The NewsHour with Jim Lehrer

MARGARET WARNER: Good evening and Merry Christmas! I'm Margaret Warner. Jim Lehrer is on vacation. On the NewsHour tonight Time Magazine's religion correspondent, Richard Ostling, reports on the pursuit of spirituality; economics correspondent Paul Solman has a regional look at jobs in America; Spencer Michels reports on shopping for electricity in California; we hear about a new discovery from Old Testament Times; and Phil Ponce shows us the Christmas story in art. It all follows our summary of the news this Christmas night.NEWS SUMMARY

MARGARET WARNER: An American telephone technician accused of spying in Russia is on his way home to San Diego for a Christmas holiday. Russia's Federal Security Service granted Richard Bliss a two-week visit if he promised to return when requested. Bliss was arrested after using satellite surveillance equipment in the Russian city of Rostov-On-Don. He and his San Diego-based employer, Qualcomm, Inc., denied the spying charge. They said the equipment was standard land surveying technology needed to install a cellular phone system in the area. In Mexico, Mexican news reports said 16 suspects have been detained for questioning in Monday's massacre. But there was still no official confirmation of the arrest late today as survivors started burying the dead. Forty-five Indian refugees were shot and hacked to death in the Southern state of Chiapas. Survivors identified some of the attackers as paramilitary gunmen linked to a local faction of the ruling party of President Ernesto Zedillo. In Pakistan today, 35 people died when two trains collided 180 miles Southeast of the country's capital, Islamabad. More than 100 were injured. News reports said an express train was traveling at top speed when it slammed into another train. Rescue workers had to cut through twisted, charred metal to get to the passengers trapped inside. Officials have not determined why the trains were on the same track. Christians worldwide celebrated Christmas today. In Cuba, more than a thousand people crowded into the city's cathedral last night for midnight Mass and parish churches around the city were packed. It's the first time in nearly 30 years that Christmas has been recognized as an official holiday in the formerly Catholic country. President Fidel Castro restored the holiday as a one-time gesture this year in honor of Pope John Paul's upcoming visit next month. In Vatican City today the Pope delivered his Christmas message to the world from the central balcony at St. Peter's Basilica. He expressed solidarity with the homeless and jobless everywhere. He also said he will travel January 3rd to pray at the Tomb of St. Francis in Assisi, Italy, which was hit recently by a series of earthquakes. He read Christmas wishes in 57 languages, including English.

POPE: And peace with the blood of the Savior brings into the world be in your hearts forever.

MARGARET WARNER: In Bethlehem, a boys' choir sang morning Mass at the Church of the Nativity built above the place where Jesus is believed to have been born. Pilgrims lit candles and kissed a silver star on the traditional spot of Jesus's manger. That's it for the News Summary this Christmas night. Now it's on to spiritual pursuits, the nation at work, power shopping, an Old Testament Find, and Christmas in art. FOCUS - SEEKING SPIRITUALITY

MARGARET WARNER: First tonight, the pursuit of sacred experiences in everyday life. Richard Ostling, religion correspondent for Time Magazine, has our report.

RICHARD OSTLING: Every Tuesday, a small group gathers at St. Gregory's Episcopal Church in San Francisco for a service of prayer, silent meditation, and chanting. It was this experience that attracted Olivia Kuser. She was raised an Episcopalian but spent years searching outside the church.

OLIVIA KUSER: It's this real ebb and flow of breath that puts you in a meditative state. And it's very simple. There isn't a lot of--there's really no dogma on it. You don't have to think about, is it Christian, is it not Christian--it's just very simple.

RICHARD OSTLING: The same night on the other side of town Jews in Congregation Beth Shalom practiced a form of meditation drawn from Zen Buddhism but taught by their rabbi. Shawn Goodman, a one- time atheist who's returned to Jewish faith, says this simple technique has deepened her experience of Judaism and affected her everyday life.

SHAWN GOODMAN: It's given me a chance to learn how to accept, more avidly accept my states, my person, my place in life right now, and not constantly be struggling or yearning or fighting to get ahead, which is part my nature and part of what I grew up with.

RICHARD OSTLING: Kuser and Goodman are among a growing number of Americans in the midst of a fragmented and complex society who are searching for ways to practice their faith more fully. They are seeking to experience the sacred in their daily lives through devotional practices drawn from their own and other religious traditions. Some are joining congregations that nurture such heightened spiritual experiences. Princeton University Sociologist Robert Wuthnow has been tracking this trend.

ROBERT WUTHNOW, Sociologist: Some people are discovering is what I've been calling spiritual practices, meaning intense serious time spent usually in a devotional activity, often by oneself, or perhaps in communion with other people in a worshipful mode but often in a small setting, so that there's a sense of belonging, a sense of intimacy.

RICHARD OSTLING: Over the past two decades many Americans left their churches and synagogues to seek what they hoped would be a deeper sense of spirituality elsewhere. They dabbled in Eastern religions, followed various gurus, and pursued new age fads. Wuthnow says this quest was often superficial.

ROBERT WUTHNOW: Their spirituality is often focused on instant gratification, something that's quick, easy, low cost, low investment, high reward. And it's also then driven by whatever happens to be faddish at the moment. One year it might be an interest in angels; another year it may be an interest in near death experiences; or another year it's an interest in Gregorian chant.

RICHARD OSTLING: After years of experimentation, many are looking for spiritual depth and, in the process, transforming not only themselves but also their congregations. Martin Marty, a leading American church historian, spoke with Producer Kate Olson.

