THE RECORD

October 15, 1977

No. 45

LYNDON B. JOHNSON SCHOOL OF PUBLIC AFFAIRS, THE UNIVERSITY OF TEXAS AT AUSTIN

EDITOR Marilyn Duncan

POLICY ALTERNATIVES EXPLORED AT 'REGIONAL CHANGE' SYMPOSIUM

The issues underlying economic and political conflict among the nation's regions were defined and analyzed here September 23-27 during a major symposium held in the LBJ Presidential Library. The conference, entitled Alternatives to Confrontation: A National Policy Toward Regional Change, was sponsored by the LBJ Library, the LBJ School, and the University of Texas. Divided into two major portions—an experts conference and a public conference—the symposium was aimed at bringing regional differences into the open to offer perspectives on areas of change and alternative solutions to problems evolving from those changes. The two-day working conference on Balanced National Growth and Regional Change brought together academic and technical economic experts from around the nation. In three general sessions and a series of concurrent panel sessions, the participants worked toward fulfilling a number of stated objectives:

. to establish the historic basis for current patterns of regional development;

. to establish economic base differences underlying these patterns;

. to establish the relationship between factor costs and different patterns of regional development;

. to examine regional differences in patterns of public finance;

. to examine the relationship between federal expenditures and regional growth;

. to examine the relationship between energy resources, economic growth, and patterns of regional development;

. to examine urban conditions in different regional settings;

. to examine rural conditions in different regional settings; and

. to examine the relationship between public services and regional growth.

Papers prepared by individual experts were reviewed by panels of other experts and by members of the audience, chiefly composed of faculty and students of economics and public affairs, public officials from every level of government, and representatives of business and industry. Also in attendance were staff members of the White House Conference on Balanced National Growth, to be held next January.

Presiding over the experts conference was Alan K. Campbell, Chairman of the U.S. Civil Service Commission. Participants offering papers were Peter Morrison, Rand Corporation; David Birch, MIT; Roy Bahl, Syracuse University; George Peterson, the Urban Institute; Charles Leven, Washington University; Kenneth Deavers, U.S. Department of Agriculture, Economic Development Division; William Murnyk, University of West Virginia; Jeffrey Williamson, University of Wisconsin; Irving Hoch, Resources for the Future, Washington, D.C.; and Robert Lineberry, Northwestern University.

The public portion of the conference was opened September 25 with welcoming remarks by LBJ School Dean Elspeth Rostow, LBJ Library Director Harry Middleton, U.T. President Lorene L. Rogers, Governor Dolph Briscoe, and Mrs. Lyndon B. Johnson.

The conference theme was explored in somewhat broader terms by participants in the public sessions. Representatives of various regions and agencies—policy makers and policy analysts—offered regional and special perspectives on the issues defined earlier in the experts conference.

Monday, September 26, was divided into two general sessions on regional perspectives, followed by concurrent policy sessions. Addresses by Governors Hugh L. Carey of New York, James R. Thompson of Illinois, and David Boren of Oklahoma and Robert W. Scott, Federal Co‑Chairman of the Appalachian Regional Commission, focused on problems related to federal funds allocations, development of energy resources, unemployment and welfare, and urban/rural change in their respective regions. Other regional representatives—Lt. Governor William Hobby of Texas, Lt. Governor Robert E. Ferguson of New Mexico, U.S. Representative Michael Harrington of Massachusetts, among others—were panelists at policy sessions aimed at exploring each of these problem areas in depth. Panels also included representatives of the federal, academic, and special interest points of view. Participants offered brief overviews of policy issues and alternatives and then fielded questions from the audience.

For summaries of policy session proceedings, see pages 5-10.

The final day of the public conference consisted of three general sessions on national policy issues. The morning session featured an address by U.S. Secretary of Labor Ray Marshall entitled "A National Policy Toward Welfare Reform and the Reduction of Poverty." A panel of national, state, and local officials reviewed the address, which centered around President Carter's Better Jobs and Income Program.

At the first afternoon session, UT Professor Walt W. Rostow offered an address on "A National Policy for Full Employment," claiming that the means to full employment lie in increased public‑private collaborations leading to greater investments in areas of resource problems. Aspects of the paper were discussed by a panel composed of Dr. James O'Leary, vice‑chairman of the U.S. Trust Company of New York; Dr. Rudy Oswald, director of research for the AFL‑CIO; and Bertram Carp, deputy director of the White House Domestic Policy Staff.

The closing session of the conference was dedicated to the topic, "A National Policy Toward Energy." Professor Carroll Wilson, Mitsui Professor of Problems in Contemporary Technology at MIT, outlined a plan for cutting the nation's dependence on oil and natural gas by doubling U.S. coal production. The plan proposed establishing commercial coal plants, developing rail or coal slurry pipelines to transport the fuel, and setting up a contract agreement between the government and industry. Panelists, addressing themselves to Wilson's proposal and to the topic of gas deregulation, were Peter T. Flawn, UT San Antonio president; Michael Finland, special assistant to the Lt. Governor of Massachusetts; and Judith Liersch, acting director of the Energy Extension Service of the ERDA Administration.

Conference co‑ordinator was Professor Victor Arnold of the LBJ School. According to Dr. Arnold two publications will develop from the conference, one consisting of the ten papers of the experts conference, and the other to be drawn from the public conference proceedings.

TOLO HONORED BY COMMERCE DEPT.

The first Secretary's Medal to be given by Dr. Juanita Kreps since she became U.S. Secretary of Commerce last January has been awarded to Dr. Kenneth Tolo of the LBJ School.

