The MacNeil/Lehrer NewsHour

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Good evening. I'm Elizabeth Farnsworth in New York. . I'm Laura in Washington. After our summary of the news this Thursday, three pollsters update the outlook for next Tuesday's elections. Paul Simon tells the story of a fishing ground in trouble. We get a rundown on what the dollar is up and down to. And S.A.'s Richard Rodriguez sees the light in California. . Funding for the McNeil-Lera NewsHour has been provided by the Archer Daniels Midland Company. With ADM ingredients in thousands of consumer products, it's no wonder ADM is called supermarket to the world.

And by New York life, yet another example of the wise investment philosophy New York life has been following for the last 150 years. And by the corporation for public broadcasting and by the annual financial support from viewers like you. The Federal Reserve came to the rescue of the dollar again today, for the second straight day, the nation's central bank aggressively bought dollars on foreign exchange markets. The action came after the currency fell to a post-World War II low against the Japanese yen. The dollar rose in value after today's intervention. We'll have more on this story later in the program. And other economic news today, the Commerce Department reported new home sales rose 2.6 percent last month. Elizabeth? Investigators have revealed new details about the final moments of American Eagle Flight 4184. It crashed Monday night in northwestern Indiana, killing all 68 people on board. According to information from the cockpit voice recorder and the flight data recorder, the plane was in a descent from 10,000 feet with its flaps extended.

And alarm sounded, indicating the plane's speed was too fast for the flaps to be in that position. As they were retracted, the right wing began to dip. The pilot attempted to recover, but the craft then rolled sharply to the right and over on its back before plunging to the ground. Investigators are still not sure what caused the sequence of events. The Space Shuttle Atlantis was launched today from Cape Canaveral, Florida, on an 11-day science mission. The six-member crew will study the Earth's ozone layer. They will also release a German satellite for an eight-day study of the atmosphere. With midterm elections less than a week away, President Clinton continued to campaign for Democratic candidates. This afternoon, the president addressed a crowd of supporters in a hangar at the Des Moines International Airport. Earlier he attended a rally in Albany, New York for Governor Mario Cuomo and other Democrats. Cuomo has gained momentum in the polls after being endorsed by New York City's Republican Mayor Rudy Giuliani.

The president had this to say about the upcoming election. This election is shaping up to be one of those classic American elections that gets replayed every so often in our history. A race between hope and fear, a race between tomorrow and yesterday, a race between people who appeal to what is best in us and those who tell us that everything is just terrible and we ought to lash out. A race between those of us who challenge the American people to do better, who try to empower them to make the most of their own lives and those who offer them cheap and easy promises of a time which never was and never will be. That is what we are facing in these closing days. The president is expected to make stops in Minnesota, California, Washington State, Michigan and Delaware before returning to the White House on Monday. We'll have more on the upcoming elections after the news summary. A Florida jury today recommended the electric chair for Paul Hill.

He was convicted yesterday of murdering a doctor and his bodyguard outside a Pensacola abortion clinic. The judge will now consider the jury's recommendation and impose a sentence at a later date. At least 12 students were injured today when a bazooka shell exploded at a high school in Folkston, Georgia. At least three of those injured are in critical condition. The shell was brought to school by a student. It exploded when it dropped on the floor. Rescue workers in southern Egypt are continuing to recover bodies today after flash flooding and fire killed nearly 500 people yesterday. We have more in this report narrated by Vera Frankel of worldwide television news. A state of emergency has been declared for a vast area of southern Egypt flooded after torrential rain throughout the region. The storm in the desert was the worst for 80 years. But it was here in Bronker that villagers trying to cope with the floods suddenly faced an unbelievable firestorm.

Floodwaters had burst a railway embankment overturning eight tanka wagons. Thousands of gallons of oil being transported to a local depot gushed out and were carried into the village by floodwaters. Is thought it was ignited by a lightning bolt. As trapped in their homes didn't stand a chance, hundreds were incinerated or as fixiated by thick black smoke from the burning oil. Rescue workers say there could still be hundreds of bodies buried in the mud and charred ruins of Bronker. The government is now expected toward a local authorities to move oil storage depots away from towns and villages. More than half of the 15,000 U.S. troops now in Haiti may be home by Christmas. The U.S. commander, Lieutenant General Hugh Shelton, made that announcement yesterday. He said some 9,000 will be gone by Christmas the rest by early next year. But today, a Pentagon spokesman said no withdrawal decisions had been made. He said the troops departure would depend on whether the mission was accomplished.

President Clinton's national security adviser, Anthony Lake, was in Haiti today. He talked to President Aristide about plans to replace U.S. forces with U.N. soldiers. And that's it for the new summary tonight. Now it's on to a campaign update, a collapsing fishing ground, the up and down dollar, and a Richard Rodriguez essay. The campaign 94 is first tonight, and five days voters will elect 36 governors, 35 senators, and all 435 members of the House of Representatives. We look at the prospects now with three pollsters, Democrats Salinda Lake, Republican Bill McInturff, and Andy Coatt, Director of the Times Mayor of the Center for the People and the Press. Salinda Lake generally does it still look like a Republican blowout, Tuesday. Well, I don't think blowout is right, I think the reports of our demise are premature. I think the Democrats have become a lot more competitive in the last two weeks.