MARTIN MARTY, Church Historian: The big news in the end of the century I think is the infusion of I'll call it the amateur's piety--prayer, meditation, and spirituality into the larger whole. What we're seeing is a great period of novelty, innovation, improvising, and establishing of new things. Religion may have a new name but it won't go away.

RICHARD OSTLING: Olivia Kuser follows a daily practice of meditation and spiritual readings that she says has deepened her work as an artist. And even though she's uncertain about calling herself a Christian, she feels welcome at St. Gregory's to receive communion.

OLIVIA KUSER: Something draws me to it. I don't understand what it is yet. But I keep taking communion because something tells me there's something for you here. I feel fed by it. I feel nourished. It seems to me the whole point of spiritual practice is to be in relationship with something other than yourself, to be in relationship with God. The whole thing is about relationship.

RICHARD OSTLING: Shawn Goodman, who's a writer, also meditates daily and chants morning prayers. She now observes the Jewish Sabbath by following the traditional practice of walking, not driving, to synagogue.

SHAWN GOODMAN: The walk for me--in a sentence--really clears my mind. It really just vacuums me out. And it's time when I become just by virtue of walking, I have a heightened sense of my environment; somehow the detail becomes so crystal clear that it really makes me appreciate God--I just see God.

RICHARD OSTLING: Rabbi Alan Lew of Beth Shalom, which is affiliated with Judaism's conservative branch, says for some Jews outside of orthodoxy, the tradition of spirituality got lost.

RABBI ALAN LEW: Judaism in its authentic, in it's original presentation was very disciplined. It was daily prayer. There were spiritual requirements for every aspect of daily life, the way you ate, the way you made love to your wife or your husband, the way you conducted business, and I think that part of the reason that Jewish spirituality got lost was because this sense of discipline got lost. In America, I think that we've come to regard spirituality as some kind of leisure activity, something that we do on weekends, an enrichment activity.

RICHARD OSTLING: For Rabbi Lew, it took 10 years in a Zen Buddhist Center to learn the value of discipline. He now teaches Buddhist meditation and Yoga exercises to his congregation. Like many Jews, he didn't have a strong religious upbringing. But today he is helping members discover the mystical tradition within Judaism.

RABBI ALAN LEW: (Meditation Session) Each of these letters is a breath sound and taking together this name of God means to be.

RICHARD OSTLING: Blending Buddhist techniques with traditional Jewish prayer, he hopes to help them discover a personal experience of the sacred.

RABBI ALAN LEW: I think that's really the essential Jewish act, is to realize the sanctity of the moment, to realize the sanctity of your experience to bring a sense of the divine into the present tense reality of your life.

RABBI ALAN LEW: (Meditation Session) The purpose of this meditation is to help us fully inhabit our lives, our--

RICHARD OSTLING: Last week, Lew led meditation sessions at Synagogue 2000, a meeting for Jewish leaders from 16 congregations who want to create a new style of Jewish life that meets spiritual yearnings. The group, which represented the reform and conservative branches of Judaism, worshiped with dance, lively music, and especially participation from everyone, rather than just centering on the leaders.

RABBI ALAN LEW: I'd like it to be a place where people, first of all, came and experienced religion directly, didn't watch a religious pageant being performed for them whose subject was having a religious experience but actually had that experience themselves.

RICHARD OSTLING: That's what the priests at St. Gregory's want to provide their congregation every Sunday morning. Here the liturgy is a collective practice in which each worshiper helps create the service. Donald Schell is one of the church's two rectors.

REV. DONALD SCHELL: We're mining the tradition, and what we're looking for is over 2,000 years what are the things that Christians have done together that have invited the most profound participation.

REV. RICHARD FABIAN: I invite you to share an experience from your own life.

RICHARD OSTLING: Richard Fabian, the other priest at St. Gregory's, invited the congregation to speak their own prayers and to reflect on their personal experiences as part of the sermon.

WOMAN IN CONGREGATION: I know that for about the last year and a half I've been praying to be made ready for something, and in that time a lot has happened. A lot of you know about--I have a recent loss-- my sister. I also have a recent gain. I have just got into a new relationship, and I have this weird feeling that I'm not ready, but that God's ready.

RICHARD OSTLING: Fabian says the most unusual practice is dancing by the entire congregation.

RICHARD FABIAN: I go to church to sing and dance. Common muscular activity has a great power, and it's probably rooted deeper in human consciousness even than languages. So the dancing experience is an experience of the congregation doing something together that reaches people at the deepest possible level.

OLIVIA KUSER: Well, I like the way it involves the whole body. You know, we move, we dance. There's incense. There's singing; there's silence. There's scripture being read out, so your intellect is engaged. I feel like my whole person can come to the service.

RICHARD OSTLING: Some critics worry that spiritual seekers can become too self-involved and lose sight of their responsibility to others, but Rabbi Lew sees the opposite happening.

RABBI ALAN LEW: At the deepest level of spirituality one feels one's connection to everyone else, to all living beings, and one recognizes that the suffering of any human being is one's own suffering, and so one feels compelled to heal that suffering.

ROBERT WUTHNOW: As people follow these practices over a period of ten years or twenty years or a lifetime, they begin to see real growth in their lives. They begin to sense that they do have a deeper relationship with God and quite often, they also begin to move out of themselves into more activity in the community.

