The NewsHour with Jim Lehrer

ELIZABETH FARNSWORTH: Good evening. I'm Elizabeth Farnsworth. Jim Lehrer is on vacation. On the NewsHour tonight we have a report and a Paul Solman discussion on the new global economy; a debate on California's new law that bans smoking in bars; a look at what the Hubble telescope revealed about the universe this year; and a David Gergen dialogue with Stephen Jay Gould about the end of the millennium. It all follows our summary of the news this New Year's Eve.NEWS SUMMARY

ELIZABETH FARNSWORTH: 1997 ended today as another banner year for the American economy. The nation's economic expansion finished a seventh year, making it the third longest in U.S. history. On the floor of the New York Stock Exchange traders and investors celebrated a record year. It was the first time the Dow Jones Industrial Average increased 20 percent or more for three years in a row. Thousands of balloons were released at the closing bell. Also, a new report showed the Index of Leading Economic Indicators was up for a fifth straight month in November. The Conference Board said that and strong consumer confidence show a very healthy economy. We'll have more on the global economy right after the News Summary. At the Terry Nichols bombing trial in Denver today federal Judge Richard Matsch warned the jury not to be swayed by the emotions of surviving victims and family members. They continued to testify in the third day of the trial's penalty phase as prosecutors present the case for sentencing Nichols to death. He was convicted last week of conspiracy and involuntary manslaughter in the 1995 Oklahoma City bombing of the Alfred P. Murrah Federal Office Building. One hundred and sixty-eight people were killed. In Kenya today President Daniel Arap Moi has reportedly taken an early lead in unofficial election returns. We have more from Tim Ewart of Independent Television News.

TIM EWART, ITN: Kenya's exhausting election process inched towards its uncertain conclusion today. As the disruption that has beset the protest continued, tempers became frayed. Everyone is now suspicious of cheating, and the count is continuing in halls surrounded by security taken to almost intimidating proportions. Independent observers say it's too early to talk of widespread corruption, just hopeless bungling.

REV. MUTAVA MUSYIMI, Independent Election Observer: The Kenyan people who displayed such patience, dignity, determination in participating in the process, deserve much better than this.

TIM EWART: President Moi does seem likely to extend his 19-year rule, but his opponents are now urging him to make way for a government of national unity. They say he must resign or be thrown out.

RAILA ODINGA, Opposition Candidate: He has a choice to exit gracefully by resigning and allowing for a new government or being forced out of office by the people of this country.

TIM EWART: Are the people taking to the streets?

RAILA ODINGA: Yes.

TIM EWART: Other opposition candidates said tonight they'd refuse to accept a Moi victory at the polls.

ELIZABETH FARNSWORTH: Brazilian troops regained control of a maximum security prison today. Some 650 visitors and 17 guards had been held hostage by inmates for three days. The standoff began Sunday, after a failed escape attempt at the Sorocaba prison compound 50 miles from Sao Paulo. They already said they ordered the raid after negotiations stalled. Early reports indicated four policemen and ten inmates were slightly injured. And on this New Year's Eve, 1998 has already arrived in many parts of the world, starting in Sidney, Australia, where fireworks exploded over the city's harbor. Thousands of revelers gathered to see the million dollar show. In Russia, a new currency rolled off the presses, super ruble notes, each new one worth a thousand old ones. New Year's there is a big gift-giving holiday. Muscovites packed the malls in the last hours of 1997. And in space the two Russians and an American aboard the space station Mir marked the occasion with an inflatable bottle of champagne and greetings for those on earth. That's it for the News Summary tonight. Now it's on to America in a global economy, no smoking in California, Hubble vision, and a David Gergen dialogue. FOCUS - GLOBAL ECONOMY

ELIZABETH FARNSWORTH: 1997 has been another big year for the U.S. economy, but the crisis in Asia has cast a shadow over the end-of-the-year festivities. Tonight we'll find out why, beginning with a report by Spencer Michels.

SPENCER MICHELS: You don't have to look much farther than the streets of any city's financial district to realize how interconnected the world is. Banks and their clients do business around the globe. Americans have invested $4.3 trillion in foreign countries, and foreigners have invested more than that here. What happens in one country's economy? A currency devaluation, a brokerage house collapse, a stock market crash can have quick repercussions overseas. In Asia, until recently, business had been booming. Production was skyrocketing. Automobiles were rolling off Asian production lines. Real estate was hot. New skyscrapers found easy financing. But the investments, many of them foreign, were more than the economies could handle. People weren't buying the cars. New buildings remained empty. Confidence collapsed. Investment pulled out fast. In Thailand, Malaysia, Indonesia, and the Philippines the value of the local currency declined rapidly. That was followed by a big drop in the Hong Kong stock market and by a stunning financial crisis in South Korea requiring an international bailout and by a deepening of the recession in Japan. In America, the effects of the Asian debacle are beginning to be felt, and they are unsettling. Among the first to feel the slowdown were the traders at Otis McAllister, an agricultural exporting firm that sells American farm products, including raisins, nuts, and various fruits and juices to buyers around the world, including Asia. Royce Nicolaisen, the firm's president, says he, along with American farmers, had planned on Asian economic growth and expanding sales but the crisis interrupted that growth and hurt business.

ROYCE NICOLAISEN, American Food Exporter: What's happening is our buyers in Southeast Asia are suddenly saying slow down. Those shipments that we needed for Chinese New Year in late January, can we put those off? We allow us to renegotiate our contracts for shipment and labor, 1998. Will you perhaps give us a discount in price? Will you perhaps give us longer payment terms? And a farmer, the American farmer is so efficient he has to plan that product from the field to the barn, to the ship, to deliver to consumer. And suddenly, he's got productsthat may be building up in his inventory warehouse looking for a home.

