Trends

Deregulation Transports Women to Higher Levels

How do you open up a male-dominated industry to women? The popular solution seems to be to require employers to hire a certain number of women. Alternatively, women can try to force the hand of businesses by bringing costly discrimination suits. But deregulation? Yes, that's right. It may not be the "in" solution yet, but if the transportation industry is any indication, it has a lot of potential.

There seems to be general agreement among those in the know that deregulation has significantly increased employment opportunities for women in the previously male-dominated field of transportation management. (Transportation managers coordinate the transport of raw materials and finished products for shippers and carriers.) According to a recent issue of the newspaper The Journal of Commerce, many members of the Women's Traffic Club of New York credit "the unraveling of decades-old statutes that regulated traffic on the nation's highways and the proliferation of truck companies as key reasons for their successful entries" into the field.

Until just six years ago, the Interstate Commerce Commission kept a tight clamp on how many hopeful trucking firms could get into the business. Then Congress passed the Motor Carrier Act of 1980, which, among other things, substantially eased entry regulations. The number of trucking companies has since shot up over 80 percent, from 18,045 in 1980 to 33,283 last year. And The Journal of Commerce reported recently that "observers say the rise of women in transportation correlates with the mushrooming in the number of truck carrier firms" since deregulation.

Marie E. Forsythe, sales manager for the international division of Paper Corp. of United States, agrees that deregulation has helped women break into the industry. "The number of women in traffic manager positions was very small but over the last 10 years our numbers have grown enormously," she notes. And Gloria M. Orlando, records manager for Transway International Corp., a transportation company based in White Plains, New York, says that now there are "a lot of women that are being offered manager positions."

The success of women in a formerly male domain shouldn't surprise those familiar with the other benefits of deregulation. Whenever the government prevents people from freely entering an industry, it hurts most those who are already excluded—usually, women and minorities. It should be a sobering thought for those who would now call on government to intervene in the free marketplace in behalf of women.

On Your Mark, Get Set, Launch!

Free enterprise is coming to the final frontier. In the wake of the Challenger disaster, President Reagan announced that NASA will launch only 14 more commercial satellites from the space shuttles before bowing out of the commercial launching business. (The first of those 14 won't be put aloft until shuttle flights resume in early 1988.)

At the same time the president was getting NASA out of the commercial satellite business, he announced his support for the construction of a fourth shuttle, to replace the Challenger. (For a dissenting opinion, see "Scuttle the Shuttle," REASON, June). Even if the new shuttle is operational by 1991, the space agency will be unable to launch nearly 30 commercial satellites for which it has contracted.

Exit NASA, enter private industry. Nearly two years ago, Patrick Cox reported in these pages ("Space Entrepreneurs," Jan. 1985) on the ways NASA's space-transportation monopoly was thwarting the development of a thriving private space industry, primarily through highly subsidized commercial satellite launchings that made private competition infeasible. As long as NASA was in the launch business, said one investment banker, there was the impression that "the elephants are dancing and some mice will be crushed." But as Cox predicted, "The bureaucratic barriers are destined to fall. The question now is how soon." In the immortal words of The Smiths, "how soon" is now.

Several aerospace firms—most notably Martin Marietta and General Dynamics—appear "ready, willing, and able" to take up where NASA left off, asserts Transportation Secretary Elizabeth Dole. Martin Marietta, for example, has received "informal inquiries" from 21 firms about satellite launchings, according to spokesman Jack Boyd. The company has made it known that it will be offering its Titan III launch vehicle to lift commercial satellites.

Most significantly, Martin Marietta has signed a memorandum of understanding granting Federal Express the aerospace firm's first satellite-launch reservation. Boyd told REASON that they're shooting for a Federal Express launch date of 1989.

And why did the government ever think there wouldn't be sufficient interest on the part of the private sector in providing this service? Rick Endres of Transpace Carriers figures that satellite launching will amount to a $6-billion business over the next six years.

Tom Brosz, editor of Commercial Space Report and a stout champion of space entrepreneurs, pronounces himself "delighted" with the new competition for satellite launchings. Brosz points out that this decision helps not only the Martin Mariettas of the world but the smaller, more visionary rocketmen (some of whom were profiled in Cox's article), as well—"smaller entrepreneurs are getting a lot more interest" from potential customers, he declares. Houston-based Space Services Inc. even reports that it is in business with two customers to launch eight satellites on its Conestoga II.

As the private-sector space industry grows, satellites won't be the only things blasted into the great unknown. Perhaps the most unusual private space venture is in the planning stage at Celestis of Melbourne, Florida. Celestis is one of Space Services Inc.'s customers, and what it will launch is an orbiting mausoleum, probably "at the end of 1987," according to Space Services spokesman Mark Daniels.

The first space mausoleum—at least two more will follow—will contain the cremated remains of more than 3,000 dead space buffs. Celestis officials were unavailable to answer questions about the launch, such as how much it will cost to spend the hereafter in geosynchronous orbit or what kind of music will be played over the ship's P.A. system.

