The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Monday, we have a Newsmaker interview with the prime minister of Japan, an analysis of the trade crisis between Japan and the United States. Betty Ann Bowser reports on the high crime statistics in the inner city, and essayist Phyllis Theroux has a message about Valentine messages. NEWS SUMMARY

MR. LEHRER: President Clinton said today he was considering trade sanctions against Japan. He said he was looking at several options and was not ruling anything out. U.S./Japan trade talks broke down Friday with the U.S. officials charging Japan failed to provide new openings for the U.S. products, Japanese officials accusing the United States of trying to impose quotas. Mr. Clinton elaborated on the U.S. position during a photo session at the White House.

PRESIDENT CLINTON: With all the Japanese investment in this country and all the jobs that are here, and with all the trade we have in Japan, they still have a built-in trade surplus of tens of billions of dollars, and not only with us but with many other countries. and they, they have reached a point now in their growth and wealth and strength when it is simply no longer acceptable for, I think, for their own consumers as well as for the rest of us for them to follow a policy so dramatically different from the policy of every other advanced economy. It costs jobs and incomes in our country, in Europe, and other places and causes their people to have to pay almost 40 percent more for basic products. I just think it's an unsustainable policy. I said so last summer when I went there. I still believe it, and it's just not acceptable for the United States to continue on the same path.

MR. LEHRER: Mr. Clinton said he would make a decision on sanctions within a few days. We'll have more on this story right after the News Summary. The President also released his annual economic report today. He criticized the Reagan-Bush years, saying trickle down economics had built a false prosperity on a mountain of federal debt. He said his own administration had put the economy on a path of rising output, increasing employment, and falling deficits. Robin.

MR. MacNeil: the heavy guns surrounding Sarajevo remained silent today following last week's NATO ultimatum. Bosnian Serbs could face allied air strikes unless they withdraw their weapons or turn them over to the United Nations. The NATO deadline expires February 21st. We have a report narrated by David Symonds of Worldwide Television News.

DAVD SYMONDS, WTN: More than a week after the mortar attack on Sarajevo's market galvanized world opinion, victims are still being airlifted to NATO member hospitals for treatment. In this airlift, 14 victims were flown to a NATO base in Italy for the care they can't get in Sarajevo. The pain of war is still evident on faces here, but a cease-fire is holding. Diplomatic pressure on the warring factions is intense. Bosnian President Izetbegovic was met by special U.S. Envoy Charles Redman at the start of a two-day mission. His visit signals a new campaign by Washington to help promote a settlement here. Peace hinges on the U.N.'s ability to put more of these guns under wraps, aided by NATO's threat of air strikes if they're not.

GEN. SIR MICHAEL ROSE, Commander, UN Troops: Total exclusions aimed for heavy weapons around a 20 millimeter radius of Sarajevo will be implemented, and any heavy weapons there will be either under UNPROFOR control or will be subject to air attack.

MR. SYMONDS: The Bosnian Serbs have less than a week to comply fully with NATO's ultimatum, but to the children of Sarajevo, the terrible violence suddenly seems far away.

MR. MacNeil: The Bosnian government today urged that the NATO ultimatum against Serb artillery be extended to five additional cities. The appeal was made during a meeting of the U.N. Security Council in New York. More than 40 nations will take part in the two-day debate, but no new resolutions are expected.

MR. LEHRER: President Clinton said today the United States looks forward to being a friend and partner to Kazakhstan. He said U.S. aid to the former Soviet republic will increase from the current level of $91 million to more than 311 million. Mr. Clinton spoke after he and the President of Kazakhstan signed an economic agreement at the White House. President Nazhurbayev also presented Mr. Clinton with papers certifying Kazakhstan had accepted the nuclear nonproliferation treaty and would dismantle its nuclear weapons. More than 1,000 nuclear warheads were left in Kazhakstan after the collapse of the Soviet Union.

MR. MacNeil: The effects of last week's big winter storm are still being felt in the southern and eastern states today, even though the sun came out and temperatures rose above freezing. More than 400,000 customers are without electricity across the region, including Mississippi, Alabama, Arkansas, Tennessee, Kentucky, Maryland, and Delaware. Ice from the storm coated power lines, causing them to fall. Ice also coated trees and branches which fell across power lines. Officials said it could be another three days before all service is restored.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to the trade fight with Japan, an urban crime story, and a Phyllis Theroux essay. FOCUS - TRADE WAR?

MR. MacNeil: First tonight, a clash between two economic giants. On Friday, President Clinton and Japanese Prime Minister Morihiro Hosokawa were supposed to announce broad new agreements aimed at lowering the huge trade imbalance between the two nations. Instead, in unusually blunt fashion, the two leaders announced they had reached an impasse. That leaves the Clinton administration considering whether to impose punitive sanctions on Japan. President Clinton had this to say at a press conference this afternoon.