SPENCER MICHELS: The crops most affected now are specialty items that Asians can do without, rather than staples like rice or wheat. It's too early to put a dollar figure on American losses, though the Federal Reserve Bank reports that devalued Asian currencies are making his products, like these cherries being unloaded in Japan, more expensive, thereby slowing down agricultural exports from California and the Midwest. Nicolaisen says over the long-term he's optimistic about doing business in Asia, but short-term he's uncertain.

ROYCE NICOLAISEN: It depends on how long the difficult situation in Asia lasts. If it's a month or two, we should be doing okay, but if we look at Korea and Japan, that maybe heading for--in Japan's case--back into a recession and for Korea that's heading maybe even into a depression, then that's going to have a long-term effect upon American farmers.

SPENCER MICHELS: The Federal Reserve also says the manufacturing sector is starting to feel the effects of Asian troubles. Boeing Company is concerned that Asian Airlines could request delays in delivery on up to 60 new planes because of reduced business. Clothing firms say they could lose money because Asians won't be able to afford to buy U.S.-made products, now more expensive because the dollar is worth more. Levi Strauss says its sales are depressed in some Asian markets. On the other hand, Levi Strauss and other companies that have factories in Asia are seeing manufacturing costs decrease. That's because their workers are paid less when calculated in U.S. dollars. With Asian-made products becoming cheaper, economists fear that Americans will buy more foreign-made goods, causing American companies to lose business. In California's Silicon Valley Oracle Corporation, the nation's second largest software maker, claims the Asian turmoil and the resulting strength of the dollar had a significant impact on its disappointing earnings. Its stock dropped, as did that of some of the other high-tech firms. Many other Silicon Valley companies, which do a lot of business with Asia, are wary. For the moment, chip maker, Intel, sees little direct impact, but that could change, they say, especially if China, a potentially large buyer of American goods, suffers a serious recession. Applied Materials in San Jose is the world's largest maker of machines used to manufacture semiconductors or chips, the brains of computers. The company had revenues of $4.1 billion last year, selling nearly 70 percent of its product overseas, mostly to Asia. While sales continue strong, CEO James Morgan says he is watching the market carefully.

JAMES MORGAN, CEO, Applied Materials: The thing that worries me most is Japan because Japan is really the economic potential engine for Asia, and the fact it keeps getting weaker, to me, is the thing that concerns me. If they could improve their consumption and build up their economy, then I think you'd see the global economy continue to grow.

SPENCER MICHELS: Applied Materials, employing 12,000 people worldwide and making and selling its products in many countries, is a global player. In a global economy such firms need a consistent, friendly business atmosphere and are willing to push for it. But they don't always get it. Many global firms, including Otis McAllister, say they have been harmed by corruption in some Asian countries.

ROYCE NICOLAISEN: It affects us in that if we ship a product, for example, Martinelli Apple Juice, and we ship that into Asia, and that at the--at the dock level, at the wholesale level that someone has to be paid off to get an important license and then someone has to be paid off to get a health certificate, and then someone has to be paid off to place your product on the store shelves, that means that our $2 bottle may cost 6 or 7 dollars over there.

SPENCER MICHELS: Applied Materials Morgan believes the attention focused on the Asian economic crisis can help force a clean-up of such corrupt financial practices.

JAMES MORGAN: I think you'll see with all the corruption issues breaking down and being exposed in Korea and Southeast Asia and so forth that that whole system will begin to shift.

SPENCER MICHELS: How hard the Asian financial crisis hits American shores probably won't be known for the next few months, but the crisis has put American executives on guard, businessmen whose fortunes depend on worldwide connections.

ELIZABETH FARNSWORTH: Paul Solman takes the story from there in a discussion recorded last week.

PAUL SOLMAN: Our analysis of the global economy comes from Michael Mussa, chief economist at the International Monetary Fund, which has just released its latest world economic forecast; journalist William Greider, author of "One World, Ready or Not: The Manic Logic of Global Capitalism," and Paul Krugman, also an author and professor of economics at MIT. And welcome to you all. Mr. Mussa, how hard are we going to be hit by the Asian crisis? How hard are we being hit?

MICHAEL MUSSA, International Monetary Fund: Well, the United States economy from the substantial slowdown in Asia from where we expected ourselves to be probably is going to feel an impact on the order of 40 to 50 billion dollars, around a half a percentage point of US GDP in a negative direction. Now, that, of course, is 40 or 50 billion in an 8 trillion dollar economy. However, the economy is doing very well domestically. And so the net effect is actually probably a little bit of a slowing desired at this stage, which means that rather than having the Federal Reserve tighten interest rates, instead, the Asian slowdown will afford the Fed some latitude to simply hold back for a while.

PAUL SOLMAN: So you should be relieved? I mean, you're smiling. We're talking about the Asian financial crisis.

MICHAEL MUSSA: Well, the Asian crisis is going to have a significant impact on the U.S. economy I think on the same order of magnitude as we felt the Mexican tequila crisis in 1995. But at that time the U.S. economy was already slowing down because of a considerable tightening that the Fed had carried out over the course of 1994. Now, it's coming to hit the U.S. economy at a time of particular strength, so we're probably going to feel it somewhat less than would otherwise be the case. That's, of course, assuming that things don't get a lot worse.

PAUL SOLMAN: Well, Prof. Krugman, assuming things don't get a lot worse, no big deal, just a drop in the ocean, bucket, whatever you want to use as a cliche here?

PAUL KRUGMAN, MIT: I guess in Greenspan I trust, which is pretty much what Mike is saying. I mean, I don't think that anything is going to happen to the United States as a result of this that can't be handled. We have intelligent policies here and amazingly, I actually do think we have intelligent policies. I mean, the direct loss of exports is serious for the companies involved, but it's an $8 trillion economy with 130 million workers. A lot of those workers are working extra hours this Christmas because the economy is, in fact, roaring on many other sectors. So I don't think this is a really--I wouldn't be scared about the situation of the U.S. economy. The Asians, themselves, is another matter.