The generic vote is now marginally Democratic. What's the generic vote, I'm sorry, generic vote means when people are choosing between Democratic and Republican, they now lean Democratic when the names of the candidates are not attached. Democrats who are ones very demoralized now don't have the level of intensity of Republicans, but at least are closer. So, I think there's real opportunity, I think that we're going to run aggressive campaigns this weekend and aggressive efforts to get out of our vote, and I think you're going to see a lot of tight elections that are too close to call today. How does it look to you just overall first? I think overall it's very positive for the Republican Party. When she talks about that Republican or Democrat vote, it never in 40 years, in 40 years of American political history, that we've been five days away from an election with Republicans tied in terms of who you're going to vote for. And after you get below some of these high profile races like Mero Cuomo's comeback at the congressional level around the country, we're seeing very, very solid Republican numbers. I think we're going to sweep the Democrat open seats in the U.S. Senate, and I think

we will control the U.S. Senate, and have substantial gains in the House. It's going to be a very good Republican era. You think there will be control in the House as well, or is that not it? I don't know. I think the Democrats have managed to shave down a few points on the generic vote. I think Clinton's numbers, in terms of intensity, disapproval is softened, and because of the sheer weight of Democrat money and these incumbent races, they've bought back a few. But I still think we're a lot closer to 30 than we are to 20, in terms of where we are today. How does the House and Senate look to you? I think that 30 is about what we'll lose. It's an average off-year, a little bit more than an average off-year election. In the House. In the House. It's following reapportionment when we won a lot of districts. There were suburban swing districts that were hard to hold on to. I think in the Senate, it's really a toss-up. I still think we'll maintain control by at least one. So, sorry. Salinda was at 22 and we were together in September. So I'm happy guys. She's at eight seats in six weeks. So I'm in a good mood. Andy Codd, how does generally, what does it look to you? This is a Republican year.

The question is how has this changed? How are Republican? Well, there's been some closure since the beginning of the month. As these people have gone home to campaign in their districts, people are thinking about local issues, more than national issues, there's a little less anti-income. I've never seen numbers like this, and you can see from all this gray here. I've been watching this for a long time. And the numbers are so Republican, I don't know how to interpret them when we get to the turnout issue and we cut these polls, which are about even on a registered voter basis to the parts of our sample that are likely to vote. Most of the polls are showing pretty significant Republican margins. And we haven't seen that since 1950. Well, let's go through some of the high-profile races where there have been turn of turn about. So the Cuomo, take that Cuomo in New York. He was way behind. A lot of people even wrote him off. People even said that on this program that he was dead in the water. Now, the polls show him what? 10 points up or some how do you explain it? Well, I don't disbelieve that.

I'm sure that he has come back. But I think these high-profile races are a little bit confused us a little bit, because there's a Republican undercurrent. It's not reflected in the Kennedy comeback, the Cuomo comeback, how well Feinstein is doing in California. But if you look at voting intentions in a more general sense, as the Gallup poll has been doing since 1950, you see a Republican, you see a Republican inclination that is inexplicable. So there may be individual things in these individual races that may have caused particular candidates in Kennedy, you say in Massachusetts, Cuomo, in New York, Feinstein, in California to go. But it's not a general Democratic thing. No. Well, I think one of the things that's really happened is I think there's been a real struggle between the Democrats and the Republicans. The Republicans have wanted this to be a national election, where these local contests were determined by national forces and the cons of Republican trends. Andy has talked about. Republicans are used to, and we have been running for 12, 15 years localized races, and

I think getting home early was a big advantage. And so... Getting home early many of the Congress. When the Congress left out, I'm trying to go home and campaign. And I think that what you've seen is us be able to add up individually race by race factors to turn these races around or make them a lot more competitive, and you have Texas, you have California, you have Pennsylvania, you have just race after race, where we've been able to do that in part because we made these races more localized. Well, let's take Texas, for instance, and Richard seems to be able to, and Richard's in George's double Bush, and the governor's race down there are running very neck and neck at this point. That's... Everything proves that. I think Bush is two or three points ahead, but it's very close. But on the other hand, K. Bailey Hutchison is winning hands down and in the congressional races, the Republicans are going to make great gains. How do you add that up? Is that back what Andy said as well? Well, I think what's happening is one of the things we haven't talked about much is how the agenda has changed this year.

People are focusing on crime, taxes, welfare, and kind of decline in moral values. That's an issue agenda that really favors the Republican Party. And so in a survey today when it says, which party you think can do the best job on the most important issue to you, Republicans have an 11% margin. And I think what's happened is we've run the most ideological campaigns we've seen since 1980 and the Republican Party this time. This time. And so maybe Michael Huffington doesn't get into office. Maybe he's been disqualified because of this story, although I think he still has a chance. But underneath that, he spent $25 million on taxes, immigration, on crime, and Democrats being wrong on Clinton. And beneath that at the congressional level, I think in a lot of these states, these ideological big statewide races, are going to lead to major congressional and legislative gains because it's polarized, what it means to be Republican and Democrat, and it's polarized in a way that's going to break to our advantage. I mean, they may not have liked the guy who was running the ads, but they liked the ideas and they'll translate another vote. I think that's part of what we're going to see on Tuesday. I do, I differ here.