Dr. Tolo received the commemorative bronze medal from Dr. Kreps for outstanding contributions he made to the Commerce Department in 1976‑77 while on leave from UT Austin.

The Secretary's Medal is usually reserved for visiting foreign dignitaries of cabinet rank or above, such as Ministers or Deputy Prime Ministers. Only rarely is the medal given to a U.S. citizen.

Dr. Tolo, former acting dean of the LBJ School, served in a variety of capacities in the Office of the Assistant Secretary for Policy during his stay at the Commerce Department. He first began his duties under the administration of Secretary Elliot Richardson and then served with Secretary Kreps.

Successively, he was deputy director and director of the Office of Policy Development and Coordination, which is concerned with analyzing policies and conducting studies of interest to the Secretary.

He also served as Secretary Kreps' representative to a number of interagency committees such as the Pension Benefit Guaranty Corporation, Water Resources Council, National Transportation Policy Study Commission, United States/United Kingdom Aviation Negotiations and the National Commission on Productivity and Quality of Working Life. His later assignments dealt with organization and management questions in the Office of the Secretary.

While in Washington, Dr. Tolo was designated a Faculty Fellow of the National Association of Schools of Public Affairs and Administration, under an arrangement that allows selected academicians to serve on temporary assignment with a Federal agency.

Dr. Tolo says his Washington experience has given him a "fuller perspective" and will be useful in further developing his teaching and research interests in the LBJ School. The Commerce Department assignment also allowed him to become familiar with a number of economic development issues that will be of importance to Texas, he says.

'ON THE RECORD'

. Please note that Computer Center hours are subject to change at the beginning of the second 8‑week session. Students should check room 3.316 at that time for tutor schedule information. Hours for Diane Blackburn, the Computer Programmer, are listed outside room 3.319.

. Professor David Warner has been invited to participate in a three‑day conference in Charlottesville, Virginia in late October. The conference, sponsored by George Washington University, the Urban Institute, and the International Institute for Management in Berlin, will be devoted to studying the governance of modern social systems.

. Professor David Eaton has been elected to membership on the Council on Foreign Relations of New York City. The Council publishes the quarterly journal Foreign Affairs and conducts meetings to provide its members with an opportunity to talk with invited guests from the United States or abroad who have special experience, expertise, or involvement in international affairs. The Council also commissions books and monographs from time to time on international topics worthy of presentation to the public.

. Thursday, October 20 from 5:30 to 7:00 p.m. at the Texas Exes Alumni Center are the time and place for a reception sponsored by the LBJ School Alumni Association. The reception will be held to initiate a new year of activities for the Association and to recognize the Association's outgoing officers. All alumni, and especially 1977 graduates, are invited to attend.

. A word of praise is in order for the behind‑the‑scenes workers who helped make the Regional Change Conference the success it was. Donna Nilsen was responsible for physical arrangements, including everything from brochure and program production to stage settings, and some 60 students had a hand in making the activities run smoothly. Hats off to you all!

. NEWSBREAK: The latest edition of "Off the Record" was last seen hanging around the 2nd floor bulletin board.

. Beginning this month the Record is including a regular column for alumni. "Alumni Forum" (p. 3) will feature news, information and editorials by and about LBJ School alumni. Malcolm McDonald (512‑443‑1799) is the contact, and invites your contributions.

. Class Representatives for 1977‑78 are Marc Dominus and Ken Apfel, second year; Don Watson and Russ Hedge, first year.

. All faculty and students of the LBJ School are invited to attend an informal beer social Thursday, October 13, 4‑5:30 p.m. in the Tom Clark Lounge in Townes Hall (Law School). The social is being sponsored by the Texas Union Graduate Programs Committee and the UT Interaction Committee. The faculty and students of the Law School and Latin American Studies graduate program will also be in attendance.

STUDENT REPORT CITED

An independent research project report written by a 1977 LBJ School graduate recently found its way to Missouri, where it became part of a major study underway in the governor's office. According to the St. Louis Post‑Dispatch (Sept. 23, pp.12‑13A), Missouri Governor Joseph P. Teasdale is considering the establishment of a Washington‑based state office in response to recent cutbacks in the state's allocation of public works funds. Scott S. Fleming, 1977 graduate and aide to Congressman Daniel R. Glickman of Kansas, conducted research in Spring '77 on the functioning of state liaison offices in Washington. His report included a chapter on Missouri, enumerating the areas in which that state is falling behind in federal aid and describing how a state liaison office could prove beneficial. The Post‑Dispatch cites Fleming's research findings as evidence in favor of establishing such an office for Missouri.

Faculty supervisor for Fleming's IRP was LBJ Professor Dagmar Hamilton.

LBJ FACULTY ON LEAVE

Several faculty members are on leave as the LBJ School begins its seventh year. Three are in Washington, D.C.:

— Professor Alan Campbell, who is chairman of the U.S. Civil Service Commission.

—Professor Henry David, who is a senior policy consultant with the National Institute of Education, where he is directing a vocational education study project. He will be on leave for the fall semester.

— Assistant Professor Beryl Radin, who, as a Faculty Fellow of the National Association of Schools of Public Affairs and Administration, is working in the office of the assistant secretary for planning and evaluation of the U.S. Department of Health, Education and Welfare.

Continuing on leave is Associate Professor Kingsley Haynes, who is in Cairo, Egypt, as director of the Middle East resources and environment program of the Ford Foundation.

