Trends

Handicapping Transit Once again a federal regulation intended to help the disadvantaged has turned into a costly monster. This one, however, may be overturned before its full destructive potential is realized.

At stake is the survival of urban transit systems. No models of cost-effectiveness to begin with, these systems have now been hit with a staggering requirement: to provide "barrier-free" access for wheelchair users to all bus and subway services receiving federal funds (virtually all urban transit systems).

While sounding humane and worthwhile, the regulation (Sec. 504 of the 1973 Rehabilitation Act, as interpreted by 1977 hew regulations, imposed by a June 1978 Department of Transportation directive) would actually impose huge costs while benefitting only a handful of people. Installing elevators at all subway stations and wheelchair lifts on all buses would cost between $2 billion and $8 billion. Some 90 percent of that cost would be needed for subway lines and would benefit only about 4,000 people.

One example of costs versus benefits has been developed by Philadelphia-based transportation consultant John Bailey. He found that the Washington Metro—which has been designed from the start as a barrier-free system—averages only 12 wheelchair passengers daily. If that demand is representative, Bailey calculates that the effective cost of modifying other subway systems will be something like $2,000 for every trip made by a wheelchair passenger. (Yes, every trip.) Obviously, it would be far less costly to buy every wheelchair passenger a specially equipped van! Or, more seriously, to have them utilize specialized vehicle services, like a dial-a-ride service for the handicapped.

City transit officials around the country—New York, Chicago, St. Louis, San Diego—have protested the DOT directive, but so far to no avail. Syndicated columnist Neal Peirce devoted an entire column to exposing its absurdity. City officials, he reported, see the federal bureaucrats as "operating in a make-believe world, thinking that local governments, in a time of Proposition 13-type restraints, can make up the difference in fares and taxes." But actually the result would be further cutbacks in service, depriving millions of citizens—including the handicapped—of service.

He might have added that monstrosities such as Section 504 are a predictable result of a political system based on the idea that people who are disadvantaged—for whatever reason—have an automatic claim on the lives and resources of their neighbors.

Rent Control—The Mirage Reappears In the wake of Proposition 13, California renters expected rent reductions, since the majority of property owners had their property taxes reduced (except those who had purchased their units since 1975-76). Although some rents were lowered, quite a few were not—some landlords waited to see what their December tax bills would be, others knew their taxes would not be going down, and others looked at continuing high demand and decided to keep charging what the market would bear. The result was new pressure for rent control.

Although rent-control referenda suffered handy defeats last June in Santa Barbara and Santa Monica, the Los Angeles city council enacted a temporary rent freeze last summer. And last November similar freezes were passed by the voters in Berkeley and Davis (though rejected in Palo Alto, San Francisco, and Santa Cruz). City councils in Beverly Hills, El Monte, and Vacaville also enacted rent freezes.

Already the results of the Los Angeles rent freeze are beginning to appear. While permits for new-apartment construction increased 13 percent statewide for the quarter ending October 31, they dropped 27 percent in Los Angeles—and a third of the permits were for luxury condominiums, not rental units. Apartment prices have dropped as much as $10,000 a unit in some parts of the city since July.

This drying up of investment following imposition of rent controls is no fluke. Study after study has shown the same effect occurring virtually everywhere rent controls are enacted. Great Britain introduced rent control in 1957. Since then, private housing has dropped from 44 percent of the total to only 14.5 percent. Privately rented homes dropped from 5 million in 1957 to 2.8 million at present, according to figures from UCLA economist Werner Hirsch. And a recent amendment to Britain's rental regulations—aimed at making it harder for landlords to evict troublesome tenants—has had the effect of further drying up the market. Because the act exempts rent contracts of less than six months, landlords now prefer to rent to foreigners and vacationers rather than to citizens. Many thousands of young Londoners who can't find apartments sleep in cheap hotels or on park benches as a result.

