Trends

Foreign Entanglements Unravel at the Edges

For four decades now, the US government has entangled itself in a complex web of global commitments and adopted a foreign policy contrary to George Washington's plea to posterity to "steer clear of permanent alliances." But there are increasing signs that two of these alliances—NATO (North Atlantic Treaty Organization) and ANZUS (Australia-New Zealand-United States)—may not be so permanent after all.

A small band of dissidents in the United States has long been disenchanted with the NATO alliance. The refusal of NATO allies (excepting Great Britain) to support the US attack on Libya opened a few more eyes, prompting a more widespread reexamination of the benefits of a lop-sided alliance that eats up $135 billion of American taxpayers' money each year.

Christopher Layne, the young foreign-policy analyst whose noninterventionist essay in the winter issue of Foreign Policy drove the establishment up the wall (see REASON's "Real Conservatives Don't Start Wars," May), wrote in the Los Angeles Times that the split reflected differing perceptions of NATO's purpose. The Europeans "believe that the alliance exists solely to defend Europe itself," he noted, while the United States "believes that NATO's strategic responsibilities should encompass the protection of Western interests in the Third World."

If our allies refuse to support us, argued New York University professor and Hoover Institution scholar Melvyn Krauss in the New York Times, why not make them pay for it—say by withdrawing some of our troops? "The answer is the doctrine of Atlantic unity.…It is no small irony that this doctrine, which minimizes the costs to Europe of opposing American interests, has worked toward our mutual estrangement." Concluded Krauss: "It is time for both the United States and its allies to take a more realistic view of their relationship."

Expect to hear more of Krauss if substantial anti-NATO sentiment develops in this country. His book The Alliance Trap is due this fall; Hoover Institution polemicist Gregory Fossedal has already hailed it as the first step toward the day "American troops…return home from Europe."

That day is still several years off. But ANZUS, a smaller, less consequential alliance, may be on its last legs.

Credit for the possible dissolution of this 35-year-old alliance belongs to New Zealand Prime Minister David Lange, who has made good on his 1984 campaign pledge to bar nuclear-armed or nuclear-powered ships from New Zealand ports. Despite US pressure to reconsider this policy, Lange has held firm. He has scheduled a crucial parliamentary vote on the matter in August. If he wins, editorializes the New York Times, "New Zealand would thus exclude itself from ANZUS and invite a new American arrangement with Australia alone."

ANZUS is in tatters, asserts analyst Ted Galen Carpenter of the Washington D.C.–based Cato Institute, because it, too, is different things to different nations. To New Zealand, it is a conventional defense pact, not a South Pacific NATO. Says Lange: "New Zealand does not…expect to be defended by nuclear weapons."

The US government, on the other hand, sees ANZUS as part of a unitary Western alliance. The military means of protecting members of this alliance are "indivisible," writes Carpenter. Or, as Assistant Secretary of State Paul Wolfowitz puts it: "We have only one navy…not one navy to accommodate one country's policy and another navy for the rest of the world."

In US eyes, New Zealand desires a free ride—protection by the United States without corresponding responsibilities toward it. Yet Lange seems willing to give up the free ride. And why not? Observes Carpenter: "Given its geographic isolation, New Zealand would be an unlikely arena for military combat even in a worst-case scenario—a war between the two superpowers. Only its previous willingness to serve as a host to America's nuclear navy made that pastoral nation a potential military target."

The New York Times's editorialists seem to have missed Lange's point. New Zealanders, noted the Times recently, "are not alone in wanting to nestle under America's nuclear umbrella while indulging in antinuclear morality." It's our Western European allies who are snuggled up tightly and will be harder to dislodge. If nothing else, the destruction of ANZUS should serve to put them on notice that alliances aren't necessarily forever.

Rain or Shine, It's Money in the Bank

How much would you pay for a weather report? In starting up Airdata Inc. in 1983, Dallas businessman M. Blake Barker bet that quite a few people would dig into their coin purses for news about the weather. Like other private weather services, Barker's bet went against the conventional wisdom, which says that weather information is a kind of "public good"—since you can't have any exclusive property rights to weather information (because it's out there free for anyone to take), no one will find it in his interest to invest in collecting it and trying to sell it. So, the conventional wisdom goes, the government has to provide weather information. But Barker's bet was a winner.