PRESIDENT CLINTON: I'm going to make a decision within a few days. I think we need to clarify what America's approach is going to be now within the next several days. There are a number of options open to us, including some that have not been widely discussed that may offer great promise here. And let me also say for those of you who worry about a trade war and other things, this is a battle that is raging not just in the United States and in Europe and in all other parts of the world that have been exposed to the mercantilist policies of Japan. This is a battle that is raging in Japan. And there are a lot of people in Japan who want to take a different course and may be strongly encouraged by the fact that we did not conclude a phony agreement one more time, but, instead, are trying to have an honest progress to a better relationship.

MR. MacNeil: For his part, Prime Minister Hosokawa insisted throughout his visit that Japan could not accept numerical targets to prove that trade progress was being made. It's this dispute that led to the impasse in the so-called framework agreement signed last July as a means of opening Japan's market to a wide range of American products. On Saturday, Prime Minister Hosokawa had breakfast with President Clinton at the White House. After that, he talked to our correspondent, Charles Krause.

CHARLES KRAUSE: Mr. Prime Minister, thank you for joining us. Last July your predecessor agreed to this framework agreement, and you, yourself, have said on a number of occasions that you support the kinds of economic changes that it envisions. Why shouldn't Americans conclude then that you simply negotiated in bad faith?

MORIHIRO HOSOKAWA, Prime Minister, Japan: [speaking through interpreter] It is true that in the mid '80s we had a very significant trade imbalance between Japan and the United States amounting to $50 billion or more, and of course, in view of the fact that this trade imbalance was significantly greater than imbalances that other countries had, we felt -- we have felt that we had to resolve that problem in Japan. The Japanese government has, indeed, been strongly aware of that and have felt that all possible efforts ought to be made in order to improve the situation. We have been making those efforts, and although today we do see some reduction in trade surfacing in Japanese, in yen terms, unfortunately, some more time is needed to improve the situation and in dollar terms as well. Now we regret that this time in terms of our framework talks we were not able to overcome this hurdle called "numerical targets." And this is because we are very much concerned that as in the case, in the past of the semiconductor agreement that might only lead to managed trade.

MR. KRAUSE: I understand what you're saying, but it seems as if the United States and particularly the President simply no longer trust vague agreements, agreements on principles, that don't include specific targets of some sort or another, criteria, as he says, in order to be very clear that this trade deficit is reduced. What are you prepared to do now to help resolve this problem?

PRIME MINISTER HOSOKAWA: [speaking through interpreter] There are issues over the past six months or so, negotiations, very serious negotiations have been conducted. Many hours have been spent on negotiating the auto and auto parts issues, the insurance issue, and government procurement issues. But at the end of the day, unfortunately, the two sides were not able to come to agreement. And we've decided that we now need some time for reflection on each side. However, there are several areas, as I mentioned, where the talks have only remained one step short of an agreement, although in some other areas more time is needed. And in those areas, again, I believe we ought -- we shall be making appropriate efforts.

MR. KRAUSE: But you are unwilling to consider some sort of objective criteria, some sort of targets, as the President has said would be necessary to arrive at an agreement between Japan and the United States?

PRIME MINISTER HOSOKAWA: [speaking through interpreter] We were not able to agree on the meaning, or shall I say the interpretation of this word "objective criteria." The U.S. side has been talking about numerical targets for the future. We've been saying that we should like to adopt objective criteria in terms of past data as a reference for judgment. The U.S. side, for example, has been saying that Japan ought to set a target for importation of auto parts at a certain level in a certain number of years ahead. Down the road several years economic situation as well as foreign exchange situation, the exchange market situation may have changed, and if you simply try to set a future target without consideration of the past, or if you simply try to extrapolate on the basis of the past and set a target for the future, that only leads to managed trade. And I explained that this ground runs counter to the basic principle of my administration, which is promoting deregulation.

MR. KRAUSE: Do you expect that if there is no agreement in the next month or two that the United States will impose sanctions and try to force a change in the imbalance of trade between the two countries?

PRIME MINISTER HOSOKAWA: [speaking through interpreter] I hope and I certainly trust that that will not be the case. Of course, in the coming month or two, in the coming days, we would like to push ahead our talks as much as possible.

MR. KRAUSE: Given the fact that you've said that your country and the United States cannot agree on what objective criteria are and how you go about measuring them, is there a way to get around this and reach some sort of agreement that satisfies both countries?

PRIME MINISTER HOSOKAWA: [speaking through interpreter] In several areas much progress has been seen. Take examples of government procurement and insurance. In those areas, I don't think there's a need for us to bend backwards and set numerical targets. In the area of automobile, the Japanese auto industry is currently suffering from recession back home as well as yen appreciation. It is, in reality, very difficult to set numerical targets or check the criteria. And incidentally, on the U.S. side, cars such as Neon, Chrysler's Neon, likely will become a serious threat to Japanese cars. I think these emerging low-priced, high performance vehicles made by American manufacturers would, in fact, become a serious threat to Japanese automobiles. In fact, we feel that the Japan/U.S. relations in the auto sector might well be reversed in the future. So when we talk about numerical targets or objective criteria in the auto industry, that kind of possibilities ought to be borne in mind.

