MORE FINGER POINTING AT INDEXING OPPONENTS
In a recent editorial in these pages ("Recovery Saboteurs," Apr.), we called attention to the growing big-government constituency that wants to repeal indexing of personal income tax brackets scheduled to take effect in 1985. By adjusting tax brackets to the rate of inflation, indexing would put an end to the windfall revenue government reaps when inflation pushes taxpayers into higher brackets. It is bracing to note, therefore, the rising sounds of fury in opposition to the repeal of indexing.
"Indexing is worth having for honesty's sake alone. If the Government needs more money, let it raise taxes openly and permit the citizenry to judge," intoned one irate voice, adding that "indexing favors low-income taxpayers—a point apparently lost on liberals who want repeal." This from a recent New York Times editorial entitled "Truth in Taxing."
Wrote Council of Economic Advisers Chairman Martin Feldstein in the Wall Street Journal: indexing "holds the key to controlling the future growth of government spending and to preventing a resurgence of spiraling inflation." Feldstein noted that the political temptation to repeal indexing is strong, "because it increases revenue without explicitly increasing taxes," adding that this "is the very opposite of responsible budgeting."
Feldstein also pointed out—as did the Times editorial—that indexing proportionately is far more favorable to lower-income taxpayers and that repeal would harm this group most. A detailed and compelling analysis of this point is made by Heritage Foundation analyst Thomas Humbert in a Backgrounder report, "Tax Indexing: At Last a Break for the Little Guy."
Assuming an annual inflation rate of 8 percent, Humbert shows that, without indexing, "the average tax bite [from one year to the next] increases by a high of 26 percent for the $12,000 income earner, to just 9.6 percent for taxpayers making $150,000 or more."
"Year after year, Presidents and Congresses have thus been piggybacking on inflation to increase the proportion of income taxed—raising taxes without ever voting to raise them. Indexing will end the deception." With such sentiment issuing from the liberal conscience of the New York Times, there may yet be hope for the survival of indexing-imposed honesty.
NOW, THIS MESSAGE: PBS CAN PAY ITS WAY
Not so long ago, it was pure sacrilege to even suggest the airing of commercials on so-called public television. Then the notion evolved into an item of controversy. Now it is a reality. On an experimental basis, 10 affiliate stations of the Public Broadcasting Service (PBS) have been broadcasting selected paid advertisements, some since April of last year.
The experiment was proposed by the Temporary Commission on Alternative Financing for Public Telecommunications, established by Congress in 1981. As federal funding for public broadcasting declined with the advent of the Reagan era—from a 1981 Carter-budget high of $172 million to $137 million in 1982 and $105.7 million for 1983—the nation's 296 PBS affiliates have had to find other sources to compensate for the federal cutbacks.
Selling commercial time is just one of many ways PBS stations can raise money. Others include additional leasing of PBS satellite facilities to other broadcasters (some satellite space already is rented out), producing shows for cable and commercial TV, selling video recordings of shows, transmitting high-speed data, and providing closed-circuit links (between universities and hospitals, for instance).
Airing paid ads, however, seemed the most likely source of income. And the results of the experiment have so far been encouraging. The New Orleans station WYES, for example, found it could generate $80,000 a month by selling commercial time, more than making up for its federal-funding cutbacks this year. Negative viewer response has been almost nonexistent, and the station's fund-raising from viewers has not been ill-affected. Estimates of potential ad revenue for all PBS stations now range from $104 million to $160 million a year.
Nonetheless, advocates of subsidized television argue that the quality of programming on PBS will be "tainted" by ads, that programming will have to support commercial values. Indeed, this is the view of Edward Pfister, president of the Corporation for Public Broadcasting, the quasi-governmental entity that oversees the PBS. But in a recent Los Angeles Times op-ed piece, Kenneth Robinson, a member of the congressionally appointed Temporary Commission on Alternative Financing for Public Telecommunications and a supporter of the ads, pointed out that "newspapers, magazines, and even high-quality commercial-television programs are currently sustained by advertising revenues, and editorial content has not been necessarily 'corrupted' by the business side of these enterprises." One need only think of the commercial success of 60 Minutes—no friend of big business—to see the truth of Robinson's contention.
