(FORTUNE Magazine) – THE BRIDGE BLOCKERS

Labor solidarity has been hard to discern in recent disputes involving newspaper unions in Detroit, Caterpillar workers in Peoria, and employees of New York City office buildings--in all of which picket lines got crossed in waves--but solidarity's flame still burns brightly among liberal intellectuals. Forty-five of them have aligned themselves with the radical talkers now running the labor movement and cheered the "block the bridges" approach associated with the AFL-CIO's new president, John Sweeney. Although not yet corporeally present on any bridges, or even picket lines, the lib-lab intellectuals--they include Arthur Schlesinger Jr., Alfred Kazin, and Betty Friedan--are marching with the workers and standing up to the bosses in the way they know best: by signing their names to a statement in the New York Review of Books.

But Sweeney's predecessor, Lane Kirkland, recurrently talked the same talk only to find that his troops couldn't walk the walk. Does nobody today remember the Houston Project in the early Eighties, wherein Kirkland was going to score big in the Sun Belt? The proposition that defeated labor then and continues to drag it down was the deregulated, competitive global economy, which increasingly forced companies to resist union wage scales if they meant to stay in business and forced workers to vote increasingly against unions (which for over 20 years have won only about half of all elections in previously unorganized companies and have lost more than two-thirds of all elections on decertifying existing unions).

The signatories appear to all be grownups, but they are putting forward a child's view of economics--a view in which companies pay generously if they are nice and lay off workers if they are into "mean-spirited selfishness," to quote the letter. The possibility that both managers and workers are always trying to maximize their own interests seems not to have occurred to the signatories, who also believe that a union revival would be a plus not only for the members but for "the vast majority of the American people."

Huh? Most economists will tell you that when unions were riding high in the Fifties and Sixties, their wage premiums--15% or more above market rates--raised prices for consumers. But that is not all the premiums did. They also forced unionized companies to overmechanize and do less hiring, all of which forced millions of workers into the non-union sector, where pay levels were depressed by the additional labor supplies. Finally, the misallocation of resources implied in this overmechanization clearly reduced aggregate output and wealth--a point conceded in What Do Unions Do?, a scholarly but generally pro-union 1984 work by two Harvard-based economists, Richard B. Freeman and James L. Medoff. None of the above seems known to the solidarity fans who signed the letter. One senses, to be sure, that none of it would prevent them from continuing to talk the talk.

THE STATE OF THE CACTUS

In the course of alternating between liberalish and conservativesque applause lines in his State of the Union act the other night, our President at one point actually averred that big government doesn't have all the answers and added: "We know there's not a program for every problem" (applause). It is true that a couple of sentences later he was positing that "we cannot go back to the time when our citizens were left to fend for themselves" (applause), a line he pointedly repeated verbatim when the applause died down (generating more applause). All of which left a fellow wondering about the number of situations today wherein citizens have fending problems for which there are no fendworthy government programs.

Friends, it is hard to think of them. We tried to assemble a little list, beginning with the problem of young folks who are failing to fend on Saturday night because they are too shy to ask for a date, but then we suddenly thought to ask how many articles in the Nexis database mention "self-esteem" within 30 words of "program," and the answer was a discouraging 16,406. We do not claim to have read even 1% of them but have ascertained that lots of programs run or supported by the federal government (including YouthBuild and Upward Bound) are intended to help kids build confidence, overcome shyness, and generally get with it.

OK. Somewhere out there one can doubtless find problems not being addressed by government programs. But browsing in the United States Government Manual--which lists the major federal agencies and departments and describes their functions--one recurrently comes across programs searching desperately for problems to solve and attaining high levels of fatuity in the process. Take the problem we stumbled across on page 131 of the manual. It seems that (a) some natural disaster has reduced a rancher's ability to feed his livestock; (b) his cattle would cheerfully munch on cactus if only its sharp spines were removed; (c) the rancher has flaming equipment capable of burning them off, but (d) he lacks the fuel to operate it. Not to worry: The Agricultural Stabilization and Conservation Service has an emergency program to furnish "cost-sharing assistance" for "purchasing fuel to burn spines off prickly pear cactus."

