Trends

SECURING SOCIAL SECURITY: AN OVERSEAS PLAN

Social Security is not just an American problem. The government-run pension systems of most Western democracies are operated in a similar chain-letter fashion—and are increasingly threatened with bankruptcy. Now a British think tank has endorsed what a small but growing number of Americans see as the only real long-term solution: privatization.

London's Adam Smith Institute sets forth its case in a recent report, Privatising Pensions. After analyzing the social security problem in Britain, the report reviews the successful privatization of the Chilean retirement system, begun nearly two years ago (see "Chile's Economic Revolution," REASON, Apr. 1982). It points out that 60 percent of Chile's workers opted for a private retirement plan in the first five months of the program, far above official projections. Moreover, the new system "has brought about a revolution in attitudes to pensions; they are now perceived as personal property, which workers themselves have earned. Previously people tried to avoid contributing to what was perceived as simply another tax. Now it is quite the reverse."

Although the advantages of private pensions are many, the real problem is making the transition. In recommending such a program for Britain, the Adam Smith Institute stresses a key feature of the Chilean approach. While people already covered by the preexisting government system can remain within it (all new workers after Dec. 1, 1982, can choose only a private plan), they are encouraged to switch to a private plan. To facilitate such transfers, every social security recipient receives an acknowledgment slip stating the value of his or her accumulated contributions. These slips can be transferred to a private pension company as the person's initial investment. But to prevent a large cash drain on the government's treasury, the slips are exchanged for nontransferable bonds that are redeemable when the person retires.

No quantitative analysis of the fiscal effects of social security privatization is included in the report, so it is hard to see whether there would still be a drain on the taxpayers during the transition years. But the report is a solid first step. It is good to see our English friends thinking along these lines.

CAB CURBS CUT

In January 1982 the US Supreme Court held that cities are not exempt from the antitrust laws. When they grant monopoly status to private firms, or otherwise restrict competition, their actions can be challenged in court.

The implications of that decision have been sinking in. One of the impacts has been a move to deregulate the taxicab business. Honolulu's corporation counsel issued a ruling in October declaring that the city's limit on the number of taxicabs was "not…legally enforceable." State law permits a limit only to protect public safety, not to enhance the economic prospects of existing firms. The day after the 1,388-cab limit was lifted, 45 new licenses were issued and 70 other applicants were turned away because they had not filled out the necessary forms.

A similar deregulatory measure was enacted in November in Santa Barbara, California. The city council eliminated from the municipal code sections restricting entry into the taxi business by requiring new applicants to prove that existing firms are providing inadequate service. Henceforth, any firm that pays a nominal fee and has insurance can enter the market. The change was made on the recommendation of the city attorney to avoid antitrust problems.

Deregulation is also being proposed in Colorado, where control over taxicabs rests with the state Public Utilities Commission. State Sen. Don MacManus proposes to remove the PUC's requirement that new applicants prove that a public need is going unserved. The requirement has been used to preserve a near-monopoly by Yellow Cab of Denver in both Denver and Boulder.

MacManus and his supporters point to successful deregulation in other cities. Since San Diego and Seattle deregulated both fares and entry several years ago, their numbers of cabs have increased dramatically and fares have gone up less than the consumer price index. San Diego paratransit administrator Barbara Lupro told Rocky Mountain News that "there are more cabs out there, and they're hungry." Consequently, they've had to seek out new markets rather than just concentrating on the airport and downtown hotels, as cabs do in Denver and other restricted-entry cities.

Another aspect of deregulation involves opening the market to jitneys. Seven 14-passenger jitney vans are now being operated in Indianapolis—by Indianapolis Yellow Cab. Company president Dick Hunt contends: "I could take 500 jitneys and serve the whole city—and I wouldn't need a subsidy," in marked contrast to the money-losing municipal bus line. Thus, while deregulation threatens existing taxi monopolies, it also offers the cab companies exciting new business opportunities offering jitney service.

WORKING POOR NOT WORKING POORLY

The Reagan administration has tightened the eligibility criteria for a number of welfare programs. As a result, the number of people receiving benefits has been cut, though total expenditures are still growing. Most of those now excluded are the so-called working poor—people with low-paying jobs for whom food stamps or Aid to Families with Dependent Children (AFDC) provided supplemental assistance.