VIET CAPITALISM: BAD MARX, GOOD MARKS
How ya gonna keep 'em down on the collective farm after they've seen Western culture and the profit motive? The Vietnamese government certainly doesn't have the answer. Ten years after the Communists' victory in South Vietnam, one would think they would be at least a little bit disturbed by the unmistakably capitalist tendencies of many of their subjects, but that doesn't seem to be the case.
In Ho Chi Minh City (Saigon), for example, there is a thriving street market. Wall Street Journal reporter Barry Wain recently found that imported cassettes sell by the hundreds on the city streets for about $1.50 apiece. Different streets and different areas specialize in electrical items, radios, cameras, bicycle parts, and food. And despite Vietnam's serious economic problems, there's an abundance of Japanese stereo equipment, microphones, and calculators.
"Wheeling and dealing, trading and scheming as furiously as ever," Wain wrote, "Saigonese display contempt for Hanoi and its socialist policies. They snarl about 'the communists' as if they were still an underground organization rather than the central government."
Curiously, the government tolerates the street trade, although it taxes the trade and extracts space rent from some street vendors. One woman who rents 14 square feet of stall space complained to Wain that "the government just looks around and when it sees we're selling more, it raises the rent."
In agriculture and industry as well, the government has been surprisingly liberal. Despite passionate debate within Communist Party and government circles, "capitalist-style incentives for farm and factory workers" have been introduced in the last two years. It may not be in the Marxist-Leninist spirit, but it seems to be working. At the Ai-Quoc agricultural cooperative near Hanoi, for example, the government previously purchased all rice at a low, fixed price; but now, it sets a quota and pays free-market prices for the surplus. Cooperative chairman Nguyen Van Nieu says, "Everyone likes the system. They can sell their surplus and get money to buy more clothes and consumer goods."
Perhaps there's a domino theory at work here. Once a Marxist regime permits such incentives, could department stores, fast-food restaurants, and Disneyland East be far down the line? Time will tell.
It's always encouraging to see free-market arguments presented in unexpected forums, but an editorial in the January issue of Prevention magazine may be especially noteworthy. A magazine that has explored unorthodox but often effective modes of health care, Prevention—which has a circulation of 2.2 million—published a ringing endorsement of a free market in health care that relies on explicitly individualist arguments.
Writing of "the freedom to take our health into our own hands in any way we choose," Editor Robert Rodale urged that "we need to have more freedom to prevent disease and to solve our own health problems." Many "health freedoms," he noted, are limited by medical-practice acts in each of the 50 states and the District of Columbia (these acts generally license medical practitioners, forbid unlicensed practice, and make it extremely difficult if not impossible for consumers to find any information about the competence of licensed practitioners). "All these laws protect a medical monopoly which we never needed, and which we especially don't need now," said Rodale.
He is somewhat optimistic that medical-practice acts can be reformed, since other professions have already been deregulated and there is popular sentiment for encouraging competition in the provision of services. And he announced the creation of a People's Medical Society to promote "health freedom" (which, he emphasizes, also requires a realization that "health is something we create for ourselves by the way we live,…[not by] unnecessary flight toward professionalizing health.")
Meanwhile, a Berkeley-based group called the Coalition for Health Democracy has been working to liberalize California's Medical Practices Act, which legislates that with few exceptions, only physicians may diagnose or treat any physical or mental condition. Coalition founder Dana Ullman attacks this 1937 law as based on "medical chauvinism"—the assumption that there is only one method of healing and only one type of training for learning about healing and that it is the government's duty to limit health care accordingly. Ullman supports a freer market in health care. He observes: "For liberals, it's a civil liberties and a consumer rights issue. For conservatives, it's an issue of individual freedoms and individual rights. It's also a women's rights issue since a key part of the women's movement has been to assert that people should have control over their own bodies…and an economic issue [involving] a more open medical marketplace with greater competition between health and medical professionals."
