Knowledge that Transforms

It has long been suggested that moves toward equality can have serious disincentive effects and, after a point, lead to unacceptable losses in real income.' We will now offer some theoretical grounds for believing that an approximation to equality achieved via the traditional instruments-transfer payments and progressive taxation-will cause an income loss far more serious than many of us have realized. We will prove that under a set of reasonable assumptions, any attempt to guarantee absolute equality of incomes using only progressive income taxes and transfers for the purpose must, at least in theory, reduce society's output to zero! However, we do not conclude from this that the search for very much increased equality is quixotic. Rather, we take this as a criticism of the means so far used for the purpose. What is called for is an exercise in imagination and ingenuity, to find some alternative ways to go about this quest. We will then show explicitly and examine an alternative procedure that, at least in theory, can achieve any desired degree of equality without necessarily exacting a serious loss in output, and will end by discussing briefly the possibility of practical approximations to such an arrangement.

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In the March 1977 issue of this Review I presented a critique of the published Bureau of Labor Statistics (BLS) series on real wages by contrasting them with some constant-utility index numbers of real wages. The latter are derived first by solving the representative consumer-worker's indirect utility function for that wage rate which restores some base period's utility after all commodity prices have changed, and second by expressing this constant-utility wage rate as a fraction of actual wage rates. In making these calculations I made use of recently published estimates of the StoneGeary utility function by Michael Abbott and Orley Ashenfelter. Unfortunately, I subsequently discovered that Abbott and Ashenfelter had miscoded some of their data so that their estimates were incorrect. This also rendered my constant-utility index numbers incorrect. Abbott and Ashenfelter have now reestimated their system of equations and with their revised estimates I now present my recalculated constant-utility real wages.' For details of the underlying argument, the reader is referred to the original article. The recalculated estimates of the parameters of the Stone-Geary function are presented in the first two columns of Table 2. The estimate of 'Yh (namely, 2,331 hours per year) implies that the constraint (,yh h) > 0 is not satisfied for the years 1929-33, 1937, and 1939-45. For this reason I do not present estimates of these constant-utility wage rates for these years and, in particular, I have selected 1946 (rather than 1939 as in TABLE 1-PUBLISHED INDEX NUMBERS OF REAL WAGES

The formulation of suitable policies and strategies for improving the economic viability of U.S. central cities constitutes one of the most crucial tasks facing policymakers in the urban field. The problem has become increasingly severe for the large number of central cities in the North East, North Central, and Western states. The basic issue is one of determining the character, dimensions, and magnitudes of policies that will reverse the process of cumulative decay and propel urban core areas into a new orbit of self-sustaining development. This paper examines some structural dimensions relating to change in central cities, and how these can be influenced by means of concerted policy action. An underlying assumption is that most policies for urban change tend to produce limited results because they are anchored on unsuitable conceptual underpinnings. The paper therefore attempts to develop a systematic framework of analysis with a view to highlighting some of the major structural dimensions of the urban environment which are amenable to those kinds of policy interventions necessary for revitalization. The paper is divided into three parts. Section I briefly outlines the conceptual focus. This is illustrated by a simple policy model in Section II. The policy implications for central city revitalization are drawn in the final section. I. Conceptual Underpinnings