PAUL SOLMAN: Are we overreacting then to this whole idea of a global economy? Has this been oversold?

PAUL KRUGMAN: Well, yes, sure. Everything that's photogenic gets oversold. And as we just saw, this is a terribly photogenic sort of thing. I think the thing to remember is that the global economy is just like the domestic economy only more so. The kind of crisis that's happening in Asia is not that different in many respects from the sorts of things that we're accustomed to on the domestic scene. If there were too many office buildings and shopping malls built in Thailand, it was for pretty much the same reason that 10 years ago there were too many office buildings and shopping malls built in Texas--runaway financial system, bad regulation, and a little bit of--more than a little bit of a market bubble. It's not something that is completely novel; it's not something that should cause us to think, oh, my God, the whole system is about to fall apart.

PAUL SOLMAN: So, Mr. Greider, is our wagon hitched to the global economy?

WILLIAM GREIDER, Journalist: I don't share this air of good feeling. First, let me say, I think it's fundamentally a mistake to suggest to Americans that this is an Asian problem; this is a global problem; and we all--we financiers, investors, banks, multinational corporations--participated in the mistakes that were made in those Asian economies. We're talking about American multinationals and German and Japanese and American banks and European banks and Tokyo banks.

PAUL SOLMAN: Briefly, how did we--

WILLIAM GREIDER: By essentially making the same plunge, a race to capture opening markets-- consumption--and over-investing, building more factories than that consumption base could support, and then at some moment discovering that those loans that had been made were, in fact, not going to be paid off, at least in the terms we imagined, and beyond that, creating a base of what I call productive over-capacity, assuming growth in consumption that doesn't develop. And at that point somebody's got to close a lot of factories and, therefore, people take defensive actions, which is to export their surplus production, if they can. And that's how it comes back to our shores. We can argue over the severity, but the fact is a lot of Americans are going to lose their jobs in the next year or two because of this crisis. And we may regard this as mild or severe.

PAUL SOLMAN: Well, let's take these one at a time. In other words, you're worried about a global contraction.

WILLIAM GREIDER: We have severe economic damage that's been done in the global trading system. And that will bounce around, causing in unpredictable, random ways other losses. As that develops, and particularly as exports and authorities get surprised by this, as they have been, there's a psychological plateau that anxiety deepens, and people then say, I'd better not invest, I'd better not buy; I'd better put the money under the mattress; or I'd better not make the loan. And if you look at where Japan is right now, it is caught in that classic trap where it can't quite get things going again because everybody's scared.

PAUL SOLMAN: Okay. So, Mr. Mussa, that's it, things get worse. That's the worst--

MICHAEL MUSSA: If things get worst. One needs to distinguish the situation in the United States from elsewhere. I mean, the United States in 1996 exported $5 billion worth of product to Indonesia, $10 billion to Thailand, and--

PAUL SOLMAN: That sounds like a lot of money to people.

MICHAEL MUSSA: But compared to the size of the U.S. economy it's a very, very small amount, even if it fell in hand. And that would be an enormous calamity far out of scale to what we're seeing in any of these economies. Its impact on the U.S. would be quite small. It doesn't say, obviously, that the particular businesses and particular individuals will not feel the impact. But one of the very favorable things about this crisis--and it is an international crisis--in contrast to what we called the debt crisis in the 1980's, which corresponded with the big inflation and disinflation in the industrial countries, which was a worldwide economic shock, this, very fortunately, something's occurring in a number of Asian emerging market countries and affecting Japan at a time when the U.S. economy is strong and Western Europe is recovering. And that is really a very favorable circumstance for the world economy to be able to absorb this type of disturbance.

PAUL SOLMAN: But your latest forecast has revised downward your estimates of only a few months ago, with respect to world growth?

MICHAEL MUSSA: World growth we revised down after an earlier revision, revised it down another 8/10 of 1 percent. And that's in the $30 trillion world economy. So that's a lot of billions of dollars. Most of that effect is in Asia. The U.S. was revised down .2 of a percentage point and Europe .1.

PAUL SOLMAN: So, Prof. Krugman, global contraction, global overcapacity. You've been somewhat skeptical of Mr. Greider on this subject for a while now.

PAUL KRUGMAN: Well, gosh, we had, as Michael Mussa pointed out, we had the debt crisis in 1982.

PAUL SOLMAN: That was the third world debt crisis.

PAUL KRUGMAN: Third world debt crisis.

PAUL SOLMAN: Brazil, places like that.

PAUL KRUGMAN: And then we recovered from that. And since then, global capacity has probably grown about--oh, I don't know--60 percent. We've had earlier crises. How much capacity is too much? I mean--you know--there's no--as far as we can tell, there's no limit on the amount that people are willing to spend if they have the money, and it's possible to screw up. Capitalist systems do screw up. We do have recessions, but I can't think of there being a sort of absolute limit on spending. So I don't understand what global over-capacity means.

PAUL SOLMAN: Well, what does it mean?

PAUL KRUGMAN: Look, there are particular things. Let's get our facts right. There are a couple of Korean auto factories that shouldn't have been built. But if you ask what too much of was built in these countries that are now in crisis, it is primarily office buildings. It's primarily real estate is the center of it. You don't need a global over-capacity story to create too much real estate building. All you need is lax banking, of which Bill Greider is right, western banks are part of the problem, but you need banks out of control and a bunch of Asian Donald Trumps take advantage of and then build some very special real estate. It's not nearly as cosmic a catastrophe as the Greider story would tell.

WILLIAM GREIDER: The dynamics of global competition, price, cost, fight for market share, drives multinational corporations, ours and theirs, and lots of others to expand into new markets and to reform their production processes, make them more efficient, blah, blah, blah.