I don't see this as partisanship. I don't see it as ideology. I see this as poor performance, perception of poor performance. And people are voting against the Democrats at very high levels and voting for the Republicans in a very negative way. And they're certainly not any explain what you mean there. Well, if you look at, in our surveys, the questions about who can best handle the most important problems, who nominates the best candidates, people have about equal levels of confidence in these two parties. Their views about the parties have not connected in any way to this trend. The trend is voting against Washington, it's voting against Clinton, it's voting against incumbents. People have very high expectations for the Democrats in 1992, coming out of 1992, they controlled the White House, they controlled the Congress, and they haven't performed to their expectations. Expectations is the big word here. I really agree with that. I think that Andy's right. I think the major trend out there is not ideological but anti-incomement. And I think what was the biggest threat to the Democrats was in early October when

anti-incomement also became anti-democratic. And when change became Republican, and I think that's the fight that we fought nationally with our generic media, nationally with the president, and in local races to say, hey, the Republicans are not changed, their agenda is going back, it's more of the same. The Democrats are the ones who have started change, started to build this country back, give us a chance to finish the job. But I think the real energy out there is the anti-incomement, anti-washing, feeling. And it's why you see such high levels of ticket splitting in places like Texas. It's why you see third-party candidates and independents doing so well. Well, there's a counter story. Again, in CBS and New York Times, the number today, when they said, what's your impression? The two CBS and New York Times poll, poll, they had favorable, unfavorable in the two parties. Democrats, favorable, 44, unfavorable, 48, Republicans had a nine-point margin in terms of being more favorable. And again, in terms of numbers, I've never seen, I've never seen, I've never seen, I've

seen there an election where the Democrats are unfavourable by four points, were favorable by nine. That suggests to me an ideology that's sticking. And number two, if it's an anti-incomement year, how do you explain this entire host of Republican governors in the Northeast and Midwest that aren't just going to be elected. They're going to be elected by literally 60% margins. You don't mind Angular and Angular as well. Angular and Illinois, Ohio, Minnesota. And in fact, what's happening now is Governor Wilson and California, I now believe based in the tracking, we're doing every day, not that we do that campaign, we see the numbers. He's going to get elected. And even Fife Simington in Arizona, who is one of our most Republican vulnerable governors, has really turned this campaign around, I think it's going to win. I think there's a possibility that we will reelect every Republican governor on the ballot. And I think- You think that's ideology? Yes. I think the reason in Arizona, when you're 20 points down and you've now pulled five points ahead and you've run a campaign on one in the last month on, here's what I've done to cut taxes, the Democrat will raise them.

Here, Fife Simington's done this to be tougher and crime. He's soft on crime. Those issues absolutely demolish the campaign. I think those Republican governors are winning because I think there's a new brand of politician out there in the Republican side. Moderate Republicans who are very good managers, and I think in the long run, they pose the biggest threats to the Democrats. More moderate than, say, the Congressional Republicans. Exactly. And I think the anti-income and feeling is focused on Washington so that many of these governors look like they've really countered those forces that don't work on Washington made their states work. I see. A governor can run against Washington, too. Well, exactly. And I think some of them have. Yeah. It does that make sense to me? It makes sense to me. There are three things that the incumbent Democrats have going against them in this election. They represent Washington, they are associated with Clinton, and they represent the power structure, the incumbency. And much of the trend that we see stems from those three forces. Is the anti-Clinton thing holding, the polls have shown this very steady, but they

showed some change. Well, the public feels better about what Bill Clinton has done lately. His foreign policy has been successful over the past month. But fundamental attitudes about a president don't change in a month. I mean, historically, we can see these relationships between approval ratings and a number of seats lost in all of that. They're pretty good. But within one election year, a few points up or down isn't going to affect it once people have a perception of a president, and they have a perception of that. I think it's quite dramatic, because I agree with St. Greenberg, the president's poll said that strong disapproval for the president's dropped, but it's dropped from 36 percent strong disapproval to 31, and it's strong approval is only about 17. That's still a weak ratio. And what we're seeing in our southern open seats and in the Mountain West are the president's strongest approval numbers are over 40 percent, and absolutely kind of are serving to hurt the Democrats in those seats. And also, what we saw in Pennsylvania, we do daily tracking there, the president campaigned on Monday in Pennsylvania and Philadelphia in Pittsburgh on Tuesday night.

The president's favorable was 41, unfavorable 48, minus 7, minus 7 again last night. He dropped to his lowest level in two weeks in our tracking after he came into Pennsylvania. Well, just understanding what happens, the president campaigns in the state and drops his lowest level in two weeks. I think what happened was people liked him when he was being the president overseas, and I'm not convinced that he's having quite the helpful impact the Democrats' hope back on the road for the Democrats this week around the country. Oh, I think he's helping a lot being on the road, because I think the major difference he's being on the road is energizing Democratic core constituents, African Americans, younger women, Hispanics, strong Democrats. We are desperate to get these turnout numbers turned around. We really need better to do that. Excitement at all, not at all, but there was a lot of discouragement, and I think now at least there is some excitement or a level playing field. What I feel has happened with the president's improvement is, for a while, Democrats were falling down so fast that it was hard to get an individual dynamic going.