RICHARD OSTLING: Although the movement toward a focused daily effort to cultivate a relationship with the divine is small, analysts like Wuthnow and Marty predict it will grow, and that it will gradually change the religious landscape of America. SERIES - 1997 - AT WORK

MARGARET WARNER: Now, a look at the job market around the country. Economics Correspondent Paul Solman has that.

PAUL SOLMAN: Jobs, jobs, jobs. It's the mantra of politicians, businessmen, and average citizens alike that in 1997 we seem to have gotten what we asked for. According to the latest government numbers only 4.6 percent of the work force is now unemployed, a 24-year low. America experienced a net gain of 3 million jobs this year, and compensation increased faster than prices; that is, wages and other benefits grew by 3 percent, while inflation rose at a meager 1.8 percent, the lowest rise since 1986. To find out what's happening in specific parts of the country we're joined by four regional economists, starting with the Northeast and Rae Rosen of the Federal Reserve Bank of New York. Welcome.

RAE ROSEN, Federal Reserve Bank of New York: Hi, Paul.

PAUL SOLMAN: And in the Northeast, what's happening with jobs?

RAE ROSEN: What's happening is we got more than we expected. Throughout the year we had to continually raise our forecast for the Northeast. Job growth truly exceeded our expectations.

PAUL SOLMAN: So let's go to the Southeast next. That's Professor Gary Shoesmith of Wake Forest University. Professor Shoesmith, what's happening in the Southeast?

GARY SHOESMITH, Wake Forest University: Well, pretty much the same thing. More jobs have been generated than we expected, but here recently, with unemployment pressing so low, it's becoming more and more difficult to generate new jobs, especially in states like North Carolina, where unemployment is less than 4 percent statewide.

PAUL SOLMAN: So generate new jobs more difficult how? I mean, what do you mean exactly?

GARY SHOESMITH: Well, difficult to generate jobs because there aren't enough folks to fill all the job vacancies.

PAUL SOLMAN: You mean, so if you have a company, you just can't find people for the job that you might, in fact, have?

GARY SHOESMITH: There are ways of attracting workers, usually involve some way of pirating a worker or workers from another company, and a lot of incentive packages have been put together to do exactly that.

PAUL SOLMAN: So there's a bidding amongst you, even inter-regionally? I mean, are you bidding for people from Rae Rosen's Northeast here?

GARY SHOESMITH: Well, there are finder's fees and other incentives for people within the company to bring someone in. The finder's fee goes up if they stay a certain amount of time afterwards. So if they can attract someone from another region of the country, that's just fine too. In fact, that's part of the problem in the Southeast. We relied on other parts of the country for a steady stream of workers and here recently, with good jobs available just about everywhere, it's becoming harder and harder to keep that up.

PAUL SOLMAN: All right. Let's go to the Midwest. Diane Swonk, First Chicago Bank, and what's happening there?

DIANE SWONK, First Chicago Bank: Well, we're literally running out of people to employ here. We've actually got a situation going on in some parts of the region where we've got less than 2 percent unemployment and actually declines in employment because there's more people retiring out of the labor force than actually entering it. The unemployment rate is still declining in those areas, but many employers are finding they're particularly hard to fill entry level positions. The younger workers, the baby bust is starting to put a squeeze on the region, so it's a real strange spot for us to be in here in the Midwest when we peaked up at 25 percent unemployment rates in some parts of the region back in 1982.

PAUL SOLMAN: What about immigrants coming in? I've been reading Iowa, places like that, that there are Cambodians, people--pockets of immigration in places you would have never imagined.

DIANE SWONK: There are pockets of immigration. Frankly, we could use more to keep employment growth going here. We literally are starting to hit our head on the ceiling of economic growth, but frankly, we're just too far in the middle of the country to get the same kind of flood of immigrants that you've seen in other parts of the country. The other thing hurting us, much like the Southeast, is that we're not seeing a migration between regions that we had seen. We had seen some movement out of California, for instance, several years ago, which has abated now that California is doing better, and we're not seeing much of that movement here. Unfortunately, we also don't have quite as good of weather as they do in the Southeast, and we found most people, until we get some global warming on like Michigan and some palm trees, they don't want to seem to settle in Chicago. They're still going South.

PAUL SOLMAN: So you're rooting for global warming out there in the Midwest?

DIANE SWONK: We're trying to do the best we can.

PAUL SOLMAN: All right. Let's get to our last person from the West Coast. This is Cecilia Conrad, Pomona College, just outside of Los Angeles. She's joining us from Dallas. Welcome. And is the picture that rosy? I mean, so far--well, you've heard--we've all heard.

CECILIA CONRAD, Pomona College: The news in California is that finally we sort of joined this train. The Northern region of the state has very, very low unemployment that sort of matches what's going on up in Seattle, where someone said that in order to get a job there you just have to pass a mirror test. If you can fog the mirror, you'll get a job.

PAUL SOLMAN: If you can fog a mirror?

CECILIA CONRAD: Yes. (laughing)

DIANE SWONK: If you're alive.

PAUL SOLMAN: Oh, you mean, if you're alive. Thank you, Ms. Swonk.

GARY SHOESMITH: What's the pay for that job? (laughing)

PAUL SOLMAN: Prof. Shoesmith wants to know what the pay is for that job?

CECILIA CONRAD: Well, I don't know. I heard a story of someone--a beautician who lost a shampooist to Boeing, so--

PAUL SOLMAN: What?

CECILIA CONRAD: --there's some real competition. A beautician lost a shampooist to Boeing Aircraft. In Southern California things aren't quite as rosy. Our unemployment rate has been going down in LA, but it's still above national averages. It's around 7 percent.

