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annenberg media ♪ annenberg media ♪ there's an old saying that the best things in life are free -- things like fresh air, sunshine, clean water. a company in minnesota found that "ain't necessarily so." what happened, and who should pay the cost of cleaning up the environment? and what happened when the environmental protection agency ordered los angeles to clean up its smog, no matter what the cost? global warming -- will it be a disaster? should we spend billions to mitigate climate change or wait and see what really happens? since the late 1960s, there has been a consens among americans that the air we breathe and the water we drink should meet certain standards of cleanliness. but, like most things of value, those standards come with a price tag attached. pollution -- how much is a clean environment worth? economic analyst richard gill and i will examine that question on this edition of "economics usa." i'm david schoumacher. the united states has always been blessed with vast natural resources, including some things we used to take for granted, like fresh water and clean, healthy air. but not any longer. in the past few decades, we've learned that industrial activity carries with it a substantial environmental price tag. if we want fresher water and healthier air, somebody is going to have to pay for it, as we found in the tiny town of silver bay, on the shores of lake superior. 30 years ago, this part of minnesota was practically a wilderness area. then, shortly after world war ii, some farsighted entrepreneurs decided there was money to be made in a rock called taconite, found here in abundance, near the famous mesabi iron range. they called their venture the reserve mining company. ruth erickson remembers the early days, before the trouble started. anybody that came here to work was in -- [ dog barks ] shush! -- was in bad shape economically. and reserve built the town, they furnished us with our medical facilities, fire, ambulance, everything. um... i can't say enough good things about reserve mining. schoumacher: taconite contains iron. not a lot, but enough to make a profit, if you know how to crush it and separate the grains of iron from the rest of the rock. and reserve knew how. but the refining process requires vast amounts of water and produces 2 tons of sandy residue, called tailings, for every ton of iron pellets. and that creates a problem. those tailings have to be put somewhere. and for years, the cheapest place to put them was the lake. that upset a lot of people, like environmentalist alden lind. the save lake superior association started in late '69 and came about largely because of concerns of people who lived in the silver bay vicinity about the impact of the tailings disposal on lake superior. schoumacher: it wasn't long before a new federal agency got involved. dr. phillip cook remembers. cook: i think there was kind of a gut reaction of people living in the area, who were... more environmentally concerned, that something that big was a problem. they didn't really, at first, have any specific concerns, other than it looked like the lake was getting cloudy and there was obvious turbidity being caused in the immediately vicinity of the discharge. but, you're right, there was a feeling that this was a lot of material going in the lake. schoumacher: uneasiness soon turned to fear. in 1973, word got out that the tailings might contain asbestos, a known carcinogen. within a few weeks, much of the population of duluth, 60 miles to the west, had stopped drinking tap water. but was there a problem or wasn't there? cook: we knew we had tailings in the water. we knew that amphibole mineral was an important fraction of these tailings particles. we knew that some amphibole minerals, particularly the grunerite, which was in the tailings, can occur as asbestos, and that is associated with human health hazards, particularly for cancer. um... what we didn't know was whether these particular amphibole particles in the water occurred as fibers. so we took samples of the water and looked at it by electron microscopy and saw that, indeed, some of the amphibole particles were, indeed, fiber shaped. that was kind of a shocking revelation to us. oh, i think it alarmed an awful lot of people. i think the first response was for an awful lot of people to get very active, very quickly. there was a petition, i think, with something like 10,000 names presented to the mayor of duluth insisting that something be done about this. schoumacher: duluth responded by building a new filtration system, but that didn't stop the protests. and we are, too, we're their neighbors. we all drink out of the same lake. it's all our country. if... uh... i don't know, people have to draw a line someplace on what kind of an environment they want to live in. schoumacher: that line was finally drawn in federal court. for the next four years, claim followed counterclaim. the answer's definitely yes, it'll delay it. hearing followed hearing. no. environmentalists produced expert witnesses who said the tailings were dangerous. reserve produced experts who said they were not and hinted that they might be forced to shut down the plant if denied access to the lake. silver bay residents saw an economic catastrophe in the making. one-dustry town. everything is dependent upon reserve mining operating. schoumacher: in 1977, the federal court handed down its decision. after years of legal maneuvering by all parties, reserve reluctantly agreed to keep the silver bay plant open and to build a tailings disposal site seven miles inland from the lake at a cost of nearly $400 million. i really have nothing to say at this time. schoumacher: today, the water in these parts is certainly cleaner than it used to be, and probably safer, and reserve is still in the taconite processing business, with all the economic benefits it brings to silver bay. but the solution to the problem didn't come cheap. and it might not have come at all if the courts hadn't intervened. the results of the reserve mining case showed that society was no longer willing to take a vast natural resource, such as lake superior, for granted. and it also showed that the courts were now willing to force business to spend large amounts of money -- in this instance, hundreds of millions of dollars -- to clean up their act. the case also illustrated