The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Thursday, President Reagan said it may be possible soon to remove U.S. troops from South Korea. Congress moved toward passage of the anti-drug bill, and two Soviet cosmonauts took a four hour walk in space. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary, our major focus is the pace of economic reform in the Soviet Union. I'll have a documentary report based on my recent trip to Moscow, and the rising impatience of some Soviet consumers, plus an interview with Gorbachev's Chief Economic Adviser, Abel Aganbegyan, followed by two American experts, Padma Desai of Columbia University, and Ed Hewett of the Brookings Institution. Then a stump speech today by George Bush and a documentary report on the state of the Bush/Dukakis struggle in Texas. NEWS SUMMARY

MR. LEHRER: It may be possible soon to bring home U.S. troops from South Korea. President Reagan said it would continue to depend on the need. He spoke to reporters this morning before a White House meeting with South Korean President Noh Tay Woo.

PRESIDENT REAGAN: That is a possibility. But it'd not be one of just withdrawing; it would be a case of are no longer needed; that would be the only way --

REPORTER: Do you see signs that they may not be needed that much longer? Do you see some signs from the North they may not be needed that much longer?

PRESIDENT REAGAN: I couldn't put my finger on some definite times, but I could just say seeing how other areas of the world have, tensions have been less -- if there's a possibility of that, why then, yes, that should happen.

MR. LEHRER: Mr. Reagan declined comment on a report concerning former Philippines President Ferdinand Marcos. The Los Angeles Times said Mr. Reagan has decided not to intervene on behalf of Marcos in a court case. A federal appeals court yesterday upheld grand jury subpoenas against Marcos which could result in his being jailed if he continues to refuse to comply. The grand jury wants Marcos's film and palm prints, among other things, for its investigation of money diversion charges against Marcos. Mr. Reagan said he did not want to get into the subject today because it might not even end up on his desk. Robin.

MR. MacNeil: House and Senate negotiators were reported to be nearing agreement to pass the big anti-drug bill before the 100th Congress adjourns. Congress could be ready to vote tomorrow for the bill, regarded as a popular measure for members running for re-election. It deals with all aspects of the drug problem, including law enforcement, treatment, rehabilitation, education, and help for authorities in drug producing companies. The Federal Aviation Administration today ordered immediate testing of take- off alarm devices on nearly 1800 Boeing 727 and 737 aircraft. The FAA said it had found a significant number not working properly. The alarm warns a pilot if the take-off controls are in the wrong position. Failure to set flaps properly was blamed for the crash of a Northwest plane at Detroit last year in which 156 people.

MR. LEHRER: Two Soviet cosmonauts went on a walk in space. They were outside their orbiting space platform for four hours, the purpose, to repair a telescope. We have a report from Lawrence McGinney of Independent Television News.

LAWRENCE McGINNEY: The faulty telescope on the Mia space station went wrong last September. Back up crews practiced the intricate repair required in tanks on earth. It involves the cosmonauts space walking the full length of Mia to reach the Telescope at the back, but when they tried it for real in June, they couldn't lever off the crucial ring clamp. Their space screwdriver snapped. British and Dutch scientists devised new tools to undo the clamp. They were sent up to Mia and this morning, Cosmonauts Vladimir Titov and Musa Manerov successfully completed the repair in a four hour space walk. Soviet television didn't show it, but they also had time to clean the windows on the space station too. Titov and Manerov are now expected to stay in Mia until they break the 326 day space endurance record. That will be in December, so they could be back for Christmas.

MR. LEHRER: There was also a piece of U.S. space news today. NASA said one of the engines on space shuttle Discovery has a cooling system leak. NASA officials said there was no evidence it impaired Discovery's successful four day flight last month. The $41 million engine will be replaced before Discovery flies again next February.

MR. MacNeil: In financial news, RJR Nabisco said its top managers are offering to buy the company for almost $17 billion. That would be the largest corporate takeover in history. The company was formed when the RJ Reynolds Tobacco Company bought Nabisco Brands in 1985. The price of RJR Nabisco's stock went up 21 1/8 points today, closing at $77 a share.

MR. LEHRER: Hurricane Joan stalled off the coast of Costa Rica today, but Costa Ricans and others throughout Central America took precautions from the storm's 110 mile an hour winds and heavy rains. Forecasters said Joan could cause heavy flood and mud damage in the mountainous regions of Central America before it eventually runs its course. The storm has already done severe damage to Colombia. We have a report from Louise Bates of Worldwide Television News.

LOUISE BATES: Hurricane Joan battered Colombia, reeking widespread damage before heading West. In one of the worst effected regions, Carmen De Bolivar, vehicles were swept away when the raging Alferes River burst a dam. Heavy rains and sustained winds racing faster than 80 miles an hour made rescue efforts futile. Water washed through this village,forcing families out to wherever they could find somewhere dry. Some of the flooded houses are beyond repair. Fifty thousand have been left homeless after the hurricane. Thirty-four Colombians are reported dead, another five hundred are still missing. Hurricane Joan hit Colombia first just a few days ago as a tropical depression. Nagahila Desert along the Caribbean Coast received more rain in the storm than it normally does in an entire year. Residents now wade through flooded streets with possessions, looking for somewhere to live. Children may enjoy the novelty of the predicament, but rescuers say the outlook is grim. Most of these here are Guahira Indians, many of whose homes were wiped out. Weather officials say that if Joan continues to devastate Central America like this, it will be the worst storm this century.

