Trends

See SPOT See SPOT Bust a Government Monopoly

When the Ukraine's Chernobyl nuclear power plant sprang a leak last year, Soviet authorities were predictably reticent. Then high-resolution photographs of the accident started showing up on Western television, and the charade that all was well was exposed.

The technology to thank for the Chernobyl pictures is a civilian French eye-in-the-sky satellite named SPOT, launched in February 1986. From an orbiting altitude of 517 miles, SPOT sends back images whose resolution can be enhanced by computer to less than 16 feet—comparable to the precision of some of the spy satellites operated by the U.S. and Soviet governments.

As Puzzle Palace author James Bamford pointed out in an essay in the Los Angeles Times, "For decades the intelligence agencies of the United States and the Soviet Union held a monopoly on photographic espionage from space." Now SPOT has broken the monopoly—and given citizens access to heretofore top-secret superpower activities.

Since Chernobyl, SPOT has given Western viewers a look at a Soviet nuclear test site, a mysterious space complex, and military facilities along the Kola Peninsula. Previously governments alone had access to such information. Now, news organizations don't need to be dependent on what information governments will release to them.

Of course, satellite technology is a double-edged sword in the Cold War, and that makes American centurions nervous. Satellites that can expose Soviet military buildups or the shifting of forces can do the same to the U.S. military establishment.

But Lt. Gen. James A. Williams, former director of the Defense Intelligence Agency, speculates that "commercial use of space photography may be an inhibitor to world conflict." As Bamford quoted Williams: "Suppose we and the Free World had had a commercial capability to monitor the Afghanistan-Soviet border in 1979. It would have been virtually impossible for the Russians to have said they were really not up to anything…when in fact the New York Times, the Washington Post, ABC, or anybody else could have said that's a boldfaced lie, we can show you the proof."

Purchases of high-resolution satellites by American news organizations, though still in the talking stage, look likely. Price estimates range from $140 million to $400 million—well below, for instance, ABC's $700 million budget for the 1988 Winter Olympics. Private rocket-launch firms expect network news organizations to be among their initial customers for satellite launching.

The U.S. government, ever alert to possible threats to its cloak of secrecy, may try to throw up a few roadblocks. News organizations will have to obtain a license from the Commerce Department to operate photo-surveillance satellites. Private space firms need similar permission to launch their vehicles. But Commerce, before giving the okay, will check with the State and Defense departments to determine whether the media's exercise of news-gathering rights might endanger that elastic old warhorse, "national security."

The Los Angeles Times warns citizens to expect the heavens to be one of the next battlefields in the struggle between the free press and state power. The people start with two advantages: the Constitution is on their side and so are numerous foreign news-gathering services outside the reach of U.S. regulators. The monopoly's already been broken. And if Lieutenant General Williams is right, we're better off even from a foreign-policy point of view.

Rewriting the Medicare Prescription

We pay, pay, pay for our politicians' promises, promises, promises, and the Medicare system is a frightening example of the financial disaster that results from this close-your-eyes-and-make-a-wish behavior. Taxpayers and politicians of all stripes are now asking: How can we prevent Medicare—which has become the primary health insurance for Americans over 65—from becoming Medimess? The National Chamber Foundation (NCF), a public-policy research organization affiliated with the U.S. Chamber of Commerce, recently issued a task-force report with a good answer: rein in the government and unleash the free market. "Catastrophic and Long-Term Health Care: Private Sector Alternatives" comes at a propitious moment.

In January 1985, President Reagan had asked Health and Human Services Secretary Otis Bowen to report by year-end "on how the private sector and government can work together" to address the need for catastrophic health insurance—that is, acute-care coverage that exceeds Medicare's limits. In December, Bowen reported back with a grand scheme: have Medicare pay all of a retiree's acute care costs beyond a $2,000 annual deductible, regardless of his income or assets.

But this expansion of Medicare, like the Medicare system itself, would predictably end up costing taxpayers far more than anticipated. And besides, according to the NCF report, the real issue of concern in health care for the elderly lies elsewhere.

About 70 percent of aged Americans already have private "Medigap" coverage for catastrophic expenses. Half of the remaining are covered by Medicaid, and private coverage is available to the rest. But neither Medicare nor most private insurers now provide coverage for the often-devastating costs of long-term care, such as nursing homes. The government already pays about half of these expenses, through Medicaid. "And it could hardly be expected to pay for more," notes the NCF report. What to do?

"Fortunately," it continues, "private insurers are starting to develop and offer long-term care insurance with great enthusiasm." The task at hand, then,is to encourage this market response in order "to make private sector financing of such care more feasible and practical."

The NCF report—the product of a task force that included representatives from businesses, taxpayer groups, senior-citizen groups, insurers, and market oriented public-policy groups—is no theoretical treatise on the virtues of free enterprise but a nuts-and-bolts explanation of just how the market could meet people's needs in this area. The authors outline many policy options, including lifting restrictions on employers' offering retirement health-care benefits as part of company pension plans; introducing Individual Medical Accounts (analogous to Individual Retirement trends Accounts), which would encourage people to save during their working years for their retirement health-care needs; creating Health Care Savings Accounts that would give workers the option of substituting private insurance for Medicare; and removing the taxes that most states impose on insurance premiums.