the way the american economy in the past had permitted business to overlook the social and environmental costs of industrial enterprise, costs which don't often show up in a firm's bottom line. we asked economic analyst richard gill to explain why the government should get involv in cases such as this. the government has to get involved because a market economy can't handle them. even the most devout proponents of a private, free enterprise system recognize the need for public intervention in situations like that illustrated by the reserve mining case. technically speaking, the problem is what economists call negative externalities of production. this is rather fancy jargon, but the central idea is clear. when a business firm produces iron, or any other product, it has certain costs -- wages, rent for land, and so on -- that is has to pay for. but it also may impose other costs on society -- in this case, the pollution of lake superior -- for which it does not have to pay. these costs are external to the firm and, indeed, external to the supply and demand price system generally. this is important because usually economists are quite impressed by the efficiency of the price system. when we draw supply and demand curves for a particular product, we're not only determining the price of the product, here, and the quantity of the product produced, here, but we're also making a statement about costs and benefits. roughly speaking, this demand curve shows how much we consumers want the product, and the supply curve tells us how much it costs the society, in terms of scarce resources, to produce the product. at the intersection of the two curves, the market exactly balances the added satisfaction we get from the product with the added cost of producing it. utopia. but hardly utopia when we take a swim in a befouled lake or, as one songwriter put it, when we brush our teeth with industrial sludge. these external costs change the whole picture, for, from society's point of view, the real costs of producing this product are not reflected in this private supply curve, but by another curve up here, or even way up here. and the problem with this new curve is that private business firms don't have to take it into account. they don't have to pay these additional costs. and this is why the government has to step in, though how it should step in is a slightly tricky matter. [ chanting "save our earth!" ] schoumacher: 1970 marked a turning point in this country's battle against pollution. people were upset about america's deteriorating environment. they let our lawmakers know how they felt on april 22nd -- earth day. ♪ the sun shine in... congress quickly passed a series of amendments to the clean air act which established higher air quality standards and faster timetables to reach them. they also created an agency to enforce the new laws. and in swearing in mr. ruckelshaus, i know that the attorney general is very sorry to lose him, but the nation is very fortunate to get him as the first administrator of this vitally important agency. i'm very honored, mr. president. i promise to do the best job that i possibly can. [ applause ] was the feeling back then that you could do a 100% job of cleaning up the environment? yes, and a lot of that is reflected in the laws that are still on the books. there was a sense that we knew what the bad pollutants were, we knew how to measure them, we knew what the health and environmental effects of those pollutants were. we had technology that was reasonably available at a reasonable cost to essentially eliminate that pollution. that was -- all of that were assumptions written into the law at the time. and many of those assumptions are still there. and by the way, they're all wrong. well, let's take the clean air act. the intent to eliminate smog, how was that supposed to work? well, the elements of smog are nitrogen oxide and hydrocarbons that interact in sunlight, they combine in sunlight and cause photochemical oxidants, or smog. now, those two pollutants -- hydrocarbons and hydrogen oxides -- come primarily, in places like los angeles, from mobile sources -- automobile. schoumacher: but how was the epa supposed to elimate smog from a city whe the car is king? county svisor kenneth hahn had been wrestling with the problem for years. well, people in los angeles loved cars. uh, you grew up liking cars. you'd go over to a high school, you'll see more cars in the parking lot than you do bicycles. los angeles county has got five million trucks, buses, automobiles, motorcycles, and motor vehicles polluting the air. we're in a big garage. no wonder here, on certain days, the people will say the smog is harmful to their health. it is. a neighboring community turned around and sued los angeles, saying, "you're dumping on us." what was that all about? yeah, it was riverside. it is just north of los angeles, where -- this was back in the early '70s -- the parents of the children who couldn't play football in the afternoon because the smog levels were so high that they were ordered indoors finally got agitated enough that they sued the city, they sued the federal government. i was ordered by a court out there to impose, as the clean air act told me to, a transportation control strategy. they said the automobile controls are not going to make it by 1975. the law says you have to ensure that these standards are met by that period, and if you can't do it by imposing the controls on the automobile, then impose transportation control. we couldn't figure out what to do. the court threatened to hold me in contempt. it sort of boiled down to an issue of their mobility versus my freedom, so i flew out there and announced that 80% of the cars are going to have to get off the road. i am here in los angeles because, in the implementation of the clean air act, los angeles is really in a unique position. schoumacher: the epa's plan wasn't greeted with much enthusiasm. it would have been a federal disaster area. it would be as bad as a hurricane or a flood or an earthquake. to tell the people they can't use their automobiles to go to work or to go to school or to go to church is crazy. the chamber of commerce out there calculated that 400,000 jobs would be lost and there would be billions of dollars in adverse effect to the economy. had epa made any kind of calculation on that? under the clean air act, we were not allowed to take