PAUL SOLMAN: And faster and faster?

WILLIAM GREIDER: And faster and faster. And they can't turn back from that, so, yes, they're closing lots of old factories, but they wind up in lots of sectors, not every sector, but in many major sectors, despite closing lots of factories year after year, winding up with a global over-capacity.

PAUL SOLMAN: Let me give him a chance to respond. You're saying that the money rushes into these sectors; they get overbuilt.

WILLIAM GREIDER: And we can blame the Koreans and the Indonesians, but, in fact, there were Americans and Japanese and Germans and French alongside them.

PAUL SOLMAN: Mr. Mussa, you've got your hands up here.

MICHAEL MUSSA: Undoubtedly, that happens from time to time industry to industry and sometimes overall for an economy. But that has been the story of the last 200 years in the United States in an economy that has been enormously productive and in which real living standards have risen consistently over the longer term.

WILLIAM GREIDER: And if you go back over those 200 years--

MICHAEL MUSSA: And it's certainly true in Asia as well, and we've gotten over-excess capacity in the steel industry and in a lot of other industries.

PAUL SOLMAN: But could he be right, could he be right, that there's this happening worldwide, and that we're going to go into some kind of downward spiral, at least for a while, like we did in the 1930's?

MICHAEL MUSSA: I think there is no reason for doing that.

PAUL KRUGMAN: Let me break in here.

PAUL SOLMAN: Go ahead. Break in.

PAUL KRUGMAN: It could happen. It would require Murphy's Law on a global scale, everything that could possibly go wrong has to go wrong, and it requires intense stupidity on the part of Alan Greenspan and his counterparts around the world, which, I guess, means it could happen. That's what happened in 1931, a combination of Murphy's Law plus intense stupidity. But there's nothing that's inherent in the system that says it has to happen.

WILLIAM GREIDER: This may surprise you, but I actually agree with your historical summary; that, of course, it requires governing authorities like the Federal Reserve and like the IMF and some others to make a series of mistakes that lead us downward, instead of pulling us out of this. I couldn't agree more. And that's one of the reasons I'm nervous because the governing authorities, not just in America but around the world are following neoclassical orthodoxy that says focus on the financial indicators, get those in balance, get those stabilized, and everything else will come into place. I am arguing that we're in circumstances now which are quite fragile, and the wise thing to do now would be to focus on real growth, the real players, the producers, consumers, wage earners, and get out of this crisis two, three years, by making sure we don't go downward.

PAUL SOLMAN: Now, Mr. Mussa, you've got--last word goes to you. You've been accused of being the cause of his anxiety. So what do you say?

MICHAEL MUSSA: Well, the IMF is far less influential in this environment than the Federal Reserve is at this stage of the game.

PAUL SOLMAN: But are you following the usual orthodoxy?

MICHAEL MUSSA: No. Actually, what we've been trying to do in East Asia is considerably different than the approach we took to the debt crisis in Latin America at the beginning of the 1980's, because that was largely a fiscal problem of governments overspending. And so cutting back their budget deficits was a central aspect of it. Now, we are trying to avoid excessive depreciation of their currency. I think the real sector needs to sort out its own problem and, indeed, it has been too much government intervention trying to keep too many businesses afloat too long that has impaired the performance of the real sector and brought the financial sector into difficulty in these economies. We need less government intervention there. We need to allow the market to work a little better.

PAUL SOLMAN: Thank you all very much.

ELIZABETH FARNSWORTH: Still to come on the NewsHour tonight the California smoking debate, the universe as seen by the Hubble, and a David Gergen dialogue. FOCUS - SMOKE-OUT

ELIZABETH FARNSWORTH: Come midnight tonight Pacific Coast time California will become the first state in the nation to ban smoking in just about all in-door public places, including bars. Betty Ann Bowser begins our report.

BETTY ANN BOWSER: Since 1995, California's state law has banned smoking in most restaurants, manufacturing plants, offices, and enclosed work spaces, but until now, saloons, nightclubs, and restaurant- bars that did not serve food were exempt. Bar owners were given two years to install sophisticated ventilation systems that would protect their employees from the dangers of secondhand smoke. The law also gave the state's Occupational Safety and Health Administration time to establish standards for the systems. OSHA was unable to do that, so at midnight tonight, the anti-smoking legislation automatically takes effect. The American Lung Association supports the measure.

DR. GUY SOO HOO, American Lung Association: The secondhand smoke exposure is equivalent to smoking a pack of cigarettes per eight-hour shift. So if you think about that, even if you're a non-smoker, you're a smoker.

BETTY ANN BOWSER: The smoking ban will now cover 35,000 additional businesses, and many of their owners and employees complain they will lose customers.

LILLI DRUGG, Waitress: I'm very worried because this is what's paying my rent and all my bills. This is my living.

PETER WICHMAN, Bartender: A lot of the Europeans, a lot of them smoke, and they're going to go somewhere else, and that's going to reflect on my tips in the end.

BETTY ANN BOWSER: Under the new law it will be up to local law enforcement agencies to police the bars and nightclubs. Violators can be fined up to $7,000.

ELIZABETH FARNSWORTH: Margaret Warner has more.

MARGARET WARNER: Yesterday, a California superior court judge rejected an 11th hour request from bar owners and others to delay the onset of the ban. He did agree; however, to hold a January 15th hearing on the merits of their argument against it. For more on the ban and its likely impact we're joined by Stanton Glantz, professor of medicine at the University of California in San Francisco, who's been active in the fight against in-door smoking in the state; and California assemblyman Brett Granlund, the ranking Republican on the assembly's health committee. Mr. Glantz, why does California need to go this far?