Welfare supporters had argued that the Reagan cuts would be counterproductive because the working poor would decide in large numbers that they were better off quitting work and just taking welfare. In fact, however, this isn't happening. Princeton University's Urban and Regional Research Center has been assembling data on the number of cut-off recipients returning to the rolls. In New York City after six months, the figure was only 7 percent, in Connecticut 9 percent, and in New Jersey 11 percent. The average for seven jurisdictions sampled was about 10 percent.

What happened to the liberals' prediction of doom? Apparently, the work ethic is still very strong among the genuinely working poor. Although willing to take welfare supplements if offered, most of these people genuinely want to be self-supporting.

The liberals' fears may have been based on what has happened since 1968 when welfare was first extended to the working poor. According to Charles Murray of the Heritage Foundation, this well-meaning change, intended to encourage people to become self-supporting, actually subsidized people to stay in low-paying jobs or to rely exclusively on welfare. That's the only explanation Murray can find for the huge growth in welfare spending since 1968 and the end to what had been a several-decade decline in the percentage of those in poverty. Today, however, most of those who don't want to work have already been filtered out; the remaining working poor are basically people who do want to work—and are continuing to do so.

Is there hope for further cuts in welfare spending? Heritage analyst Jonathan Hobbs thinks federal welfare spending could be slashed by 75 percent. The 49 major programs—including AFDC, Medicaid, food stamps, and Supplemental Security Income (SSI)—will total $413 billion in fiscal 1983. Yet every single poor family (as classified by the government's poverty threshold) could be lifted out of poverty by spending just 26.6 percent of that amount ($110 billion).

Where does the other $300 billion go, then? Well over $100 billion goes just to pay the 5 million poverty bureaucrats administering these 49 programs. Another large chunk goes to people who aren't poor. If a Massachusetts computer check of bank records is representative, about 10 percent of AFDC, Medicaid, and food stamp recipients have too much money to qualify. According to the Food Research and Action Center, two-thirds of the students who were eliminated from the school lunch program in the wake of 1981 funding cuts are not poor, nor are 41 percent of those who have been dropped from the school breakfast program.

For a full analysis, we'll have to wait for Hobbs's forthcoming book, Farewell to Welfare, to be published this spring. But it should be clear, already, that there's room for radical surgery.

MONEY FUND SAFETY STRATEGIES

The idea of privatizing bank deposit insurance has been floating around recently both in this country and in Switzerland (see Trends, Nov. 1982). Now there is talk of privately provided insurance for deposits in money market funds.

The New York Times reports that the mutual fund industry was surprised and dismayed by new legislation and federal agency rules that allow banks and savings institutions to offer accounts very similar to money market funds. The industry claims that it has been put at an unfair disadvantage: while the new account offered by the banks and S&Ls is insured by the federal government, a money market account doesn't enjoy such government perks.

David Silver, president of the Investment Company Institute (the mutual fund industry's trade association), said in a recent speech that the industry's response to the problem is to explore "methods through which money market funds' investors who are seeking maximum safety consistent with the convenience and high returns available from money market funds can be reassured that their money is as safe as we in the industry know it is." One such method, still at the level of informal discussion, is private insurance. (Other possible defense tactics being considered by the industry, according to the Times, include lowering minimum deposits for money market accounts and following the example of the Dreyfus Corporation by trying to establish banks.)

The money funds have skyrocketed in the last three years—total assets have grown from $55.9 billion at the end of 1978 to around $300 billion by the end of 1982. Part of the reason for this growth is that higher interest rates offered by money markets have lured depositors from banks and S&Ls. At a time when security of investments is especially important, it will be interesting to see how skillfully the mutual fund industry grapples with the challenge and whether private insurance becomes part of their strategy.

FIRST AMENDMENT TRAVELING THE AIR WAVES

The Federal Communications Commission (FCC) continues to push for returning broadcasting to the marketplace, free of government controls. In recent weeks:

• FCC chairman Mark Fowler proposed that the government abandon regulation and let the market determine who uses the airwaves;

• Fowler next asked the commission to relieve TV broadcasters of requirements that they devote specified percentages of time to nonentertainment programming, keep detailed logs, and conduct community surveys (radio broadcasters were freed from these controls in 1981);

• The FCC repealed its 20-year ban on "trafficking" in radio and TV station licenses. The measure removes a three-year waiting period before licenses can be resold; Fowler argues that it will make more stations available for purchase and attract venture capital.