In fact, the staff of the California Board of Medical Quality Assurance has already prepared a proposal for some reform of the Medical Practices Act. The proposed change would permit anyone to treat patients for any condition except for prescribing, surgery, radiation, invasive instrumentation, and diagnosis of disease or other pathology in that group of activities. The change would, however, mandate state registration and information disclosure for alternative health care practitioners.
The staff proposal hasn't been accepted yet by the board itself, and in any case, it wouldn't come even close to creating a truly free market in health care. But it would be a start. As Ullman says, "It is time that consumers be granted basic human rights for self-determination in health care," and a free market provides the structure for that.
ZONING DETACHED FROM THE REAL WORLD
If you had the unhappy experience of checking out a home purchase in the classifieds of your Sunday paper recently, you may have noticed that the price of housing remains outrageous. There are several reasons for high housing costs, but one that is rarely mentioned is one of the great sacred cows of American politics—the single-family, detached-house zone.
The chances are great that you live in a city with exclusive single-family zoning—an estimated 95 percent of all zoning ordinances have such provisions. For decades, the wisdom of this standard has been an item of faith for liberals and conservatives alike, so it has taken some audacity for a prominent Chicago lawyer named Richard Babcock to challenge it publicly.
In a recent presentation at a Los Angeles conference, Babcock described the effect of exclusive single-family zoning on the housing market. Decades ago, local politicians used zoning to segregate tenements and apartment buildings—where new immigrants lived—from "the broad expanse of middle-class clapboard and brick houses that lined most of the suburban and small-town streets." But what these politicians and the planners in their employ didn't account for and couldn't have accounted for is that the housing market has changed radically.
The waste and misallocation of resources that comes in the wake of government zoning is appalling. In southwestern Connecticut, there are 33,000 acres of vacant land zoned minimum one-acre residential—it lies vacant because there isn't enough demand, at the prices that would have to be charged, for single-family housing. In urban and urbanizing areas of southern California, there are 700,000 acres of vacant usable land zoned similarly; in Topeka, Kansas, 60,500 acres in single-family districts are vacant; and even in New Orleans, 6,500 vacant acres are zoned for single-family units.
Although Babcock is not a zoning-law abolitionist, he knows where the solution to the problem can be found. He asks, "What can be said in defense of the detached single-family house district? What else other than the market? If that is what the buyer wants and is willing to pay for, then let all residential zones be so designed. But if the exigencies of demographics and cost lead to new demands for housing, why should a local ordinance force the builders and buyers to pay the costs of detached single-family units?"
INDIANS TAKE GAMBLING CHANCES
Many churches depend on their weekly bingo game for a considerable portion of their income. Several state governments have cashed in on lotteries as an easy source of revenue. Now, tribes of American Indians are also getting into the gambling game as a source of jobs and income for Indians on reservations. But not everyone likes it.
Indian reservations are generally viewed as independent "nations" subject to federal, rather than state or local, law. Despite this, law-enforcement agents in Riverside County, California, earlier this year enforced an antigambling ordinance and shut down both a poker casino and a bingo parlor on an Indian reservation. When the county's actions were contested in federal court, the judge ruled that the poker casino, but not the bingo parlor, would be allowed to operate. Because the operators of the poker casino were acting as a tribe, argued the judge, they are exempt from the local ordinance, while the bingo business—as the enterprise of a single Indian acting on his own behalf—is not entitled to the exemption.
In January, the Yaqui Indian Reservation outside Tucson, Arizona, opened a 20,000-square-foot bingo parlor, a facility that cost $1 million to build and can accommodate 1,300 players. Almost immediately, Tucson and Arizona state authorities sought to outlaw bingo playing on the reservation, where more than 800 people—mostly non-Indians from Tucson—each night try their luck at winning $12,000 in prizes. The authorities argue that reservation gambling violates state law and takes business away from churches and charities licensed to operate bingo games.
The Yaquis, however—along with some 40 to 60 other tribes throughout the country who within the last two years have opened gambling operations—claim exemption from local and state laws. And under federal law, there is no provision to prevent the Indians from operating gambling enterprises. Indeed, a 1981 Supreme Court ruling upheld the right of the Seminole Indians of Florida to operate bingo games on their reservation without local or state regulation.