The downdraft was so great that candidates couldn't get individual races going. Now I feel that things have leveled off. The president's stabilized, the party ID numbers, whether you feel Democrat or Republican have stabilized, that means we have the ability to create individual dynamics there that help our candidates and make these races closer. But now in the next six days, the biggest thing we need to do is to get Democrats out and build Clinton still very popular with core Democrats. Is that what it's all about now? It's getting the core constituents, getting the core constituents, the Democrats are despondent. I don't think they're going to be less despondent by being told, however, to smart and help and vote and own self-interest, I mean, I don't think that worked very well. That was a pretty risky thing to do, and if my guess is that thing. You made it when the president goes out and says that doesn't help matters. I don't think so. I might have been spontaneous. Well, I haven't been spontaneous, but it's spontaneously unsuccessful. The Republicans are not having problems energizing their voters, are they? No, through one of the things we've seen now for six months is if you say you disapprove of President Clinton, your interest in the election is 10 or 15 points higher than

those people who approve of President's performance. And so the coalition that does not like Bill Clinton has been waiting and waiting for this coming Tuesday to send a signal that they're not happy, and they're going to be their come rain or shine. That's a tough thing to combat as well. Well, it's a broader cultural phenomenon if you think about it. I mean, in every arena we have the painters and the people who dislike things, a lot more active than the people who like things, and it's becoming a broader cultural phenomena that I think we have to think about, but it's certainly in fact in this election. All right. Melinda, gentlemen, thank you very much. Still to come, fishing trouble in New England, the dollars ups and downs, and a Richard Rodriguez essay. Next tonight, a story about one of the world's richest fishing grounds on the verge of collapse. Recently, a federal council recommended shutting down almost all commercial fishing on Georgia's bank off Cape Cod.

The recommendation came after research showed that the stock of cod had a confounder where at historic lows after years of overfishing. Here with more on how things got so bad is business correspondent Paul Solman of WGBH Boston. The annual festival of St. Peter, patrons saint of fishermen in Gloucester, Massachusetts. The residents of this old fishing town have come here to receive the blessings of Cardinal Bernard Law and ask for protection from the perils of the sea, and increasingly the perils of a struggling industry. I would call to your mind the fact that there is a new kind of storm threatening the boats of this and other harbors. That threat to harbors across the globe is overfishing, and to stop it, divine intervention will have to overcome not so much the laws of nature as the laws of economics, as you are about to see.

This is the harvest for the total of England fish industry from 1960 up to 1993. And you can see what it is that's causing all of this pain and anguish in the industry. Dennis Meadows, a professor at the University of New Hampshire, has spent a good part of his professional life trying to educate people so they can learn the consequences of their policies in time to avert disaster. So congratulations, all of you have just assumed responsibility for fishing companies. To show how economics is killing the fish business, Meadows has created a game, Fish Banks. On this day, a group of high school teachers and one wringer were randomly formed into teams and taught rules that inevitably it seems lead to ruin. Each of six teams are fishing from. It starts off with a thousand dollars and five boats, with which to make lots of money. Or as Meadows puts it, your company's goal, each of your companies is working as hard as you can with all the systems and sites and strategic thinking of your command to maximize

your assets. Fish Banks has played out over 10 imagine in a year. There's plenty to figure in, interest costs, salvage value, but basically, we players face two yearly decisions, where to fish, deep sea, coastal or not at all. And whether or not to buy more boats. And with that, it was anchors away. There's a couple of options that we could buy early and then level off and try to sustain a catch to sustain a profit. We opted for a hook line and sinker strategy, greedily ordering four new boats while putting our first five on the high seas, where the fish were jumping, though the costs were high. Let's go fishing! At the end of year one, we were in the swim, with nine boats plumbing the deep. So you see that team two and team three are leading now. They each have assets of 3340, but team three only has seven boats, team two has nine boats. Two, mine, was netting fish and income at a furious pace.

But everyone was making money. It was in fact reminiscent of the glory days in fisheries like Gloucester 20 to 30 years ago. You could walk across the high ground boats. That's how many boats they used to be in Gloucester. Sam Favallaro, a retired fisherman, remembers. Every stall down the fish bay it was working, Gloucester was jumping. The real ways were all working, and we changed it up to work this thing. Everybody was working. Not any more though, the seafood staples of the past, ground fish like Haddick, Cotton, Flounder are growing scarce. On this day, wholesaler J.B. Wright took in 54,000 pounds of fish, only about 4% of it ground fish. The rest, you don't want to know. Tom Hill is a regulator with the New England Fisheries Management Council. The recent stock assessment says that the judge's bank stocks of yellowtail, codfish and Haddick are at the lowest levels in history, in history.

In this stock assessment, though it may not be perfect, it is an accurate reflection of the trends. If we go much lower, the stock assessment scientists are not guaranteeing that we won't have a total collapse of the fishery. In other words, there just might not be enough fish left to maintain the stock. And so we come to the classic economic problem, as true on land, as on sea, and famously described in a 1968 article by biologist Garrett Hardin, The Tragedy of the Commons. And we hope you won't think we've gone too far of field to illustrate it. A commons is a field in which the members of a local community can freely graze their livestock. No one owns it, everyone can use it. And this is fine, so long as the community is small and there's plenty of grass to go around. But when the community grows, so does the number of people grazing their animals. And eventually, though it may take a while to notice, the commons is overrun and overgrazed. The tragedy of the commons, in the words of the original article, is in the remorseless

working of things. That is, what makes sense for each individual spells ruin for the community as a whole. Now we could just as easily have done that explanation at sea, assuming, of course, the ability to walk on water and shepherd fish on cue, because what's true of the commons is just as true of the ocean, the tropical rainforests, and all other natural resources, no ownership and open access are a recipe for using up what you've got. Moreover, as catches become smaller, fishermen work harder to maintain their income, own our and other technologies, improve their efficiency, and it all just accelerates the remorseless working of things. Okay, number two, pass through superior force of intellect, left into the lake. At the end of year three, our company was doing fine, but there were early signs of overfishing. And Robert Orr, one of our competitors, tried to negotiate an agreement to cut back.