MR. KRAUSE: But what you seem to be saying, if I understand you, is that some of these new cars that you've mentioned, some of these Chrysler cars that you have, will be a threat to Japanese cars in the United States. But what the United States is saying is that it would like to be able to sell cars and other goods in your country to try to redress this balance. Do you think that what the administration is saying, that essentially U.S. goods are kept out of your country not because they're not competitive but because of unfair barriers to trade, is that true? Is that a justified view of the problem in your country?

PRIME MINISTER HOSOKAWA: [speaking through interpreter] When I mentioned the Chrysler's Neon, I was talking about Chrysler's plan to launch Neon in the Japanese market, and the Japanese auto industry fears that they will take a shellacking because of Neon in Japanese market. On the U.S. side, I think the auto industry here ought to be making cars with a steering wheel on the right side, which would sell more in the Japanese market. Right hand drive I think accounts for about 18 percent of the world market. European manufacturers like Mercedes Benz, BMW, they're selling well in the Japanese market. If U.S. manufacturers would come up with cars with engine displacement of less than 2000 CC's and perhaps priced at 3 million yen or below, and the Japanese are interested very much in foreign cars, and I believe that the Japanese market would be a promising one as well. And I'm sure that Neons and Cirruses and so on will, I think, increase in sales in the Japanese market.

MR. KRAUSE: You seem to be saying that if U.S. goods were more competitive, they would sell in Japan, and that could resolve the problem. And yet, the view from here is quite different, that, in fact, your government, your economic system makes it virtually impossible for U.S. manufacturers to compete in your country. Do you recognize that, and are you prepared to make some fundamental changes?

PRIME MINISTER HOSOKAWA: [speaking through interpreter] But European cars are selling very well in Japan, and I think that is a reflection of the efforts that are being made by European manufacturers. So taking the example of the automotive market, I don't think that the Japanese market is closed.

MR. KRAUSE: But, again, are there barriers in other areas of trade that result in U.S. companies being unable to sell in your country? There's a $60 billion imbalance at this time, and it's not all automobiles, and the question is from the U.S. side whether your government is prepared to make some fundamental changes.

PRIME MINISTER HOSOKAWA: [speaking through interpreter] We've been making internal efforts to compress the trade imbalance, however, we have not really been able to generate significant results as yet. There are areas within government's reach, and those areas that lie beyond. Now, in those areas within government's reach, the government has been making its utmost efforts, and we certainly will continue with efforts to make the Japanese market fair and open. However, the major role lies in the private sector. And the government cannot command Toyota or Nissan not to export their cars or to purchase more foreign auto parts, and so on. So within the area of government's reach, we will do all we can.

MR. MacNeil: What should the United States do? We get two views now. Clyde Prestowitz was the chief trade negotiator at the Commerce Department during the Reagan administration. He's now president of the Economic Strategy Institute, a Washington think tank that focuses on economic competitiveness. Gary Saxonhouse is a professor of economics at the University of Michigan and the author of many articles on the Japanese economy. He joins us from Ann Arbor. Clyde Prestowitz, it sounds rather strange to hear a Japanese prime minister lecturing an American president on free market economy and what government can meddle in and what it can't meddle in. Do you have any sympathy with his argument that the Japanese government can't tell Toyota what to do?

MR. PRESTOWITZ: I was thinking the same thing particularly because even as we speak, the Japanese government is now engaged in negotiations with the European Community to negotiate a specific market share in Europe for the Japanese automobile industry. Even as we speak, Japan Airlines is working with other Asian airlines to adopt a resolution setting specific market share targets for airline traffic in the Pacific Basin. Even as we speak, Japanese utility companies and Japanese trading companies are forming buying the monopolies for such items, commodities such as coal, iron ore, wheat, and so forth, in which all the buyers of Japan ban together to play off supply in countries like the United States, Australia, China, and South Africa, against each other. All of these represent instances in which the Japanese government is either a player or acquiesces in private activity which is certainly a form of managed trade.

MR. MacNeil: So you're saying they're willing to do elsewhere what they're not willing to do with the United States?

MR. PRESTOWITZ: Well, it certainly sounds that way. And I would even say that the reluctance to set targets sounds strange to me, because as a U.S. trade negotiator in the 1980s, I can remember Japan's Ministry of International Trade & Industry specifically suggesting a target of $300 million for Japanese procurement of U.S. auto parts. I remember NTT, Nippon Telephone & Telegraph, specifically setting a target of $200 million for procurement of foreign telecommunications equipment, and in the semiconductor negotiation which Prime Minister Hosokawa mentioned, it was the Japanese side which kept coming back to the Americans and essentially saying, you know, what do you want, and they would say, will 12 percent market share do it, and we would say, no, we don't want to talk about managed trade. And they would come back and say, well, how about 15 percent? Until finally we settled at 20 percent. So all this reluctance on the Japanese side to set some kind of objective criteria just sounds very strange to me.