So fired up over the issue are Arizona state legislators that a bill is now in the works to prohibit non-Indians from collecting large winnings from bingo games played on the reservation and from assisting in operating the games. Among the Indians' allies in trying to keep the games going are the players themselves. When a tribal leader announced to a parlor full of players the Indians' intentions to fight the pending regulation, response from the crowd was enthusiastic.
A CLEAN SWEEP FOR CONTRACTING OUT
It probably comes as no surprise, but we now know—thanks to a report by the General Accounting Office—that contracted custodians clean Post Offices at about half the cost of Postal Service custodians. The difference is due largely to the higher wages and benefits paid to Postal Service employees.
The GAO found that in buildings of 10,000 square feet of less, the average cleaning cost is $1.88 per square foot with Postal custodians and 77 cents with contractors. In some areas, contracted cleaners perform at a cost as low as 69 cents per square foot. And, reports the GAO, contractors clean as well as Postal custodians. No comparison of costs was made for offices larger than 10,000 square feet, but the GAO estimates an average saving of 20 to 34 percent with contracted cleaners, not quite as dramatic as the savings with contractors in the smaller offices.
Though the Postal Service uses contractors to clean more than half of its offices of 10,000 square feet or less, rarely does it contract custodians to clean its larger buildings (though these represent 75 percent of total post office space). The GAO report, released at the end of last year, adds yet another layer to the mounting evidence that the private sector provides goods and services at far lower costs than the government.
CHILDREN'S TV: THE PLOT THICKENS
One of the fine traditions of American politics is the suffering-kiddies appeal—innocent children will lose out unless we approve loan guarantees for Chrysler, increased funding for the Export-Import Bank, and subsidies for golf courses in suburban Louisville. Specious as the argument may be, one must admit its wonderful versatility. Indeed, it might be called the perfect one-size-fits-all political argument.
A rather creative application of the suffering-kiddies appeal was made in March by Bruce Christensen of the National Association of Public Television Stations. In this instance, Christensen suggested that the suffering of innocent children is inversely correlated with taxpayer funding of educational television—the less money, the more suffering. "At current inadequate funding levels, the question is not how to do more for children but whether we can continue for long doing what we do now," Chistensen warned.
But are more taxpayer dollars for television the only way we have to prevent a generation of anomic and culturally impoverished children? Perhaps not. In fact, commercial cable television has recently been coming up with a dazzling variety of programming for children. One such service is Nickelodeon, which provides 13 hours daily of nonviolent children's programming with such shows as Pinwheel (sort of a Sesame Street without the alphabet), Livewire (a variety program), You Can't Do That on TV (a junior version of Laugh-In), and in the near future, a revival of the famed Mr. Wizard series that enriched the childhood of more than one REASON reader. Another cable service is the new Disney Channel, a pay-TV channel with original series such as Welcome to Pooh Corner, Good Morning Mickey; and a cartoon series called Mousterpiece Theatre, hosted by George Plimpton.
Some of the toughest critics of children's television are not children but former FCC commissioners (one former commissioner, Newton Minow, originated the phrase "vast wasteland" describing television generally). But even ex-commissioner Nicholas Johnson, who has criticized several aspects of commercial television in the past, is reportedly impressed with the state of children's programming on cable.
Government-funded television may have to cut back its programming as its money dwindles—but will innocent children suffer? Probably not. They'll just change channels.
STATES ACCELERATE IN OPPOSING LIMIT
Enacted by Congress in 1974 as a fuel-saving measure, the national 55-mile-per-hour speed limit was never very popular. Many localities throughout the country chose to enforce it only slightly, and in the West at least, the idea of going slow didn't ever settle into the ways of many motorists. And official resistance to the speed limit is continuing to mount.
In Nevada, for instance, drivers exceeding the 55-mph limit up to 70 mph are fined just $5 for wasting energy. Wyoming levies a $5 fine on motorists exceeding the limit up to 74 mph. And in Utah, fines and penalty points are less for those caught exceeding the limit up to 64 mph than for those traveling at speeds above 64 mph.