We're going with a number of boats on it, we're going to overfill this resource by about year six, we're all going to sit in here trying to build each other, and I don't want to be working out. To Joe Salisbury, my most competitive teammate and a former lobsterman, it sounded well a bit fish. Yeah, it hasn't dropped dramatically, and I think it'd be taken a lot of dollars out of people's block if you jump too soon. Let's go fishing! You see, it wasn't that we didn't all realize we had to regulate ourselves at some point. It's just that in the heat of business battle, we didn't really trust the competition to abide by handshake regulations. And frankly, we were more concerned about today's profit than tomorrow's potential problem, which it turns out is precisely the mindset that New England Fisheries Council has faced for years. The resubmission for the winter quounder has been disapproved, we will discuss that on the ground fish. These are appointed representatives of the fishing industry, charged with preserving the fisheries.

The council was set up in 1976 by the Magnussan Act, which banned foreign boats within a 200-mile limit. The council members themselves have closed grounds, limited both catches, and the number of days boats can fish, have even increased the mesh size of nets to let the little ones live another day. Despite their efforts, the catch has dwindled, faced with impossible choices. Some fishermen simply deny there's a problem. When activist Angela Sanfilippo questioned the scientific data, we tried to force the issue. I can't believe that marine biologists are actually making up these dire predictions. I'm going to say that they're making up, but remember, marine science is an assumption. That's what it is all about. We're working with Mother Nature and accepted biologists and scientists. They want to take the place of Mother Nature. It isn't like in the field, we plan the trees or we know many trees we're cutting, and we can actually see them. We cannot do that with the ocean. Of course, plenty of luster fishermen acknowledged the overfishing.

What was so striking is how many people denied that there was a problem. They're friends who do some of them on it. Could they get together and do something about it if they fish them together? Regulator Tom Hill. Whenever you have people who have an individual economic interest in a public resource, it's very difficult for them to perceive that by sacrifice that they have a long-term gain that they're competing with other participants who have unfettered access and by sacrifice individually, they never see the return. The way fisheries are managed historically throughout this country and the rest of the world, why the sacrifice upfront is very hard for fishermen to swallow. Meanwhile, back at the fish game, year four is just over, and if you'll pardon the partisanship, team two, now up to 15 boats, was leaving the other companies in our wake. The only glitch the size of the catch was dropping in deep water, so we decided to move more of our boats offshore.

Admittedly, team one's Robert Orr, the would-be negotiator, was beginning to sound more convincing as he tried again to concoct a formula for self-regulation. Right now, you have more boats than any other group, right? You'll get more profit than any other group. Can we cut the boat purchasing at this point, and can we go with the allocations of two-thirds and one-third, two-thirds deep sea, one-third coastal? Sounds like socialized species, that's a third. Joe Salisbury, our former lobsterman, finally came on board, and we thought everybody had agreed to a plan that would maintain our lead, but restrict fishing and stop buying boats. Unfortunately, Robert Orr's teammates apparently hadn't gotten the word. Hey, I got three boats per sale. Focus me a hundred bucks. So. Let's go, Frankie.

Let's go, Frankie. I'd like to put a clarification. Your team just bought the boats? My team just bought the boats. Now it sounds like the music that's just... Also, the remorseless working of short-term self-interest continued to take its toll. On the other hand, economics does make for adaptation. The Gloucester fleet, running out of prime species like cod, has a necessity diversified into such unlikely and unprephizessing preachers as the dogfish, a leading export to England, where it's the secret ingredient in fish and chips. But even dogfish looks good, compared to the latest hot species in Gloucester, the slime eel, which feels about as pleasant as it looks. Koreans skinned them and turned them into wallets. They also eat these suckers, and while slime eel may sound unappetizing to you, remember

tastes change? Lobster, a member of the insect family, was once garbage food in New England, lost and even passed a law against feeding it to your servants more than twice a week. Mr. became appealing when it became scarce, at which point it also became expensive, illustrating another compensation of economics, as catches of cod say have thinned the price of the fish has soared, keeping fishermen afloat. I'm going to sit down, I'm trying to work these nicely, you both stand up, somebody else take over and start negotiating this, it's not fun. By games end, with the offshore fishery also on the verge of collapse, we did reach an agreement, but it was too little, too late, the remorseless working of things. We had literally bankrupted the fishery, and we had a few last questions for Dennis Meadows. What are the kinds of people if you played this with? I've played this game with at least 200 groups in 25 countries ranging from, let's say, a group of 12-year-olds in Timbaleesi in Soviet Georgia, it was Soviet Georgia back in

those days, to senior United Nations officials. I played it recently with the Secretary of Agriculture for all the Northeastern States. Who did better? The Secretary of Agriculture did better than the 12-year-olds, right? Well, no, the Secretary of Agriculture managed to kill off all their fishing about four years. It was actually a little depressing for me to see that happen. This was a very well-informed team, most groups don't begin to take action until the catch is down so low that it's almost impossible for the fishery generation. I'd rather suspect that's what's happening off the Northeast coast now to say it simply. In each year, through intense negotiation and pressure and government incentives, the industry is able to force on itself a policy which, if it had adopted it three or four years earlier, might have worked, but now is no longer adequate. This year, they'll come up with a new policy which, if they had done it three or four years