MR. MacNeil: Mr. Saxonhouse, how do you see it? Is the -- is Prime Minister Hosokawa being disingenuous here? What -- how do you see what's going on?

MR. SAXONHOUSE: Not at all. I think it's one thing for the Japanese government to restrain its exporters. It has statutory authority to do that. It did that with Japanese -- the Japanese exports of automobiles to the United States. It's quite another matter to require Japanese consumers to buy American cars. I simply don't know what kind of levers the Japanese government would have short of setting up a socialist-style economy to require the Japanese consumer to buy thirty thousand, fifty thousand, a hundred thousand units of foreign automobiles. I -- you know, I think this is really quite foolish as a suggestion. You have to remember also that the experience the Japanese had with trying to fulfill the terms of the 1986 and 1991 semiconductor agreement have led them away from this approach. In order to meet the terms of that agreement, it required them to intervene in the affairs of hundreds upon hundreds of Japanese companies. It required them to ask those companies for what their purchasing plans were for the next six months, what their purchasing plans were for the next twelve months, what their purchasing plans were for the next eighteen months, who they were going to buy their semiconductors from. If that isn't reregulating the Japanese economy, if that isn't forcing the Japanese into a Soviet-style system, I don't know what is. Prime Minister Hosokawa is interested in taking a new approach. He is interested in deregulating the Japanese economy. And I think he has the support of his own population and, indeed, I think he has the support of the Europeans and other trading partners in Asia. None of those areas of the world support the United States' demands for numerical targets. It's a tragedy --

MR. MacNeil: Mr. Prestowitz --

MR. SAXONHOUSE: -- to see President Clinton not realizing that the United States has painted itself into a corner and is not supported in this particular policy by any other major player in the international economic system.

MR. MacNeil: Mr. Prestowitz has just said that Japan is busily negotiating numerical targets with the Europeans.

MR. SAXONHOUSE: That is a -- they are restricting their exports to Europe. That is resulting in the increase in the prices of European -- of Japanese cars in Europe. If the United States wanted Japan to restrict its exports of automobiles to the United States, I guess Japan would go along with it. Indeed, we still have the voluntary export restraints that were first imposed in 1981, in effect at approximately one million, six hundred thousand units. Were we to restrict this further, this would simply result in the increases in the prices of automobiles in the United States. It would be bad for the American consumer. It would probably be good for Japanese companies.

MR. MacNeil: Mr. Prestowitz, obviously, you disagree on this. Let me ask you this. Mr. Hosokawa said that in areas where the government has real influence -- he mentioned insurance and government procurement -- they've made real progress. Indeed, he made it sound as though they're only one step away from agreement on anumber of things. Is the -- are the differences so great and the Japanese failure to perform so great that it now justifies American sanctions?

MR. PRESTOWITZ: Well, in measuring progress on the insurance and the government procurement, I'm not really sure exactly what he meant. The U.S. insurance industry has less than a 2 percent share of the Japanese market, while it has well over 10 percent of most other important international markets. As far as government procurement is concerned this dispute between the U.s. and Japan has been going on for quire some time and Japanese procurement of - - government procurement of foreign goods remains very low. Now perhaps he was talking about some procedural changes to further open bidding, for example, of Japanese government procurement to foreign bidders. And I think certainly the administration and others would welcome that, but the point that I think is important to make here is that one of the reasons the Clinton administration has adopted the results-oriented approach is because over the past 15 years we have had agreement after agreement. There have been 30 odd agreements between the U.S. and Japan on trade issues, all of them related to procedural measures, and two things happened. One was that when the U.s. asked for procedural changes in Japan, U.S. negotiators were attacked as Japan bashers. It was said that they were asking Japan to change its culture and that they were, therefore, bashing Japan. Secondly, really nothing changed. Despite all of these agreements in government procurement and in insurance and telecommunications and financial markets, the result has been no real increase in foreign penetration of Japanese markets. Robin, I'd like to just make one other point if I can in response to Gary's comment. No one, particularly not the U.S. administration, was asking the Japanese government to compel its consumers to buy U.S. automobiles. The administration has not made any proposals for setting market shares or for setting specific levels of sales. But what the administration has done is to suggest that the Japanese began to count the number of Japanese dealers who carry foreign cars. It's impossible for a consumer to buy a car if he can't find out the dealer. And in Japan, 97 percent of the dealers carry no cars except Japanese cars. In the U.S., those percentages are exactly the reverse.