His Airdata operates WeatherTrak, a computerized phone service that gives callers up-to-the-hour weather bulletins for any of 235 cities around the globe. Barker buys his information from private services, then stores it as taped phone messages. Available in more than a dozen major American cities, the service is targeted at travelers, who find it's handy to know what the weather will be doing upon arrival at their destination. Up to 75,000 a day are paying from 35 to 55 cents per call to find out.

These charges to callers, however, contribute only 25 percent of Airdata's revenues—advertising sales make up the rest. In most cities where WeatherTrak is available, the weather bulletins contain commercial messages of one of four paying advertisers: Continental and United airlines, Hilton Hotels, and Metromedia Long Distance. Sponsors often even include the WeatherTrak number in their regular print and broadcast ads, at their own expense.

A highly technology-intensive enterprise that mainly relies on computers and communications devices, Airdata has a staff of only two people. This year, the company expects to earn $86,000 on $1.2 million in revenues, and for next year Barker projects revenues exceeding $2 million. When it rains it pours?

Thirty Million Americans Are Going All the Way

By now, even the skeptics can't help but notice that local governments across the country are successfully privatizing many of their services. But hard-core cynics may still wonder: just how far can privatization be taken? The answer is found in the blossoming residential phenomenon known as proprietary communities. In these privately owned and planned developments, private organizations provide everything from garbage collection to police protection, fire-fighting service, and community transportation. "Within their enclaves," reports The Economist, "these associations perform all the functions of a small government."

Twenty-five to thirty million Americans now live in proprietary communities, which can be composed of condominiums, single-family detached homes, town houses, or high-rise buildings. Some are large, but most are not—the typical new association consists of 60 condos or 150 houses, with common areas and shared facilities.

All proprietary communities are governed by associations of which every owner is automatically a member. People who buy property in such a community must agree to abide by the association's rules, which may dictate anything from the color of residents' curtains to the areas where a car may be repaired.

Why do people choose to live in private communities? One reason is the recreational opportunities; many developments offer golf courses, swimming pools, tennis courts, saunas, hot tubs, gyms, hiking trails, and jogging paths.

The shared costs of proprietary living make other amenities affordable as well—like technology. At Las Colinas, a 12,000-acre development near Dallas, residents have access to several nationwide computer databases, over 20 radio stations, and 30 television channels of current movies and special programs.

These communities are not just for the rich. They are often an affordable alternative for the young and struggling, as well; and some, such as Woodlands in Houston, strive for a mix of income levels and ethnic background.

About 2,500 of the 100,000 proprietary communities in the country are "adults only." Security is often the most important feature, especially for the elderly. Many communities have guarded entrances, electronic communications systems, and roving police.

"Another advantage of adult communities," reports the Los Angeles Times, "is the opportunity for grassroots, participatory democracy. Residents are encouraged, even mandated, to handle their own affairs—and they do."

The people who live in proprietary communities might not give it much thought, but what they're doing is truly radical—in their own way they're on the cutting edge of a phenomenon of the '80s: privatization.

Milestones

• No more reruns? Two Denver-based cable giants, Tele-Communications Inc. and American Television & Communications Inc. (owned by Time Inc.), are discussing with other cable companies the possibility of forming a fourth national network. Visions of taking on the Big 3 have been spurred on by deregulation, which will let cable companies drop required program services that tie up valuable channel capacity. Says John Malone, president of Tele-Communications, "We're tired of selling retreads—we want some prime meat."

• Who ya gonna call? American Telephone & Telegraph has proposed to slash its long-distance charges by $1.5 billion—to 19 percent below the rates that prevailed when the government-enforced Bell monopoly was dissolved in 1984. The biggest cuts would be in daytime and evening calls on weekdays, where competition is strongest. MCI and GTE said their companies will probably match any cuts the federal phone regulators allow.

• Just a bad memory. Synthetic Fuels Corp., the quasi-governmental agency set up in 1980 to subsidize development of a synthetic fuels industry, is dead. Through loan and price guarantees, the corporation was supposed to ante up for synthetic fuels projects that would produce the equivalent of 500,000 barrels of oil a day by 1987; four projects and 4,300 barrels a day later, what poor management and charges of impropriety couldn't get Congress to do, the budget deficit and declining oil prices did: in December it pulled the plug, and by spring the SFC had breathed its last.