ago, might actually have stayed off the decline, but now it's too late. When we asked Meadows one final rather self-serving question, whether Team Two had one or not, he wouldn't answer. I prefer not to put a lot of emphasis on who wins because invariably, we're talking about a set of people who really all lost. Collectively, they all made themselves poorer than they needed to be. Usually they all ripped off the fishery. And to say that one of the groups won under these circumstances is just a misnomer. Tomatoes, the punchline is that without management, everybody loses. Thus the key question becomes, how to overcome the remorseless working of things, a behavior pattern that he summarizes as stupid, the S is for small expectations, trying to win rather than pursuing a grander goal, T is for time pressures. I was always born in my whistle and telling you that the tide was about to go out.

Of course, that's true in real life also. There's enormous pressures on time. I'm trusting partners, a very low level of trust around the room. Poor examples. Come in to an exercise like this with a stalk of win, lose, competitive, beat norms. I, is simply inadequate understanding of the system. We didn't realize that strategies that worked early in the game wouldn't work so well later on. And finally, deep, dysfunctional norms. Our norms emphasize self-gain competition and winning it all costs, rather than trust, shared sacrifice, and the good of the whole. Now the orthodox economic response to stupid overexploitation is limiting access by, in effect, privatizing, granting exclusive fishing rights wherever possible, for example. Because owners it has felt well husband their resources. But as long as people have to work together, the competitive instinct will have to be harnessed. And so Dennis Meadows ends his presentation with the following demonstration, and we promised

the last visual metaphor of this story. The game is thumb wrestling. And if there's more than one of you, you can play along with us right now by trying to pin each other's thumb. In Meadows version, only for a moment, just like that. The goal is to maximize your pins in 15 seconds. Ready? Set? Go! Now the question is, are you using the typical competitive strategy employed by the team on the screen, which scored only one point? Or did you like Robert Oren, his fellow player, figure out a better way? The hope is that fishing fleets from Gloucester to Gaddask will also learn to cooperate before it's too late. The fear, of course, is that they rarely do. Next tonight, a declining dollar.

The Federal Reserve Bank tried for a second straight day to prop up the value of the dollar in world currency markets. It worked, at least for the moment. But the dollar has been on a downward slope against both the Japanese yen and the German Deutsche mark for some time. The question we now ask, how does the value of the dollar in international markets affect the dollars we all use on Main Street? Here to help us explain our Carl Weinberg, chief economist at High Frequency Economics, a New York financial consulting firm, and Christopher Ferrell, economics editor for Business Week Magazine. Welcome. Let's start with you, Mr. Weinberg. What's happening this afternoon with the dollar? Well, the Fed intervened twice today, having intervened once yesterday, what that means is they went into the market and they bought dollars from banks and from other institutions to try to prop up its price a little bit. Initially, the dollar rose because the Fed was buying dollars from the public. However, toward the end of the afternoon, the dollars continued to slide from its high levels during the day, even though the Fed was trying to prop it up. Before we get into why that might be happening, what does it mean to say they bought dollars?

What's the mechanism? How does this work? Well, the Fed just picks up the telephone and calls the bank and says, we want to buy dollars from you at a certain price. The idea is that by buying more than the market wants to buy itself, they can cause the price of the dollar to rise relative to other currencies. And why is the Fed intervening? Well, typically, if you look at the foreign currency markets, it's like a one-way train. It can go up and up and up or it can go down, down, down, speculators, pile on. And you can get a downward spiral in a currency, the dollar. So you want to stop that. Once the speculators think this is a sure thing, I'm going to make money off a falling dollar. The Fed will come in, it'll intervene, and it'll catch everybody's short. People are going to lose a little bit of money. There's a little bit of demand in that market. It settles things down, and the Treasury, the government is telling the foreign currency markets to look. We're drawing a line in a sand. We think enough's enough. We're comfortable with the value of the dollar, at least around these levels. And why now, Mr. Weinberg, why now? What happened?

I mean, I know the dollar reached the low, very low levels early this week, but why did it happen now and why did the Fed intervene now? Well, a cheap currency, a falling dollar, has good points and bad points. For people who want to produce goods to sell to other countries, a cheap dollar is very good. For people who want to produce goods to sell here in place of goods that we import from other countries, that's also good. A cheap dollar creates jobs. The Treasury knows that, and it likes that. In fact, it's the Clinton administration has promoted a cheap dollar for much of this year, right? That's exactly right. Right. And these of you, Japan, perhaps some commercial objectives, but also because a cheaper dollar does create jobs. But the backside of it is that when the US government goes to fund its deficit, it asks people both at home and abroad to buy its bonds. People from abroad are very nervous about buying US dollar bonds when the price of the dollar is falling all the time. So Treasury has to balance the need for creating jobs or the benefits from creating jobs on one side with the cost of financing the government deficit on the other side. Today they decided the line is here, the benefits don't outweigh the advantages.