LBJ SCHOOL COMMITTEES, 1977‑1978

(Chairpersons appear in italics)

INTERNSHIP AND PLACEMENT

Kenneth Tolo

Keith Arnold

Lodis Rhodes

Richard Schott

Angela Hatton (2nd year student)

John Rooney (2nd year student)

Betty Rogers (1st year student)

Bernie Little (1st year student)

Elizabeth Hall (ex‑officio)

Wilda Campbell (ex‑officio)

FACULTY RECRUITMENT, SPEAKERS, AND CONFERENCES

Sidney Weintraub

Victor Bach

Marlan Blissett

David Eaton

Jurgen Schmandt

Speakers Committee:

David Duncan (2nd year student)

Harley Duncan (2nd year student)

Brook Myers (1st year student)

John Nelson (1st year student)

Faculty Recruitment Committee:

Bonnie Fisher(2nd year student)

James Dodson (2nd year student)

LIBRARY AND COMPUTER CENTER

Albert Blum

Matthew Berman

Emmett Redford

Mark Sayers (2nd year student)

Matt Burns (1st year student)

Diane Blackburn (ex‑officio)

Linda Thompson (ex‑officio)

JOINT DEGREES PROGRAM

Dagmar Hamilton

Victor Arnold

Gerard Rohlich

ADMISSIONS AND FINANCIAL AID

David Warner

Lynn Anderson

Leigh Boske

John Gronouski

Stephen Spurr

Albert Hawkins (2nd year student)

Rhonda Belt (1st year student)

Elizabeth Hall (ex‑officio)

ALUMNI FORUM

DEAR ALUMNI:

The LBJ School Alumni Association has passed a second landmark in its development, with the election of a new slate of officers. On behalf of those officers, I'd like to thank each of you for your previous participation and to ask your renewed support as we initiate a new year of activities.

The first landmark of the Alumni Association was its creation and the election of its first officers in 1975. Few people will appreciate the time, effort, and financial support contributed by our outgoing officers. We are deeply indebted to Mike Moeller, Bruce Esterline, Jan Younglove, Jean Shoemaker, and Mel Waxler for their leadership. We want to recognize them at a reception in Austin on Thursday, October 20, 5:30‑7:30 at the Alumni Center. We invite all alumni to attend.

We enter a new stage of development this year as we attempt to broaden the membership and participation in the Alumni Association. We'd like to invite the 1977 class of graduates to become active. We hope to open local chapters of the Alumni Association in Washington, D.C. and other areas where there are major concentrations of graduates, so that the Association does not become Austin‑based. We also hope to make more alumni active in the organization than have been in the past.

Why should you become involved in an Alumni Association? As a product of the LBJ School, you are affected by the professional status of other graduates of the School. Because of this common interest, we need to promote the professional status of alumni. We can do this through a professional organization established to represent alumni before the School, the Legislature, and other forums where our interests may be discussed. We need to develop a network of job contacts to promote each other to positions of a higher level and interest. We need to enhance the exchange of information in the performance of our daily jobs through contact with fellow graduates in related fields or agencies.

How does the Association plan to achieve these goals? We hope to enhance professional contacts by again publishing the Alumni Directory. We hope to augment this professional information with a biannual newsletter, exchanging personal and professional news items such as marriages, special awards, babies, and new degrees received. We hope to hold professional and social meetings in the local chapters of the Association. The Austin chapter hopes to hold a seminar with the LBJ School faculty to evaluate the success of LBJ School training for the public and private sectors.

We feel that you have a lot to gain as an Alumnus of the LBJ School by becoming affiliated with the LBJ School Alumni Association. We are, of course, dependent on you to conduct these activities. We'd like to ask each of you to respond to the letter you'll be receiving in the next two weeks. In it we invite you to attend the organizational meeting of your local chapter and to contribute $10 for the directory, newsletter, correspondence, and seminars to be made available to all contributing members. Please contact:

LBJ School Alumni Association

P.O. Box 13241 Capitol Station

Austin, Texas 78 711

We look forward to a new and exciting year with you as a member.

Sincerely,

David B. West

President

BUNKLEY SEEKING STATE OFFICE

Crawford B. Bunkley, second‑year student in the LBJ School, filed his candidacy for State Representative, District 33‑0, a position recently vacated by Eddie Bernice Johnson. Bunkley worked last spring as assistant to Rep. Johnson on the House Labor Committee, where he analyzed proposed legislation and made policy recommendations.

A native of Dallas, Bunkley graduated from Brown University with a major in American history before coming to the LBJ School last year on a fellowship.

Bunkley met with other LBJ School students at a brown‑bag luncheon on Tuesday, Oct. 4—his filing date—to answer questions about campaign issues and plans. Among the issues he listed as top priority were property tax reform, equalization of school finance, housing, and Texas Services to the Elderly.

Fellow class members are raising funds for the campaign from among present and past LBJ scholars. Marc Dominus and Dave Osborn are in charge of fundraising at the School.

Campaign headquarters in Dallas are located at 1924 Lanark.

CAMPBELL ADDRESSES LBJ STUDENTS

Alan K. Campbell, former Dean of the LBJ School and now Civil Service Commissioner, spoke to LBJ students on Friday, September 23 about the Presidential Management Intern Program and the Federal Reorganization Project. He began his talk by describing the 2.8 million holders of civil service positions in the federal government, noting that there are small numbers of minorities and women in the upper grades of the civil service. Unlike times in the recent past, Campbell explained, the supply of applicants for most civil service positions are filled from within; therefore, the number entering the system from the outside is very small. Faced with this situation, Campbell said he was not interested in developing a strategy to attract more applicants to the general pool. Rather, he maintained that his interest has been to develop a program that would provide opportunities for agencies to hire at the entry professional level outstanding men and women with skills particularly well suited for public service careers.