MR. LEHRER: There were rumbles from an earthquake this morning in the New England States of Maine and New Hampshire. No injuries or damage was reported. It measured 4.0 on the Richter Scale, which qualified it for a moderate label.

MR. MacNeil: On the Presidential campaign trail today, both candidates were meeting tonight at the traditional Al Smith dinner in New York. On the way, Bush spoke at a high school in Queens, where he received the endorsement of the city's police union.

VICE PRESIDENT GEORGE BUSH, GOP Presidential Candidate: It is time to get serious crime, and my opponent is against the death penalty regardless of the offense, and I say that some crimes are so heinous, so outrageous, that the death penalty is warranted. And when a police officer is murdered, the killer should pay with his life.

MR. MacNeil: Dukakis campaigned in Connecticut, continuing his counterattack on charges by Bush. He compared the Bush campaign with the Watergate era Nixon White House, saying truth was the first casualty in the Nixon White House, and it's been the first casualty in the Bush campaign.

GOV. MICHAEL DUKAKIS, Dem. Presidential Candidate: I believe the American people value the truth in politics. And I'm going to do everything I can to make sure that the truth wins and that we win on the 8th of November.

MR. LEHRER: That's it for the News Summary. Now it's on to a major update look at economic reform in the Soviet Union, a Bush stump speech, and a Presidential campaign report from Texas. FOCUS - PERILS OF PERESTROIKA

MR. MacNeil: Our major focus tonight is the future of the economic and political reform program launched in the Soviet Union by President Mikhail Gorbachev. The Gorbachev program, called Perestroika, has been running into obstacles, and the growing impatience of Soviet citizens with their standard of living. Mr. Gorbachev has tried to clear away some of the political opposition to reform by putting more of his supporters in key positions of power and shunting aside potential opponents. How much time he can buy is a matter of dispute. We went to the Soviet Union last week to see how Perestroika is progressing. It is almost winter in Moscow. And it may be the deepest winter of discontent for Mikhail Gorbachev since he became Soviet leader and started trying to shake up his backward society. Lenin's revolution is approaching its seventy-first birthday. Gorbachev's revolution is only 3 1/2 years old, but measured in economic progress, it is looking very tired. All the exciting talk of change has produced little people can buy to improve their lives. The leadership shake-ups, the sidelining of political opponents, the decrees promoting competition and private enterprise have as yet produced no significant change in standard of living, and there's a sense of time running out, of pressures mounting on Gorbachev to do something fast. It was obvious when he visited the Siberian City of Krasnoyosk in mid September. Emboldened by the new freedom to speak their minds in public, the citizens of Krasnoyosk bluntly confronted Gorbachev in a manner unprecedented for a Soviet leader. They demanded better housing, food and medical care. As startling as the scenes of protest was the fact that they were shown on Soviet television. You know, it's difficult to know just what to think about Perestroika. When we were here in the summer, there was a lot of euphoria, but three months of reading all the commentaries, Western and Soviet, about all the difficulties Gorbachev was having about the shortage of consumer goods, the slow improvement in food supplies and so on, let me to expect that when we got back, people would be very pessimistic and gloomy about it. But just casually talking to people from all over the Soviet Union here in the department store Gume, that isn't the reaction you get. This couple is from Soviet Georgia.

TRANSLATOR SPEAKING FOR SOVIET CITIZEN: He said, yes, we see a lot of changes, we've seen a lot of changes. We're happy with what's going on. Thank you very much. Thank you, Mikhail Gorbachev, and let God give him health and happiness.

MR. MacNeil: It is widely reported that goods are much scarcer outside Moscow. This man from Central Asia disputed that.

TRANSLATOR SPEAKING FOR SOVIET GENTLEMAN: He says that the living standards now in Asia now, in Asian Republics, are much much better than Moscow. He just came from Kiev. It's better than in Moscow.

TRANSLATOR SPEAKING FOR SOVIET WOMAN: I don't know, my mother and I, we live, two of us, together, and I think we just have more money now.

MR. MacNeil: Do you notice any change in the supply of food or consumer goods Is it getting better or worse?

SOVIET WOMAN: [Through Translator] In our town, yes.

MR. MacNeil: Which town?

TRANSLATOR SPEAKING FOR SAME SOVIET WOMAN: A little town, a young little town, she says, in Kushki Regic.

MR. MacNeil: This man comes from Eva Nova about 180 miles away.

MR. MacNeil: Are people getting impatient for faster results from Glasnost?

SOVIET MAN IN STREET: [Speaking Through Translator] Some of them do -- some of them don't. It depends on the people, because things never come so soon.

MR. MacNeil: This man comes from the Ukraine.

SOVIET TRANSLATOR FOR SOVIET CITIZEN IN STREET: He says it needs time and effort to make Perestroika. In a big country like this it's a big thing and I understand that we must be patient, because it will take a lot of effort, and there are people who would like to interfere with Perestroika, and those who don't want it to happen. And maybe even if we have to retreat one step, then we'll go forward because I think we'll have it in the future.

MR. MacNeil: This cleaning lady from Moscow was less enthusiastic.