Look for more such ventures, practical and bizarre, as private enterprise takes its first steps into space. A new era has arrived.

Is Keynesian Stability So Much Fruit Salad?

Back in the bad old days, the economy was a mess. Panics. Bank crashes. Inflation. Deflation. Lots of ups and downs. Then came the New Deal and the Fed, fiscal policy and monetary policy. Thanks to government intervention inspired by British economist John Maynard Keynes, the economy stabilized. The booms weren't as big, but neither were the busts.

This story, or a somewhat more sophisticated version, has backed up government macroeconomic policy for decades. Economists had the numbers, they thought, to prove it; their data showed that the economy was in fact much more volatile before World War I than after World War II, when the government really cranked up its activist policies.

But the numbers, it seems, weren't as good as everybody thought. A young, MIT-trained economist is making the academic rounds with new research that is giving conventional Keynesians conniption fits. Christina D. Romer of Princeton University argues in three new articles that economists have been relying on data that in effect compare prewar apples with postwar oranges.

For example, to measure production, modern data gatherers use industrial output—the end products of manufacturers. But pre-World War I figures instead count intermediate materials, such as pig iron, that manufacturers use to produce those end products. When the economy is good, companies tend to build up their materials inventories; when things sour, they draw them down. Simple enough. But this means that those materials statistics exaggerate the peaks and valleys of the business cycle. Presto! A volatile prewar economy, courtesy of the data.

To get the apples and oranges matched up right, Romer constructed new indices and found that the economy looks basically the same in both periods. If you measure materials, it looks jumpy. If you measure goods, it looks stable. (She found similar results for employment and GNP statistics.) At least on the face of things, government fine-tuning hasn't smoothed out the peaks and valleys. "Without clear evidence of stabilization, we can no longer simply assert that government stabilization policy is obviously effective," Romer writes in the prestigious American Economic Review.

Romer's work has created a storm of controversy. "Conventional Keynesian macroeconomists desperately want to believe it's wrong," Romer told REASON. So far, however, they've had little success at attacking it. And a similar study of European and Japanese data by Professor Steven Sheffrin of the University of California at Davis, has confirmed Romer's results.

Meanwhile, non-Keynesians have embraced Romer's research. "It substantiates their viewpoint," she said in an interview. Chicago economist Robert Barro has told her that he plans to include her data in future editions of his introductory macro textbook, a leading competitor to such Keynesian tomes as Paul Samuelson's famous text.

She stresses that her work applies to actual government actions, not economic theory, so it doesn't necessarily contradict the basic Keynesian principle that "policy matters." It is possible, she says, that the economy would have been even more volatile without government intervention. Or, she told REASON, "it could mean that policy matters but we just haven't used the right policies," a position advocated for years by Milton Friedman.

Indeed, even as she stands firmly by her results, Romer is loath to throw out Keynes. "I'm incredibly careful, and my training is sort of Keynesian," she said. "In my heart of hearts—that's what I teach my undergraduates."

Coming from a scholar so sympathetic to Keynesian ideas, Romer's evidence is all the more convincing.

Red Dawn or Red Dusk?

Just how widespread is the Soviet Union's influence in the world today? It may not be nearly as far-reaching as many people fear, according to a new report by the Center for Defense Information, a Washington, D.C.-based research organization.

The Center argues that Soviet influence in the world peaked in the late 1950s, when nearly 15 percent of all countries in the world, constituting 31 percent of the world's population (not including the USSR), were "Soviet-influenced," that is, beset by "high levels of Soviet involvement and presence" and "a close and cooperative relationship with the Soviet Union."

Those percentages have declined over the decades. CDI figures that in 1986, just 11 percent of the nations of the world, and 6 percent of the world's non-Soviet population, fall under the Soviet sway.

Why the steep drop? The report maintains: "Soviet inability to hold the allegiance and support of important Third World countries over the long-term has been the major weakness of the Soviet Union in attempting to expand its influence." The outstanding examples of Soviet diplomatic failures in large nonindustrialized nations have been their "losses" of China, Indonesia, India, and Egypt.

Even today, notes CDI, the Soviet Empire is in trouble in the Third World. Outside of Eastern Europe and Mongolia, virtually all Soviet client states are engaged in armed conflict. For instance, "there are guerrilla wars in Afghanistan, Angola, Cambodia, Ethiopia, Laos, Mozambique, and Syria; border conflicts for Vietnam and South Yemen; Cuba has troops in Angola and Ethiopia; Libya has troops in Chad; Syria has troops in Lebanon." (Readers may disagree with CDI's exclusion of Nicaragua from its list. Nicaragua, "anti-American / pro-Soviet," is labeled "Cuban-influence[d]" but not a "member of the Soviet bloc.")