Wandering randomly through the manual, one bumps into programs to lend money to "beginning farmers," to offer technical assistance to companies suffering from "a wide range of management...problems," to coordinate efforts to "eliminate illiteracy by the year 2000," to indemnify dairy farmers whose milk has been taken off the market because it contains "toxic substances," to prepare works on Air Force history, to promote "innovative relations between managers, labor unions, and professional organizations," to provide "social science information for public and private decisions on...rural America," to provide "training programs for museum professionals," to make "the operation of small craft in U.S. waters both pleasurable and safe," to "increase the...visibility of women-owned businesses," to provide job training for political refugees, and--a special favorite--a Commerce Department program that "encourages...the business community in being responsive to consumer interests" (hoots and jeers).

RAISING THE STAKES

A common estimate is that Americans legally bet around $500 billion a year nowadays. Unknowable billions were wagered on this year's Super Bowl, something like $70 million of that amount was bet with Nevada bookmakers alone, and an estimated (by yours truly) 25 million sports fans didn't really care that much when Neil O'Donnell threw his second interception with a few minutes to go because the 13 1/2-point spread left Steeler bettors still victorious.

An interesting question is how come most people seem to limit their betting to sports. Life is, after all, full of numerous other thrilling events with uncertain outcomes, yet only economist Julian L. Simon (University of Maryland) has had the wit to promote betting on public-policy questions. As already gleefully noted in this space, Julian is famous for having won a complicated bet made in 1980 with doomsayer Paul Ehrlich (Stanford), then famous for a book called The Population Bomb. Simon bet that inflation-adjusted prices of five different commodities would fall rather than rise in the ensuing decade. Hopelessly committed to the view that multiplying humankind was rapidly running out of resources, Ehrlich sprang for the bet, ended up losing on all five commodities, and glumly sent Simon a check for $576.07. Ever since then Simon has been pestering him to make another bet, but Paul has steadfastly declined, which might seem understandable except that he is still writing papers saying the people are overwhelming Mr. Planet's resources.

Now looking for real action, Simon is putting some new bettable propositions on the table and talking of a $100,000 bet to be made between two opposing blocs of scholars: those who think life will get better and those who think the opposite. (Simon's personal participation will apparently be limited to $20,000.) The measures of "better" include data on mortality rates, income and educational levels, the cleanliness of air and water, the levels of accidents and of losses to natural disasters. The State of Humanity, a just-released 694-page work edited by Simon and featuring contributions by him and several dozen other scholars, exhaustively documents the long-run worldwide favorable trends on these and other measures and offers a theory about why they will continue unless we have global wars and political upheavals. Those possibilities are the two explicit hedges in Simon's rosy scenario and obviously cannot be dismissed.

Still, the data are impressive about the tendency of humanity's lot to improve over time during the past few centuries. Why do things get better instead of worse? Simon's answer is disarmingly simple: In free societies with increasing knowledge and access to technology, problems end up as opportunities. "The growth of population and of income create actual and expected shortages, and hence lead to price run-ups. A price increase represents an opportunity that attracts profit-minded entrepreneurs to seek new ways to satisfy the shortages. Some fail, at cost to themselves. A few succeed, and the...result is that we end up better off than if the original shortages had never arisen." Says Simon: "This theory fits the facts of history."

The view here is that Julian is surely right about the trends, also right about the importance of betting on them. Well-publicized bets on testable social and economic predictions should have immensely beneficial effects: First, the betting puts pressure on those who won't put up to shut up. It should reduce the hypocrisy level in a political world where so many characters are now getting by and going unpunished for peddling baloney. In addition, the existence of bets will force public players to be much more specific about the timing and extent of the outcomes they foresee. Finally, in a world where bets are recurrently made and (presumably) paid off, people will find it easier to remember who was right and who was wrong in years past.

A Caesars Palace betting line on future federal budget deficits would be a great place to start.

REPORTER ASSOCIATE David C. Kaufman