As a background to the analysis of the development of marine resources of the Soviet bloc countries, it seems appropriate to compare fishery activities of the Eastern nations with world tendencies in the utilization of marine-living resources. Table 1 indicates the following trends in the socialist countries use of ocean resources in recent years: 1) During the first half of the decade of the 1970's, the Soviet bloc rapidly increased its share in the total world harvest of marine organisms. 2) The rate of growth of the catch volume in socialist countries was many times higher than that registered during the same period by world fisheries. 3) Beginning in 1976, Soviet bloc fishing nations showed a sharp slowdown in the rate of increase of their catch. Some fisheries (for example, Poland) even registered a decrease in harvest compared to 1975. This was probably the turning point in fisheries development in the Eastern nations. One of the most important reasons for the rapid growth of the Soviet bloc's long-range operations is that Eastern countries have based their expansion on resources of high abundance, even if they are not of highest value. Large concentrations of commercial species underutilized by coastal nations are presently the main targets of Eastern fleets (see Jan Elwertowski). Soviet bloc fisheries have shown a high level of technological flexibility and adaptability to the various conditions of resource use. This has enabled them to make frequent changes in ocean areas and species exploited, while at the same time maintaining high production rates in their harvesting process (see A. T. Pruter). The ability to respond to the variety of challenges of ocean resource use is in turn based on the well-developed maritime economies of some Eastern countries, particularly of the shipbuilding industries in Poland, East Germany, and the Soviet Union. Soviet fishing potential experienced tremendous growth based principally on supplies obtainable from the German Democratic Republic (GDR) and Polish shipyards. Bulgaria and Rumania also developed their ocean fisheries with ships built mainly by the GDR and Poland. According to the Lloyd's Register of Shipping Statistical Tables six socialist fishing nations (Bulgaria, Rumania, Cuba, GDR, Poland, and the USSR) owned 60 percent of the total world fishing fleet tonnage (vessels over 100 GRT). The Eastern bloc's fleet is also growing more quickly than the tonnage of the world fleet. In the Soviet Union, the most characteristic feature of fishing fleet development is the increasing number of large factory trawlers over 2,000 GRT each. In 1977, this part of the Soviet fleet constituted about 64 percent of the total Russian fishing potential. In 1977, the total number of factory supertrawlers (over 2,000 GRT) of the six Soviet bloc fishing countries reached 932 vessels. This fleet grew during the period from 1975 to 1977 by 215 vessels and it is the group which demonstrates the fastest growth rate in Eastern fishing fleets. Large factory trawlers are necessary for developing super-deep-water and pelagic fisheries. In open ocean areas and in Antarctic operations, the difficult hydro-meteorological conditions and the long distances from home ports require high seaworthiness, a high degree of autonomy of navigation, and high engine power. In their ocean fishery activities, Eastern countries are able to harvest any type of marine-living resources with the full utilization of their internal economic and social factors, and without the necessity of imports or larger hard currency outlays. Indeed, exports of a part of the fish production generates currencies which in turn can be devoted to finance emergency fish imports or to pay license fees for fishery activities within *NORFISH, Institute of Marine Studies, University of Washington.

The secondary benefit structure of the Old Age, Survivors, and Disability Insurance system (OASDI) transfers $25 billion per year to families of retired, deceased, and disabled workers without appreciable regard to past contributions or to need. Since these benefits are financed through payroll taxes, the insurance premiums of larger families are subsidized by the contributions of individuals and smaller families, regardless of ability to pay. This subsidy exists even with the strong weighting of the system in favor of lower income workers. The present research indicates that returns on Social Security contributions vary more by family pattern than by any other variable. Moreover, the enactment of several recent congressional bills would further expand the transfer among family types. Research suggests that if equity among families and individuals is an issue of concern, then alternative means of financing Social Security cost increases should be implemented.

The sea will produce minerals for the practical use of mankind only when the cost and demand factors of land sources are such that the sea becomes an economically feasible source. Oil and gas are the only mineral resources to have value at the present. Future energy sources from small-scale tidal power plants or ocean thermal gradients and fresh water sources by desalination are possible. There is presently no technology for the ocean mining of compacted minerals and no interest in extracting the low concentrations of dissolved minerals, although there is some activity in mining unconsolidated minerals. Living resources show signs of overexploitation by world fishing industries and have become a subject of international concern. The Fishery Conservation and Management Act was designed to provide a more rational and economic pattern of resource development. 13 references.

We are delighted that Nicholas Rau has attempted to generalize our result that: the of rate of return regulation is highly sensitive to the nature of the uncertainty. His paper has stimulated us to reflect further on generalizing and simplifying our joint results. Originally, we stated the following results: a) If uncertainty affects the maximal quasi-rents function R(K, u) in a multiplicative way, R(K,u) = R(K)(1 + u), then a sufficiently large gap must exist between the regulated rate of return (s) and the cost of capital (i) to induce the firm to select ex ante a scale of plant greater than the scale chosen by the unregulated monopolist. The closer is the regulated rate to the cost of capital, the more likely is it that the regulated firm will select ex ante a smaller scale of plant than is chosen by the unregulated firm. Were that to occur, regulation would definitely be worse than no regulation. b) If the uncertainty enters the maximal quasi-rents function in an additive way, R(K,u) = R(K) + u, then the conventional Harvey Averch and Leland Johnson (A-J) occurs (unless the regulation drives it out of business). Rau's main conclusion is that: .... if the state of nature affects both the average and marginal return on capital, then whether an A-J or anti A-J prevails depends on the amount of randomness in the environment. The more 'noise,' the more likely is an anti A-J effect (p. 190). A general and simple statement of the regulation theorems is derived below which contains points a) and b) and Rau's conclusion as special cases. 1. A General Formulation of the Problem