It's time to stabilize the currency. Well, Mr. Farrell, the Fed intervened what three times before this year, and it didn't work. It didn't work. No, it absolutely did. Why didn't it work then? Well, the reason is if you were talking about the dollar and currencies, if we're really talking about the yen, that's what we're primarily talking about. Because if the dollars up against a lot of our other major trading partners like Canada or Mexico, most of Latin America, Australia, Britain, these are countries that we do a lot of trade with, and a dollar has done reasonably well. It's maintained its value against a lot of these currencies. But against the yen, we've fallen a lot. The financial markets are convinced that this administration has only one trade policy with Japan, and that's a lower dollar. And that's why I talk about these one-way trains. So if everyone believes that, they begin to behave that way, the dollar falls, and what the treasury in the Fed is really scared of is that you get sort of a market explosion. Everything gets in turmoil. This is to try to prevent, to say to the markets, look, we don't just want the dollar

to be going lower and lower against the yen. We do want things we do have. This is not our only policy against Japan. So as a consumer, what does a low dollar mean for me, and what does it mean if it's stabilized? What does this affect the average American consumer? Well, our basic cost of living index has a relatively small weight only about 10 or 15 percent for goods that are imported. So when you go to the grocery store, the fruits that are imported from Europe, the fancy cheeses, the wines, those prices will go up. When it comes to bread and butter and hamburger and fish and whatever, they won't be affected very much at all. Some big, very prominent items in the cost of living like automobiles, they will probably go up because of the large amount of imported automobiles that we have. But other important items in the cost of living like rent won't be much affected at all. So you'll see small increases in your cost of living, but probably not enough to scare anybody. And what about if I'm a manufacturer, Mr. Ferrell? How does it affect me?

Let's say I'm a manufacturer of something that has a fairly high percentage of imported components. Well, if that manufacturer has a problem, you're hurting because your cost base is going up. So all the international competition and this economy to sell goods and services, because we have the strongest economy in the world. So if you're a German manufacturer, you want to sell your goods here. If you're a Japanese manufacturer, you want to sell your goods here. Our manufacturers want to sell their goods here. So there's a lot of competition. So your costs are rising from these imported goods, which you end up doing is laying off some people. You got to lower your costs. That's where it happens. This is one of the impacts why we do see layoffs. To a large extent, what you're saying is that the lower benefits are exporters. Our companies that are exporting overseas, they are hiring people. They're doing better, lower value, and taller helps them. But if you are a company that imports a lot of goods, you're under cost pressure. You can't raise your prices in this economy. You've got to either lay off some people or hire contingent workers or figure out some way to lower your costs.

But rather, go ahead, sir. Just to add a point, though, it depends on what you manufacture. If your business is just importing goods and reselling them, then the imported goods are a very high percentage of price. So you're fine. But if you manufacture something, if you import goods and then add value to it, let's say you're a car manufacturer and you import kits from Japan and then you assemble them and you have a very high content of wages and your total costs and a very high content of capital and equipment, those things don't change. And on average across the economy, imports are less than 10% of the total wage costs. So while some individual companies may be hit very hard, or some specific industry may be hit hard, on average the impact on the cost is really not going to be all that great. In other words, we shouldn't be terrified that our cheaper dollar is going to lead to inflation. It may increase some costs in some specific areas, but that's a change in relative prices. It's not inflation. Well, as I understand it, please, both of you comment on this. The European view is that a dollar which falls is an indication that the economy is in trouble. But the American economy seems to be doing pretty well.

So why is the dollar falling if the economy is doing pretty well, please? Well, I can't find any correlation whatsoever between the strength of the economy and the strength of a currency. For every example, you can give me where it works. I can give you a counter example. Japan's economy is in a desperate depression. Their yen is soaring. Germany has been in a recession for the last two years. Their Deutschmark is rising. The dollar dropped like a stone during the go-go years of the Reagan administration. It rose like a rocket during the Reagan depression. So you can't really say that the growth or strength of an economy is directly related to the strength of a currency. That's a neat idea that we feel good about our currency because we feel good about our economy, but I can't find any support for it. So it's really not an indication of international disrespect for this administration's financial policies. When you talk to people who use that a lot, no one has faith in the Clinton administration. This isn't a very good government, but as you mentioned, the Japanese government has a lot of trouble and the Japanese yen is higher. What I think it really boils down to is inflation expectations. There is a strong belief that inflation is going to rise in the U.S., we have an economy that's growing.

Unemployment is down. So inflation's got to rise. It's had to have risen for the past year and hasn't, but this is the belief. So the dollar weakens, that makes everybody nervous, makes the financial markets nervous. That's going to lead to inflation. It's going to lead to these price increases that we haven't seen. But this is the psychology of the market takes over. And this is what we're reacting to, we're not reacting to a lot of economic fundamentals, we're reacting to an inflation psychology that's deeply embedded into the belief inflation's got to erupt. So you find it's a source. Does fear of inflation mean that we're going to see higher interest rates pretty much inevitably. That's what the wire reports are saying. That seems to be what's baked into the market. All the talk after the intervention was, well, now the Fed has to raise short-term interest rates. What we'll talk is that tomorrow the raise short-term interest rates, perhaps by half the percentage point and what the market really wants, this economy's growing strong. There's no inflation. But the market is talking that we really need a full percentage point rise in short-term rates by the Federal Reserve either tomorrow or on November 15th, which is when the Federal Open Market Committee, that's the meeting of the Fed that decides whether or not they're

going to raise their lower interest rates. We've got to do this to reassure the currency traders to reassure the financial markets on inflation. Well, we have just a little bit of time left, and I want to know whether you think the intervening intervention, this one today and yesterday is going to work. I don't think so. There are certain very neat tactical elements in what the Fed did today to get some very strong message to people who were betting against the dollar and the— What tactical elements? Well, what they did was they came in with no provocation, totally by surprise, and took people who had bets that the dollar would get weaker and completely wiped them out. And while that's very painful to them, it's a lesson to the market that it's expensive to bet against the dollar. But overall, you know, the Bank of Japan has been buying dollars at the same size that the Fed bought dollars today and yesterday. They've been doing it every day for the last few months, and it hasn't done very much to keep the end down. The market is many, many times bigger than the size of official intervention. So other than tactical aspects, I don't think in anything other than the shortest term they can keep the dollar up.