PAUL SOLMAN: 7 percent. Well, that's whopping. And you've got lots of immigrants there, right?

CECILIA CONRAD: We've got lots of immigrants. The job growth that's taking place is taking place in sort of a high-tech sector, but we have still a fairly large pool of low-skilled workers who I'm a little worried haven't become completely part of this growth trend.

PAUL SOLMAN: So who isn't getting the job? Stay with you for a moment, Ms. Conrad. I mean, who are the people who are getting hurt by--in this economy--assuming for a moment--I mean, I'm a journalist, I'm always pushing that question, but assuming for a moment that some people are?

CECILIA CONRAD: I think what's happening here are if we look at people with just a high school education or less than high school education, particularly the lowest skill, those with less than a high school education in the LA area, one of the sectors that used to employ them was in apparel, and that sector has been moving out, moving south of the border, and moving to other countries, and so those jobs have sort of dried up. So that group, while I think there's some evidence that they could become part of this group--we see little evidence of hope here and there--I'm worried that they haven't been completely helped by this growth trend.

PAUL SOLMAN: What about inequality? I'll go back around the country in a second, but I want to stay with that because we've heard so much about inequality. I have reported on it myself an awful lot over the years. Has inequality begun to shrink, or are you talking about a situation where it's the same as it was or increasing as the people without the high school educations get hurt?

CECILIA CONRAD: I think inequality has begun to shrink a bit in LA. I'm optimistic that things are improving for the sector. We've got some growth in construction, which helps you--help to employ some of those workers. We've also seen some trends in racial inequality in the state that are promising. Last--in the last data that's available--the 1996--the median household incomes for African-American families grew by something like 25 percent in the West.

PAUL SOLMAN: 25 percent?

CECILIA CONRAD: Yes. That's just incredible. And there was a growth also for Hispanic households but not so much of a growth in the white households. And so we might see a little bit of lessening of racial income inequality in the West as well.

PAUL SOLMAN: Ms. Swonk, what about who's not getting the jobs in the Midwest and the inequality issue?

DIANE SWONK: Well, there are very few people who are not getting the jobs. They're not always getting the jobs they want, per se, but they are getting jobs. And the inequality issue has kind of been two things going on: First of all, we have seen some increase in entry-level wages. It's very common here now to pay eight, nine, and ten dollars an hour at your typical fast food restaurants and offer benefits. There's big signs out that are saying if you want to work part-time at McDonald's, you get benefits now, a very different situation than we saw in the past. Interesting, though, many of those benefits are coming out of the hides of some of the full-time workers. I know one retailer in the area that cut back on benefits on their full-time personnel, particularly their staff and backroom personnel, to offer benefits to part-time retail workers, even during the Christmas season. Very different kind of equation where the tightnesses at the entry level--we're seeing things sweeten up a bit, which is helping bid up wages, and the kind of packages that those people get. On the flip side of it there's still a lot of sort of middle management workers and full-time workers that are feeling very mixed about this economy, even as good as it is here in the industrial Midwest.

PAUL SOLMAN: Prof. Shoesmith, inequality and who's not getting the jobs, those two questions connected.

GARY SHOESMITH: Well, in the Southeast it's easy to identify those that aren't getting the jobs, even those that are losing jobs, and that's in textiles and apparel, much like in California. Back in the beginning of 1996, we were losing jobs across the Southeast to the tune of 18,000 per quarter on a seasonally-adjusted basis. That quickly dropped to around 9,000 a quarter by the first of this year, but it's still hanging in there at about 8500 jobs per quarter. So the situation in textiles and apparel is still fairly chronic here in the Southeast, and it's hard to picture those workers, say a textile worker, leaving a textile plant for the last time, and then walking into one of the jobs that you can find in banking and finance or health care and some of those industries. So I think a lot of those workers that are leaving textiles and apparel, actually leaving the area as well, but as far as inequality, low-skilled workers, I think, have a very, very dim outlook for the future. They'll either be unemployed or employed at very low wages. So I'm not as optimistic as some other folks as far as inequality shrinking.

PAUL SOLMAN: Okay. What about the Northeast? Rae Rosen, inequality, and who's not getting the jobs?

RAE ROSEN: There's no doubt that the inequality has increased, particularly in New York State.

PAUL SOLMAN: Increased in New York State. We heard--

RAE ROSEN: Increased in New York State.

PAUL SOLMAN: --out in the West Coast at least the racial inequality seems to have dropped but not in the Northeast.

RAE ROSEN: I would doubt that the racial inequality has dropped as well. The problem is in the Northeast, particularly in New York State, we have two clumps of people at opposite ends of the spectrum. We have a disproportionate number of very well-educated people with graduate degrees, you know,Master's, a doctorate, and we have a disproportionate number of people without a high school diploma, though some of those are our own creation, we cannot graduate them from high school, and we do a far poorer job of that than many other cities across the country, and then we have a large volume of immigrants coming in. And to the degree that they don't have a high school diploma, it's very hard to employ them.

PAUL SOLMAN: But the disproportionate number of people who have the Ph.D.'s should drive down the wages up in that part of the spectrum--

RAE ROSEN: What we find is that we have a disproportionate number of the high, high wage earning people and a disproportionate number of the low because you can't cross employ.

PAUL SOLMAN: So the people who have got the Ph.D.'s are getting the jobs, even though there are a lot of them?