Among those concerned about the mirage of rent control is Sen. William Proxmire. In a recent Senate speech he identified rent control as a "major reason" for the lack of progress in making safe and sanitary housing available to all Americans. Proxmire cited Roger Starr's book, America's Housing Challenge, which "explodes the myth that rent control serves the interests of the poor." Starr points out that rent control speeds the deterioration of older buildings by reducing the flow of funds needed for maintenance. "Expecting rent control to be a cheap way to provide standard housing for the needy is as absurd as using great white sharks for lifeguards: they are cheaper than people but they destroy the drowning."

The practical dilemma, of course, is that there are more tenants than landlords, and every tenant likes the idea of having his rent held down. The only hope is to educate the voters with the true results of rent control. In the majority of California cities where the issue has come to a popular vote, rent control has been soundly defeated. It is the politicians, not the people, who have generally voted in the controls.

Nuclear Revisionism Much of what passes for debate on the nuclear power issue amounts to little more than an exchange of accusations. Far too often, there is no agreement on the facts—and without that, complex policy issues cannot be addressed properly.

One such issue concerns radiation exposure from nuclear power plants. Such plants do emit small amounts of radioactive material into the air. This fact has led to some of the opposition to nuclear plants, as opponents argue that this radioactivity is dangerous to those living or working nearby, possibly leading to increased incidence of cancer. But such charges evidence a complete lack of context.

First of all, a coal-fired power plant of equivalent electrical capacity releases greater amounts of radioactivity than a nuclear plant. Why? Because coal contains a number of radioactive elements, including uranium and thorium. Comparing radiation doses from 1,000-megawatt plants meeting emission standards of the Nuclear Regulatory Commission and the Environmental Protection Agency, a team of Oak Ridge National Laboratory researchers found that the whole-body population dose commitment from the coal-fired plant is from 18 to 23 man-rem/year, compared with only 13 man-rem/year for the nuclear plant (see Science, Dec. 8, 1978).

Adding further perspective, REASON contributor Petr Beckmann points out that the average US citizen receives about 80 mrem/year from all natural sources—cosmic rays, the ground, rocks, and elements like potassium in the body. The average person gets another 50 to 100 mrem/year from chest X-rays. Fallout from past nuclear bomb tests still gives 7 mrems/year. And airplane passengers receive 3 mrem in just a 10-hour round trip between New York and Los Angeles. Consumer products like color TVs and smokedetectors give another 1 mrem/year. What about nuclear power plants? The average person gets only 0.01 mrem/year from them, although NRC standards permit an exposure of up to 5 mrem/year at the plant's property line.

Thus, the radiation exposure issue is a classic example of the red herring.

Public-Sector Lobbying To what extent can a public-sector entity use tax monies to lobby for or against a political issue? Not much, ruled the US District Court in Denver. The First Amendment bars "publicly financed opposition" to exercise of the right to freely petition for changes in the authority of representative government, ruled the court in a Colorado case.

The issue concerned a proposed constitutional amendment to limit government spending. The Denver school district board decided to use tax money and district facilities to urge defeat of the amendment. It interpreted the state's 1974 Campaign Reform Act to allow such activities; the act provides that government entities may "make contributions…in campaigns involving only issues in which they have an official concern."

According to the District Court, though, that wording must be very narrowly construed—for example, to concern such matters as school board elections. A proposed constitutional amendment is far too broad an issue, said the court. "An interpretation of the Campaign Reform Act as a grant of express authority for a partisan use of public funds in an election of this type would violate the First Amendment." Citing its duty to protect the freedoms of speech and petition, the court said that "a use of the power of publicly owned resources to propagandize against a proposal made and supported by a significant number of those who were taxed to pay for such resources is an abridgement of those fundamental freedoms."

In the future, therefore, public entities may have to think twice before spending our money fighting proposals to cut taxes and limit spending.

Antigoverment Mood Grows Public opinion polls taken over the last few months indicate that popular discontent with high taxes and government spending is more widespread than many people have realized.