CLEANING LADY: [Speaking Through Translator] I'm a cleaning lady, a cleaning woman, and I have some friends who have a job of this kind. Their little children are -- so we're not paid too well. And what can I say? The prices are very high. I came here, I walked around, I looked around, but I have to leave without having bought anything because the prices are cooperative, the prices of the goods they produce are so high it's impossible to buy anything.

MR. MacNeil: The biggest symbols of unhappiness remain the long lines to buy Vodka, the only commodity deliberately made scarcer to fight alcoholism. Recently, the government eased up a little, extending shop hours, permitting wine and beer to be sold in supermarkets.

MR. MacNeil: [Talking to Couple in Street] Excuse me. Could we ask you a question? We're from American television. We're asking questions about Perestroika. Have you noticed any change in your life under Perestroika?

SOVIET LADY: [Through Translator] Yes, we have some.

SOVIET GENTLEMAN: [Through Translator] At my work, I feel changes. The manager of the shop we have --

TRANSLATOR SPEAKING FOR SOVIET GENTLEMAN: The management of the plant wanted to have another man instead of him, but the workers want this man to stay and he stayed.

MR. MacNeil: Whatabout you, you don't see any changes?

SOVIET LADY: The main change is I'm pregnant with our third baby.

MR. MacNeil: For generations, the Soviet people have been told that if not they, their children would have the good life. Now Gorbachev may have unleashed a new un-Soviet emotion, impatience. Impatience is fanned by the press, emboldened by Glasnost, the official encouragement of free speech, stunning in this information constipated society, encouragement with limits. When newspapers got too critical of the slow pace of reform, Gorbachev lectured them to be more constructive. In turn, Soviet intellectuals are now charging that Gorbachev is slowing down on reform. Outside the provocative Moscow News, we got a taste of the new impatience and the arguments it provokes.

SOVIET MAN ON STREET: [Through Translator] Here I share the opinion of academician Sakarov, and other people who believe that at the moment there are two trends competing or just battling in the country, and this is the government which becomes less and less reformistic, less and less reforms, and the people who are becoming more and more impatient, so the main thing brought by the Perestroika is Glasnost.

MR. MacNeil: Openness.

TRANSLATOR FOR MAN ON STREET: Openness.

SOVIET MAN ON STREET: [Through Translator] So we feel it at the moment more than we feel anything else.

YOUNG SOVIET WOMAN ON STREET: [Through Translator] People, they, everything, always disorder -- things like this, it gets on people's nerves and people are irritated by it, but the fact is that time is needed, because time is needed for such a complicated process. There are a lot of things that should be rethought redone, so time is needed, so people are waiting for it.

MIDDLE AGED SOVIET WOMAN: [Through Translator] I'm all for Perestroika, and I see that Perestroika is great, and there are a lot of changes in my life that I've seen. For example, I make much more money than before. My salary is higher. This is one thing. I have flat so I have no complaints about housing problems. What I think is that we need to go on this Perestroika, and the main thing is to kick out the people who interfere on the way, those Communists who interfere with the process, then they should be kicked out from the office. And it makes Perestroika work, so I'm all for it.

MR. MacNeil: What about this gentleman, what about this gentleman, what does he think?

YOUNG MAN ON STREET: [Through Translator] What I think is that we talk a lot but we don't do a lot so far. And I think that people are getting angry because the situation is worse than it used to be.

MR. MacNeil: What kind of people are getting angry?

YOUNG MAN ON STREET: [Through Translator] The working people, the working class, because it looks like Perestroika is dealing only with the working class. There are no more food in the stores, for example.

MR. MacNeil: Is the anger that they feel, you say they feel, is that going to turn people against Perestroika?

YOUNG MAN ON STREET: [Through Translator] No. I mean that the first people were very enthusiastic. They believed in what they were told and after three years, and nothing had changed; they are just beginning to lose faith.

MR. MacNeil: I see. Do other people agree with that? Do you agree with that, that people are getting impatient with it? [Translator asking crowd the question and everybody shouting answers at once]

MR. MacNeil: What did he say?

OTHER GENTLEMAN: [Through Translator] I don't agree with what they say. There are people who think that some uncle, some kind uncle should come and give everything, give food and things to the people, and they're just sitting, waiting, for this kind uncle to come, and they do nothing, so they don't work.

TRANSLATOR FOR OTHER GENTLEMEN: He said he does not help two fingers to get it, to help the process, just waiting.

MR. MacNeil: The Russians are a notoriously patient people, but the message appears to be getting through to the Kremlin that this time there is a limit, something must be radical to woo the Soviet people into the far more frightening stages of Perestroika ahead, raising prices to real market levels, reducing subsidies, creating unemployment, perhaps inflation. Academician Abel Aganbegyan is one of the architects of Perestroika and Gorbachev's Chief Economic Adviser. In a remarkably candid interview, he admits they are feeling the pressure.

MR. MacNeil: Mr. Aganbegyan, the tone of reporting on Perestroika both here and the Soviet Union and in the United States has turned pessimistic. Is that justified?