What lies behind these actions? And where is broadcast regulation heading? A detailed answer is provided in a February 1982 Texas Law Review article, "A Marketplace Approach to Broadcast Regulation," coauthored by Fowler and his legal assistant Daniel Brenner. It traces the history of the "trusteeship model" applied to the frequency spectrum by Congress and the FCC, contrasts it with a marketplace model, and seeks to show that various Supreme Court decisions don't forbid the FCC, in its role as guardian of the public interest, from moving to the marketplace model.

The law review article was excerpted last summer in Broadcasting magazine, creating quite a stir. Fowler may have made a tactical mistake by suggesting that, in exchange for removal of regulations, broadcasters pay an annual "spectrum fee" to the government, to be used to subsidize public broadcasting. That idea has not pacified critics of deregulation but has roused the opposition of most broadcasters. It has also been attacked as a poor idea by economist Douglas Webbink, former deputy chief of the FCC's Office of Plans and Policy, in a proderegulation "Backgrounder" for the Heritage Foundation.

One of Fowler's strongest arguments for deregulation—the First Amendment—is picking up new support, however. Columnist William Safire put the issue squarely in a recent column: "Either apply the Fairness Doctrine [and other regulations]…to newspapers, or stop applying those standards to broadcasters." Answering his own question, Safire pointed out that "freedom is in the Constitution and fairness is not." Weighing in soon after in support of this view was none other than New York Times publisher Arthur Ochs Sulzberger. In a speech at Columbia University, Sulzberger termed the fairness doctrine both unfair and obsolete. "The line between print and electronic journalism is thin at best and getting thinner. Any oversight of free speech is not the role of government." Indeed, he said, "It is time for print publishers to join with their electronic brethren to close this First Amendment gap."

NEW WAVE OF OCEAN RESEARCH

It seems like only yesterday when Jacques Cousteau shocked and alarmed us with sights of beer cans, garbage, and oil slicks in the ocean. Environmental groups warned that if we didn't do something, before long the oceans—the source of life on earth—would die from mankind's pollution. Not only did this message generate funds for well-meaning groups, it also helped mobilize political support for UN efforts to create an all-encompassing Law of the Sea regime.

But now that that effort has been partly derailed by the Reagan administration (see "Sink the Floating OPEC," Oct. 1982), it's time for a second look at the oceans. And that's just what's been provided by a 112-page report from the United Nations Environmental Program. The result of a four-year study by nearly 100 marine scientists, it states that except in coastal regions the oceans are rather healthy after all. "We overestimated the problem 10 years ago," acknowledged Yugoslav marine scientist Stjepan Keckes, referring to the alarmist 1972 Stockholm Environmental Conference. "We didn't have the facts then, but now, we do, and they say that talk of the death of the sea on a global scale is groundless," he told the Reuters news service.

Currents and chemical processes break down most waste, even oil, and disperse it with little or no trace, the study found. The ocean floor shows little sign of any build-up of wastes. There is no general public health risk from metal concentrations in the seas. Only in certain coastal zones are there risks of dangerous pollutant build-ups, and these can be handled on a local or regional scale.

In short, there is no need for a coercive UN ocean regime to save us from ourselves.

EX-IM BANK FLIES HIGH—ON TAXPAYERS' TAB

It is no surprise that the Export-Import Bank—the Rolls Royce in the garage of government welfare programs for business—has been among the biggest losers in the Laker Airways bankruptcy. Aviation Week reports that Ex-Im had loaned Laker $86 million to buy five McDonnell Douglas DC-10-30 aircraft in 1980 and guaranteed a second loan of $73.6 million; so when Laker Airways capsized last year, Ex-Im repossessed five planes now valued at $100.9 million.

Of course, the story may have a happy ending. The aircraft could very well find a new lease on life with the Air Force, which is considering the acquisition of two of the planes for presidential travel. Perhaps "Ron" could be stenciled on one and "Nancy" on the other (in the event, we could certainly be thankful for a monogamous chief executive). As it is, the Laker affair increased Ex-Im's fiscal 1982 deficit from $110 million to $160 million. That may sound like quite a sum for a bank, even one under government auspices, to lose in a year. But the bank's own president and chairman, William H. Draper III, predicts that Ex-Im may suffer an operating loss of $260 million in fiscal 1983, the biggest loss in the bank's history.