Campbell went on to say he has worked to establish the Presidential Management Intern Program, to be open only to academic year 1977‑78 graduates of public management schools. The applicants will be chosen by dean nominations at the local level with regional screening committees ranking these selections and submitting them to a final selection at the national level. He said it is expected that there will be 1,000 to 1,500 nominees for the 250 to 300 positions open each year. Those selected will enter at GS9 level and will serve in the program for two years with an opportunity for promotion. While the appointments will not assure civil service status at the end of the two‑year program, the intern will be eligible for conversion to competitive civil service status, depending on his or her performance during that period.

The Intern Program has a strong affirmative action element which Campbell said he hopes will attract qualified minorities and women and enable them to apply successfully for the program.

Campbell also commented on the President's Reorganization Project. He indicated that reorganization was still in the early planning stages, and task forces have been set up for such functions as housing and social services. Also, the Civil Service and the Office of Management and Budget are in the process of reviewing the total Federal Personnel Management System, and Campbell noted this report should be ready to submit by January.

[news item]

A recent Texas Coordinating Board news release contained an interesting quote from a speech given by Dr. Kenneth Ashworth, Texas commissioner of higher education: "It is not fair measurement of the value of a college education to judge whether or not graduates—immediately upon graduation— enter professions directly related to their degrees. We have to remember that the average American works in seven different jobs in three different careers during his or her working lifetime. To judge the appropriateness of a degree program to the first job a graduate takes would be like using the score at the end of a first inning as the final score for a ballgame."

CONCURRENT POLICY SESSIONS, SEPTEMBER 26, REGIONAL CHANGE CONFERENCE

The following summaries were derived from reports by the UT News and Information Service:

"ENERGY AND GROWTH: WHAT LIES AHEAD"

There is no area of sharper potential confrontation than that of energy and its relationship to the growth of the national economy, a geologist and energy expert said here Monday.

The United States and all its regions have sustained unprecedented growth and prosperity by the use of energy, Dr. W.L. Fisher said.

The nation's continued growth—or lack of it—will be a function of "how much and how" we use energy in the future, he predicted. Sustained growth will require either substantially reduced levels of energy consumption or adequate supplies at higher costs, Dr. Fisher said.

Dr. Fisher, director of the Bureau of Economic Geology at the University and chairman for a symposium session on energy and growth, said five states now produce 60 percent of the nation's energy.

"There will be geographic shifts in the future simply because resources are where they are and they ultimately are finite," the geologist said.

To date, the United States has consumed barely one‑fifth of its total identified fossil fuel reserves, Dr. Fisher noted. Compared to the total resource base of fossil fuels, that consumption constitutes a little more than two percent, he added.

Outlining the energy problem, Dr. Irving Hoch, a Fellow at Resources for the Future in Washington, D.C., told symposium participants that the federal policy of low prices for oil and gas have curtailed domestic production.

This has led to "a substitution of Saudi Arabian oil for Texas and Louisiana oil and of liquified natural gas from Indonesia and Algeria for U.S. liquified natural gas. We've encouraged OPEC by our policies, the economists said.

Low prices for oil and gas also have inhibited the development of more expensive alternative energy sources such as oil shale, coal gasification, and solar energy, Dr. Hoch said.

He predicted the energy price crunch will intensify population shifts from the North to the South and West but said that all areas of the nation will be faced with more air pollution as a result of the federally mandated increase in coal use.

Divisiveness among regions over the energy issue "can get out of hand," warned another symposium speaker.

"It already is out of hand in some senses," said Lee C. White, a Washington, D.C. attorney and former chairman of the Federal Power Commission.

An advocate of price controls, Mr. White conceded that "regulation is really a very wretched thing. But we have to weigh it against other alternatives." Today, no desirable alternatives exist, he said.

"I don't have any confidence, really, in what has been called the free market," he continued. "We don't have a free market," Mr. White said, but one that is regulated by the OPEC cartel.

Federal price controls should not be blamed for the current OPEC stranglehold, the attorney maintained. Past federal action actually has supported high prices for domestic oil, Mr. White said.

He cited the period between 1959 and 1973 when a national policy of import quotas kept out foreign oil that was selling below United States prices. The result was that during that 14‑year period, American consumers paid $85 billion more than they would have, had cheaper foreign oil been imported, Mr. White said.

A fourth energy expert at the symposium recommended, however, taking the energy issue out of the political arena and putting it in the marketplace.

Dr. Walter J. Mead, professor of economics at the University of California at Santa Barbara, said federal energy policies have been counterproductive and always have served some special interest at the expense of the nation as a whole.

Congress will always respond to the organized pressures put upon it, he said, although political solutions rarely favor the general public. As an example, Dr. Mead cited the cargo preference bill now pending in Congress.

The bill would require a yet‑to‑be‑determined percentage of oil imported to this country to be transported on ships built, owned, and manned by American crews. Dr. Mead predicted the bill will pass to satisfy a campaign commitment President Carter made to the maritime and shipbuilding unions.

The "losers" will be the taxpayers and the consumers, particularly residents of the Northeast who are heavily dependent on imported oil, Dr. Mead said.

The economist called for elimination of price controls on oil and gas and the elimination of benefits to oil producers such as the oil depletion allowance.