ABEL AGANBEGYAN, Gorbachev Adviser: [Speaking Through Translator] There are certainly some grounds for this. We have encountered much more serious difficulties than we expected. The force of inertia, the resistance to restructuring, turned out to be quite powerful. On top of that, over the short stretch of Perestroika, we have already managed to make a number of mistakes. What is important though is that we are critical of ourselves, that we try to analyze not only accomplishments but also our short falls, today's short falls, and not just those of the past. And we are drawing conclusions. We have recently adopted a whole range of decisions that we believe will give a strong push to Perestroika. So in spite of those difficulties, I remain optimistic.

MR. MacNeil: You are optimistic. Is, is Mr. Gorbachev still optimistic?

MR. AGANBEGYAN: [Speaking Through Translator] I hope he is. He sees farther than we do. And he has probably more optimism than we do.

MR. MacNeil: You say you hope he is optimistic. Do you know he is? Or is he getting a little down cast with all the obstacles to Perestroika?

MR. AGANBEGYAN: I know that he is, although there is a measure of disappointment, maybe even some bafflement in each of us, because we never expected the difficulties we met with.

MR. MacNeil: One point made by a number of commentators recently is that unless Gorbachev moves quickly to provide tangible evidence of improvement in living standards, the people are going to become disillusioned with Perestroika, and you will never get them to support it.

MR. AGANBEGYAN: I believe that in principle this view is correct. And we have made it our goal, Mr. Gorbachev has set this goal of making within two or three years a dramatic leap forward precisely in the living standards. The draft plan for next year that will be discussed shortly by the Supreme Soviet calls for an unprecedented turn in the economic development towards meeting people's social needs.

MR. MacNeil: Are you saying that you regard it now as essential to improve living standards before you move to realistic economic pricing?

MR. AGANBEGYAN: I believe so. We must first balance the market, or at least make some headway along this path, otherwise, rising prices may produce inflation, which would be even worse.

MR. MacNeil: Do you feel now that you have a time limit, say that within three years, if you haven't made some improvement in living standards, then Perestroika is doomed?

MR. AGANBEGYAN: Time is the main limiting factor. We must move quickly, but we cannot do everything. The important point is for the people to see that improvements are happening. We don't have to solve all problems, but people must see that things are getting better.

MR. MacNeil: Is the need to improve consumer goods so urgent that you might need to use some of your hard currency reserves to buy consumer goods in the West? Is it that urgent?

ABEL AGANBEGYAN, Gorbachev Adviser: I believe we must change the structure of imports by nearly doubling, and this is my personal opinion, the share of consumer goods we buy and reducing the share of grain and the share of hardware products and some machinery.

MR. MacNeil: Just to be clear that I understand you, are you saying you would recommend reducing imports of grain and machinery in order to buy certain kinds of consumer goods? Well, what kind of consumer goods do you mean?

MR. AGANBEGYAN: I can only give my own view, of course. What we are going to do, I don't. I think that consumer goods should first of all include clothes, footwear, some technology goods that enjoy demand. So this must be a broad spectrum of products that would saturate the market, that would help us saturate the market.

MR. MacNeil: Is it an indication of your anxiety about the slowness of Perestroika, that Gorbachev found it necessary to lecture the editors recently on their reporting and their criticism? I mean, to us in the West, it looked as though he was closing the door a little on Glasnost, or openness.

MR. AGANBEGYAN: I saw it quite differently. The point is that we have moved to a new phase in Perestroika. For three years we have been working, for example, on a program of switching to a new system of management. Now we begin to put it into effect. Now we are moving from words to acts. And accordingly, our press ought not to just say how things should be done, but show what is really being done. This was the thrust of Mr. Gorbachev's remarks, meaning that you have helped us to draft a reform, now help us put it into effect.

MR. MacNeil: Well, finally on that point, is it, is this a bit of a return to the old ways of trying to make the press a cheerleader for official policy, and not leaving it to the press to praise or criticize as it decides?

MR. AGANBEGYAN: No, it isn't a return to the past. In general, there can be no return to the past in Glasnost. The openness has now broken the dam, so turning the flood back is simply impossible. It is impossible, and the nineteenth party conference, as you know, has adopted a special, very progressive resolution about further promotion of Glasnost. We are going to continue along the way of deepening and broadening democracy. And Glasnost is its most important feature. So I believe there is no turning back here.

MR. MacNeil: Mr. Aganbegyan, thank you very much.

MR. MacNeil: Now, with two people who study the Soviet economy closely, we take up the question of what measures Gorbachev can take to advance Perestroika and can he succeed. Ed Hewett is a Senior Fellow at the Brookings Institution in Washington, author of a recent work, "Reforming The Soviet Economy: Equality Versus Efficiency". Padma Desai is a Professor of Economics at Columbia University and the author of the forthcoming book "Perestroika In Perspective: The Design and Dilemmas of Soviet Reform". She just returned from a trip to the Soviet Union.

MR. MacNeil: Ms. Desai, what do you find significant in what Aganbegyan is saying?

PADMA DESAI, Columbia University: The first thing which I noticed was that he was admitting, as it were, that Perestroika has proved more difficult, that in actual practice it has been quite difficult to bring about an improvement in the people's living standards. There is also the view which he expressed that there should be more imports of consumer goods, manufactured consumer goods. He mentioned shoes, clothes and things like that, and that seemed to me to be a positive thing to do, that the Soviets should be able to import more consumer goods, consumer durables, for example, so that the people feel an immediate improvement in their living standards. And I might mention here that recently, only last week, we had reports that their completed credit arrangement with German banks to the amount of $1.8 billion, and a huge part of that credit is proposed to be spent for buying consumer goods. The Germans are also hoping that they may even be able to sell some shoe manufacturing and clothing manufacturing machines to the Soviet Union so that better quality products can be produced.