Current demographic trends show that a higher proportion of the population will be elderly in the future and that these elderly will live longer—all of which will put an added strain on Medicare financing. And the Medicare payroll tax already places a heavy burden on today's workers. Allowing the private sector to develop, concludes the report, would facilitate "the 1980s worldwide trend away from bureaucracy and towards the market."

There's No Biz Like Privatization Biz

With the emergence of privatization as a real, live public-policy option, it was only a matter of time before a privatization industry sprang up, clamoring to provide public services more efficiently and less expensively than local government.

Well, time is up. A new New York–based firm, Municipal Development Corporation (MUNI), has become "a pioneer in the emerging growth industry of privatization," according to a research report by brokerage firm McKinley Allsopp, lead underwriter for MUNI's initial public offering. MUNI is unique in that it intends to offer the gamut of privatization services: from acquisition to development to operation of facilities including roads, bridges, water systems, and public buildings.

As MUNI's common-stock prospectus notes, "there are many entities which currently participate in one or more aspects of privatization.…However, [MUNI] believes that there are currently no other companies that have been specifically organized to undertake an entire privatization project in the manner contemplated by the Company. " The prospectus also predicts: "As the potential for profit through the privatization of entire projects is more widely perceived, a growing number of entrants into the field can be expected."

MUNI's first project is a wastewater treatment facility in Pasco County, Florida. But perhaps its most radical act has been to propose construction and maintenance of what would be the country's sole private toll road. The 10-mile road, in Loudon County, Virginia, would connect a toll road operated by Dulles Airport with a state highway. It would be owned and operated by MUNI, though the state would retain the power to set the rules of the road. (No 85-mile-an-hour speed limits, eight-year-old drivers, etc.)

Local officials say the road is badly needed to relieve commuter traffic on a parallel state road. But as muni president John D. Miller told the Washington Post, "With the incredible federal deficit, they're just not going to be able to throw money at road problems. With many projects…there's no need for the investment of public resources."

And there are other good reasons not to go that route. Virginia road construction schedules call for the state to build the 10-mile Dulles extension by the year 2000; MUNI claims it can do the job, privately, in just four years. MUNI officials have met with Virginia transportation bureaucrats, but they face a number of obstacles, not least of which is a state law forbidding private toll roads.

Whatever the outcome of the MUNI-Virginia negotiations, the privatization business seems here to stay. As the Post said of the toll-road discussions, "The fact that the idea could be plausibly suggested reveals how times are changing."

How to Unsnarl Air Traffic Jams

It's 10:15, your plane was supposed to take off at 9:00 and you're still cooling your heels in the airport. A baby is screaming, and the guy next to you keeps blowing smoke in your face. Finally, you get on board. And sit. For 45 minutes in the hot sun. The baby is still screaming—and you know how it feels. You take out the newspaper and read the headline: "Four dead as planes collide."

What's going on here?

Thanks to an inefficient air-transportation system, U.S. air travelers are wasting $500 million to $1 billion of their time a year (depending on whose estimates you believe) hanging around waiting for delayed planes. Meanwhile, the number of near-collisions in midair is at an all-time high, largely because of a shortage of qualified air traffic controllers that has persisted since the Department of Transportation fired striking union members in 1981—three years after airline deregulation and plummeting prices brought more and more air travelers aloft.

In response, the usual suspects are calling for reregulation of the airlines—despite estimates that deregulation has saved passengers at least $6 billion a year. (See Trends, Dec. 1986.) But the brewing crisis in air traffic may actually end up increasing freedom of the skies. Two proposals that would reduce government involvement in air-traffic control are now on the table, and one is a genuinely free-market response to today's problems.

The Air Transport Association (ATA), an airline-industry trade group, wants the Federal Aviation Administration (FAA) to spin off its air-traffic control operations into a federal corporation like Amtrak or the Postal Service. Funded by user fees, this quasi-independent entity would have its own source of revenue and would be exempt from civil service and procurement regulations. So it could more easily upgrade its equipment and workforce.

While the ATA plan would probably improve skyway safety and efficiency somewhat, it wouldn't permit the new corporation to hire back fired controllers. So there would still be a shortage of qualified personnel. Nor would the ATA proposal do anything to reduce overcrowding at airports—the source of many delays.

"What is needed is an enterprise more like Comsat than the Postal Service," argues Robert W. Poole, Jr., president of the Reason Foundation, in a new study that advocates the outright sale of air-traffic control operations. (Among its other activities, the Reason Foundation publishes REASON.) Instead of a federal corporation, Poole advocates a nonprofit cooperative owned by air-system users, including airlines, private pilots, business-aircraft owners, pilots and controllers, and such federal users as the Defense Department and Customs Service.