However, Dr. Mead predicted the future will see "more and more regulation" and a declining growth rate in the standard of living through inefficient use of scarce resources.

"These dismal events I foresee for the future will continue until we, the people, rid ourselves of some naive notions about the political process and the real world limitations on any government's ability to make rational economic decisions," Dr. Mead concluded.

"CHANGING OPPORTUNITIES: WHY BUSINESSES MOVE"

The president of the Federal Reserve Bank of Boston said here Monday the economic outlook for New England is "brightening" because the region is undergoing a number of adaptations that will make it more attractive to business and industry.

Frank Morris said the adaptive process with respect to wages, energy usage, and state and local taxes can be "observed quite clearly in New England," but not so much in the Middle Atlantic States.

Mr. Morris pointed out that a high-cost region such as New England must adapt to survive by reducing the cost of doing business there.

"There are two principal elements to this process," he said. "First, the region's industrial structure shifts to favor those industries least dependent upon the highcost factors. Second, if shifts in the industrial structure still leave the region at a significant cost disadvantage, a satisfactory rate of employment growth can only be maintained by a relative reduction in the local standard of living."

He said the sacrifice in living standards could come in the government sector. He noted, for example, that since about 1975 Massachusetts has been moving away from the liberal policies of the 1960s and is tightening up on its programs of welfare and unemployment compensation.

"If you quit a job in Massachusetts now," he said, "you are not eligible for unemployment compensation." The speaker pointed out that the state could no longer afford the "largesse" of unlimited social policies.

Another aspect of New England's adaptation to unfavorable circumstances can be seen in its consumption of energy, Mr. Morris said.

"Because energy costs have always been high in New England, the industrial structure has shifted away from industries which use energy intensively," he said. The most important manufacturing industries in New England now are low‑energy users such as computers, electrical equipment, nonelectrical machinery and instruments.

He said New England's energy costs, which have been primarily oil‑based and which for years were above the national average, have begun now to converge with the nation's energy prices.

"Oil prices have been relatively stable while the cost of gas, which is much less important to New England manufacturers than to competitors elsewhere, has risen sharply," he noted. "Coal prices have also risen more than oil in this period and this fuel is also used much more extensively outside of New England."

Another area in which New England has adapted to minimize its cost disadvantages is in wages, the speaker pointed out.

While the region probably has the highest cost of living in the continental U.S., Mr. Morris said, wages in New England are below the national average.

"If industrial growth does not provide sufficient employment opportunities to hold the unemployment rate to a satisfactory level, then wages will have to adjust," Mr. Morris continued. "The process may be slow and painful, but high unemployment rates will make workers more willing to accept jobs at lower rates of pay and, over time, wages in the highcost area will fall relative to those in other parts of the country."

Mr. Morris said there are evidences the "adaptive process" is having a beneficial impact on New England. He said the area is recovering from the last recession better than it has from previous downturns and the recovery of manufacturing has been "particularly encouraging."

"We hope that it is an indication that the types of manufacturing we now have in New England can be competitive and prosper in our fairly difficult economic climate," Mr. Morris said.

He observed that the national employment objectives of the Carter Administration cannot be met by monetary and fiscal policies alone. What is needed is manpower training for uneducated teenagers ("functional illiterates") who are entering the labor force and special incentives for private investment in manufacturing industries in older urban centers.

Mr. Morris concluded that "regions are just like people and firms except on a grander scale." He said they have "to do what they are best at and be able to adapt to changing circumstances in order to maximize their opportunities."

Sharing the symposium session with Mr. Morris was Gerald Duskin, senior economist with the Office of Economic Research, Economic Development Administration, Department of Commerce.

Mr. Duskin cited two "nonreversible" federal policy actions as having had the most important influence in shifting firms and populations from the Frostbelt to the Sunbelt. They are the interstate highway system and the construction of the inland waterway system.

Other federal stimuli, which he called reversible actions," in inducing firms to relocate include:

—Regulation of freight rates, which stimulated trucking at the expense of railroads and which "worked against the rail‑based industries of the Northeast."

—Investment tax credits, which benefited growth regions of the South and West.

—Accelerated depreciation allowances, which accelerated replacement of old capital and chased new capital to the suburbs away from the old industrialized belt, thereby resulting in an abandonment of jobs and industrial plants.

—Use of tax exemptions to borrow for new construction. He noted that "changes in tax codes are the most effective ways of changing growth patterns."

—FHA and VA mortgage insurance programs, which he said were "principal forces" in the suburbanization of people and the flight of industries to meet the location of the labor force.

Mr. Duskin said the pattern of the 1950s and 1960s that saw the tearing down of institutions, population migrations from the rural South to the urban North and West, and unplanned growth "is behind us." The patterns of the 1970s reveal an "acute awareness of our finite resources," he said, adding: "We are becoming supply conscious."

Mr. Duskin said he does not see a mass movement of industries back to urban centers but some reversal in the "trek outward" of industries in the future.

"THE FUTURE OF STATE AND LOCAL GOVERNMENTS: THE UNCERTAINTIES OF GOVERNMENT FINANCE"

A new set of fiscal problems has emerged for the growing Southern region of the United States with the shift of economic activity and population to the Sunbelt, while in the declining Northeast and Midwest, fiscal problems of state and local governments have been accentuated.

That observation was made by Dr. Roy Bahl, professor of economics and director of the Metropolitan Studies Program in the Maxwell School at Syracuse University....