RAE ROSEN: Very definitely. The people who've got the Ph.D.'s are employed as bankers or in finance. If we could bet a trained blue collar mechanic, that person could walk out with a $40,000 job tomorrow, but one of the problems is that many our schools quit training blue collar mechanics.

PAUL SOLMAN: What about inflation? I mean, if there's so much push for--there's such a tight job market, then are you, Ms. Rosen, thinking that inflation is just around the corner because inevitably all these bonuses and piracy we've been hearing about will drive up wages and, therefore, ultimately drive up prices?

RAE ROSEN: We're certainly worried about it in the Northeast, but we just haven't seen any signs of rampant inflation. We aren't seeing a boom this year or this period the way we had in the 80's. We haven't seen real estate prices run through the roof and prices double in five years. We haven't seen the same thing happen in wages. It's just not imbedded in the economy. But it's something we'd certainly be worried about. There's about $12 billion that's going to be distributed by Wall Street to 155,000 people. That's a lot of money to a very small sector.

PAUL SOLMAN: So the prices may be--housing prices may be going up.

RAE ROSEN: Luxury coops and condos are going to go through the roof.

PAUL SOLMAN: Professor Shoesmith, what about you, what about inflation in the Southeast, North Carolina is where you are, but in general?

GARY SHOESMITH: Well, I don't think the inflation is really tied to some, any particular geographic region. It's really more along the lines of industries. And I think here in the U.S. economy in 1998 we're going to see really two economies: one economy consisting of industries that don't face a lot of stiff foreign price competition. Those companies will be able to pass along increased wages into prices. Then the other side of that, the industries that do face intense price competition from abroad are going to take it on the chin in terms of profits, I think. In fact, we've already seen quite a bit of that happening. In durable goods, for example, deflation has already been occurring now for the past five or six quarters.

RAE ROSEN: Could I interrupt?

PAUL SOLMAN: Yes, please.

RAE ROSEN: I think the right word is goods versus services. The goods we get competition from abroad. And prices are going to be contained, and we may see prices declining for some goods. But for services it's very hard to compete. You have to pay a fireman here. You can't redeploy 'em in Ireland.

PAUL SOLMAN: And that's where you might see some pressure?

RAE ROSEN: You might see--and services dominate the economy today.

PAUL SOLMAN: Professor Shoesmith.

GARY SHOESMITH: You know, there are some goods, though, that'll be subject to the same discrepancy in inflation, building materials, for example, that can't be shipped because of their weight versus value. Now, those kinds of products will also be experiencing quite a bit of inflation because of the lack of competition.

PAUL SOLMAN: Let's move to Asia as this Asian crisis envelopes us and has everybody interested. Ms. Swonk, Asia will not affect the job situation in the Midwest, you don't think?

DIANE SWONK: I think it certainly is a risk, but one of the things we have going for us in the Midwest, it's already affected us a little bit--there has been a slowdown in exports to that part of the world. The good news for us, there's been a pick up in exports in some surprising places, and some places we did expect. Europe has done much better than we thought, especially in terms of capital goods and autos, which is frankly what we make here in the Midwest. We've also seen exports surge to Latin American economies. There's clearly a risk of contagion with regards to the Asian crisis. If we see some investment flows really slow dramatically into Latin America, that could certainly hurt us, but so far we've not seen it, and prospects remain relatively good South of the border and frankly North of the border in Canada. Canada is our largest trading partner, very close trading partner here in the Midwest to us, and that's been a major buyer of our goods as well. So for now we're a little bit insulated. It is a concern going forward, but frankly, since we're already running out of people to employ, it's not that big of an issue in terms of really holding down growth.

PAUL SOLMAN: Well, let me finish with one last question for Cecilia Conrad, and that's the same Asia question. We're running out of time, but California is the place where presumably you'd see it.

CECILIA CONRAD: That's right.

PAUL SOLMAN: Are you seeing it?

CECILIA CONRAD: Asia could be a problem for California in several ways. First of all, in the export, we sort of built our ability to grow on being part of the specific rim--Pacific Rim--sorry about that.

PAUL SOLMAN: Well, it's a specific rim. You're quite right.

CECILIA CONRAD: And we also have 175,000 Californians, which is just about 1 percent of overall employment, employed in Asian-owned companies in California, and there's some concern that those companies may start to cut back because of the downturn in those economies. We also have quite a bit of Asian investment in real estate, and we're a destination for tourists from Asia. So there are several different ways in which this could have a slowdown on the California economy.

PAUL SOLMAN: But last word, you're not--you don't look scared.

CECILIA CONRAD: I'm not scared.

PAUL SOLMAN: Okay. Well, let's leave it there. Thank you all very much. Appreciate it.

MARGARET WARNER: Still to come on the NewsHour tonight, shopping for power, a Biblical find, and Christmas in art. SECOND LOOK - POWER PLAY

MARGARET WARNER: Next, a second look at the prospect of shopping for electricity, a piece we originally aired last year from Spencer Michels.

SPENCER MICHELS: Sometimes it seems our lives are measured out in kilowatts. We rely on electricity to supply our basic and not so basic needs, and we pay for it. Northern Californians, in fact, pay 50 percent more than the national average. They, like most Americans, have to buy it from a monopoly, they have no choice. In this case the supplier is Pacific Gas & Electric Company. But now all that is changing as competition comes to the electricity business in California. Daniel Fessler is president of the State Public Utilities Commission which regulates public utilities.

DANIEL FESSLER, California Public Utilities Commission: What we're talking about is admitting competition into the generation of electricity and saying that that's going to be a more efficient means of putting sustainable downward pressure on costs than was regulation.