STANTON GLANTZ, Anti-Smoking Activist: (San Francisco) Well, secondhand smoke is the third leading preventable cause of death. It causes heart disease; it causes lung cancer; it causes cervical cancer. And it's just time to protect the last group of workers who deserve protection from these toxins. A cigarette is like a little toxic waste dump on fire, and the one group of workers who have the highest exposure to these toxins are people in the hospitality industry. And it's now time to protect them and to protect all the other people who would like to go to a bar or a club and have a good time and not be asphyxiated.

MARGARET WARNER: Mr. Granlund, you disagree.

BRETT GRANLUND, (R) California Assemblyman: (Los Angeles) Well, I do. Certainly--No. 1, it's never been established--and the argument's going to go on and on about secondhand smoke--but that's not the issue here. The issue is, if I own a business, it's my choice to make that a smoke-free bar or to make that a smoking bar. And when legislators or the system or the bureaucracy has the gall and the audacity to believe that they're going to be able to come in and tell someone who may be a member of a private cigar club that they pay dues to belong to that they cannot go into their private cigar club and smoke because they want to protect employees, most of which smoke, most of whom smoke, a much higher rate of smokers in the hospitality industry and particularly in the bar and waitress industry than any other industry, any other job in California.

MARGARET WARNER: Mr. Glantz, was there a way to do this that didn't infringe on personal freedom say of bar owners or smokers who wanted this kind of environment, and waiters or waitresses?

STANTON GLANTZ: Well, first of all, Assemblyman Granlund said several things that are wrong. First of all, the evidence I was quoting on secondhand smoke wasn't something I made up. The California Environmental Protection Agency spent six or seven years studying this subject and reached those conclusions. Furthermore, the statement that most people who work in bars isn't true either. The California Department of Health Services commissioned a survey and found that about 2/3 of the people who go to bars are non-smokers and that about 85 percent of the people who go to bars are in favor of this law, including a lot of the smokers.

MARGARET WARNER: I guess what I'm asking--

STANTON GLANTZ: To get to the freedom question, I mean, I don't think there's any freedom to poison other people. If someone came into a bar and said, you know, it enhances my bar experience to open up a 50- gallon drum of benzine or formaldehyde or acrilene or dimethyl nitrosomine, or NNK, or nicotine, or carbon monoxide because I like putting these poison fumes in the air, you would call the environmental safety people And that's exactly what you do when you smoke a cigarette; you're poisoning other people. I think if smokers want to go in private places and smoke in ways that won't hurt other people, that's their right. Everybody has bad habits. But there's no--to me, your right to swing your fist ends where my nose begins. And people have a right to breathe clean air. And this is the last bastion of indoor air pollution we have in California.

MARGARET WARNER: All right. Assemblyman, what's wrong with that argument about why can't somebody who's in a bar and wants to smoke just step outside and smoke and not endanger the health of anyone else?

BRETT GRANLUND: Well, because probably we live in California--we have some of the filthiest air on earth--it's not necessarily safe--if you watch the news in Los Angeles--we have many days where we have smog alerts that suggest that seniors and young people stay indoors; that they don't go outdoors because our air is too unhealthy to breathe, No. 1. No. 2, the smokers have voluntarily given up the airplanes, the movie theaters, most work places, everywhere except for the Elks Lodge, the VFW Hall, and the bars that allow smoking, and gaming clubs. And certainly the fact that smokers have voluntarily gone along with these bans in the past--restaurants and so forth--the folks that support this ban are in for a very, very big surprise in just about eight hours when their law goes into effect, and they find out it's unenforcible and that their surveys are absolutely garbage; they were not scientific surveys; or field polls. They were not done in bars; they were not done with people who go to bars. And people that would tell you that my grandmother or my preacher are sitting home, waiting to go out to a bar to get drunk tomorrow because they won't have to breathe smoke are just absolutely ludicrous.

MARGARET WARNER: Okay. So staying with you for a minute, what are you saying is going to happen when midnight strikes? Are you going to say that there's going to be passive resistance to this, smokers are going to continue?

BRETT GRANLUND: I would say that people in bars are going to go on with their life just like they will at 11 o'clock, they will at 12, and they will at 1, and they will tomorrow night as well and the next night as well.

MARGARET WARNER: All right. Mr. Glantz, how is this going to be enforced?

STANTON GLANTZ: Oh, it's going to be first--again, Assembly Granlund has made several states that are simply incorrect. To say that the smoke-free workplace laws, that the airline laws went into force without any opposition is crazy. The tobacco industry pulled out all the stops trying to prevent those laws too. I mean, we're just getting a complete replay of the argument. We heard the same thing before airlines went smoke free. We heard the same thing before work places went smoke free. We heard the same thing before restaurants went smoke free, and every single time the predicted catastrophe simply didn't materialize. I think that the state of California is doing quite a good job of implementing this law. There's some antics--there's an advertising campaign using television and radio ads to educate people about what the law says. There have been mailings sent to every bar in the state. The Alcoholic Beverage Commission is involved in the enforcement. And nothing- -

BRETT GRANLUND: Now, if I can tell you--

MARGARET WARNER: Assemblyman, let him finish, and I'll get right back to you.

STANTON GLANTZ: I don't think anything's going to happen at 12:01 tonight. Everybody's going to be celebrating the New Year's. I think the time that you want to come back is in a week or in a month after people have had a chance to really understand what this law says. And I think sure, the tobacco industry, who gives the assemblymen a lot of money, by the way, is going to be out there, trying to orchestrate opposition to this, trying to make trouble, but this is a law that the vast majority of Californians want, the tobacco industry pulled out all the stops trying to get it repealed last year, and thanks to Sen. Bill Lockere, the president pro-tem of the Senate, they will stop, and I think that a month from now if you come back, you're going to find an awful lot of happy people here in California.

MARGARET WARNER: All right. Assemblyman, your turn.

BRETT GRANLUND: I want to respond. There's one thing about the zealot anti-smoker. They only lie when they move their lips. And I'll give you just a couple of examples. One, you just heard from Mr. Glantz that ABC's involved and ABC's going to help enforce that.

