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National Center For Policy Analysis
DAILY POLICY DIGEST
Thursday, October 14, 1999

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IN TODAY'S DIGEST

   o   A SEVENFOLD INCREASE IN LAND PRICES and an apartment glut
       are some of the effects of "Smart Growth" policies in
       Portland, Ore....NCPA

   o   CRITICAL INDUSTRIES HAVE NOT CERTIFIED THEIR Y2K
       COMPLIANCE, says former Gov. Pete Du
       Pont....NCPA/WASHINGTON TIMES

   o   NOBEL ECONOMIST ROBERT A. MUNDELL is a defender of the
       gold standard and supply-side tax cuts, say
       observers....WALL STREET JOURNAL

   o   THE LONDON UNDERGROUND MAY BE PRIVATIZED despite the
       Paddington station wreck, say observers....WALL STREET
       JOURNAL

   o   THE U.S. SUPREME COURT HAS AN AGE DISCRIMINATION CASE
       brought by state employees, which raises issues of
       federalism....NEW YORK TIMES

   o   FASTEST GROWING AREAS AND INDUSTRIES HAVE LOWEST UNION
       MEMBERSHIP rate, according to an AFL-CIO study....NEW YORK
       TIMES

   o   WHITES-ONLY AFFIRMATIVE ACTION CHALLENGED, as black
       student claims his 14th Amendment rights are
       violated....CHICAGO TRIBUNE

IN TODAY'S NEWS

PORTLAND: SMART GROWTH'S BAD EXAMPLE

Portland, Ore., is pioneering Smart Growth (also known as the New
Urbanism), the latest fad in urban planning.  Smart Growth
promises such things as less congestion, more affordable housing
and cleaner air, says economist Randal O'Toole.  But in Portland,
Smart Growth policies are delivering rapidly increasing
congestion, higher housing prices and more pollution.

Portland's regional government, called Metro, anticipates area
population will increase 75 percent by 2040.  Yet it plans to
increase highway capacity no more than 13 percent while it adds
90 miles of rail transit lines to the 30 miles already built.

   o   In 1990, 92 percent of all the trips taken in the Portland
       area were by auto, while 3 percent were by transit and the
       rest were by walking or bicycling (see figure
       http://www.ncpa.org/ba/ba305/ba305fig1.gif ).

   o   Metro officials project that even with planned changes, by
       2040 Portlanders will still drive for 88 percent of their
       trips and use transit for just 6 percent.

   o   And the number of miles of congested roads will more than
       triple -- partly due to "traffic calming" measures to
       discourage driving, such as narrowing and reducing the
       number of traffic lanes, including eliminating turn lanes
       on major streets.

Metro plans to increase population density by two-thirds; for
example, some neighborhoods of single-family homes have been
rezoned for multi-family housing.  There is now a huge surplus in
apartment and multi-family housing and a major shortage of
single-family homes.  Since 1996, Portland has ranked among the
five least affordable U.S. housing markets and land prices have
increased sevenfold.

Metro also admits that its plan will increase smog by 10 percent,
which is consistent with Environmental Protection Agency data
showing that the worst air pollution is found in the densest
cities and urban areas.

Source: Randal O'Toole, "Portland: Smart Growth's Bad Example,"
Brief Analysis No. 305, October 14, 1999, National Center for
Policy Analysis, 12655 N. Central Expy., Suite 720, Dallas, Texas
75243, (972) 386-6272.

For text http://www.ncpa.org/ba/ba305/ba305.html

For more on Land Use Controls
http://www.ncpa.org/pd/state/state4.html

BEWARE COMPLACENCY ON Y2K COMPLIANCE

January 1, 2000, is only two-and-one-half months away and no one
knows for sure whether their lights will stay on when that date
rolls around. However, recently there was a long list of electricity
suppliers who had not yet announced that they are Y2K compliant.

Moreover, a long list of companies in the chemical industry,
water suppliers and nuclear power plants that operate on
computers had yet to affirm that they are 100 percent ready for
the new millennium, according to Y2K expert Dick Lefkon.

   o   The U.S. electric power industry is comprised of
       approximately 3,200 different electric utilities and some
       big names -- including Baltimore G&E, Detroit Edison,
       Florida Power, Indianapolis P&L, Minnesota Power and
       Wisconsin P&L -- had yet to claim they are fully ready
       for the 21st Century.

   o   The chemical industry is composed of approximately 69,000
       operations -- but the government has Y2K data on fewer
       than 500 of them.

   o   With regard to water supplies, we only have data on fewer
       than 600 of the 190,000 operations.

   o   A Nuclear Energy Institute survey indicates that 22 of the
       nation's 103 nuclear reactors are not expected to be 100
       percent ready until the fourth quarter.