More boldly, the Colorado and California state legislatures are now considering bills—which stand good odds of being passed—that would repeal the 55-mph limit. The rub is the fact that the Reagan Transportation Department, which has been bullish on the limit despite a 1980 GOP promise to repeal it, has threatened to withhold federal funding for highway construction—which totals $12.1 billion—from states that do not comply with the federal law.
Other state legislatures are watching to see how California and Colorado fare in their open challenge of the Transportation Department. Kentucky's, for one, has enacted a bill to allow higher speed limits if the federal government yields on the issue. And some legislatures, including those of Idaho, North Dakota, and West Virginia, are considering changes in their speed-limit laws or in the enforcement of existing laws.
TAKING FARMERS TO MARKET
Since the Great Depression, South Africa, like the United States, has seen a proliferation of agricultural control boards—there are 23 of them now—and farmers' cooperatives. The industry-dominated control boards, backed up by the enforcement power of government, generally determine how much of their output individual farmers can sell, and at what prices; and some of the cooperatives have coercive powers. There is a Land Bank in South Africa, as well—a sort of central bank for agriculture—which provides loans to farmers at below-market rates. But there are signs of late that South African farmers are turning away from state protection and seeking to establish a free market in agriculture.
Maize (corn) growers constitute South Africa's largest agriculture sector, and 80 to 90 percent of these farmers are represented by the National Maize Producers Organization (NAMPO). Since the majority of Maize Board members are elected by the farmers, then, NAMPO effectively controls the board. The producers' organization recently sided with South Africa's Free Market Foundation (FMF) and other free-market groups in calling for the immediate deregulation of agriculture and the simultaneous decontrol of other aspects of the economy. The producers' group came to realize that farmers lose more as a result of controls than they gain from assistance programs. It also recognized that government regulation and protection of industries that supply farmers—the manufacturers of diesel engines, vehicles, steel, and tires, for example—impose burdens on farmers as well.
In recent talks with the FMF, reports REASON correspondent Leon Louw, the maize growers' organization agreed that through the Maize Board it would summarily terminate maize price controls and restrictive licensing for millers and bakers and would phase out the one-channel marketing system now under the board's control. Because maize is South Africa's largest agricultural product, the board's actions could have far-reaching ripple effects throughout the nation's economy.
HONG KONG PAVES THE WAY FOR AUTOMATED TOLLS
An automated toll-collection system that would let drivers bypass congested toll booths is soon to be installed in Hong Kong. Similar to concepts discussed in REASON's January 1982 cover story ("Rush Hour Remedy"), the system would make use of specially encoded devices mounted on each vehicle. Whenever a vehicle passed over a sensing point, wires buried in the road would detect its presence and record its passage for subsequent billing. This technology makes it feasible for road-user fees to be varied by time of day and location so as to match supply with demand, encouraging car pooling and the use of mass transit, staggered working hours, and other means of reducing peak-hour congestion.
Hong Kong Transport Secretary Alan Scott told the Reuters news service that a pilot program has been approved by the governor. It will outfit 5,000 government vehicles with code boxes and install a limited number of sensors in the roadway, at a cost of $5.3 million. If the pilot program is judged successful, it will be extended throughout the colony, with the ultimate cost reaching $50 million. Scott indicated that interest in the idea had also been expressed by authorities in Manila and Singapore, "but we will be the first in the world to do it."
PEASANT LIFE AT PRESENT UNPLEASANT
For any starry-eyed city slicker who dreams of small-farm living—raising rutabagas and strawberries and reading Ralph Waldo Emerson next to a wood-burning stove—a recent article by agricultural economist Luther Tweeten in Science magazine may come as a jolt. Tweeten suggests that small farms and small farmers aren't all they're cracked up to be.
Tweeten examined eight fairly common beliefs about small farms and found that they're either way off the mark or totally false. One such belief is that small farms provide a higher quality of life. Yet detailed studies of approximately 800 rural families in Iowa and North Carolina found widespread feelings of alienation, demoralization, and pessimism, possibly because these families generally had extremely low income. Tweeten also pointed out that there has been and continues to be a mass exodus from small farms and a shift of operators from fulltime to part-time status.