MARGARET WARNER: That's the Alcohol Beverage Control Board.

BRETT GRANLUND: Right. The facts are that Mr. Glantz knows. The Department of Health Services knows that one month ago Alcohol Beverage Control made a decision that they had no legal standing to enforce this law; that they would not enforce that law; and they contacted DHS and told them that they were going to have nothing to do with that, and they had no standing to go after the liquor license of a licensee who had a violation of some other code that had its own penalties. Andin response to that, they sent out notices to 35,000 licensees in the state that their liquor license would be in jeopardy if, in fact, they didn't become the smoke police. They have sent out notices that said you must remove your ashtrays tonight at midnight. Nothing could be further from the truth. They sent out all kinds of propaganda, as they usually do, most of it untrue, none of it a quote out of the law because the one thing that they don't want to have happen is for bar owners to actually know what the law says. And I've urged every bar owner to get a copy of AB-13, the actual law, posted in their bar and let the people decide for themselves and make their own decisions not based on media hype and misinformation that's being spread by the folks that want to stop people from being able to smoke in a bar.

MARGARET WARNER: All right. Well, gentlemen, thank you very much. We'll be back to see how it goes. FOCUS - PICTURE PERFECT

ELIZABETH FARNSWORTH: The Hubble Telescope, which went into space in 1990, produced its most detailed images ever this year, and they came from the ends of the universe. To tell us about them we turn to Anne Kinney, an astronomer with the Hubble program. She's also a visiting professor at Johns Hopkins University in Baltimore. Thanks for being with us. Where is the Hubble now and who decides what it looks at?

ANNE KINNEY, Space Telescope Science Institute: Well, the Hubble's in orbit. It's about 350 miles up and at the beginning of the year, when we did a refurbishment mission, it got a little boost because the orbit degrades. So where it ends right this moment would be hard to tell you because it rotates around the Earth every 90 minutes.

ELIZABETH FARNSWORTH: And the refurbishment mission was when you fixed some things on the lenses, right?

ANNE KINNEY: No. In this case we weren't fixing; we were replacing with newer instruments that had more capabilities and new wave bands.

ELIZABETH FARNSWORTH: Amazing pictures came out this year. What did you learn from those pictures that you didn't know before?

ANNE KINNEY: Well, we learned some things about the galaxies when they collide, which is very important to us because in the early universe we think it was a very common incident for galaxies to collide. Now that the universe has expanded galaxies are farther apart.

ELIZABETH FARNSWORTH: Okay. Let's put up the first colliding galaxy picture. What are we seeing in this picture?

ANNE KINNEY: This is the antenna galaxy, and the blue blotches that you see are actually star-forming regions that are very massive. In this galaxy we detected about a thousand galaxies. This was done by Brad Whitmore and Francoise Schweitzer.

ELIZABETH FARNSWORTH: Okay. Wait. Let's back up a minute while we're looking at this picture. Tell us what a galaxy is and tell us where this is, how far out it is.

ANNE KINNEY: This is about 63 million light years away. So in terms of the entire universe, you'd call it fairly local.

ELIZABETH FARNSWORTH: Because the universe is that huge.

ANNE KINNEY: Yes. The whole universe would go back about 14 billion light years. And so this object gives us an opportunity to see a galaxy colliding nearby us, so we can really see the mechanisms at work as something collides.

ELIZABETH FARNSWORTH: And what is a galaxy?

ANNE KINNEY: A galaxy is a conglomerate of about 100 billion stars.

ELIZABETH FARNSWORTH: Like our own Milky Way.

ANNE KINNEY: Like our own Milky Way. And these two that were colliding were spiral galaxies like our Milky Way, which--

ELIZABETH FARNSWORTH: We have another picture. Let's look at the second colliding galaxy picture.

ANNE KINNEY: That will give you the real picture of what's going on. There you can still see the two bodies that formed together to make sort of a heart shape, and you can see the tails as they went together. They're probably on their first path right now.

ELIZABETH FARNSWORTH: When you say collide, do you mean literally collide, these are galaxies that are running into each other in space?

ANNE KINNEY: I mean literally collide, and they not only run into each other, in a case like this they are probably what you're going to end up, which is one galaxy, not two.

ELIZABETH FARNSWORTH: When did this happen? If these are so many million light years away, this happened that many million years ago, right?

ANNE KINNEY: Sixty-three million years ago, yes. That's how long it took the light to get to us. And so 63 million years ago they were in that first path in their collision. Now they're probably already emerged into an elliptical galaxy, a fairly homogenous, settled galaxy.

ELIZABETH FARNSWORTH: Now, we have an artist's concept of what it would be like if our own galaxy collided. Let's look at that. Tell us what we're seeing here.

ANNE KINNEY: Well, if Andromeda, which is our sister galaxy, collided with our own galaxy, this is what it would look like. It would contort as it approached us. There would be a lot of star formations. It would go through a period where it settles, and then in the end, you'd end up with an elliptical galaxy, fairly homogeneous galaxy that would look something like this.

ELIZABETH FARNSWORTH: And is this important because this is the way galaxies form, this is--you're seeing what happened that made the universe?

ANNE KINNEY: We're trying to understand the way galaxies form, and mergers are very important in that process.

ELIZABETH FARNSWORTH: Okay. We have another picture called planetary nebula. Let's look at that. And tell us what we're seeing here.

ANNE KINNEY: Now, we're looking at something truly local. This is within our Milky Way. This would be about 2,000 light years away. So it's really close by. This is the very late stages of a star's life, and--

ELIZABETH FARNSWORTH: Let me interrupt you. So it's not really a planetary nebula. That's some kind of misnomer?