The most recent—an Associated Press/NBC News poll last December—found that 63 percent favor a substantial cut in federal spending, even if it means that federal programs they favor would be cut. Only 27 percent would oppose such a cut. Moreover, this majority opinion holds true for every major population group—even those described as "very liberal" (56 percent in favor), "somewhat liberal" (62 percent), the poor (60 percent), and blacks (61 percent). Only when it comes to which programs to cut first are these groups divided.

These results were foreshadowed by earlier polls last fall. A Time poll by Yankelovich, Skelly, and White in October found that, by 48 to 40 percent, voters favored slashing federal taxes by one-third, as last year's Kemp-Roth bill would have done. In that same poll, 48 percent identified the federal income tax as the levy they most wanted reduced—property taxes ranked second, at 33 percent.

Earlier, a September poll by the Washington Post found that voters in every region of the country would support a Proposition 13-style cut of 30 percent in state and local taxes, by a 60 percent margin. A more moderate cut of 20 percent won the support of three-fourths of those polled. Meanwhile, a Los Angeles Times poll found that support for Proposition 13 itself kept climbing after its passage—despite over 70 percent feeling that public officials are not "making an honest effort to carry out the will of the people on Proposition 13."

The one disheartening note in all this is that the public is not really convinced that it can get along with less government. Many voters apparently believe simply that government is very wasteful and that it can and should continue to provide most present services, doing so more efficiently. In the Time poll, 43 percent gave "government waste" as the main cause of high taxes and 69 percent said it should be "possible to cut taxes a lot without reducing services." At the local level, 51 percent would rather have the same tax rate and more services than the same services and lower taxes! The Post poll found similar sentiments, with seven out of eight saying they are more concerned with how tax money is spent than with the amount of taxes they pay.

Thus, those favoring large-scale reductions in the scope of government still have their work cut out for them. Support for the tax revolt does not—yet—mean support for substantially less government.

Portugal Edges toward Freedom The 1974 Portuguese revolution ousted a right-wing dictatorship. It also led to a communist-managed peasant seizure of 2.5 million acres of farms, nationalization of all banks, and the adoption of an explicitly socialist constitution. The side effects were many: food production plummeted, and the country has had to import half of its food; the balance-of-payments deficit climbed to $1.5 billion; and inflation soared to 27 percent.

Now, the 10th government since 1974 has taken power, and Portugal is making a marked shift away from socialism. The new premier is Carlos Mota Pinto, a former law professor and advocate of "reformism"—a gradual move toward restoring the private sector. Seized farms are being returned to their former owners, banking has been effectively denationalized, and economic statistics are looking a bit less dismal: inflation has been cut five percentage points and the balance-of-payments deficit cut to $1.1 billion. And the Socialist Party has begun losing by elections.

In turbulent Portugal it's too early to tell how far Mota Pinto will be able to go, but his actions thus far bode well for the free market.

Home Instruction Goes Public One of America's least-noticed phenomena—educating children at home—has become highly visible thanks to a recent article in Time. Across the country many thousands of parents are defying educational orthodoxy, and in many cases state laws, by teaching their children at home.

Radical educator John Holt is one of the leading advocates of home teaching, arguing against the regimentation and coercion of nearly all formalized schooling. His newsletter Growing without Schooling gives pointers on teaching and learning and keeps track of victories and losses for deschoolers.

In many states teaching kids at home still runs afoul of the law. In New Hampshire, Mrs. Betty Tompkins has been told by the state Board of Education that under present regulations she may not educate her daughter Heidi at home. But the Board agreed to consider abolishing the regulation. Mrs. Tompkins has been using the Calvert home-study curriculum, one of the leading correspondence-style curricula. Among others are the Seventh Day Adventist Home Study Institute and the Accelerated Christian Education (ACE) curricula.

Several other home-study cases have resulted in lengthy court battles. In Ohio, Mr. and Mrs. Tom Lippitt had their daughters taken away and made wards of the court when they tried educating them in an at-home Lippitt Christian Day School. Though Mrs. Lippitt is an Ohio-certified teacher, the school was not licensed by the state. After a lengthy struggle (and time in jail), the Lippitts regained custody of the girls, on condition that they be sent to the Heritage Christian School. Ironically, although that school (with 450 students) is much larger than the Lippitts' home school, it, too, is unlicensed! The Lippitts are appealing.