SPENCER MICHELS: Under regulation, the Public Utilities Commission, or PUC, set the rates and rules for Pacific Gas & Electric. The regulator also guaranteed PG&E's stockholders a fixed rate of return on their investments. In return, the utility had to meet all power demands and provide service to all. Fessler says that system didn't work very well.

DANIEL FESSLER: The fact is that government, in the final analysis, is not a very good watchdog of these matters.

SPENCER MICHELS: So, in a move that 46 states are contemplating and a few already experimenting with, the PUC and the California legislature changed course. They made it so customers will be able to buy electricity the way they now buy long distance telephone services. They altered the way PG&E will operate and promised lower electricity rates. Before deregulation, PG&E generated power at plants like this old natural gas-fueled facility on the shorts of San Francisco Bay. Under the new rules, it will have to sell off half of those plants to competitors. In the old days the public utility would transmit its electricity over high voltage lines. Now, a non- profit operator will handle transmission. The only part of the business that stays the same is distribution. The utility will continue to bring electricity into area homes and businesses. PG&E's president, Robert Glynn, says he knew the monopoly had to come to an end someday and the company is prepared to adapt.

ROBERT GLYNN, President, Pacific Gas & Electric: We don't intend to be road kill in this transition. We intend to be out in front. And part of being out in front is getting through the transition.

SPENCER MICHELS: PG&E, a $9 billion a year utility, may have to pay a price, at least at first, to comply with the new law.

ROBERT GLYNN: It is going to cost us some money. There's no question about that. Where we have a lower stock price today than we did a couple of years ago, we have a lower dividend than we had a year ago.

SPENCER MICHELS: With PG&E forced to sell power plants in California, it is buying and building power plants elsewhere in the country and world to compete in an increasingly deregulated market. In California, the utility's new competitors will be independent power producers, like the owners of this new $250 million power plant in Crockett, North of San Francisco, which also provides steam to the sugar refinery next door. Such privately-owned facilities already provide 20 percent of California's electricity, but they sell it to the big utilities, which under federal law must buy it. Now, however, efficient, state of the art plants like this using natural gas, which has declined in cost, will be able to sell their inexpensive power directly to small customers. Greg Blue is regional manager for Desk Tech, a part owner of the Crockett plant.

GREG BLUE, Independent Power Producer: We see a much broader market now if we can due to deregulation actually sell to industrial customers, perhaps residential customers, small commercial customers.

SPENCER MICHELS: Why is that good for you? You already are selling all the power you're producing.

GREG BLUE: Well, we want to sell more power. We want to build more power plants. We are the competition. We will be competing with the utility for the end-use customer.

SPENCER MICHELS: So too will be producers of power generated by the wind or geothermal sources under the ground. These producers of electricity joined with the entire industry to lobby for deregulation. But independent electricity producers like these will rush to serve mostly big energy users or affluent communities, where they can make more money, according to consumer advocate Nettie Hoge. She is executive director of The Utility Reform Network, TURN.

NETTIE HOGE, Consumer Advocate: We don't have enough consumer protections in this legislation as it currently stands to provide the folks that are at the bottom of the heap, when the cherry picking is done, are going to get reliable and inexpensive energy.

SPENCER MICHELS: Hoge is also concerned about projects like PG&E's Diablo Canyon nuclear power plant. As part of the restructuring deal, utilities will be able to collect money for five more years to help pay off such inefficient and expensive plants that they built in the past. These investments, which totally nearly $30 billion, are called "stranded costs." PG&E's Glynn argues that as a regulated monopoly, his firm had no choice but to build expensive facilities; therefore, the company should be compensated.

ROBERT GLYNN: We didn't have a choice to open a store in this neighborhood and close a store in other neighborhoods. We had an obligation to serve everyone who showed up, and we've done that.

NETTIE HOGE: We don't think that they're entitled by, you know, decree or God-given right to 100 percent of what they called a stranded investment.

ROBERT GLYNN: We're recovering nowhere near 100 percent of our costs, although some say we are. As I said, on our nuclear power plant, which is a large source of transition costs, we're recovering about 40 cents on the dollar on a forward-looking basis. That's hardly full recovery.

NETTIE HOGE: We're going to dog the utilities at the PUC until the end of the--you know--2000 decade to make sure that that money, the stranded investment, is not overpaid by us.

SPENCER MICHELS: Industry insiders say that if the utilities had not been granted substantial repayment, they never would have gone along with deregulation. Large electricity users, like steel and cement companies and agriculture as well, say the eventual savings will be worth paying off the utilities now.

BARBARA BARKOVICH, Electricity Consultant: I mean, I think if you go to meters and--

SPENCER MICHELS: Barbara Barkovich, a consultant to those large consumers, foresees a 30 percent price drop in five years for her clients.

BARBARA BARKOVICH: For them, electricity represents 15 to 25 percent of their total production costs. And in an intense internationally competitive market, to be able to save some significant percentage on something which is such a big percentage of your total operating costs, can make a big difference in terms of being able to stay in business and continue to provide jobs, for example, in California.

SPENCER MICHELS: The legislation calls for an immediate 10 percent rate reduction for small electricity users effective in 1998. After five years, the market forces are supposed to reduce rates even more, but consumer advocate Nettie Hoge is not convinced.

NETTIE HOGE: After 2001, however, the regulatory grip of the PUC and the legislature will be off, and all bets are off. Rates will change, depending upon "the market." Our analysis indicates that small customers will not do well in this new market unless they can aggregate their demand. That means get together and buy like a buying cooperative or something, because we don't have any market power.