MR. MacNeil: But let me -- we're going to use up all our time and not get to this issue. Do you think -- you heard President Clinton earlier saying he was considering some form of sanctions - - do you think that sanctions are justified?

MR. PRESTOWITZ: Well, I think that it has to be -- rather than think in terms of sanctions as a punishment of Japan, I think what the President has to do is to explain that this trade relationship with Japan imposes real costs on the United States. There are fewer Americans at work, and the ones who are working earn less as a result of this trade relationship with Japan. So it's incumbent upon the President as part of his policy to create growth in the American economy, to create good jobs for Americans that he take those measures necessary to assure that American industry is not damaged, that American workers are not harmed as a result of an asymmetrical trading system.

MR. MacNeil: Yeah. And --

MR. SAXONHOUSE: Could I make a final comment?

MR. MacNeil: Yes. It doesn't have to be a final comment. Do you think sanctions of some kind are justified? You've heard the President is considering them.

MR. SAXONHOUSE: We have international procedures available when we have complaints between two countries. We have the GATT. We've spent seven years negotiating the Uruguay Round Agreements. We have dispute settlement mechanisms. These are courts that are run by impartial panels, situations where one party is not prosecutor, judge, and jury. This seems to make a much better, much better sense than starting sanctions which very likely will hurt the American consumer and which may result in retaliation by Japan.

MR. MacNeil: What kind of --

MR. SAXONHOUSE: It seems to me --

MR. MacNeil: What kind of sanction might the President impose that would hurt the American consumer, Mr. Saxonhouse?

MR. SAXONHOUSE: Well, if the -- if tomorrow President Clinton imposes a tariff on cellular phones imported from Japan, the American consumer will have to pay more for that particular product. That hurts us, might hurt Japan. The Japanese might respond in kind by imposing some kind of barrier on a product we sell in Japan. You have to remember we sell over $50 billion worth of goods in Japan. The market is by no means as closed as has been suggested. There have been dramatic changes in the Japanese economy over the last fifteen/twenty years precisely as a result of many of the negotiations that Clyde has referred to. No one would doubt that the financial services market today is radically different from what it was 20 years ago. Twenty years ago, foreigners had very, almost no access to the Tokyo Stock Exchange. Today, foreign capital drives the Tokyo Stock Market up and down.

MR. MacNeil: Mr. Prestowitz --

MR. SAXONHOUSE: American --

MR. MacNeil: I just a final comment from Mr. Prestowitz. What, briefly, what measure do you think President Clinton should, and what do you think he will take?

MR. PRESTOWITZ: Well, in the cellular phone case, we had an agreement with Japan on cellular phones, and the Japanese have not lived up to the terms of that agreement. So I think that he's justified and probably will impose some kind of restraint on Japanese cellular phones in the U.S., or perhaps on some other item in response to that. I disagree with Gary that it will raise the prices in the United States. There are many suppliers of these phones. The price in the market is set by competition, not by tariffs or the cost of production. Beyond that, I think it's important to recognize that there are a number of things that the President can do, which don't necessarily --

MR. MacNeil: We have just a few -- just a few seconds left, if you can finish briefly.

MR. PRESTOWITZ: The President can put enormous pressure on Japanese industry operating in the United States to increase its procurement of competitive U.S. products, U.S. parts, U.S. material. And I think that's where the big dollars lie, and that's probably a direction in which he'll go.

MR. MacNeil: Right. Well, gentlemen both, thank you. Jim.

MR. LEHRER: Still to come on the NewsHour tonight, an urban crime story and a Valentine essay. FOCUS - ROOTS OF THE PROBLEM

MR. LEHRER: Now a look behind the high crime statistics in Washington, D.C., and other major U.S. cities. Betty Ann Bowser reports.

ELEANOR WOOD, Public Housing Resident: I've seen people being beaten unmercifully, people being shot and killed right there in that field by my yard.

MS. BOWSER: Eleanor Wood has seen it all. For 30 years, she's lived in a public housing project in Far Southeast Washington, D.C.. She's angry that her once clean and safe apartment complex has become a refuge for drug dealers who feed Mrs. Wood's fears and heighten her sense of isolation.

ELEANOR WOOD: Everybody's into drugs, and you got to be very careful because you don't know who is who out there. And these people out here don't do no talking.

MS. BOWSER: Police say a majority of homicides in the District of Columbia, where violent crime statistics are among the highest in the nation, take place within two blocks of public housing projects. Housing & Urban Development Secretary Henry Cisneros says that situation is not unique to the nation's capital.

HENRY CISNEROS, Secretary, Housing & Urban Development: If you took a map of a city and you looked at public housing, chances are the red dots that indicate criminal incidents would be heavily concentrated in or around public housing. Now I don't say that lightly. I hate to say it, because my job is to try to make public housing better, but it's just the facts.

MS. BOWSER: Rodney Stotts, who lives in Mrs. Wood's neighborhood, has lost 17 of his friends to such violence just in the past two years. And like Mrs. Wood, the 22-year-old feels isolated.