Another belief is that operators of small farms and owner-operators take better care of their soil than do other farmers. Yet a survey of 37,000 land owners found that in none of the 10 regions of the United States did average rates of erosion by nonfamily corporations exceed those of other types of ownership; and in the Southeast, almost 57 percent of land owned by nonfamily corporations used soil-conserving practices, whereas only 36 percent of land owned by families used these practices. Furthermore, on a nationwide basis, higher income levels of farmers were associated with lower rates of erosion.
Tweeten found that small farms are not more energy-efficient than large farms. (In fact, energy costs per dollar of gross receipts per acre and per unit of production expenses were consistently higher for the smaller of any classes of farms compared.) Also, contrary to the belief that federal programs have hastened the demise of small farms, Tweeten points out that "the most comprehensive analysis to date of the impact of commodity programs concluded that…government price and income payment policy has generally been neutral in its effect on farms of varying sizes producing program commodities."
Are small farmers better citizens? Do they contribute more to the community? Probably not, Tweeten concludes. "Given the importance of income and employment to well-being, the socially optimal size of a farm from the standpoint of the community is not a small low-income farm." The economically optimal size of farms is certainly not small. If we had to rely on a system of smaller farms, "consumers would experience substantial loss of utility because of lower farming efficiency and attendant higher cost of food."
In short, Tweeten rains on the Mother Earth News–Thomas Jefferson–Joni Mitchell parade celebrating the small farm. At least in agriculture, small isn't beautiful—it's inefficient, impoverished, and apparently not much fun.
Pill power. Three studies by the Centers for Disease Control, published in a March issue of the Journal of the American Medical Association, confirm a scientific speculation previously publicized in this column (Nov. 1982)—that birth-control pills do not cause breast, uterine, or ovarian cancer and, on the contrary, help to prevent cancer of the ovaries and uterus. The link between blood clotting and the use of the pill by women age 35 and older who smoke still holds.
Plane truth. The Tupolev Tu-144, the USSR's supersonic transport reportedly modeled on the Concorde aircraft, has been permanently withdrawn from scheduled service because the aircraft is "too heavy and too inefficient," according to a Moscow civil aviation ministry official. He noted that the Concorde—a joint project of the British and French governments—is now practically out of service as well.
Celebs support pot. Former television stars Tom Rettig of Lassie and Billy Gray of Father Knows Best have endorsed a California initiative to legalize marijuana. Rettig reported that his nearly 20 years of pot-smoking hadn't harmed his life.
An ease in apartheid? For the first time in South Africa's history, blacks will be able to exercise limited ownership of dwellings in specially demarcated urban areas throughout the nation. Beginning July 1, the government will allow blacks to purchase 99-year leases on 500,000 government-owned houses located in racially segregated areas.
Entitlements ceiling? At a meeting in March, the nation's governors endorsed a resolution that put them on record for the first time as calling for a restraint on the growth of so-called entitlements. As Washington Post columnist David Broder put it, "Such political 'untouchables' as Social Security and Medicare can no longer remain untouched."
Wild and crazy guys. The Soviet Union has withdrawn from the World Psychiatric Association to avoid the humiliation of being expelled. The WPA congress scheduled for July was expected to suspend or expel the USSR because of its habit of incarcerating dissidents in psychiatric prison-hospitals.
Flying high. The Supreme Court has thrown out the conviction of a college student discovered to have marijuana in his two suitcases after investigators detained him at Miami International Airport. A majority of the court agreed that the investigators had violated the Fourth Amendment ban on unreasonable searches and seizures.
We're ahead. Richard DeLauer, the Pentagon's top scientist, reports that the United States is superior or equal to the USSR in 19 of 20 basic technologies that will influence the balance of power in the next 10–20 years. Moreover, the quality of our weapons is equal or superior to the quality of Soviet weapons in 27 of 32 separate categories.
This article originally appeared in print under the headline "Trends".