ANNE KINNEY: Yes. They were named planetaries because the first ones to be seen were spherical, and they looked like planets, even though astronomers knew they weren't. What Hubble has started to see is that the planetaries have an enormous range of behavior and look very different from one to the other. This one probably got its pinch in the center because of a close companion that forces the thing to not be able to expand around the center so that all the gas that gets expelled is expelled along those two axis.

ELIZABETH FARNSWORTH: So this is the Hubble seeing--is it a star expanding--the gases expanding against some sort of another object?

ANNE KINNEY: In the late stages of a star what happens is that the star does expand for 1/2 billion years. It gets very large, and then eventually the surface of the star gets exposed, and it expands very rapidly. And when the surface is exposed, it also gets very hot, very bright, and it lights up, so you get to see the gases that have been expelled over the years.

ELIZABETH FARNSWORTH: And those beautiful colors are the way it looks?

ANNE KINNEY: They're very close to the way it looks. These were taken in narrow band images and put together, so they are not exactly the way our eye would see them. The colliding galaxies were almost exactly-- they were natural color. They were very, very close to the way we would see them.

ELIZABETH FARNSWORTH: Now, we have detail from the planetary nebula. Let's look at that.

ANNE KINNEY: So this is another planetary that is thought to have a very close companion, Hubble 5. It's called--again, the companion was probably pinching the thing in the center so that when the gases expand, they expand in a double bubble type formation. That's why you see it as a butterfly type formation.

ELIZABETH FARNSWORTH: And what does it mean, what we're seeing here, for the way that our own planet was formed, or that we're formed?

ANNE KINNEY: Well, we have another planetary image that we can look at--the lemon slice--that is our best guess for how our planet will look 6 billion years from now when it becomes a planetary nebula. We think that our planet will be a spherical planetary nebula because we don't have anything like a massive companion that would limit the expansion in one direction.

ELIZABETH FARNSWORTH: What we're seeing now is--

ANNE KINNEY: What we're seeing here is a double--you see, there's sort of a double shell. The outer shell is the slow wind; the inner shell is the very fast wind, as the star exposes its inner layers to become bright and then illuminate the gases that it's been expelling.

ELIZABETH FARNSWORTH: When these things happen to the stars, they throw carbon and all sorts of materials into space, right? Is that the carbon that helps make us up?

ANNE KINNEY: Yes, absolutely. And, in fact, it is stars of our mass, mass like our sun, that put carbon back into the galaxy. That does not happen with the more massive stars. They put in--the really massive stars put in iron, which is in our blood, and oxygen, which we also need. But for carbon it's the lower mass stars like our sun that expel into the local medium and then collapse into the next phase of star formation.

ELIZABETH FARNSWORTH: So the Hubble is looking at something so far away that it's what we're made up of too.

ANNE KINNEY: Yes.

ELIZABETH FARNSWORTH: Interesting. Thank you very much. DIALOGUE

ELIZABETH FARNSWORTH: Now, a Gergen dialogue. David Gergen, editor-at-large of U.S. News & World Report, engages Steven Jay Gould, professor of zoology and geology at Harvard University. He's the author of "Questioning the Millennium: A Rationalist's Guide to a Precisely Arbitrary Countdown."

DAVID GERGEN: Steve, millennium madness is almost upon us as the year 2000 approaches, but our forebearers--many generations ago--had a very different view of what the millennium was all about. Tell us about it.

STEVEN JAY GOULD, Author, "Questioning the Millennium:" It is a strange change of meaning because the original millennium has nothing to do with counting periods of human history in thousand-year intervals. The original millennium is a prediction about a grand and glorious future, when the devil will be bound for a thousand years, and Christ will come again to reign on Earth. It's a prediction in Chapter 20 in the last book of the Bible, the Book of Revelations, since millennium means "a thousand years," literally, that makes sense. In other words, it's the thousand-year period of future bliss after Christ returns when He will rule with his saints upon the Earth.

DAVID GERGEN: If you go back--refresh us just a little bit more in Revelation and the 20th verse there because there is a second coming. What was foreseen was at the second coming there would be an apocalypse.

STEVEN JAY GOULD: Yes, this is going to be the grand battle. The devil is cast into the bottomless pit. Jesus comes to reign for a thousand years. After that period is over, then the devil is released. He teams up with Gog and Magog--there's another grand battle and then comes the true last judgment. All the bodies are resurrected, and the good ones go up, and the bad ones go the other way.

DAVID GERGEN: Well, for a long, long time people thought the apocalypse was almost at hand, and Christ, Himself, told his apostles that the apocalypse might happen even in their lifetime.

STEVEN JAY GOULD: Indeed. I tink that's why the transfer got made to counting periods of a thousand years because Jesus says in the three synoptic gospels quite explicitly that this end is going to come soon, the second coming, the millennium. He says there are some of you who will still be alive--some of you standing here today will still be alive when the Son of man comes into His Kingdom. And then it didn't happen. So when you're faced with that situation--which by the way is the only constant feature of the history of apocalypse--is every predicted date for Armageddon hasn't come to pass, and people have to come down off their mountaintops in disappointment and that's exactly what's happened. In fact, the first major Christian apocalyptic movement known as the Modenists, was I think in about 150 AD, so this is very early in the history. It's been part of the history of Christianity right from the beginning, but, of course, it never happens, so then you have to ask the question: Well, where did we go wrong? Why didn't it happen? We thought there was going to be this grand second coming in the millennium, and what arose out of that in trying to explain when it would come, since they were wrong about the first predictions, was a kind of complicated argument that we wouldn't find satisfactory today because it's only based on metaphor and analogy but was important to folks at that time--they reasoned as follows: The Bible says in many places--Psalm 90 and very explicitly in Peter's 2ndEpistle--that one day with the Lord is as a thousand human years. So they reasoned as follows: If God created the world in six days and then rested for a seventh, and each of his days is like a thousand of our years, that meant that the Earth could endure for 6,000 years, six of God's days, after which would come the grand Sabbath, the thousand year millennium, God's day of rest; therefore, you see, if you could only figure out when the world began, then you would know when it has to end, because it can only last 6,000 years. That's when people started counting human history in millennia, that is, each thousand year period is one of God's six days. After they're all finished, the world ends.