RODNEY STOTTS, Congress Heights Resident: It's like you're trapped, and like a rat. You back a rat up in a corner, he's going to come out fighting. Same way with a person. You back him up in a corner, he's fearing for his life or whatever, he's going come out and fight.

UNIDENTIFIED WOMAN: Bloodshed around here is like your baby crying. We're so used to it. We hear it all the time. You're just used to it.

MS. BOWSER: These young women are all single mothers on welfare, living in and around public housing. They say their children have become all too accustomed to violence.

MS. BOWSER: What do you tell your kids when you've got gunshots every night waking you up at 2 or 3 o'clock in the morning?

SECOND UNIDENTIFIED YOUNG WOMAN: We don't even have to tell them no more. They tell us, ma, somebody's gettin' shot.

MS. BOWSER: When we asked several of these young women if we could visit their homes, they refused, saying it would be too dangerous for them. They were afraid it would call attention to themselves. But it wasn't always like that. There was a time when the neighborhood wasn't always so full of fear and people trusted each other.

JIM BANKS, Community Leader: Usually people greeted you, and there was no fear.

MS. BOWSER: Seventy-four-year-old Jim Banks grew up in Anacostia in Far Southeast at a time when gunshots were rarely heard. He remembers his Anacostia neighborhood of single family homes as a place where there wasn't much money but there was hardly any crime. In fact, he says Anacostia used to have one of the lowest crime rates in the city.

JIM BANKS: The only thing you feared was that if you were misbehaving, often by the time you got back home, your parents would know about it. [siren in background]

MS. BOWSER: Did you hear sirens like this all the time?

JIM BANKS: No, no. That was -- if you heard a siren, that was an extraordinary event, extraordinary event.

MS. BOWSER: It was something people came to see what was going on?

JIM BANKS: Absolutely.

MS. BOWSER: And nowadays --

JIM BANKS: In those days, if you heard that siren, everybody in all these houses would be on their front porches looking to see what was going on.

MS. BOWSER: But Banks' childhood began to change after World War II. The GI's returned to lots of open arms but also to lots of "no vacancy" signs.

NEWSREEL ANNOUNCER: Today, the United States is in the midst of the most acute housing shortage of its history.

MS. BOWSER: As part of its dramatic rehousing effort, the government allowed neighborhoods like Anacostia to be rezoned, away from single family homes to rental apartment buildings. Then the federal government also launched a massive urban renewal campaign. Part of the plan was to bulldoze whole neighborhoods where people lived in squalid tenements. In the nation's capital, people were moved en masse to public housing projects in Anacostia and Congress Heights next door.

JIM BANKS: The idea was that if you could provide them with standard housing, their lives would change. And that was not true.

MS. BOWSER: Ironically, Jim Banks was in charge of urban renewal in the District of Columbia in the 1960's. He later ran the D.C. Public Housing Program. In those jobs, he helped implement the public policies that so dramatically transformed his old neighborhood, public policies he now says didn't work.

JIM BANKS: Most of this was well-intentioned. It's not -- I mean, because that also makes it more tragic, the fact that well- intentioned ideas sometimes turn out poorly. But it was all well- intentioned.

MS. BOWSER: But Housing Secretary Cisneros thinks many government policy makers back then were not as well-intentioned as Jim Banks.

SEC. HENRY CISNEROS: It's very clear that in the 1940s and in the 1950s the strategy was put 'em altogether, put 'em on the other side of the freeway, and we can be rid of 'em. But the truth of the matter is that society doesn't work that way. You can't contain social problems.

HANNAH HAWKINS, Community Activist: How's your hand today? Oh, you got to wash that hand some more, you hear?

MS. BOWSER: Hannah Hawkins, a lifelong resident of Anacostia and a community activist, says it's no surprise that putting so many poor people in one location created new problems.

HANNAH HAWKINS: I call it a form of apartheid when they do this. It's a form of discrimination when they do this. And the reason why I grew up in a healthy environment is because we not only had the low income folk living next to us, but we had the engineer, we had the doctor, we had the lawyer, we had the school teacher.

MS. BOWSER: Today Anacostia and Congress Heights have practically no doctors, lawyers, or school teachers. The exodus of any professional or middle class has left Far Southeast Washington few services and jobs. There is only one supermarket to serve more than 70,000 people. There are only two small public library annexes. And this is only one of two sit-down restaurants in the whole area. What Far Southeast has a lot of is liquor stores and idle, unemployed young males who hang out. All too often, drugs is the only form of commerce.

HANNAH HAWKINS: When they cleaned out other areas, they lumped 'em and dumped 'em right over here. And they did nothing about the community.

MS. BOWSER: Who's "they?"

HANNAH HAWKINS: The developers. Jim Banks was one of the developers. He was one of 'em. He cleaned out -- helped to clean out Southwest, and a lot of people were misplaced.