MR. MacNeil: Mr. Hewett, what do you find significant in Aganbegyan's comments?

ED HEWETT, Brookings Institution: Well, I suppose first of all that he is saying it isn't working well. You know, your question to him whether the press is now being pressed to be more positive about it, I think he gave the right answer. I mean, actually the press can't be more positive if they report accurately what the General Secretary is saying. In his speeches now he brings the greatest gusto to say how poorly things are working.

MR. MacNeil: Do you think Gorbachev could push through politically his colleagues in the Politburo a drastic change in priorities to be importing popular consumer goods instead of wheat?

MR. HEWETT: Oh, I think he could. Although, you know, I mean, look, this country consumption every year runs about 350 billion rubles. You couldn't import more than 10 or 20 billion rubles' worth of consumer goods a year. The reason you do that is more for political reasons, that is, I would import consumer goods. I'd go down to Hong Kong or Taiwan and buy fake Adidas, fake watches, bring 'em back, and put a label in each one saying, this is Perestroika working for you, and put 'em out in the stores. But you're doing that just to buy time while the real things are working, which is the internal reform.

MR. MacNeil: How much would he have to spend, in your view, in order to buy himself a significant amount of time, considering that he has 217 million consumers to --

MS. DESAI: Well, it is difficult to put a number on how much he'll have to spend but --

MR. MacNeil: I mean is it one fake Adidas watch per consumer, or is it --

MS. DESAI: Well, I mean, a billion, or a couple of billion dollars in the course of the next three years, that is an amount which I would consider the minimum amount to be spent on importing manufactured consumer goods and durable products. But at the same time, I think it is important also to emphasize the need for improving domestic capacities for improving consumer goods. There Mr. Gorbachev also seems to have an implicit plan for granting some kind of political, not autonomy, but certainly some economic autonomy to the Baltic states, which are the more efficient states in the Soviet Union which produce consumer durable goods. And there is an implicit contract that in return for the economic autonomy and the political autonomy of foreign-relating political fronts, the popular fronts in these Baltic states, that greater supplies of consumer goods will be coming from these states.

MR. MacNeil: Do you see it that way, Mr. Hewett, that he's using, giving Latvia, Estonia, and Lithuania, a little more freedom in order to make them good shop windows and producers for the rest of the Soviet Union?

MR. HEWETT: I suppose that's one of the motives. Also, clearly politically he's being pushed in that direction and it makes good political sense to do it.

MR. MacNeil: But back to the amount of hard currency he would have to spend in order to make a significant demonstration of an improvement in consumer goods, to buy himself some favor in time, I mean, is a billion dollars a year the right figure?

MR. HEWETT: A billion is all right. A billion dollars a year buys you about 10 billion rubles' worth of consumer goods, because you price them very high. But it emphasizes just a symbol. I mean, as Professor Desai says, you've got to work on the problem internally. It's not just goods, by the way. It's also services, which is part of what the cooperative reform is about.

MR. MacNeil: Would that mean, has he got the hard currency reserves to spend that way, or as in the case of Germany, would he have to borrow the money to do it?

MR. HEWETT: Well, no, the Soviet Union is very well off financially. They've got about $15 billion in Western banks. Gross debt is only 40 billion, so that net debt of 25 is minuscule for a country that size. They've got about a $35 billion gold stock. They can afford it, and, indeed, they should have done it several years ago. It's because they're so conservative internationally that they've been reluctant to do it. And I think that reluctance is finally breaking down.

MR. MacNeil: He has said and his plan lays out that ultimately they have to move to realistic pricing, they have to get rid of the subsidies that has kept the official price of bread and meat where it was back in the 50's, 60's. What is a realistic timetable for moving towards real market pricing?

MS. DESAI: It's, again, difficult to name a year or specify a timetable for a purpose, but when you talk to Soviet economists, they mention the same thing, that you have to sort of flood the system, saturate the system with all kinds of consumer goods, processed foods, manufactured consumer goods, before you even think of raising prices on food items at least.

MR. MacNeil: What is the theory behind that?

MS. DESAI: The theory behind that is that our people are not ready for higher prices, that they're used to lower prices on lots of consumer items and that politically it would be counter productive, that it would be a non-feasible step to take. They don't cite Poland, but that is very much at the back of their mind, as it were.

MR. MacNeil: And they would have to be paid more money, Mr. Hewett, because the Soviet salaries for many people are extremely low in relation to the prices they are already being charged.

MR. HEWETT: Well, they'd have to be paid more money. I mean, I must say I've never met anyone who is ready for higher prices. the Soviets aren't different in that regard, and I differ somewhat with Soviet economists who say, first you flood the market, and then you get the right prices. Part of the problem with some products in the Soviet Union is prices are so low people literally will waste them. So it's got to be a combination --

MR. MacNeil: There's the example given that it is cheaper to feed pigs, for farmers to feed pigs bread, instead of grain, because bread is --

MR. HEWETT: Feed them bread instead of grain. Gorbachev in one of his speeches said we've got to stop kids from playing football with bread loaves. And that's right, and so you've got to have a combination of putting more goods on the market,but raising prices at the same time. I think Professor Desai is right. You've got to be most careful with food, with things that are the basic staple. I mean, you know, this country is trying to figure out what is the difference between socialism and capitalism in the new world, and they don't quite know that yet, but for sure, one of the differences better be that people can get their basic necessities surely and at a relatively low price.