Dr. Bahl presented a brief overview to introduce a panel discussion on the future of state and local governments and the uncertainties of government finance. Other panelists included Felix Rohatyn, a partner in Lazard Freres and Company and chairman of the Municipal Assistance Corporation of New York City; Gerald Christenson, commissioner of finance for the State of Minnesota, and Henry C. Cisneros, assistant professor of environmental studies at UT San Antonio and city councilman of San Antonio. Austin Mayor Carol McClellan introduced the speakers and served as moderator.

"The problem in the Northern Tier states is that spending decisions did not reflect the realities of a slower growth in personal income and employment indicators of growth in fiscal capacity," Dr. Bahl said in a prepared text. "In many Northern states the problem has become one of an overdeveloped public sector relative to the capacity to finance that level of activity."

Noting that the most hard‑pressed areas in the declining region are the older central cities, Dr. Bahl said those cities are doubly‑damned in that they are experiencing rapid economic decline and their fiscal position is affected by high concentrations of the poor, citizens with little tax‑paying capacity and with heavy public expenditure needs.

"There are differences in fiscal and government structure between North and South which may permit Southern states to avoid some of the stereotype Northern fiscal problems," the economist continued. "Many of the current fiscal difficulties of Northern cities and states are an outgrowth of decisions made during the rapid fiscal expansion of the sixties.

"That expenditure growth was due to many factors including large increase in employee compensation stimulated by inflation and public employee unions, growing debt and pension commitments, and in some cases growing public service commitments to the poor."

Dr. Bahl cited several significant regional differences, including:

—Fiscal systems in the South tend to be state‑government dominated, relying heavily on the sales tax, while fiscal systems in the North are more local-government dominated and rely more heavily on the property tax.

—The central city appears to be a more dominant governmental unit in the South than in the North, due to the newness of the cities and their better experience with annexation and consolidation.

—State and local governments in the North appear more burdened with fixed commitments such as pensions and debt.

—A larger share of Northern Tier expenditures are for public welfare.

—Average state and local government employment, relative to population is higher in the South, but the average wage of those employees is higher in the North.

Dr. Bahl pointed out that such regional differences must be recognized because any federal policy which deals with state and local finance problems will have different effects in different states....

Mr. Rohatyn, recalling a poem by Dylan Thomas to his dying father in which he said, "Do not go gentle into that good night," said that if our cities are dying, he thinks they should not go gentle into that good night, either. He added that he knows of no worthwhile civilization that doesn't involve a healthy, vibrant, and extremely active and positive urban life.

"I don't believe in the inevitability of simply giving in to the demise," Mr. Rohatyn said. "Over the last two and a half years in New York City, we have done something that is fairly unique in any kind of government. We have turned the trend around when the city was in great economic difficulty and for three or four months was almost going bankrupt every month. That was at a time when the federal government took a position that it really didn't make any difference if New York City went bankrupt."

He commented that if the city had gone bankrupt it also would have included New York State which would have meant securities in the aggregate of about $34 billion or about 20 percent of the national banking system's capital.

"The question is whether you feel there has to be affirmative action, both regional and federal, to turn the economy around in these regions and cities," Mr. Rohatyn explained. "If you don't do that, you're just going to have a continued exodus of taxpayers . . . and you'll be creating in some of the older cities a critical mass of people who have no hope and no place to go. And then you'll create a series of social nuclear bombs that you'll have to cope with sooner or later. To postpone the decisions is to allow the problems to become much greater."

Mr. Christenson commented that what needs to be done in this country is to develop clean, concise, consistent policies that can work at the federal, state and local levels.

"So many of the things we're talking about are interrelated," Mr. Christenson emphasized. "You can't separate property taxes from the condition of the central cities ... from environmental protection ... from the way you treat senior citizens ... from energy ... from housing availability ... from trying to keep independent farmers in this country. All of those areas are interrelated.

"I want to stress the property tax because I think in this country we have relied too heavily on the property tax. I think that what we do at the federal level should be aimed at trying to reform what we're doing at the state and local levels."

Mr. Cisneros said that at this point in the history of the American city there is a great need for those who are willing to assert that the city is a saveable entity in our society.

In regard to fiscal problems of Southwestern cities, Mr. Cisneros said that most of the cities have benefited from the shift in national population and economy in recent years. He noted that most of those cities have good budget situations and credit ratings, but that the key fact in healthy budget situations in Texas cities is enlightened annexation laws in the state, which have allowed the cities to keep themselves from being ringed in by a noose of suburbs.

"URBAN AMERICA TOMORROW: WHAT WE MUST DO TODAY"

The metropolitan area of the 21st Century will look more like the state of Massachusetts without Boston, said Dr. Charles Leven Monday.

In every area of the country, "nonmetropolitan growth has just skyrocketed relative to metropolitan area growth."

Dr. Leven, director of the Institute for Urban and Regional Studies at Washington University in St. Louis, predicted a proliferation of merging metro systems where people will live in areas more densely populated than today's. Citizens will spend less time traveling to and from work but more time obtaining specialized services, the economist said.

In his view, the urban problem is independent of the question of poverty, although he conceded the two are related. The issues of poverty and inequality are too important to be treated "as a footnote" to housing or transportation policy, he noted.

However, Richard Hatcher, mayor of Gary, Ind., and a panelist for the policy session, called poverty the " central problem of the American experience" and predicted that until it is solved, "we will continue to wrestle with other problems and not reach sound solutions."

The United States can ill afford to maintain a "holier than thou" world posture when it fails to solve its own problems, Mayor Hatcher charged.