Significantly, the USSR has not posted a gain in influence since 1979, when Vietnamese puppet Heng Samrin was installed as Cambodia's ruler. East Asia, in fact, has been the sole bright spot for Soviet imperial ambitions in the '80s, as relations with the antidemocratic regimes in Vietnam, Cambodia, Laos, and North Korea have warmed.

The implications of the decline in Soviet influence are unclear. But the study prompts the proverbial grain of salt when confronted with the claims and prescriptions of those who see the nations of the world drowning in a tide of red.

Milestones

? Deregulation raises interest. Texas lawmakers, faced with unpaid loans to the state's depressed oil industry, have approved legislation allowing out-of-state banks to acquire Texas banks and savings and loans. The measure won the support of two traditional foes of deregulation: small, independent bankers, who hope out-of-state capital will slow the decline of their state's economy, and federal bank regulators, who want to save the government from bail-outs. California, meanwhile, recently passed several bills that will allow interstate mergers of both banks and S&Ls.

? Noble cause. In August, a dozen economists, all Nobel laureates, signed a letter widely distributed to U.S. newspapers urging "the Congress and the President to resist pressures for protectionist pressures and instead to move as far as possible in the direction of reducing the restrictions on international trade."

Global Trends

Indians to Sing Hong Kong Song?

NEW DELHI—India's Andaman Islands, which were freed from the British yoke before the mainland gained its independence in 1947, may soon become India's first free market. The islands are located in the Bay of Bengal, 1,000 kilometers from the nearest point on the Indian mainland.

Nonresident Indians (NRIs), particularly those settled in Hong Kong and the Gulf countries, have long urged the Indian government to convert the Andaman Islands into a "new Hong Kong." Their request has become even more urgent in recent years: Hong Kong faces an uncertain future once it is transferred to Chinese control in 1997, and Indians residing in Gulf countries are suffering as the oil boom has busted.

Slain Prime Minister Indira Gandhi had ordered a top-level examination of this proposal after meeting with several delegations of NRIs, yet nothing ever came of it. But her son, Prime Minister Rajiv Gandhi, has again raised hopes (and eyebrows) by confirming that his government plans to establish a free port on one of the Andaman Islands.

Gandhi has said: "Such a free port offers one of the most exciting prospects for non-Indian investment and a free economic zone." The delay in creating the zone is only because "we are trying to sort out some constitutional and other problems."

Will Indian industrialists like the idea? Dilip Piramel, chairman of Blow Plast Ltd., told the Delhi press: "It is a very interesting idea and is most welcome.…This will help the Andamans to grow rapidly. Hong Kong has been exporting 2–3 times the goods exported by our entire country." (It is interesting to note that the 14,000 NRIs in Hong Kong—out of a total population of 5 million-control more than 10 percent of its $45-billion trade.)

Not only will the free port create job opportunities and earn foreign exchange for India, it will also attract investment from nearby countries such as Malaysia, Burma, Indonesia, and Thailand. If Mr. Gandhi is serious about establishing an Indian Hong Kong, the world may soon see another lesson in laissez faire.

—Probir Kumar Sarkar

Free Enterprise Working in Jamaica, Mon

Sometimes the policies advocated by free-marketeers sound so dull. For instance, Jamaica, under Prime Minister Edward Seaga, has deregulated commerce, reduced taxes, removed import quotas—are you still awake? Yet the results of Jamaica's liberalization are anything but dull. One aspect, in particular, demonstrates vividly the colorful and multifarious benefits of a free economy.

"Higglers" are the poor but industrious international traders, mostly women, who have taken full advantage of the unfettering of Jamaica's economy. Syndicated columnist Georgie Anne Geyer, writing in the Wall Street Journal, calls them "Jamaica's amazing, new entrepreneurial village adventuresses, doggedly traveling the Caribbean airlines with shopping bags and suitcases filled with goods."

There are about 13,000 higglers in Jamaica, most of them uneducated rural women. They fly to neighboring countries—the Bahamas, the Cayman Islands, Panama—with bags stuffed with Jamaican products, such as thyme and bananas. These they sell or trade, bringing back to Jamaica goods ranging from whiskey to onions. Then they sell these imports in arcades or on the streets.

Higglers, like most entrepreneurs, ask only that the government leave them alone. In the 1970s the Jamaican state under Socialist Prime Minister Michael Manley did just the opposite—it taxed and harassed higglers, even confiscated their goods. Seaga's rule has been kinder; the government has relaxed exchange-rate controls and even granted higglers their own euphemism, "Informal Commercial Importers."

Ironically, Jamaica's enlightened policy comes at a time when many American cities, among them New York and Washington, D.C., are clamping down on street vendors. Cities considering similar restrictions would be wise to listen to Buster Riley, a leader of the Jamaican higglers: "With this trade, people make a better living and have better schools for their kids. They aren't pressing the government to give them these things but are working for them on their own."