Is it dangerous in any way if it doesn't work? I mean, is it something we should be worried about? Well, the danger is that you lose credibility, and that's the real danger that the Federal Reserve loses credibility. The Treasury loses credibility, but I'm reasonably optimistic that this may work a little bit more than some of the previous ones, and the reason is the inflation outlook. And the inflation outlook still is good. The economy is doing strong, and those economic fundamentals will provide some support for the dollar. Well, Mr. Weinberg, Mr. Ferrell, thank you for being with us. Thank you very much. Finally tonight, S.A.S. Richard Rodriguez, editor of the Pacific News Service, speaks of a lesson learned in San Francisco. After a city has been devastated by nature or war, what do its citizens know? On the 11 o'clock news, a hurricane washes ashore, tornadoes tears down Main Street. The survivors surveyed the debris, but with what knowledge? In 1989, when San Francisco was the disaster seen on the evening news, I remember seeing

a woman standing over her collapsed house in the Marina district. She shrugged. What the earthquake could talk to her, she said, is that a house is a thin wall which can come down in a moment. She saw the world now as a saint might. All is vanity. Five years later, the broken buildings in the Marina district have been repaired or replaced, but I have not forgotten that woman and what she knew. Yet there also is this. The Embarcadero, the Spanish name for the war is being recast as an elegant boulevard. Five years ago, a monstrous freeway is doing, where now there is light. Perhaps the region of this country that best knows tragic impermanence is the American South. One mother's remember parents who saw villages, towns, entire cities destroyed by the civil war. The ancient cities of the world, like Rome, reassure us that the man made survives. But visiting Tokyo a few months ago, I was struck by how casually the Japanese assume

that the city that exists today, the vast construction called Tokyo, would probably be torn down and replaced in a few decades. In the city that is known earthquakes and bombs, there is no permanence. The Embarcadero used to be a place for stevidors and sailors. City people did not promenade along the walkway. In the 1950s, when Californians were seized by the postwar enthusiasm for movement and freedom, state bureaucrats constructed a two-tiered freeway to connect the bay bridge to the Golden Gate Bridge. The citizens woke up one morning and realized that their city had been cut off from the bay. The Embarcadero freeway led to a citizens revolt in San Francisco against all freeway construction. San Francisco is a city of just 750,000 people, but surrounded by a metropolitan region of over 6 million. The city has never lived easily with its suburbs.

That is a reflection both of its provincialism and its originality. Last year, after the Los Angeles earthquake closed the Santa Monica freeway, crews labored day and night to repair the damage. In San Francisco, freeways have stood unfinished, like dangling particibles for over 30 years. Nearly five years ago, the earthquake caused brick walls to fall, office buildings cracked, wooden houses caved in, but also the ugly freeway was damaged. Early after months of bureaucratic wrangling, the Embarcadero freeway came down. San Francisco saw a man-made mistake undone. At a time when so many young people in the city had died of AIDS, when the homeless leapt on downtown streets. At a time when ugly, tall buildings proclaimed the triumph of mediocrity, there suddenly was a broad boulevard of light. San Francisco's pretensions have always been Yankee, materials complained to rages and

the papers concerning the palm trees being planted along the Embarcadero. People say they belong in Los Angeles, but the city was Mexican before it became American, and the name for this boulevard is after all Spanish. At the end of that old movie, San Francisco, Jeanette McDonald stands with Clark Cable and Spencer Tracey on Twin Peaks, overlooking the ruins, the city destroyed by the 1906 earthquake. As she sings the city's oddball anthem, a rebuilt San Francisco appears on the screen as yet by magic. Years later, San Francisco would again be shaken. The city would again realize impermanence, but if all things man-made are impermanent, then so too is the ugly, and the shadow cast by hideous freeway is as impermanent as a lovely house. From its tragic knowledge, San Francisco constructs a stylish promenade, where middle-aged joggers run like children under a cloudless sky.

I'm Richard Rodriguez. Again, the major stories of this Thursday, for the second straight day, the Federal Reserve bought dollars on foreign exchange markets to protect its value. A Florida jury recommended the death penalty for a man convicted of killing a doctor in his escort at an abortion clinic. And tonight, a South Carolina mother who said her two children had been kidnapped and a carjacking was arrested and charged with their murders. Good night, Elizabeth. Good night, Jim. That's the news hour for tonight. We'll be back tomorrow night with political analysis by shields and she go among other things. I'm Elizabeth Farnsworth. Good night. Funding for the McNeil-Lera news hour has been provided by the Archer Daniels Midland Company. With ADM ingredients in thousands of consumer products, it's no wonder ADM is called supermarket to the world.

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