In Iowa, the Robert Sessions family has been fighting a court order forbidding them from educating their son Erik at home. Although Sessions teaches at Luther College, he is not certified for elementary or secondary education, and the state has used that fact against him. Sessions argued for his right to teach his son on grounds of personal religious liberty, by analogy with the conscientious objector cases of the 1960s. In October he prevailed at the District Court level and is at least temporarily free to continue teaching Erik—but school officials are reportedly planning an appeal.

In a few other states the picture is brighter. The Time article cited examples of unharassed home teaching in California, Connecticut, Maryland, Massachusetts, and Washington State. And in December a Massachusetts court upheld the right of parents "to preserve home education" under that state's laws. But much legal effort will have to take place before such a right is protected across the country.

Protecting (?) Stockholders For the past 10 years or so there has been a great deal of clamor from Ralph Nader and his compatriots for federal chartering of corporations. One of the arguments has been that stockholders get the short end of the stick when firms incorporate in states like Delaware, famous for its nonrestrictive corporations code.

The facts, however, appear to be otherwise, when someone gets around to looking for them. Two University of Rochester economists—Peter Dodd and Richard Leftwich—did just that. Their study, for the University of Rochester's Managerial Economics Research Center, examined the relationship between the state in which a firm is incorporated and its stockholders' wealth, as measured by stock prices. Specifically, they studied cases in which New York Stock Exchange firms reincorporated in the years 1927-1977. Among these moves were 242 switches to Delaware from other states. Surprise!

When the switch to a more lenient state was announced, the price of the stock went up. Concluded the authors, "The evidence presented here lends no support to the arguments that stockholders are harmed by management's choice of state of incorporation."

Why, in fact, did the stock prices go up? Dodd and Leftwich suggest that states such as Delaware are selected because both the cost of doing business and uncertainty about legal decisions are lower there. Stockholders correctly perceive these advantages in bidding up the value of the firms' stock.

Nader & Co. now have one less rationalization for their campaign to clamp more restrictions on American business.

Milestones • Sue the Regulators. Although the Airline Deregulation Act of 1978 specifies that any airline flying across state lines is exempt from state regulation, the California Public Utilities Commission just won't let go. It wants to keep controls on the eight interstate lines now serving the state and is threatening them with $2,000 fines for each violation of its regulations. The eight have taken the PUC to court, to tight for their newly won freedom.

• Dump Davis-Bacon. The federal law that requires paying "prevailing" (that is, union-scale) wages on federal construction projects should be repealed. So says the General Accounting Office of the 47-year-old Davis-Bacon Act, which it calls "inflationary and ineffective." Many business firms hope the GAO report will encourage the administration to back repeal of the law as part of its anti-inflation program.

• Another New Country. Yet another entrepreneur is attempting to start a new nation. Col. Herbert Williams has purchased a 400-acre island in the Rio Grande River from its Mexican citizen owners and plans to declare it independent. The island emerged after Hurricane Beulah changed the river's course in 1967; the US government views the land as Mexican, but that government has never accepted jurisdiction. Enter Williams, with plans for a casino, passports, ship registration, bank secrecy—the works. If all else fails, Williams plans to fall back on his Cherokee heritage; the 19th-century Mexican treaties of Iguala and Guadalupe give the Cherokees the right to establish a nation.

• Bureaucratic Prejudice. What to do when the head of a federal agency expresses obvious bias on a case in which he is conducting a supposedly objective inquiry? Throw him off the case! That's what federal Judge Gerhard Gesell did recently, in a precedent-setting case. The offending bureaucrat was Michael Pertschuk, head of the Federal Trade Commission. The FTC is supposed to be conducting an inquiry regarding TV ads aimed at children. Pertschuk, however, has made such broad statements condemning such advertising that he has tainted everything done by the FTC in its inquiry, ruled Gesell. In the future, bureaucrats may find it advisable to button their lips when posing as seekers of fact.