MS. BOWSER: Banks also is critical of the policies he once helped develop, but at the time, he says, he and other African-American leaders had no idea that the concept of public housing would get so distorted by other problems like crime, welfare, and unemployment.

JIM BANKS: In public housing we had come to, to use it as a housing of last resort, that -- and we have clustered together families with the greatest need, which is an unnatural clustering. I mean, this never occurred before in our society, where thousands of people with clearly intense both social and economic needs were placed together and creating a climate which really set the tone for life in those communities. And that's what we have done.

MS. BOWSER: According to Banks, it was the court that did more to change the nature of public housing, more even than the policy makers. In the 1960s, several decisions made it possible for single mothers to get into public housing. Prior to that, the rules were married couples only.

JIM BANKS: In the old days if there was a girl 18 years old had a baby, she was not eligible for admission. And she no skills operating a household, and they just didn't admit them. Now you find developments where 50 percent of the people are young girls 21 years of age with children, and it is basically a disorganized community, and that kind of public policy has not been hopeful, the stability of the community.

MS. BOWSER: Eleanor Wood, who at 71 still works full-time, is incensed by the number of young women with children on welfare that live in her project.

ELEANOR WOOD: It creates a hell of a big problem, because we have too many people sitting on their ass, not working, young people. There are too many young people sitting on their ass, not working. What do they want to work for? You give 'em a check. Then the next couple of days they get food stamps? What do they want to work for? The government ruins them.

MS. BOWSER: But these single mothers on welfare don't like being blamed for their neighborhood's problems. They resent being dependent on the system and are trying to get off it.

FRANKIE JENKINS, Single Mother: I'm not going to be on public assistance all my life. I don't like being on it now. But I know I'm here, so I can keep the fight, so when younger generation comes up, they can say, well, I know that woman, she was a strong black woman just like all my other black sisters in here. Not all of us are sitting home, watching the soap operas. We're out here trying to do something. We're tired of the stereotyping.

MS. BOWSER: They are not the only ones tired of being stereotyped. Rodney Stotts says that by segregating so many poor people in one place it creates a stigma that is hard to overcome.

RODNEY STOTTS: I go for a job. They would address. I put Southeast at the end. Wham! I'm automatically disqualified. So what is there left?

MS. BOWSER: Either get a job or do crime?

RODNEY STOTTS: That's it. If you know of another alternative, please tell me, because them the only two I've ever know for 22 years.

MS. BOWSER: Sociologist William Julius Wilson has studied the problems of inner city youths like Stotts for years. Wilson has recently discovered that unemployment in such impoverished neighborhoods is higher than previously documented, in some areas as high as 75 percent. He says there is a clear solution for turning these communities around.

WILLIAM JULIUS WILSON, Sociologist: The best way to improve the life in these neighborhoods is to put people back to work. Work does not only provide a source of income and support for your family, but it's a framework for daily behavior, you know, and a framework for patterns of interaction because of the disciplines and regularities that work imposes.

MS. BOWSER: Housing Sec. Cisneros agrees with Wilson. He adds employment opportunities might be more available if more inner city residents could move to the suburbs.

SEC. HENRY CISNEROS: This is not a popular thing to say, but the very concentration of large numbers of people who are poor, without role models, without hope, the pathologies that ensue, including crime to a major extent, become unmanageable.

MS. BOWSER: And what about racism?

SEC. HENRY CISNEROS: So we've got to give people a choice. And race clearly is one of the major factors that has kept people from moving to the suburbs.

MS. BOWSER: Cisneros is trying to drum up support for a new approach that would allow people to take vouchers or perhaps federal housing subsidies and use those to move into private housing in the suburbs.

SEC. HENRY CISNEROS: Opening up the suburbs is a critical part of this strategy, the toughest thing maybe in America to do, but it's got to be part of our strategy.

MS. BOWSER: At age 74, Jim Banks has returned to the Department of Housing & Urban Development where he is a consultant to Cisneros. He is still searching for solutions to the complex problems that plague his old neighborhood. He goes back there every day to the Anacostia-Congress Heights partnership which he founded three years ago to help the residents of public housing. The partnership works with a network of private and public service providers to form grassroots organizations that can tackle problems at their source.

UNIDENTIFIED WOMAN: [reading] People living on the streets and with kids, and here I am living like a prince or something.

MS. BOWSER: At one such program, Moms and Tots, the idea is to help young, single mothers on welfare get their high school diploma and the skills needed to get a job. Another partnership program is Books and Balls where boys get to play very competitive basketball instead of hanging out. In exchange for the privilege of playing basketball, the boys agree to work on their reading skills.

UNIDENTIFIED BOY: [reading] I climbed up on the bar yelling, "Wash, I'm shot, I'm shot!"