Ex-Im has had few friends among liberals in recent years, but conservatives have also begun to notice how the millions are adding up. In the legendary Atlantic article in December 1981, David Stockman, director of the Office of Management and Budget, related how he argued in a White House budget meeting for cutting Ex-Im's subsidies to corporations. When his counsel was resisted, he said, "I went into this demagogic tirade about how in the world can I cut food stamps and social services and CETA jobs…and you're going to tell me you can't give up one penny for Boeing?" (Boeing is one of the biggest beneficiaries of years of government subsidy of US exports.)

More recently, Sen. Jesse Helms (R–N.C.) has been circulating in Congress a cost-benefit study of Ex-Im's loan subsidies. It figures that the bank's indirect costs to taxpayers between 1976 and 1980 were an average of $200 million every year. The report by John Boyd, senior economist for the Federal Reserve Bank of Minneapolis, shows that Ex-Im's lending is "indeed subsidized and much more heavily than previous studies have suggested."

Last October, the influential conservative columnist Donald Lambro reviewed the case against Ex-Im in his syndicated column. Lambro concluded, "The old arguments that Ex-Im helps create jobs at home while the loans pay for themselves no longer hold water."

MULTIPLYING HOUSING

It would be wonderful if there were a single painless solution to the housing crunch in the United States, but there isn't. Nevertheless, there are some steps that could be taken to alleviate the problem, and some of them are surprisingly simple.

Martin Gellen, city and regional professor at the University of California at Berkeley, has suggested one such reform in a recent study called Underutilization in American Housing. He recommends that strict building and zoning codes be relaxed so that new apartments, called "secondary units," can be created in already existing but underutilized single-family housing. He estimates that as much as 15 percent of the nation's housing stock is now "severely underutilized," partly because of a 12 percent decline in household size in the last 30 years and a 28.3 percent decline in the average person-to-room ratio. As the Los Angeles Times put it, "Many people are rattling around in larger and larger dwellings while the present housing crisis continues outside." Gellen suggests that doing away with unnecessary government restrictions on secondary units would free the housing market to remedy this imbalance.

Part of the advantage of secondary units is that they are far cheaper than new housing construction. In a supplemental study called A House in Every Garage: The Economics of Secondary Units, Gellen points out that "because construction costs have been rising faster than incomes, secondary units represent the only form of affordable housing that can be produced today at a profit in large quantities and without subsidy.…[Also] they require no addition to infrastructure (such as streets and sewers) and involve no displacement, and therefore involve considerably lower social cost than new construction."

Relaxing zoning restrictions and housing codes may be a sound idea in principle, but politically, it is not so easy. Gellen told REASON that local planning boards are often susceptible to pressure from organized homeowners who angrily defend existing restrictions against any challenge. The Los Angeles Times says that housing codes stand "as consecrated tablets next to apple pie and motherhood in the parade of American values vociferously defended at planning commission and city council meetings." Another political problem, says Gellen, is that politicians are accustomed only to traditional solutions to the housing problem such as building more units or granting subsidies. In fact, many municipalities effectively penalize secondary unit conversion by reassessing the new units at a much higher tax rate than the actual cost of the improvements can justify.

Still, all is not hopeless. In November, the California legislature passed a bill that will compel cities and counties to permit secondary units on at least some of the lots now zoned for single families. Gellen says there are gaping loopholes in the legislation (for example, if a suburb already has an area of single-family dwellings on large lots that it allows to be converted to duplexes, the suburb won't have to do anything new). But even as a symbolic gesture, it's a giant step.

UP IN SMOKE

There are at least two ways to look at sellers of water pipes, roach clips, and other drug paraphernalia. From one perspective, they're simply honest business owners selling accessories for an activity—drug use—that coerces and defrauds nobody. From another perspective, paraphernalia sales lead directly to the commission of heinous crimes and should be outlawed.