The hope is that disruptions will be minor and speedily remedied.
But such figures do not instill a sense of well-being and
confidence.

Source: Pete du Pont (National Center for Policy Analysis), "On
the Dark Side of Y2K," Washington Times, October 14, 1999.

For Du Pont columns http://www.ncpa.org/oped/dupont/dupont99.html

For more on Year 2000 (Y2K) Computer Bug
http://www.ncpa.org/pd/economy/econ13.html

WHO IS ROBERT A. MUNDELL?

Champions of free enterprise are hailing the decision of the
Nobel Committee to award this year's prize in economics to Robert
A. Mundell, a Columbia University professor and father of Reagan-
era supply-side economics.  He was also a force in launching the
new European common currency, the euro.

   o   Mundell conducted research into common currencies when the
       idea of the euro was still a fantasy.

   o   He also examined the implications of cross-border capital
       flows and flexible foreign-exchange rates when capital
       flows were still restricted and currencies still fixed to
       each other.

   o   He stoutly defended the gold standard in his works, and
       was an early advocate of tax-cutting, supply-side theory
       which laid the foundation for "Reaganomics."

Economist Jude Wanniski says Mundell "made it possible for Ronald
Reagan to be elected president," by providing the intellectual
backing for the Reagan tax cuts.

In a profession long dominated by the theories advanced by John
Maynard Keynes, Mundell's ideas were considered radical when they
were first advanced in the 1960s and 1970s.  But they have become
nearly mainstream among economists as supply-side economics has
been vindicated by the skyrocketing growth of the 1980s and
1990s.

When the Reagan tax cuts became fully effective in 1983, the U.S.
economy began its long march forward and, experts point out, has
never looked back except for a nine-month recession associated
with the savings and loan crisis.

In its lead editorial this morning, the Wall Street Journal
comments: "In terms of actual policy initiatives, Robert Mundell
has been the most influential economist since John Maynard
Keynes."

Sources: Michael M. Phillips, "Mundell Wins Nobel Prize in
Economics," and Editorial, "A Supply-Side Nobel," both in the
Wall Street Journal, October 14, 1999.

For Editorial  (requires WSJ Interactive subscription)
http://interactive.wsj.com/articles/SB939851654249088588.htm

For "Mundell on Supply Side Economics" (requires WSJ Interactive
subscription)
http://interactive.wsj.com/articles/SB939852669155833030.htm

For more on Supply-Side Policies
http://www.ncpa.org/pd/economy/econ4.html

IS LONDON'S TUBE ABOUT TO BE PRIVATIZED?

Since the days of former Prime Minister Margaret Thatcher, who
put in motion Britain's aggressive privatization policy, Her
Majesty's Treasury has picked up $63 billion from selling off
national assets ranging from the country's telephone system to
the national sugar company.

In fact, Britain has collected nearly 10 percent of all the money
raised globally through privatization since 1990.

Now suggestions are being heard to privatize parts of the London
Underground, the world's oldest subway system.

   o   The London Underground loses hundreds of millions of
       dollars a year, even with an average one-way fare
       equivalent to more than $2.80 -- raising the question, who
       would buy it?

   o   Yet following the 1996 sale of British Rail -- the
       country's long-distance passenger network -- major
       investments have been made in new tracks, cars and updated
       stations, leading most observers to rate the privatization
       a grand success.

   o   And the 1984 privatization of British Telecom resulted in
       a doubling of investment, followed by substantial
       reductions in phone rates and waiting times for phones to
       be installed.

   o   But any talk of privatization throws British labor unions
       into a panic.

So the recent train crash in which 30 to 40 people were killed is
being used by the unions to undermine privatization efforts.

But supporters point out that 3,500 people die every year on
British roads without raising a public outcry.  By contrast,
prior to the Paddington crash, only 56 people died in train
crashes in Britain in the past 10 years.

Source: Greg Steinmetz, "Her Majesty May Sell Part of London's
Tube, Angering Some in U.K.," Wall Street Journal, October 14,
1999.