MR. MacNeil: Let's move on to how optimistic or pessimistic you are as professional economists about whether he can do this in the political context he faces. Obviously, it's of great interest to the United States and the West. There are many skeptics here. For instance, Robert Gates, who is the Deputy Chief of the CIA, said in an important speech last week, "Gorbachev's reforms are just half measures and even if realized, would not create the dynamic mechanism to close the technological gap to the West. Do you agree with him on that?

MS. DESAI: Well, I think we have sort of a different time span in mind. You talk with the Soviet people and they say these things are going to take time, not in my generation, not in my child's generation probably, but beyond that, so they are obviously patient, but I agree that results have to be delivered, that people have to notice improvements in their living standards. And so it is urgent for him to make the people feel that they are getting the results of Perestroika, as it were. But, you know, it seems to me from watching the film clips which you had, the complaints which people sort of let out, talking so freely with a foreign reporter, crowds gathering around you. That is something so new on the Soviet scene. We see people complaining to foreigners, so we have the freedom. They have the freedom which we notice. And it seems to me, ironically, the Soviet scene now has changed by not from freedom alone. We want a situation where it is bread which is becoming important. And that I find something very refreshing, that there are definite gains so far as freedom is concerned, expressing views is concerned, and that's a big step forward.

MR. MacNeil: Mr. Hewett, are you optimistic that Gorbachev can pull this off, that he will be given politically the time to make it at least seem to begin to work and succeed?

MR. HEWETT: I think he's got a decent chance. The reforms he's introducing right now won't work and in that sense, the pessimism is right. But what's exciting is that --

MR. MacNeil: Which reforms won't work?

MR. HEWETT: Well, the reform is a package that's been introduced in '87 and '88, the group of reforms that give more autonomy to enterprises that try to get the government get out of their hair and essentially try to enliven local initiative. It isn't enough. He's got to go farther. But I think he will go farther in the long-term. Every time in the past he's hit a barrier he's gotten more radical and that's precisely what he's doing now. So I think after a couple of bad years he's going to come back for more radical reform in the 90's, and the debate we've seen is setting the foundation for that. I mean, these people are debating socialism, what it's about.

MR. MacNeil: So are you at least as optimistic as Mr. Hewett is?

MS. DESAI: Yes. I tend to be optimistic just from watching Mr. Gorbachev, and the manner in which he reacts to situations when he notices that there are complaints that things are not working. For example, the tax measures which were adopted for taxing income from cooperatives and the tax rates went up to 90 percent, thattax measure which was introduced sometime in the spring of this year was abolished around July, three months later, and that is something which I find very refreshing in the sense that you feel that they are learning some lessons --

MR. MacNeil: Could it be one of the mistakes that Aganbegyan was referring to?

MS. DESAI: Probably. Also, the changes which he announced last week, which were widely reported here, that the peasants should be made the master of the land, that land could be leased to the peasant for 50 years by the farm management, and the things which he said like we want arrangements which work, it doesn't matter what kind of arrangements, depending on the situation in the country. In the Baltic areas, there are prosperous, collective farms, let them remain collective farms.

MR. MacNeil: Let me ask you each finally and briefly. General William Odum said the other day we should applaud Perestroika, but not finance it. Do you think, Mr. Hewett, that the West, the United States, should help him make it work?

MR. HEWETT: No. I think it'd be a great mistake for us as a policy to try to help Perestroika work. It's basically their problem. They're going to have to work it out even if we tried to help. We don't really know what to do, and the resources we could bring to bear would be quite modest.

MR. MacNeil: Do you have a view on that?

MS. DESAI: Yes. I think that I agree with Dr. Hewett, that we should let them do their thing, that Mr. Gorbachev is a very impressive leader. He has been initiating the right kind of changes, in my judgment, and they are going to work at some stage sooner or later.

MR. MacNeil: Well, Professor Desai, Mr. Hewett, thank you both for joining us.

MR. LEHRER: Still to come on the Newshour tonight, a Bush stump speech and a Presidential campaign report from a battleground called Texas. SERIES - '88 - ON THE STUMP

MR. LEHRER: U.S. Presidential politics is the rest of what we have tonight. There is another in our series of excerpts from campaign speeches. It is Vice President Bush's turn on the stump. That will be followed by a report from Texas, a state where Bush has roots and much going for him in his race against Dukakis. First, the speech, the Vice President delivered it today to a group of high school students and policemen in Queens, New York.

