivered as local first-class mail to the final destination.

There are serious problems with ECOM from the start. For one, although the Postal Service suggests that in most cases ECOM will deliver a letter more quickly than if it were sent first-class, faster delivery is not guaranteed. Second, the $40-million system cannot stuff more than two pages into an envelope, nor can it insert any auxiliary material such as brochures and return envelopes, which are extremely important to the direct mail businesses targeted by the USPS as potential customers.

Finally, even if the shoddy ECOM edifice does not collapse on its own, the Justice Department may bring it down. The department's attorneys have argued in US District Court that the USPS is not even authorized to run ECOM on a permanent basis, since the Postal Rate Commission gave permission only for experimental ECOM service. The Justice Department's case was supported by statements from the Postal Rate Commission itself, two private telecommunications companies, and three senators, Paula Hawkins (R–Fla.), Jesse Helms (R–N.C.), and Steve Symms (R–Idaho).

The District Court has handed down a decision saying it lacks subject matter jurisdiction in the case, but it suggested other avenues the Justice Department might pursue. The department is expected to decide by July how to proceed with the ECOM case at this point.

Meanwhile, there is increasing sentiment for ending the historic monopoly of the USPS on first-class mail. The same three senators involved in the ECOM litigation have sponsored a bill to repeal the private express statutes that ban private companies from delivering first-class mail. In a recent survey of small businesspeople, the National Federation of Independent Business found 72 percent opposed to the private express statutes and only 22 percent supporting them.

A DECENTRALIZED MONETARY SYSTEM

A new argument has been raised in favor of the idea of circulating gold and silver coins: the vulnerability of our present monetary system in wartime. Writing in Gold Standard News, economist Joe Cobb has pointed out:

With just one small atomic bomb on New York, an aggressor could knock out the electronic banking system of the United States. The stock and bond markets would cease to trade, and paper credit would be of dubious value.…The weakest link in the chain—the electronic networks that today transfer debits and credits across the nation—would stop.

Although the government has lots of gold and silver salted away in Fort Knox and various mints, this hard money would be unavailable in a crisis. Cobb's point is that if this gold and silver were widely dispersed throughout the economy in the form of circulating coins, there would be a backup monetary system ready to swing into action in time of war or other calamity.

This national defense argument is now being raised in support of various coinage proposals before Congress. A bill to implement the Gold Commission's recommendation for a bullion-weight gold coin has been introduced by Rep. Ron Paul (R–Tex.) and Sen. Steve Symms (R–Idaho). Precious-metals analyst Charles Stahl predicts an enormous demand for the proposed American Eagle coin, rivaling that for Krugerrands. Newsweek has quoted Treasury Department officials as predicting the sale of nearly 20 million ounces worth of coins in the first year—about eight percent of government gold stocks. At $375 per ounce, that would bring in $7.5 billion in revenue to reduce the deficit.

The American Eagle would not be legal tender, though it could be used in payment of private debts, according to Treasury Secretary Donald Regan. But the gold and silver coins proposed in two other bills—the Free Market Gold Coinage Act and the Free Market Silver Dollar Act—would be recognized by the government for the payment of taxes and debts. Both bills would allow minting of the coins by private firms, which would increase the number actually produced.

Even the General Accounting Office seems to support the idea of a decentralized money system. In a report titled "National Defense-Related Silver Needs," GAO says a silver bullion coinage program should be considered as a way of reducing excess silver in government stockpiles.

ZODIAC ZAPPED

Two cheers, at the most, for Michel Gauquelin. The director of the Laboratory for the Study of the Relations between Cosmic Psychophysiological Rhythms in France has just published a study that found no correlation between the character traits of 2,000 successful people and the signs of the zodiac under which they were born.

Gauquelin assembled 52,188 character traits from published biographies of 2,000 Europeans, including sports champions, military men, actors, artists, politicians, scientists, and writers, and tried to correlate them with the personalities attributed by eight astrology textbooks to the signs of the zodiac. The Gauquelin study also took into account such complicating factors as the moon sign and the rising sign, as well as the sun sign.

According to Gauquelin, the correlation between personality traits and zodiac signs was no greater than would have been predicted by chance. "It's an ideal proof," Gauquelin told the Los Angeles Times. "What can I do more?"

Unfortunately, however, Gauquelin is now working on another project arguing that there is a link between the position of the planets at the time of a person's birth and his future professional career. Gauquelin contends that successful athletes, for example, are more likely than other people to have Mars either rising or setting at the time of birth.

As charming as Gauquelin's theory may be, perhaps the last word belongs to Kendrick Frazier, editor of the journal that published the work on the zodiac: he observed that it is not unknown for a scientist to do very good work in one area and very poor work in another.

MILESTONES

Privatization supported. Sen. Paul Laxalt (R–Nev.) has endorsed economist Steve Hanke's proposal to privatize federal grazing lands by giving existing holders of grazing permits the right of first refusal to purchase them (see Hanke's article on p. 43 of this issue).

Plea Dropped. In early April, Idaho Gov. John V. Evans signed into law a bill eliminating the plea of mental illness as a defense in criminal cases. Most states have a welter of laws for determining whether an accused person is mentally ill according to conventional definition, and special punishments masquerading as "treatment" if they are. Idaho's new law should help eliminate the injustice there.

Lawbreakers Paying. California's program for compensating victims of violent crimes, the nation's oldest program of its kind, is now being paid for entirely by lawbreakers. Because of new state anti-crime laws that provide for increased fines, a projected $12.7 million will now be put into the indemnity fund, making it completely solvent without a nickel of taxpayers' money for the first time.

MD Ads Okayed. The American Medical Association and local affiliated physicians' groups must obey a Federal Trade Commission order to end all ethical standards that restrict doctors' advertising. In March, by reaching a tie 4-to-4 vote, the Supreme Court automatically upheld a lower court's ruling in favor of the FTC's order, after it had been appealed by the AMA.