DAVID GERGEN: And then they figured out, I guess, around the 16th century or so, that if you look back from Christ's birth and you went through all the begats in the Bible and measured back, you could date the beginning of time from about four thousand years before--

STEVEN JAY GOULD: That became the most common way to try to do it. You have to assume the Bible is absolutely literally true, which, of course, it isn't, since the Earth's 4 1/2 million years old, but--

DAVID GERGEN: You will hear from our viewers on that.

STEVEN JAY GOULD: Nonetheless--but if you take the Bible absolutely literally, you can make a pretty good estimate there's still some doubts because not every date is filled in, and there are some overlaps, but a lot of people played that game, and they came up with about 4,000 B.C., the most popular date was Archbishop Usher, 17th century English cleric, who had October 23rd at 12 noon in 4004 B.C.. Let us not accuse him of any imprecision. Other estimates came up with the venerable B in the 8th century--something like 3950--the Hebrew Bible counts 3761, I think. But everybody pretty much agrees.

DAVID GERGEN: So if it goes back 4,000 and there are 6,000 years before the apocalypse from the beginning of time until the seventh day, when you get the apocalypse and the second coming, that gives you 4,000 years before Christ was born and then 2,000 years after.

STEVEN JAY GOULD: Oh, indeed. If you believe that system, we've either gotten there or are getting there very soon--if Jesus was really born in the year zero, and, therefore, the Earth began in 4000 BC, then that gives you a reason to think under that system that it'll end in 2000. The problem is Jesus was not born then. That is, the man who developed our modern BC/AD system of time, a man named Dionysus Exiguous, a monk.

DAVID GERGEN: Dennis the Short.

STEVEN JAY GOULD: --made a little mistake in Jesus's birth. It turns out that Herod died in 4 BC, and that's well attested. So if Jesus and Herod overlapped, which is certainly a requirement of the biblical narrative, or you wouldn't have stories like the slaughter of the innocents and the return of the magi to their own country- -then Jesus must have been born in 4 BC or earlier. So if Jesus was born in 4 BC and the Earth was created 4,000 years before--that's where Usher got his 4,004--then it should have ended--you would think--in 1996 on October 23rd, but really in 1997, because little Dennis made another mistake. He didn't include a year zero. Shouldn't blame him. There was no zero in western numbers at the time. And therefore, 6,000 years after 4,004 BC is October 23, 1997, last month, and it didn't happen.

DAVID GERGEN: That mistake by Dennis the Short--there was no zero in the mathematics of his time--has caused enormous confusion about when to celebrate the end of a millennium. We now think of a millennium in the more secular terms--a thousand years--so when should we celebrate the end of this millennium--December 31, 1999, or December 31, 2000?

STEVEN JAY GOULD: A wonderful unanswerable question because it's not about the world out there, it's about our somewhat arbitrary systems for ordering, but it all arises from little Dennis's business of not having the year zero. We shouldn't blame him. There was no zero in western numbers at the time--didn't come in till the 10th century--but because there wasn't a year zero, AD time began on January 1st , year one, it's like having a ruler that begins at 1 instead of zero.

DAVID GERGEN: So logic says that this millennium, this century ends on December 31st, year 2000?

STEVEN JAY GOULD: Right. And the beginning is 2001, which is why Arthur Clarke and Stanley Kubrick call their book and movie that. Yes. If you follow out Dennis's logic, you see the year 100 if you want each century to have a hundred years has to go into the first century, and the problem never goes away--1800 goes with the 1700 years--1900 goes with the 1800 years--and 2000 is sadly not the beginning of the millennium but the end of the 20th century.

DAVID GERGEN: You say in your book, though, that at the end of the 19th century and the turn of the 20thcentury the high culture of our society dictated and we all agreed that the 19th century ended and the year 1900 came to an end, 1901 started, but you say this time around we're going to end this century on December 31, 1999.

STEVEN JAY GOULD: Yes. There's a big debate in the 1890's, but there was a meaningful distinction between what you might call high and pop culture then and the folks who controlled things, the official celebrations, the newspapers and magazines, high cultures; they accepted Dennis's mathematical necessity, and every official celebration at the beginning of the 20th century was January 1, 1901. But you see the man in the street--pop culture--has always favored the zero zero. It just looks more interesting. 1999 to 2000 is much more interesting than 2000 to 2001. So pop culture has always wanted that solution but never had any power. In this century it's one of the outstanding sociological phenomena of our time. There is no distinction anymore between pop and high culture--Benny Goodman, Wynn Marsalis--playing jazz band--symphony orchestras--it's fine, since pop culture has always favored the zero zero year and high culture doesn't exist to impose a different solution anymore, this millennium is going to turn in 2000 by popular decree, and Dennis's whole problem is going to be solved because the 20th century gets only 99 years that began on January 1, 1901, when high culture was still in control and will end by popular proclamation on January 1, 2000.

DAVID GERGEN: Well, we can understand millennium madness, indeed. Steven Jay Gould, thank you very much.

STEVEN JAY GOULD: Thank you. RECAP

ELIZABETH FARNSWORTH: Again, the major stories this New Year's Eve, 1997 ended as another banner year for the American economy, with the now seven-year-long economic expansion the third longest in U.S. history. And the jury considering the death sentence for Terry Nichols in the Oklahoma City bombing trial was warned by the judge not to be swayed by emotional testimony from survivors. We'll be with you on-line and again here tomorrow evening. I'm Elizabeth Farnsworth. Good night. Happy New Year!