SPENCER MICHELS: How consumers, large and small, fare under utility deregulation in California will be watched carefully as other states, especially those with high electricity costs, consider bringing competition to the power industry.

MARGARET WARNER: California's program to deregulate electricity was supposed to begin next Thursday, January 1st, but computer system problems have forced a postponement. A new start-up date will be announced soon. FOCUS - BIBLICAL FIND

MARGARET WARNER: Next tonight, an ancient artifact has come to light that scholars believe offers independent confirmation that a prominent Old Testament site, King Solomon's temple, actually existed. I spoke recently with a scholar who has examined the piece, Kyle McCarter, Jr., chairman of the Near Eastern Studies Department at Johns Hopkins University. He began by describing the artifact.

KYLE McCARTER, JR., Johns Hopkins University: (Owings Mills, Maryland) It's a piece of Iron Age pottery that's inscribed with an archaic form of Hebrew writing.

MARGARET WARNER: All right. We're going to put a slide of it up. Tell us what it says. Translate it for us, if you would.

KYLE McCARTER, JR.: It's very brief. It says, "As Ashyahu the King has commanded you, give into the hand of Zacharyahu silver of Tarsheesh for the temple of Yahweh." And then there's an indication of an amount, which seems to be three shekels.

MARGARET WARNER: All right. And what do you take that to mean?

KYLE McCARTER, JR.: It seems to be some kind of command, instruction, invoice for payment of silver to the temple through the agency of this man who's called Zacharyahu. And it's royally commanded; that is, it is the instruction to the king that the silver be given.

MARGARET WARNER: And what can you tell about the era or the time that this dates from?

KYLE McCARTER, JR.: The most important indication for the date is the type of writing. And the script seems to me to date to the late 9th century BC.

MARGARET WARNER: Now, the temple of Yahweh or the house of Yahweh is--how do you know that's King Solomon's temple? I mean, what's the relationship there? What's the link there?

KYLE McCARTER, JR.: Well, there could conceivably be more than one temple of Yahweh.

MARGARET WARNER: Which means literally, what, "House of the Lord," or--

KYLE McCARTER, JR.: House of God.

MARGARET WARNER: House of God.

KYLE McCARTER, JR.: It's the biblical name of the temple. But the indications from this document are that it is a king who is the king of the Southern kingdom, Judah, who would then be reigning in Jerusalem. And so the temple of God in Jerusalem would be, in fact, the temple that Solomon had built sometime before this.

MARGARET WARNER: All right. And remind us what King Solomon's temple was and its significance or its place in the whole sweep of the Old Testament story.

KYLE McCARTER, JR.: Well, the story is that Solomon built the temple after David's death as a way of establishing the worship of the God of Israel in Jerusalem. The temple was built according to the best standards of the day, with international help.

MARGARET WARNER: And it was built what, in about the 10th century.

KYLE McCARTER, JR.: Built in about the 10th century.

MARGARET WARNER: And how was it destroyed?

KYLE McCARTER, JR.: It was destroyed by the Babylonians when they--when they besieged and attacked Jerusalem in 587.

MARGARET WARNER: Now, is there in the Bible a specific reference to a king needing to repair the temple? I mean, that's what this seems to refer to, that they're commanding someone to pay some money for repair.

KYLE McCARTER, JR.: Well, there are a number of such references. The Bible often mentions the need to repair the temple, kings who did, kings who didn't. The interesting thing here is that this document fits well with the passage in II Kings 12, which describes a project that a king at that time in the late 9th century undertook to repair the temple.

MARGARET WARNER: Do you want to read us just a little bit of that?

KYLE McCARTER, JR.: Well, I'll paraphrase parts of it. In Verses 4 and 5 of that chapter it indicates that this king, whose name by the way was Jehoash, commanded that silver be collected to repair the temple. The indication was the temple was damaged and in need of repair. He instructed that this silver be collected-- stipulates some particular types of silver, and then the indication in Verse 5 is that the silver was to be collected through the agency of priests.

MARGARET WARNER: And what is the significance of this discovery?

KYLE McCARTER, JR.: Well, I think that any discovery like this enhances our picture of the material role of the Bible. I mean, we have the Biblical test. We have a sense of the historical outline of the period. But whenever we have an actual artifact from the time, it enhances our understanding; it improves our knowledge of the details and the historical background. This one is especially interesting in that regard because it does mention a king by name. It does mention the temple by name. And it even specifies a type of silver, the silver of Tarsheesh, which is very interesting, it seems to be a kind of fine, imported silver. So there are a number of aspects in this very short document that are very exciting to us.

MARGARET WARNER: And, before this finding, was there other several independent or non-biblical cooperation of the king, of the temple of Solomon?

KYLE McCARTER, JR.: There are other references in pre-Exilic inscriptions. That means, again, before the Babylonian destruction in the 6th century. Other references to a temple of Yahweh--at least one other in another document similar to this but much later--this would be the earliest reference to it.

MARGARET WARNER: Now, where was this piece--this artifact found?

KYLE McCARTER, JR.: We don't know. This artifact is in a private collection. It belongs to a man named Shlomo Mussaif, who is a collector in London. This object came from the antiquities market, as so many things do. So, unfortunately, it wasn't found in a controlled archaeological excavation. So we don't know where exactly it came from. It must have been found in Jerusalem.

MARGARET WARNER: And does he know?