VICE PRESIDENT GEORGE BUSH, GOP Presidential Candidate: Only two days ago, two young New York police officers shot and killed in the line of duty, Chris Hobam, an undercover narcotics officer, 26 years old, Michael Bucek, 24, a uniform patrolman. You know, when yesterday I was out in Detroit, where they were mourning two of their own, Frank Wallace and James Schmidt, gunned down on Monday, you know our first priority must be to keep the criminals away from the good and decent people who want to raise their families in peace and safety. And that's why I think it was disgraceful that my opponent supported the only furlough program in all 50 states and throw in the federal government, the only one in the country that furloughed murderers, who had not even served enough time to be eligible for parole. That is bad for the communities of this country. He never should have supported that. And when a police officer is murdered, the killer should pay with his life. And I also believe it would be a deterrent. We've heard a lot of tough talk about drugs from my opponent. Well, now, it was now mentioned, or maybe it was Matt, that Congress appears to be nearing completion of a major drug bill, which includes the death penalty for drug kingpinsand for anyone who kills a police officer in a drug-related incident. And so I challenged my opponent to drop the rhetoric and stand up publicly for the support of this bill, no more rhetoric, let's hear his support for this legislation. When I was 18, I headed off to war, and your war though is right here at home. And it starts, well, before you're 18, and I'm talking, of course, you know about drugs, and I'm going to ask you to look, as Michael Jackson says, at the man in the mirror and make a change. For those of you who don't use drugs, congratulations. You're taking care of yourselves. But here's the key question, here's the key question. Do you have some enabling behavior that tolerates drug use in your friends, and do you sit idly by as your classmates waste their lives on drugs, or do you step up and say, hey, we care, you've got to stop? And some of you here may have parents who use drugs, and that's one of the toughest things. Their use is enabling behavior for you and it's doubly hard for you to push 'em away and too say no, but you have power too, not just to say no, but to talk to your parents just like your friends, come talk to the people here at this school, tell 'em you care, tell 'em you want 'em to stop, tell 'em they're just hurting themselves. And those of you who buy drugs, you know how those dealers live. You've seen the fancy car, those Mercedes and the Porsches, at least on the television, and you've seen all those gaudy displays of what money can buy for these people. And they just don't ignore the misery around 'em; they make their misery live, alive, and they make it their lives as well. And who do you think is paying for their Porsche or their Rolexes? Let me tell you. There isn't enough money on all the mean streets in this city to keep those guys happy. They're makin' it on your money and on your parents' money and your middle class money pays for the bullets in the guns that kills the officers that we honor here today. And we've got to stop it as a nation. '88- TEXAS SHOWDOWN

MR. LEHRER: Crime and guns are very much a part of the Presidential campaign in Texas, one of those so-called "battleground states" where the experts have said from the beginning the Presidential race will be decided. We have a battlefield report now from the Texas battleground. It is the work of Correspondent Betty Ann Bowser of public station KUHT, Houston.

BETTY ANN BOWSER: Houston television stations are bullish on the economy, with psychological reminders that Texans are recovering from one of the worst economic downturns in history.

HOUSTON COMMERCIAL: Businesses are convinced that now is the best time to be in Houston and each is contributing to the spirit of Houston's renaissance.

MS. BOWSER: And when they talk about a Houston renaissance, it is more than just words. Most of the economic indicators show that Houston is, in fact, coming back. Jim Gaines tracks the area's economy.

JIM GAINES, Economic Consultant: All of the indicators that we're looking at, the help wanted index, business phone connections, residential permits, residential foreclosure rates, employment levels as measured by the State Employment Commission. All are on up ticks.

MS. BOWSER: Unemployment is down from 13 percent to 7 1/2 percent. Consumer spending is up over 1987. Even the residential real estate market is rebounding, August posting record sales. Nancy Hinton is a broker.

NANCY HINTON, Real Estate Broker: We're very high on Houston right now. In other words, it's probably one of the nation's biggest bargains. You can buy houses now below replacement cost. They're just a bargain.

BETTY ANN BOWSER, KUHT: And only in Texas would people welcome traffic jams once again. To folks here it means people aren't leaving Houston by the thousands anymore. But the recovery is still in its early stages and Houston remains oil dependent. The bank crisis isn't over yet either. It's estimated another 100 institutions will have failed by year's end. Mark White was the state's Democratic Governor until he was unseated by a Republican two years ago. He's also an unpaid adviser to the Dukakis campaign and he doesn't understand why the Democratic nominee isn't making more hay out of the region's economic woes.

MARK WHITE, Former Democratic Governor: There are many things in Texas that you can carry the attack to the Republicans today. The economy is a good one. We've lost every major bank in Texas. We've lost savings & loans throughout the oil and gas producing states as well as the farm states. We've lost our whole industry in oil and gas. Those are issues that only George Bush should have to explain and in Texas, he's not explaining them.

MS. BOWSER: This is how George Bush has campaigned in Texas.

VICE PRESIDENT GEORGE BUSH, GOP Presidential Candidate: Here's the Governor of Massachusetts speaking. "I don't believe in people owning guns, only the police and military." That is not the American way, and that is not the Texas way, and I feel just the opposite.

MS. BOWSER: Bush has painted himself a conservative Texan and depicted Dukakis as a liberal who's for gun control, against the Pledge of Allegiance, and for letting criminals out of jail on weekends. Houston Pollster Richard Murray says the GOP strategy is working.

RICHARD MURRAY, University of Houston: They had to knock Dukakis down and they did that very effectively in late August and early September, when for four or five weeks, they hammered and hammered away, and the Governor's campaign scarcely responded. And an unanswered charge tends to stick.