The California legislature and former governor Jerry Brown evidently subscribe to the latter view—or at least pandered to those who do. Last September they enacted an "anti-headshop bill" prohibiting the sale of drug paraphernalia as of the beginning of this year. A couple months after the bill passed and was signed, the Los Angeles Times noted that several headshops were capitulating to the new edict. "BUY NOW OR MAKE YOUR OWN LATER!" warned a sign near the entrance to the Record Retreat, a small Los Angeles record shop. The Record Retreat's coowner told the Times, "The paraphernalia section has always done good business, but if it is going to be a hassle, then I won't sell. I don't want to lose my [business] license."

But other headshops are a bit more feisty and inventive. In response to an earlier, local antiparaphernalia ordinance, the Loading Zone in Thousand Oaks continues selling what appear to the untrained eye to be the same products, but they're being sold with radically different marketing techniques. What was formerly a bong pipe for marijuana is now an "herbal smoking pipe." Roach clips have been magically reincarnated as memo holders and hat ornaments. The shop has posted signs such as, "These items are intended for use with herbal smoking mixtures, tobacco, or snuff," and, "Any reference to illegal usage will result in refusal of service." The Loading Zone is still in business.

It's too early to know whether creative marketing will be sufficient to circumvent the new statewide law as well; but Steve Hollowell, who chairs an organization of headshops called the California Progressive Business Association, says that enforcement of antiparaphernalia laws in other states has been a resounding flop. Even though 32 states have enacted such statutes, paraphernalia is still sold everywhere in the country except Nebraska and southern Florida, where litigants got tired of being harassed by the government and conceded. Even within California, the Thousand Oaks experience is not unique: San Diego has had a total ban on paraphernalia for two years (enacted with the active support of then-Mayor Pete Wilson, now in the US Senate), yet the ban has never been enforced. So it is conceivable that the obnoxious new state law, like the dodo, will waddle into oblivion and never be seen again.

RENT-A-BOOK MAKES A COMEBACK

What if government didn't operate libraries? Could people have access to books without having to buy them? The answer is the commercial lending library, an institution few people under 30 have heard of. Yet today they are making quite a comeback.

The basic idea is for bookstores, drugstores, and other retail outlets to lease or purchase large numbers of copies of popular books and rent them out to customers for short periods of time. In the years just after World War II, lending libraries were very common, and there were four wholesale suppliers just in the New York area, according to the New York Times. What did them in was the growth of paperback books at 25¢ to 50¢ apiece. By the late 1960s, lending libraries had become nearly extinct.

But today's high book prices have given the industry a rebirth. Womrath Rental Libraries, for example, has 300 lending libraries in Connecticut, New Jersey, New York, and Pennsylvania. Most are in bookstores, but a few have been set up by companies like Avon and Citibank as employees benefits. Thus far rental libraries seem to be concentrated on the East Coast, with just one company (Cobler Book Stores) offering them in Houston, for example.

Bookstores like the idea because it builds traffic and makes at least a small profit. Readers like it because the rental libraries have enough copies on hand that they don't have to endure long waits for a bestseller, as happens at public libraries.

Rental libraries cannot substitute for all the functions of a public library. But they do an excellent job of bringing popular books to the public, which is, in fact, one of the public library's major activities.

TREATING AILING WELFARE STATES

It would be too much to say that the cradle of the welfare state, Western Europe, is now becoming its grave. But there has recently been a substantial reduction of welfare-state programs' scope and cost in nearly every country in western Europe, and the changes have often come about with far less political anguish than might have been predicted.

Last October, the Economist suggested that the main threat to European welfare states is "posed not by mean-minded conservatives,…but by the sheer cost of maintaining welfare programmes at a time of little or no economic growth." Rising unemployment has more than doubled the cost of unemployment benefits in some countries, and spending on medical care has increased as the relative percentage of old people has increased.

In Britain, the Conservative government has already cut unemployment benefits and welfare benefits. But the Socialist Mitterrand government in France, confronted with enormous budget deficits, has also proposed reductions of increases in welfare payments and elimination of some minor medical benefits (hospital patients now have to pay for food and other nonmedical services). And Denmark—one of the most extensive welfare states on the continent—has its first Conservative prime minister in this century, Poul Schluter, who has suspended compulsory wage indexation and implemented a plan to cut government spending by about 6 percent (this in a country that had a budget deficit equal to 12½ percent of the gross national product).