Older cities have subsidized the growth of the Sunbelt, the Gary mayor said. He suggested policymakers consider "arrangements" for the Frostbelt to "retain more of the wealth we generate in the form of taxes."

With the new‑found affluence of the South, West and Southwest, those areas should be willing to assist in the reconstruction of the older section of the Frostbelt, Mayor Hatcher said.

An "absolute priority" of a national urban policy should be full employment, he continued. He endorsed the Humphrey-Hawkins bill, the proposed "full employment" legislation that would make the federal government the employer "of last resort."

Mayor Hatcher conceded the price for full employment is "substantial," but said it is not as expensive as unemployment.

Mayor Hatcher also made a plea for urban development banks to encourage reinvestment in central cities.

He added that a "spirit of self help" is essential if urban development is to succeed.

"If there is one thing I've learned after 10 years of wrestling with the problem of Gary, Indiana. it's that government, whether we're taking about local, state or federal government, cannot solve all the problems," Mayor Hatcher said. "That is, for some people, a hard truth to come to, but it is the reality of the situation."

Mayor Fred Hofheinz of Houston, another panelist for the session, cited the "different but equal problems of those cities on the decline and of urban areas now expanding. The federal government should recognize the unique problems of each area and design separate programs to deal with them," Mayor Hofheinz said.

The Community Development Block Grant Program, now being considered by Congress, and new programs proposed by the Department of Housing and Urban Development are what Mayor Hofheinz termed solutions inappropriate to the problems at hand.

The session chairwoman, Dr. Ethel Allen of Philadelphia, Pa., stressed the need for more input from local officials on questions of federal urban policy.

Dr. Allen, a physician and councilwoman‑at‑large, said:

"The answers will come only when the local elected officials, those who understand and comprehend the problems to a great extent, are taken into consultation with those individuals who are going to make what they call the national urban policy."

"THE CHANGING FACE OF RURAL AMERICA: HOW WE ADDRESS SHIFTING RURAL PROBLEMS?"

The foremost problem related to rural development in the United States today is tile disproportionate number of poor people concentrated in the rural South, according to panelists in this session.

Kenneth Deavers, director of the Economic Development Division, U.S. Department of Agriculture, said that for the first time ill contemporary history, "rural parts of the country are growing more rapidly ... in terms of population and income and employment than are the urban areas. Between 1970 and 1975, the nonmetro areas increased by 6.6 percent while the urban population increased by only four percent," he said.

Speaking in the panel overview he said that accompanying this population growth was substantial growth in employment and economic base, with nonmetro areas absorbing 40 percent of the total increase in non‑farm employment. Rural areas now have in excess of 25 percent of the total employment in the United States, he said.

Mr. Deavers said three elements set rural development apart from generalizations about national development.

First of those is level of development. By such measures as per capita and median family income, level of development remains low in much of rural America.

Second is structure of development—the mix of activities that make up the economic base of development.

"Although state and local development agencies often concentrate their efforts on attracting high‑wage industry, these enterprises often have the poorest employment opportunities for the local poor," Mr. Deavers explained.

The third element he cited was spatial composition of development within and between rural regions. He said rural unemployment areas were widely scattered and that areas of serious unemployment were juxtaposed with areas of the best growth.

He noted that the rates of growth in rural America have varied from 3 1/2 percent in the North Central states to in excess of 12 1/2 percent in the West. He said some areas have grown so much that there now are serious questions in many nonmetro areas about the capacity to absorb the rapid development in terms of facilities and services.

Despite regional growth, low family incomes are a way of life in the South as they have been for decades, the panelists agreed.

"It's important, since we talk about poverty as an urban phenomenon, to recognize that in 1970, 44 percent of the poor people in this country didn't live in cities," said Mr. Deavers. "They lived out in the rural areas, and in the South the proportion is much higher. Nearly 60 percent of the poverty in the South is in the rural areas."

Despite the fact that 60 percent of all nonmetro poor in the United States reside in the South, Mr. Deavers noted in a paper he prepared for the conference, that the South has a high incidence of "working poor" due to the stronger attachment to the labor force of male-headed families.

"These poor are excluded from many of the current categorical welfare programs and would be among the most benefitted by proposals for welfare reform," he said.

In the South, he noted, almost 40 percent of the nonmetro poor are black. But, outside the South, the nonmetro poverty population is almost exclusively white. In the South, he said blacks both overshare in employment declines and undershare in growth.

A greater awareness of rural problems at the public policy level was urged by Dr. William Nagle, administrator of the Rural Development Service, U.S. Department of Agriculture. He stressed the need to understand that the causes, effects and potential solutions of rural problems are different from urban problems and that critical differences in problems exist among rural areas themselves.

"The growth issue is probably the single most politically explosive issue in every state and in every sub‑state district and almost every county and municipality in the country," he said. "It is that issue that is not only forcing a redefinition of what is liberal and what is conservative, but is forcing almost every level of government into something other than a custodial role," he said, stressing that state and local capacity for planning and implementing projects to guide rural growth be strengthened.

Dr. Nagle said changes are taking place in many major governmental agencies and praised Congress for passing the Rural Development Act of 1972.

"When it comes to dollars, the rural people who have not gotten adequate attention in the past are in fact the USDA's immediate rural development constituency," said Dr. Nagle. "This means small farmers and poor people and older people with no transportation and all rural people who have inferior access to health care, fire prevention facilities or good schools; the rural Indians, the Spanish surnames, the blacks, the migrant workers, the poor whites ... and all other rural Americans. The Rural Development Act made these people the USDA's constituency by law."