MS. BOWSER: State Treasurer and Dukakis supporter Ann Richard smiles when asked about the gun control issue, but she knows it is no laughing matter.

ANN RICHARDS, State Treasurer: Well, yeah, that gun thing's been a big issue and even though I think the Bush campaign has not been truthful, you know, if you tell a lie long enough, you get people to believe it. And never has Michael Dukakis done anything nor said anything that would suggest that he's going to take people's guns away from 'em.

MS. BOWSER: Still, Dukakis has acute perceptual problems in rural East Texas, where people carry guns around in their pick-up truck. Some people are so poor here they literally hunt to feed themselves. Once considered a Democratic stronghold, East Texas went for Reagan four years ago, and this time around it is leaning toward Bush. It's a traditional swing area where statewide elections are frequently lost or won, and this is Michael Dukakis on a campaign swing through East Texas, with his native son running mate, Lloyd Bentsen.

GOV. MICHAEL DUKAKIS, Dem. Presidential Candidate: Foreign companies buying up real estate, buying up companies, buying up plants in this country. Pretty soon we're going to be tenants in our own country. We're here to make America No. 1, to go for the gold, to make this nation the best America.

MS. BOWSER: Themes, but no specifics, and in the eyes of former Democratic Gov. White, a mistake.

MARK WHITE, Former Democratic Governor: I think he needed to stop and talk to the business leadership in this state, talk to the business leaders in East Texas, to visit with them about his plans for restoring the economy in Texas. That is an area that he could have made a lot of mileage, I think, by showing 'em that he's a sound fiscal policy Governor and he's going to be a sound fiscal policy President.

MS. BOWSER: It was after the Dukakis/Bentsen appearance in East Texas, that we paid a visit to the Lufkin Barbecue House. It wasn't very scientific, but we took a poll.

CUSTOMER: Well, I'm just more or less gonna have to vote for Bush because Dukakis is tryin' to take the firearms away from his own people in the state he's from.

LADY CUSTOMER: We hunt and I'd like to keep my guns.

MS. BOWSER: What about gun control?

OLDER CUSTOMER: Yeah, yeah. I am against him on that too. I happen to belong to the NRA, I'm a life member.

MS. BOWSER: The other issue hurting Dukakis in East Texas is the notion that he's opposed to the Pledge of Allegiance. Dukakis has been criticized for vetoing a Massachusetts bill that would have required teachers to make students recite the pledge every day. Luan Tatum is County Democratic Chairman.

LUAN TATUM, Angelina County Democratic Chairman: He explained it to the satisfaction of us lawyers. We understand that, that loyalty oaths are wrong. But as far as the mainstream voting public, probably didn't explain it well enough.

MS. BOWSER: Dukakis State Chairman John Sharp has his hands full these days, going from one rural area to another, trying to convince people that Dukakis is not against the pledge or for gun control.

JOHN SHARP, Dukakis State Chairman: The only person in this race that has voted for federal gun control was George Bush, when he was a Congressman and he voted for the 1968 Gun Control Act, and Lloyd Bentsen beat him on that issue in 1970, when Lloyd Bentsen ran against him for the United States Senate.

MS. BOWSER: Having Bentsen on the ticket has been a plus for Dukakis. Like Bush, he is a Texan. Like Dukakis, he speaks fluent Spanish and is well liked by Hispanics. We went back to Pollster Murray after the Vice Presidential debate and asked him if Bentsen's popularity in Texas could transfer to Dukakis.

RICHARD MURRAY, University of Houston: Bentsen was a great opportunity to introduce Dukakis to Texas voters and have him taken seriously. But Dukakis still had to make the sale. Bentsen could set it up, but he couldn't deliver. Dukakis had to do that and he failed to in this state.

MS. BOWSER: The Dukakis camp has struck back with a massive eleventh hour advertising campaign.

DUKAKIS CAMPAIGN AD: George Bush voted for a gun control law that prohibited you shipping even a deer rifle across state lines.

RICHARD MURRAY: They're August commercials running in October. They're fine; they're just 60 days too late.

MS. BOWSER: Optimism is running high in the Bush campaign here. The Republicans hold a significant lead in the polls, helped primarily by the voters in rural West Texas, where Bush lived for several years, and by voters in the major metropolitan areas. Dukakis is looking for votes among traditional Democrats, Hispanics, and black voters. But former State Republican State Chairman George Strake thinks it's all over.

GEORGE STRAKE, Former Texas GOP Chairman: Dukakis has given us every opportunity anybody in politics could ever want this time, because Dukakis, his stand on the issues is contrary to what the majority of Texans think, and all we've had to do is stand up here and repeat what he has openly said.

MARK WHITE, Former Democratic Governor: I've been urging them to take a sharper attack on George Bush, because I think that he's entitled to it. The issue needs to be refined. What did you do for eight years, George? Where were you?

MS. BOWSER: With only a few weeks to go, most observers agree it is unlikely Bush will have to answer that question, or that Dukakis can raise enough doubt about his opponent to nudge Texas into the Democratic win column. RECAP

MR. MacNeil: Finally, the main points in the news again, President Reagan said it may be soon possible to remove U.S. troops from South Korea. Congress moved toward passage of the anti-drug bill, with a vote possible tomorrow. Two Soviet cosmonauts walked in space for four hours. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.