Global Trends

Latin American Freedom Promoters Get It Together

MIAMI, FLORIDA—At a recent gathering here of Latin American intellectuals sponsored by the Francisco Marroquín Foundation, the topic was "Prospects for Freedom in Latin America." Not an auspicious theme, judging from recent events. But "in spite of all the empirical evidence," said Manuel Ayau, president of Francisco Marroquín University in Guatemala, "we are optimistic."

The immediate objective of Foro Latinoamericano's participants was to form a bureau of free-market Latin American speakers and to schedule lectures for them in various Latin American cities. "Getting the people acquainted with like-minded thinkers from other countries is a necessary first step," said Lucy Schwank, who organized the meeting. The meeting included lectures by Peter Berger of Boston University, Melvyn Krauss of the Hoover Institution, and Guatemala's Armando de la Torre, as well as working sessions.

The participants agreed that focusing on purely short-term political gains is futile. In Ecuador, for example, a free-market candidate won the recent presidential elections, but lack of support may tie his hands when it comes to fundamental reforms. "It's no use having a free-market president if his own party doesn't understand what it's all about," complained the Ecuadorian delegate.

Bolivia has the opposite problem. "Not a single government official can be described as a free-marketeer, but they were forced to adopt a market-oriented program as the only practical way to stamp out raging inflation," said the Bolivian delegate. "They did it from necessity, not from conviction."

The participants noted that broad efforts on the educational front, attuned to long-run objectives, have proven effective in promoting Latin American liberty. Dr. Ayau's Francisco Marroquín Founsity will be 15 years old this fall, has over 3,000 students, and is a major force on the intellectual scene. "I started out with a discussion group with a few friends of mine about 25 years ago," said Ayau, a former president of the Mont Pelerin Society. "I like to think that our growth is a reflection of the power of our ideas."

Research institutes are another promising approach. Peru's Instituto Libertad y Democracia, headed by Hernando de Soto, achieved international fame with its pathbreaking studies of the informal economy of Lima's barrios—a classic case of F.A. Hayek's spontaneous social order. Free-market "think tanks" have mushroomed in most Latin American capitals over the past decade, though not all have been successful. "What we need is some cross-fertilization—a pooling of experiences," said Bill Weston, executive secretary of the Francisco Marroquín Foundation. "We believe that promotion of the speakers' bureau will help further this objective."

(For more information on Foro Latinoamericano and the sponsoring foundation, contact Bill Weston, P.O. Box 953089, Stuart, FL 33495.)

—Julio Cole

Turbulence Reported in Mao's Coffin

Five-year plans in Communist countries aren't among the world's more innovative documents. But the Chinese government's recently approved five-year plan looks to be another big step out of the Maoist morass and toward a more liberal economy.

The ambitious blueprint calls for what the Wall Street Journal terms "a massive transfer of administrative power from central authorities to local governments and an equally major step to gradually remove government at all levels from business and industry." Though the plan is not long on particulars, details include:

–Railways and port facilities will be decentralized. The state must contract if it desires to use them.

–Internal airlines, post, and telecommunications departments may set rates at profit-making levels and keep 90 percent of those profits.

–Control of education will devolve from the central government to local governments, in order to end "excessive and rigid state controls over schools."

–The price of electricity will be determined by the market, rather than government edict.

–Price controls on most goods will be allowed to fluctuate as demand increases or decreases.

The tone of the document is perhaps its most encouraging aspect. References to "initiative," the "enterprising spirit," and the need "to separate the functions of government from those of enterprises" suggest the radical break that Chinese ruler Deng Xiaoping is making from Maoist orthodoxy.

One reform Deng has encouraged for several years is the private ownership of homes. Most Chinese are renters, assigned to state-owned apartments. They are dirt cheap, with rent equal to about 5 percent of one's income. But they are also, predictably, scarce.

Certain cities, such as Wuhan, are experimenting with rent increases to discourage demand. Peking and Canton have built housing developments in which overseas Chinese can buy apartments for their own use or for relatives. And now the government is requiring factories that construct housing complexes for their workers to sell, rather than rent, at least a fifth of all new units.

If these steps seem too tentative to herald a trend, consider the prediction of He Shaoyi of Peking's Municipal Housing Management Bureau. Private homeownership, he says, "is going to be the future of housing in China. The ultimate goal is to have people buy houses rather than have housing assigned to them by their work units."