West Germany's new Christian Democratic government led by Helmut Kohl has delayed increases in pensions; as of July, pensioners will have to contribute to the national health insurance; and beginning with the next academic year, student grants will be repayable in full once a student starts earning a living. Germany's labor minister, Norbert Blum, said, "We are faced with only one choice—caution or demolition. And as I am against the demolition of the social welfare system, I regard a breathing space as absolutely necessary."

Fiscal austerity may seem only sensible to moderate or conservative governments, but it often poses thorny ideological problems for socialists. Late last year, Sweden returned to power the Social Democratic party on a platform of strengthening the welfare state and implementing new state control over the economy. It's anyone's guess how long the Swedish socialists can stave off the problems plaguing their Western European brethren.

In any case, the Swedish steadfastness contrasts with the pragmatism of French Socialists. Some dissident leftists in France have questioned the government's commitment to socialist ideas, but one pro-Mitterrand journalist, Jean Daniel of Le Nouvel Observateur, defends the government's reductions in spending as austerity with a human face. "It is wrong to declare that this policy constitutes a 'moderate' policy," he wrote. "It is scandalous to say that it is less 'leftist'; on the contrary, it is created by and for the people." Of course, a rose by any other name smells just as sweet.

A VOTE HEARD 'ROUND THE WORLD

Every revolt against oppressive government interference has to start some time. In the 13 colonies, it was the battle at Concord. In France, it was the storming of the Bastille. In Tehama County, California, it was the passage of Measure A.

The voters of this pastoral county in northern California approved an extraordinary ballot measure last November called the "landowners' bill of rights" that strikes down virtually all zoning laws and other legal controls on private land. The Los Angeles Times reports that, among other things, it forbids restrictions on building on private property, including acreage for crops; abolishes requirements that property owners who develop land in isolated country areas must pay the cost of building roads or other improvements; and forbids the county from using eminent domain for roads and from metering private water wells.

Apparently the impetus for Measure A was a land-use plan commissioned by the county government and produced by consultants from San Francisco. Unveiled in early 1982, it called for strong controls on the development of agricultural land, which angered property owners. A small group of citizens organized and, with a campaign chest of $2,500, won at the polls.

As might be expected, officials of Tehama County's two cities are challenging Measure A in the courts. Their attorneys claim it can be struck down, while an attorney for the citizens who promoted Measure A is confident it will be upheld. REASON will keep you posted.

DEREGULATION FLIES TO EUROPE

The basic charter of the European Economic Community (EEC), the Treaty of Rome, requires free competition for all businesses within the Common Market. Yet airlines remain heavily regulated and subsidized. At long last, however, the breezes of deregulation have reached Europe's skies.

The opening shot was a major study by the European Civil Aviation Conference (ECAC), released last fall. It documented for the first time the full extent of government control of commercial aviation. It turns out that capacity is limited on 90 percent of all European routes. In addition, the report revealed the little-known existence of "confidential supplemental" to published intercountry aviation agreements that further restrict service.

The ECAC study shocked the European Parliament into insisting that the EEC develop plans for deregulation—or the Parliament will take the EEC to the European Court of Justice for violating the Treaty of Rome. Aviation Week (Nov. 8) predicts that the EEC will respond first by issuing a policy statement limiting the extent of subsidies any government can make to an airline. The next step will be to open new markets to commuter and regional airline service. (Such a move was expected by year-end.) The third step, expected sometime in 1983, would be for the Council of Ministers to allow more freedom in setting fares. And the fourth step, probably in 1984, would be setting up EEC procedures to monitor and oversee competition.

The consensus seems to be against "radical" US-style deregulation, but once the process begins, it is not clear how far or how fast it will go. The British are taking an early lead, having largely deregulated air freight pricing in November. In addition, aviation minister Iain Sproat overturned a Civil Aviation Authority decision last summer and allowed investor-owned British Midland Airways to compete with state-owned British Airways on routes from London to Edinburgh and Glasgow.

Sproat is very favorably impressed with the results of the increased competition spawned by deregulation in the United States. Despite the recession and the bankruptcy of Altair and Braniff, US regional airlines—the most aggressive competitors—had a banner year in 1982, with traffic growth estimated at 17.5 percent. Among the winners were Midway Airlines, People Express, and US Air.

