Further & More

Road to Insolvency

User fees for city streets, based on electronic metering, is an idea whose time has come in Hong Kong (Trends, June 1983)—but apparently not in Hawaii. The state's Transportation Department studied the possibility of having electronic identification devices installed on cars and then billing drivers every month according to the distance they traveled in congested areas on Oahu. But when officials asked 400 Oahuans their opinion of the idea, an overwhelming 84 percent were opposed (not surprisingly, given that road use is now presented as a free good).

Mark Coleman, a reporter for the Pacific Business News in Honolulu, told REASON that the idea is "dead in the water." The mayor is opposed, and the local Chamber of Commerce wants to solve the island's traffic problems with a costly light-rail system.

In the state agency's survey, there was nearly as much public opposition to other possible ways to reduce traffic congestion on Oahu Island. Some 75 percent were against toll roads, and 69 percent were against a system of purchasing permits to drive in a car-pool lane with fewer than four passengers. The analysts who conducted the study for the state suggested that public opposition to user fees might stem from notions that they would somehow be an added tax burden, involve an electronic invasion of privacy, and be unfair to travelers who must travel during peak traffic hours.

Meanwhile, Hong Kong's pilot program now includes 35,000 cars.

Insecure freedom

Among other things, the First Amendment to the US Constitution guarantees free speech and a free press. But as Michael McMenamin and William Gorenc, Jr., revealed in their January 1983 REASON investigation, "Subverting the First Amendment," the Securities and Exchange Commission doesn't want to hear about such freedoms. Though since that REASON article appeared, others within the press have become alarmed about the SEC's war on the First Amendment, the commission continues its subversive efforts (see last month's "Press to the Wall," page 66).

The latest instance of SEC disdain for press freedom is the commission's recent order that Stock Market Magazine, a 23-year-old financial news and analysis publication with a circulation of some 15,000, cease publishing until it registers with the commission—in effect, obtain a license to publish. The SEC order was upheld in July by a federal district court. A 1940 law authorizes the SEC to require investment advisors to register with the commission but specifically exempts the publishers of general and regular-circulation publications. Stock Market's publisher is appealing the decision.

Prior to this ruling, as recounted by McMenamin and Gorenc in REASON, the SEC had only once tested in court the issue of whether a financial publication must register as an investment advisor. The SEC pursued the case for over 10 years, finally lost it in 1978, and did not appeal. In spite of this loss in court, the SEC continued its policy of licensing and regulating financial publications.

Even before the ominous Stock Market ruling came down, other SEC activities had caused increasing alarm among the press. Commenting on an earlier SEC cease-publication order, an editorial in Editor & Publisher (June 30) stated the situation in no uncertain terms: "It appears the Securities and Exchange Commission is doing what Congress has feared to do—in fact, what it is explicitly prohibited by the Constitution from doing—and that is issuing a license to publish." And if the SEC "can suppress one publication," the magazine warned, "other government agencies may feel they also have the right to do likewise."

And More

• Not left out. Free-market economists have long known how the supply-and-demand dynamic of the marketplace can serve a variety of needs—even satisfying people most skeptical of free markets. In February, Trends reported on how the market has accommodated liberals and leftists with social-investment mutual funds. They're a device for investors who choose, for example, not to put their money in companies operating in South Africa, military contractors, and nonunion firms ("The Virtues of the Market"). Now the Wall Street Journal reports that of three major social-investment mutual funds, one—Pax World Fund—has performed better than the Standard & Poor's 500 stock index in both 1983 and the first half of 1984. Also, two new newsletters on "acceptable companies" are now being published, as well as The Concerned Investors Guide with data on companies' labor practices and product safety.

• Capital news. Surprises of surprises, there's some good news to report about the recent $50-billion tax-hike bill. In "Hard Times for Hard Assets" (Dec. 1983), Contributing Editor Joe Cobb detailed some wheeling and dealing last fall concerning a legislative proposal. Under that proposal, the capital-gains holding period—the time a capital asset must be owned in order to qualify for the lower, capital-gains tax rate—would be cut from one year to six months, but "hard assets" (things like gold and silver, artworks, etc.) would no longer be considered capital assets. Under the tax bill that passed in July, however, not only was the holding period cut to six months, but hard assets are still eligible for the capital-gains tax rate.

• "Never mind"—this once. The IRS has dropped its penalty against a taxpayer who typed "Signed involuntarily under penalty of statutory punishment" on her 1040 Form (Brickbats, Sept.). But the tax collectors are pursuing their case against 98.8 percent of the other 7,699 citizens charged with having filed "frivolous" returns.

• What ads up? The move toward prescription-drug advertising was recently reported in Trends ("Prescriptions for Healthier Markets," August). A recent article in the bastion of the consumer movement, Consumer Reports, focused mainly on the opposition to such ads but did concede that "a flat ban on all ads to consumers may not be legally possible—or even desirable." Consumerists, for example, have long battled for pharmacies' right to advertise price comparisons of prescription drugs—and ads stressing price comparisons are among those being most eagerly promoted by the more aggressive pharmaceutical firms.