MS. BOWSER: Rodney Stotts spent a year cleaning up environmental hazards in a partnership program, the Earth Conservation Corps. He is currently waiting for an appointment as a cadet in the DC Police Department. Also under the partnership's wing, Hannah Hawkins started an after school program for the children of public housing.

HANNAH HAWKINS: Excuse me. You don't talk like that at the table. You just blessed it.

MS. BOWSER: Her program is now independent, funded entirely by private funds, and no government assistance. And that is by choice. Jim Banks says it's a mistake to expect immediate results when the situation in public housing has been festering for decades. And he cautions nothing will work unless the residents, themselves, do it.

JIM BANKS: Nothing will work in terms of addressing this problem unless you get the people who are its victims involved and use their energy and their creativity. Nothing will work. No government, no private programs will work, because you can't force this change.

MS. BOWSER: Banks says change only happens when people have an investment in their neighborhood.

JIM BANKS: The crime comes primarily from people who have no sense that anything that's in their community is accessible to them, is theirs, or that they can lay claim to having developed it. They are outside, looking in. They have absolutely nothing to lose. We want to give people something to lose. You give people something to lose, and they will protect it.

MS. BOWSER: Banks' critics have called him an idealist and a dreamer, but he insists until you give people that something to lose, they'll remain on the outside, unable to get in. ESSAY - IT'S IN THE CARDS

MR. MacNeil: Finally this Valentine's Day, essayist Phyllis Theroux has some thoughts about the art of saying what you mean.

PHYLLIS THEROUX: Among other things, Washington, D.C., is distinguished by being the location of the world's largest library, the Library of Congress. There are an estimated 532 miles of shelving, all of them full books written by people who in their brief allotment of time on earth jotted down their thoughts as fast as they occurred to them. In Washington, one is continually reminded of the fact that human beings are political animals, but inside the Library of Congress, it becomes equally as clear that we are also something a little larger or more inclusive. We are creatures of the word. Broadly defined, a word can be a picture like the cave drawings in Lascaux, France, or a sign. Washington is also the location of Gallaudet University for the Deaf, or as it's more acceptable to say these days, the hearing impaired, which is a sign of how words can fall in and out of favor. But there's been a lot of alarm among educators that words, themselves, are falling out of favor. We hear them and we speak them as human beings have always done but writing them down is another story, one that has become increasingly more full of grammatical errors, or is it "fuller" of grammatical errors? Even people who make their living with words sometimes wonder whether they've got it write. And people who don't can feel even more insecure, which is why Hallmark Greeting Cards continues to do such a land office business. Hallmark capitalizes on that insecurity, particularly on Valentine's Day, when we really want to get it right. Next to Christmas, Valentine's Day is when you buy cards the most. Stumped for words. Have no fear, Hallmark is here, along with a burgeoning number of other greeting card companies that expect to do $5.9 billion worth of business in the United States alone this year, the best year ever. Hallmark is the Library of Congress among greeting card companies. Headquartered in Kansas City, Missouri, it does 44 percent of all the business, and if you think you're outwitting them by making your own card with a crayola or magic marker, you're not; Hallmark owns them too. Hallmark knows, in more than twenty languages and one hundred companies, who you are and what you would say if only you were eloquent, clever, funny, or profound enough to say it for yourself. In fact, now you can. In one of its 11,000 card stores around the country, customers can step up to a computer and print their own message. But Hallmark's latest card on the market which promises to be a much bigger success allows you to record a 10-second message in your own voice.

CARD RECORDING: Reed, this is your Bumpa, wishing you a Happy Birthday.

PHYLLIS THEROUX: Herein lies the problem. We are becoming people who don't write it down but speak it into a telephone or now, unbelievably, into an envelope. Isn't it taking the whole idea of greeting cards a little too far? Not when you stop to think about how far we have to go in order to greet each other these days. In an age where families are scattered all over the map, cards and letters -- no, scratch letters -- cards and phone calls are what keep us together. It's only a matter of time before our phones have TV monitors so we can critique our children's friends and wardrobes as if they were in the same room. But we aren't in the same room, which is one of the reasons we use a phone and send cards. Human beings are desolate if we can't communicate with each other. And now, with the use of E-Mail and fax machines, we can do it with nearly the speed of angels, which may be one reason why angels are becoming so popular. We are beginning, in the way we communicate with each other, to resemble them. I think there's another reason. With more and more people replacing their own light bulbs, angels are all we have to hold the ladders. Everybody else is out of town browsing through cards to send home. I'm Phyllis Theroux. RECAP

MR. LEHRER: Again, the major stories of this Monday, President Clinton said he was considering trade sanctions against Japan. He said he would make a decision within a few days. And the cease-fire in Sarajevo continued to hold. The Bosnian government asked the U.N. Security Council for help in lifting the siege against five other Bosnian cities as well. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour for tonight, and we'll see you again tomorrow night. I'm Robert MacNeil. Good night.