KYLE McCARTER, JR.: I don't think he does.

MARGARET WARNER: I see. And how do you know it's not a forgery?

KYLE McCARTER, JR.: Because it mentions a king by name, because it mentions the temple by name, and so on, we have to wonder, and for that reason, it has been subjected to a number of laboratory tests in Europe and in the United States. None of those tests has cast any doubt on its authenticity. My own opinion from the analysis of the document, itself, and its language, the writing, and a number of subtle indications in the text, it seems to me that it would be almost impossible for a forger to have the subtlety and the scholarship to have produced this document.

MARGARET WARNER: And finally, how unusual is it to find this kind of corroboration of the Bible? In other words, just that? Is it rare, or is a lot of the Bible, either Old or New Testament, independently corroborated?

KYLE McCARTER, JR.: Well, a lot of it is actually. Many parts of the Bible are historical in the fairly strict sense. And so when we have archaeologically recovered materials from the period in which the Bible was being written, or the Bible--about which the Bible is talking--we often have corroboration, so to speak. That is, we have a coordination material from the ancient record that fits with things that we see in the Bible. It is unusual to have something that is this dramatically close to a specific historical situation that's described as this one in II Kings 12 is. That's unusual.

MARGARET WARNER: I see. Well, thank you very much, Professor McCarter.

KYLE McCARTER, JR.: Thank you. FINALLY - CHRISTMAS STORY

MARGARET WARNER: Finally tonight, the images of Christmas captured by great artists. Phil Ponce reports.

PHILIP LEONARD, The National Gallery of Art: What we're going to be looking at are old master paintings that have to do with the birth of Christ.

PHIL PONCE: Each year, the National Gallery of Art in Washington offers a special tour of Christmas- related paintings. This year, our lecturer, Philip Leonard, turned to the Gallery's Italian Renaissance Collection. Leonard selected eight works that tell a Biblical story of Christmas. He chose them from 216 works in the Gallery's permanent collection of Italian Renaissance works.

PHILIP LEONARD: Now, remember, the important thing to keep in mind is that this is the Christmas story in art, so we're going to be talking about it from the standpoint of the way that we are looking at painted images that were made for a particular function, function in terms of the imagery of the Church.

PHIL PONCE: First on his list was the three-part altarpiece by Angnolo Gaddi, "Madonna Enthroned with Saints and Angels."

PHILIP LEONARD: So you'll notice that in this altarpiece we had the Annunciation. You come over here in the Quatrafoil and you have the Angel-Annunciate, and then over on this side, you can see the Holy Ghost descending; you have Mary dressed in red and blue, accepting the news that's coming to her from On High. The Annunciation takes us to the Nativity.

PHIL PONCE: Artist Duccio Di Buoninsegna recounted the scene in Byzantine style in 1308.

PHILIP LEONARD: This is just a small part of an altarpiece. In fact, this comes from the great celebrated Gothic altarpiece, the "Maesta," that was on the high altar in the cathedral in Sienna. In the case of the section that we have here we have the Nativity and then on either side we have Ezekiel and Isaiah, prophets, who prophesied the Messiah. The scene that shows the Madonna, the Christ Child has been born. In the Eastern tradition the Nativity is very often shown taking place in a cave setting. In the Roman tradition of the West the preferred setting was usually the stable. But you get both in this--the stable and the King.

PHIL PONCE: After the Nativity came the Adoration of the Magi. Fra Angelico and Fra Filippo Lippi created this work for the famed Medici family in 1445.

PHILIP LEONARD: Here we've come to an important change in terms of European artistic life. We're moving from the Gothic period into what is described as the Renaissance, the Italian Renaissance, paintings that may still have a religious subject, but they were made for a secular setting, and they begin to have a more dramatic character to them. Here is the Madonna, dressed in red and blue, with the Christ Child. Then here in the foreground are the three wise men, the three magi, and they're arriving here. It's quite a scene, splendidly dressed, richly attired, wonderfully coifed hair. Only one of them has a gift that we can see. It's the gold container that's over here.

PHIL PONCE: Venetian artist Giorgionne depicted other visitors to the infant Jesus.

PHILIP LEONARD: This is the Adoration of the Shepherds. And you'll notice that the painter, Giorgionne, has made it very believable. These people look like living, breathing people. They're not like, you know, these very stiff figures against a flat, gold background that you get on an altarpiece. But these are what we would call representational figures. They're very life-life.

PHIL PONCE: Gallery guide Philip Leonard ended his tour with the work of Florentine artist Piero Di Cosimo. It shows Mary visiting her elderly cousin, Elizabeth, the mother of John the Baptist. Also pictured are two saints who were not actually alive at the time of Christ's birth.

PHILIP LEONARD: To close this examination of Christmas paintings here at the National Gallery let's carry it to another type of imagery. This guy has a bell. This guy has a crutch. This guy has a pig, there, that identifies him. He's Saint Anthony Abbot. And very closely associated to the Christmas story is what we have right here. He's Saint Nicholas, and he becomes the source of Saint Nicholas, who is where we get our Santa Claus. So you see, we've got a lot of references to Christmas here at one time. RECAP

MARGARET WARNER: Again, the major stories of this Christmas night, the American telephone worker accused of spying in Russia was on his way home for Christmas. And Mexican news reports said more than 40 suspects had been detained for questioning in Monday's massacre, though no arrests have been confirmed. We'll be with you on-line and again here tomorrow evening. I'm Margaret Warner. Thank you and good night.