PICKING UP ON COMPETITION

From the suburbs of Tucson comes a reminder that the principles of free-market economics extend even to the humblest and least glamorous aspects of daily life—such as garbage pickup.

For years, the government of Pima County, which includes the metropolitan Tucson area, had carved the suburbs of Tucson into refuse duchies, as it were, and given private companies exclusive franchises for garbage collection in those areas. About seven years ago, however, when a private company applied for a franchise to do business in an area already designated as another company's turf, county attorney Rose Silver discovered that the entire policy of granting franchises exceeded county government's statutory power under Arizona state law. Pima County proceeded to open up the refuse collection market. Now, according to county official Robert Prothero, any vehicle that passes a minimal safety inspection can receive a permit from the Pima County Health Department to pick up garbage anywhere in the county outside the Tucson city limits—and the vehicle's owners can charge whatever price the market will bear.

What has been the result of removing the old encumbrances to the marketplace? For one thing, the number of refuse collection companies has grown dramatically: while there were only two companies just before the new policy was implemented, there were 15 by the end of 1982. Another result of competition has been lower prices for customers. Mom-and-pop operations such as John and Bonnie Rodney's Avara Valley Disposal charge only $10.50 per quarter for garbage pickup compared to $22.50 charged by SCA Services, a nationwide company that had been the biggest beneficiary in Pima County of the earlier system of exclusive franchises. (Incidentally, the success of small companies like the Rodneys' is an interesting commentary on the economies-of-scale argument often used by proponents of exclusive franchises for large firms.)

So far, the siren song of free enterprise in garbage collection has not been heard by the Tucson city fathers, who retain jurisdiction over garbage collection inside Tucson. But the attractiveness of low prices and competitive services enjoyed by their suburban neighbors may eventually prove irresistible even for the most conservative Tucsonians.

MILESTONES

Socialists' accomplishments. Even if their economic theories leave a great deal to be desired, the new Socialist governments of Greece and Spain are increasing personal freedom. In office since late 1981, the Papandreou government in Greece has lifted a requirement of baptism for legal status, increased freedom of speech, outlawed torture, permitted Greeks to marry outside the Greek Orthodox Church, ended laws against adultery and abortion, and will soon abolish the church's monopoly on granting divorces. Similarly, the new Gonzalez government in Spain has pledged to liberalize laws against divorce, contraception, and abortion.

"Hash heaven" still flourishing. Although the Dutch government closed the marijuana and hashish shop in a youth center in Enschede (see Milestones, Jan.) in November—bowing to pressure from the impeccably progressive Swedish government, which threatened to go to the United Nations with charges that the Netherlands was flouting international drug-traffic treaties—Dutch police are still tacitly permitting a large drug trade, according to an Associated Press article. "Everything is illegal," the head of the Amsterdam police narcotics squad explained to a reporter, "[but] with the shortness of manpower, we have to make priorities."

Antisodomy law struck down. In September the US District Court in the Northern District of Texas declared that a Texas statute prohibiting "deviate sexual intercourse with another individual of the same sex" is an unconstitutional impingement on the right of privacy and the Equal Protection Clause. The court said, "Every individual has the right to be free from undue interference by the state in important and intimate personal matters."

Academic gravy train lambasted. Retiring California State University trustee Charles Luckman, in a farewell speech, said it is "a sham and a pretense" for the CSU board to continue opposing tuition while they're approving increases in student fees (which were doubled last year to more than $400). He called for charging tuition for "those who can afford it." The tenure system, he added, has become "a frightfully expensive way of guaranteeing employment to a special group" and has saddled the CSU system with much "dead wood."

Creationism law axed. A federal judge in New Orleans has struck down the Louisiana legislature's requirement that public schools teach so-called creation science along with the theory of evolution. The court ruled that the law violated the state constitution, since only the state board of elementary and secondary education and not the legislature may mandate the teaching of a particular course.

Legal smog lifts. A Nixon-era antitrust decree that restricts joint development of smog-control devices by auto makers will be ending, as a result of an order signed by District Court Judge Jesse Curtis. At the request of Reagan administration lawyers and the auto industry, the decree will be scaled down for the time being and will expire completely in five years.