For more on Selling Government Enterprises
http://www.ncpa.org/pi/internat/intdex7.html

For text (requires WSJ Interactive subscription)
http://interactive.wsj.com/articles/SB9398544602800655.htm

For more on the U.K. http://www.ncpa.org/pi/internat/intdex9.html

AGE-BIAS CASE GIVES COURT NEW CHANCE TO AFFIRM FEDERALISM

Must the states bow to federal laws on age discrimination in
employment?  Legal observers are reporting that arguments before
the Supreme Court yesterday revealed that the five justices who
are committed to states' rights appear to have lost none of their
zeal.

   o   The case was brought by the federal government and a group
       of state university professors and librarians from Florida
       and Alabama who sued their employers for age
       discrimination.

   o   The case had been dismissed last year by the federal
       appeals court in Atlanta.

   o   A Supreme Court ruling that Congress lacked authority to
       make states liable in applying the Age Discrimination in
       Employment Act would raise new questions about the ability
       of Congress to define and legislate civil rights
       protections.

   o   The Court has never ruled that discrimination on the basis
       of age is unconstitutional -- and Justice Antonin Scalia
       said yesterday that he found it "extraordinary" that
       Congress "just went ahead" and did so on its own.

In recent decisions, the justices have greatly circumscribed
Congress's ability to make federal law binding on states.

Source: Linda Greenhouse, "Age Bias Case in Supreme Court Opens a
New Round on Federalism," New York Times, October 14, 1999.

For more on Age Discrimination
http://www.ncpa.org/pd/law/emplaw/index2b.html

IN OTHER NEWS

ORGANIZED LABOR FACES ITS DECLINE

The AFL-CIO is pondering a study it commissioned that shows
unions are losing strength not only in key industry sectors, but
in the most vital regions of the country.

In short, job growth is fastest in industries were unions are
weakest, while job losses are greatest in sectors where unions
are strongest.  Moreover, the fastest-growing U.S. metropolitan
areas tend to have the lowest percentage of workers in unions,
while the slowest growing areas tend to have the highest
concentration of union workers.

   o   Between 1984 and 1997, the 30 fastest growing sectors of
       the economy -- including hotels, child-care, finance,
       retail trade and airlines -- added 26 million new jobs,
       but only one out of 20 workers in those sectors became a
       union member.

   o   In industries with the greatest job losses -- such as
       autos and steel -- four-fifths of the 2.1 million jobs
       lost belonged to members.

   o   Economically vibrant cities such as Atlanta, Dallas,
       Houston, Miami and Phoenix tend to have the lowest
       percentage of workers in unions.

   o   Meanwhile, slow-growing cities like Chicago and New York
       City -- which has 13 percent of the nation's union members
       -- tend to have the highest percentage of unionized workers.

The proportion of workers in unions has plunged to 13.9 percent
today from 35 percent four decades ago.

Economists point out that unions often have only themselves to
blame for dwindling membership numbers.  Too frequently, absurd
wage demands and confrontations with management have convinced
businesses to pack up and move their operations out of the
country.

That is not a concern of the Union of Needletrades, Industrial
and Textile Employees, which is seeking to organize laundry
workers.  "It's a major growth industry," one of its officials
recently observed, "and it can't move offshore."

Source: Steven Greenhouse, "Union Leaders See Grim News in Labor
Study," New York Times, October 13, 1999.

For more on Union Membership
http://www.ncpa.org/pd/unions/membership.html

A CHALLENGE TO WHITES-ONLY AFFIRMATIVE ACTION

As proof that if you wait long enough you'll see it all, Alabama
has an affirmative action scholarship program exclusively for
whites who enroll in one of the state's two historically black
colleges.  And now, a black student has challenged it in court,
claiming it violates his 14th amendment rights guaranteeing equal
protection under the law.

   o   The affirmative action plan affects Alabama State and
       Alabama A&M.

   o   It was created in 1995 to encourage whites to add some
       diversity to the traditionally all-black student bodies.

   o   White enrollment has increased from seven to 10 percent at
       Alabama State since the 1995 decision by U.S. District
       Judge Harold L. Murphy.

Now, the same judge has allowed Jesse J. Tompkins, a part time
student at Alabama State, to challenge the constitutionality of
the scholarships, claiming he was denied a scholarship in 1996
because of the affirmative action program for whites.  He is
being defended by the Center for Individual Rights, a Washington-
based legal group that takes racial preference cases around the
country.

Tompkins argues that racial opportunity has become so
well-equalized in American that we no longer need take race into
account. Observers believe that if Tompkins wins his case, it
could help unravel affirmative action programs around the
country, regardless of which race is involved.

Source: Clarence Page (Chicago Tribune), "Affirmative Reaction,"
Dallas Morning News, October 13, 1999.

For more on Affirmative Action in Education
http://www.ncpa.org/pi/edu/edu1a.html

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
                  NATIONAL CENTER FOR POLICY ANALYSIS
                            DALLAS, TEXAS

                    "Making Ideas Change the World"

                           Internet Address:
                          http://www.ncpa.org
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *


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