Dr. Charles B. Knapp, special assistant to the secretary, U.S. Department of Labor, said that without ignoring the admittedly severe plight of urban areas in this country we have to keep our eye on what the issues are in rural areas.

"One issue that's very important ... is a paradox ... of there being jobs in the economy at the same time we are running a seven or eight percent unemployment rate," said Dr. Knapp. "This has come to our attention particularly just in the last month or so with respect to agricultural unemployment."

Dr. Knapp said that the Department of Labor believes there are enough migrant farm workers in this country to perform the labor that needs to be done by growers, but he indicated that jobs are not taken because they are "bad jobs." He cited a study conducted by Labor Secretary Ray Marshall in the Texas Rio Grande Valley where ways were found to reorganize citrus‑picking work "so that the jobs in fact became better jobs and became jobs that domestic workers would be able to take and earn a living doing."

"The burden of doing these things to a large extent ... falls on the Labor Department and particularly one of the favorite targets of the critics of the department, the U.S. Employment Service, who absolutely must do a better job of matching people with jobs, particularly in rural areas," Dr. Knapp said.

Another program responsible for such work, he said, is the Comprehensive Employment and Training Act. Dr. Knapp explained that as CEDA is now structured, funding projects much like revenue sharing programs, it is advantageous in terms of getting more funding for projects to run the most efficient operation possible. That is, to lower cost per placement, he said.

"There isn't an incentive the way the system is structured now to go to the people who really need it," he said. "To go to the hard core unemployed, to go to the rural areas where placement costs are much higher because of transportation and communication problems. This is a case again when we in the Labor Department have to get ourselves together in terms of making sure this program works."

"SHARING FEDERAL EXPENDITURES: THE IMPACT ON REGIONAL GROWTH"

Whose needs require the most generous slice of Uncle Sam's federal expenditures was discussed here Monday by representatives from land‑use planning, politics and government, and public policy analysis.

Chairman of the panel was Dr. Richard P. Nathan, Senior Fellow of the Brookings Institution, who pointed out the role of the new technology in regional controversies, calling the computer the "root cause" of those controversies.

The computer has given us the capacity to know the demands and understand the claims of all groups, he said, adding that it leads us to a better understanding of what we're doing in domestic policy.

Dr. Nathan reminded participants of an admonition by the late Baltimore newpaperman and social commentator H.L. Mencken, that for every human problem, there is a solution that is simple, neat and wrong.

Other participants in the session were Dr. George Peterson, Senior Research Associate with the Urban Institute in Washington, D.C.; E. Blaine Liner, executive director of the Southern Growth Policies Board; Michael Harrington, U.S. Representative from the 6th District of Massachusetts, and Thomas P. O'Neill III, Lieutenant Governor of Massachusetts.

Dr. Peterson, in summarizing the overall picture of federal spending, described the U.S. as approaching a situation in which regional imbalances are, in effect, preserved by policy. In spending money for goods and services, the federal government has operated like the private sector, spending dollars where they are most efficiently and effectively invested, he said. The result is that the most federal dollars go to the economically healthiest areas.

"At the same time we're moving towards compensating or offsetting those regional differences in spending patterns by strong grants‑in‑aid payments which are skewed toward the northeast and the north central states," Dr. Peterson noted, adding a question about the desirability of such a policy.

The U.S. has lacked a regional spending policy for the past half‑century, largely because of the mobility of goods, capital and people, the policy analyst said.

The belief has been that federal dollars poured into one area would indirectly benefit other areas by circulation through various channels of interaction. People in search of employment could move from less promising locations to more promising ones, Dr. Peterson continued.

However, a factor spoiling this traditional situation is the immobility of people from areas of intolerably high unemployment, he said.

Approximately $380 billion of federal domestic spending being paid out in fiscal 1977 can be broken down into three elements, he noted. They include personal transfers (such as Medicare), purchases of goods and services and grants-in-aid to governments.

"The tilt to the South and West in federal spending comes entirely in purchases of goods and services, especially for military personnel and defense contracts," according to Dr. Peterson.

He pointed out that the grants‑in‑aid programs have seen drastic and overwhelming shifts in the last six to seven years from newer, growing areas of the country to the older areas, including the declining troubled cities of the Northeast.

Mr. Liner pointed to problems involving the progressive income tax relative to federal spending patterns. States become aware, he explained, that they are contributing more to the federal coffers via the progressive income tax than they are receiving in federal assistance.

In discussing redistribution of funds, Mr. Liner expressed preference for individuals being the target of funds distribution rather than regions.

A call for national unity in facing regional problems came from Representative Harrington. Sectional rivalries are part and parcel of the history of America, he said, asserting his own dedication to the preservation of the federal system.

In the past the North and East, the historically affluent sections of the country, have come to the aid of those less affluent, he maintained, a record which should not be forgotten.

Americans now are squabbling at a time when they should be working together to produce a great society, he continued.

"There is not a problem that we can conceive of that is without a solution," Congressman Harrington said. A sense of what we want to be as a people is necessary, he added.

Closing the panel was Lieutenant Governor O'Neill (son of the speaker of the U.S. House), who asserted that there "is not a single problem in America that can't be dealt with around a table."

A resident of Boston, Mr. O'Neill described the problems of America's older, decaying cities, in particular the high costs of living in cities such as Boston.

"We must recognize that we do have regional variations in the cost of living and that the cost of living is higher in parts of the country," he said.

"We have got to look to Washington to turn the picture around."