This new enterprise, dubbed Airways Corp., would be modeled on Aeronautical Radio Inc., a successful user coop created in 1929 to provide communications and navigation services for several airlines. Because Airways Corp. wouldn't be part of the government, it could quickly cure the manpower problem by rehiring the fired controllers, as well as retired military controllers whom the FAA won't hire now. (Its employees would have the same rights to organize and strike as any other workers.)

Poole, an MIT-trained aerospace engineer by background, also suggests that the government turn over ownership of landing slots and control towers to the nation's airports, which could then charge market prices to users. Under the status quo, airlines get the use of valuable landing rights for free. This is why there are often many more planes trying to take off and land in peak hours than airport capacity can really handle. The result: all that dead time hanging around with crying babies and cigarette puffers. If airlines had to pay the market price for their landing slots and control-tower use, traffic would even out a bit as more-popular times became more expensive.

Poole's more radical proposal has been widely reported in the aviation press and debated along with the ATA plan in Washington. Congress has until October 1 (when the current law expires) to decide which, if either, of these proposals to adopt. Until then, the future of flying will be, uh, up in the air.

Milestones

• Unconstitutional message in bottle. Random examination of federal employees' urine, ordered by President Reagan last fall in the heat of the war on drugs, "appears to be in serious trouble in the courts," according to the New York Times. In at least 13 cases, state and federal judges have ruled the tests violate the Fourth Amendment's search and seizure protections.

Global Trends

Will Polish Polish Off The State?

Helplessly watching the country run out of toilet paper was bad enough, but now the Polish government is really up to its eyeballs in…problems. It seems the natives are getting awfully restless about the way their country is run.

According to the Washington Post, "a new political movement…has gained the support of thousands of young people here and ushered in a new generation of opposition leadership eager to test communist authorities." Freedom and Peace, which has no formal membership or leadership, has boldly tackled the issues of mandatory military service and the subordination of the army to Soviet commanders—issues previously considered untouchable by leading Polish dissidents.

Formed two years ago, Freedom and Peace is committed to nonviolence and open activity. About two dozen supporters have sent their military service cards back to authorities, and eight have been jailed for refusing to serve in the army or to recite the military oath because it refers to "brotherhood with the Soviet Army." Over 10,000 sympathizers have signed petitions supporting the prisoners, and thousands receive the group's underground publications.

Communist authorities, fearful of the group's potential to collaborate with soul mates in other Soviet Bloc countries and anxious to avoid more political arrests, don't know quite what to do about this new challenge to their power. For example, they fined 11 participants of a sit-in but did nothing when the protestors refused to pay their fines.

Perhaps the officials are too busy battling Poland's underground press. Security police have been trying a new tactic—instead of jailing publishers, they're confiscating distributors' cars. But seven illicit presses are fighting back with a new tactic of their own: they've created an underground insurance company to cover the confiscations. A man associated with Nova, the oldest illegal publishing house, explained it to the New York Times: "We decided to combine with some other publishers and pool the risk by creating a sort of Lloyd's of Warsaw. We pay dues and are covered for loss of cars, paper, equipment."

Meanwhile, schools in Poland are no longer the breeding ground for subservience that state officials dream of. The Washington Post detailed the example of Lubochnia, where the Catholic Church is winning a 40-year-old struggle with the government over education. "Lubochnia's Institute of Christian Culture is an unofficial but serious community college, and the rural population it serves is gaining a grounding in Polish history, politics and law completely outside the control of communist authorities." The party has tried to compete with the school, but its new Rural Institute of Marxism-Leninism reportedly has had to import teachers as well as students from outside the area.

The church is gaining ground throughout the country. Nearly every diocese holds an annual Week of Christian Culture, with uncensored lectures, plays, and art exhibits. Churches in major cities also sponsor lectures by Catholic or dissident intellectuals on such subjects as ethics, history, and economics. "There was a time when the state was at the point of eliminating religious education," says Bishop Zbigniew Kraszewski, head of Warsaw's church school system. "Now all the children are in our schools, and no one listens to what the state says about it."

When nervous government authorities introduced a "religious studies" course in state schools to cover the "birth, development, and death" of "the social phenomenon" of religion, Kraszewski hardly batted an eye. "If they keep it up," he explained, "we can go on the attack. It will be enough if we start talking in our schools about Marxism. After 40 years of experience, we won't have to go far to find the weak points."

Polish authorities seem to have their hands full trying to squelch dissent. Maybe they should concentrate on alleviating the toilet-paper shortage.

Global Roundup

• Free to fly. Liberalization of Ireland's aviation policy has led to the licensing of Ryanair, a new airline that proposes to offer five new routes at fares significantly lower than established carriers'. And in Australia, new East-West Airlines is challenging the dominance of its two entrenched rivals by providing half-price service on its Sydney-Melbourne route. Several trade and consumer groups in Australia strongly support reform of the country's regulatory policy, and the two opposition political parties endorse the privatization of national airlines.