that into account in announcing a transportation or a land use control that would achieve the standard. removing that number of cars would have just devastated it -- economically. the air would have been cleaner, but there wouldn't have been -- people wouldn't have been able to get to the hospitals and other things. what was the philosophy behind the law that said, "we don't want to count cost"? the philosophy is just as i stated at the outset, that we thought we knew what the bad pollutants were, that we knew how to measure them, we knew the level at which the health and environmental effects occurred, we could get them below that level with a margin of safety, and we had the technology that could achieve that at a reasonable cost. all those assumptions are wrong. and if those assumptions are wrong, then the law that embodies those assumptions is bound to drive us to an irrational result. and it's just particularly obvious in a case like los angeles. schoumacher: as it turned out, the law which drove us to an irrational result was amended. los angeles was given a waiver, which allowed the city more time to clean up the air and lowered the standards it was expected to meet. today, the city of the angels drives on and on. the air isn't as clean as it would have been with 80% of the cars off the road, but neither is los angeles an economic basket case. the story of los angeles versus smog was only one of many conflicts that developed during the 1970s. cleaning up the environment, no matter how beneficial, wasn't going to be as easy, or as cheap, as we first thought. but does that mean we shouldn't try to clean up pollution? what are the economic principles involved? we asked economic analyst richard gill. well, one principle economists don't thk too highly of is what we might call the principle of perfection. it's a natural approach. we have these harmful external effects, let's get rid of them no matter what the cost. the 1973 plan for los angeles was a little like this. smog is harmful to your health. let's get rid of it, virtually outlaw driving for six months of the year. there are countless examples of this approach. nuclear generating plants involve certain hazards. let's ban them completely. alcohol leads to driving fatalities. let's bring back prohibition. the trouble with this approach is not only that it usually doesn't work -- the los angeles plan had to be modified -- but that it's bad economics. in our society, clean air has become a product. it brings us certain benefits, but it also has certain costs of production. and what economists want to do is to measure these benefits against these costs, taking, of course, all external effects into account. these look like ordinary supply and demand curves for our product -- cleaner air -- measured by some reduction of particulate matter, noxious fumes, and the like. but these curves do take external effects into account and are curves of social benefit and social cost -- more accurately, marginal social benefit -- msb -- and marginal social cost -- msc. what these curves tell us is that, as we produce cleaner and cleaner air, moving towards the right, the added social benefits begin to decline and the added social costs begin to rise. this makes sense intuitively, i think. reducing the first and worst air pollution brings us a lot of social benefit. getting extremely clean air is somewhat less important. also, as the los angeles case shows, producing somewhat cleaner air is not too expensive, while producing very, very clean air would have been disastrously costly. so what the economist says is apparently fairly simple -- keep on cleaning up the air until the added -- the marginal social costs begin to exceed the added -- the marginal social benefits, until the intersection of these two curves. i say "apparently simple" because measuring these social costs and benefits is not always that easy. schoumacher: from the 1990s and into the new millennium, we saw record floods, record high temperatures, more crop failures, longer droughts, melting polar ice caps, rising seas. most climatologists, though certainly not all, rethat thrising tperatures of the past several decades -- a phenomenon known as global warming -- are due to human activity. but there's more general agreement that the social and economic ramifications of trying to do something about the problem are enormous. both politicians and economists hotly debate the costs versus the benefits of how much to do and when to do it. to solve global warming, or to slow it, is likely to be very costly. and we'rtalkg about not just mlions of dollars, but billions of dollars and ybtens of billions of dollars every year that we would have to spend to make a significt dent on the trajectory of climate over the years to come. but the costs of doing nothing are potentllcatastroph, because the changes in the climate which will occur are generally irreversible. schoumacher: december 1997. at the environmental summit in kyoto, japan, the world's developed countries pledge to cut their greenhouse gas emissions. stuart eizenstat was chief u.s. negotiator. eizenstat: the major agreements that we reached were for the developed countries to take specific targets -- on average, a reduction of about 5% from 1990 levels -- to be reached in the year 2001. schoumacher: in january of 2001, a new president assumed power and took another look at the kyoto agreement. president bush decided it would hurt the u.s. economy and announced he would not sign the accord. the decision by the united states not to participate in the kyoto accords touched off an uproar in european capitals. volatile protestors gathered outside the european union in gothenburg, sweden, in june of 2001, where president bush answered questions from the european press. we didn't feel like the kyoto treaty was well-balanced. it didn't include developing nations. the goals were not realistic. however, that doesn't mean we cannot continue to work together and will work together on reducing greenhouse gases. one can never forget that the united states is responsible for 25of the world's emissions of greenhouse gases. schoumacher: natural scientists have pondered questions associated with greenhouse warming for a century, but the political, institutional, and economic issues have only begun to be considered. professor william nordhaus of yale university developed the first model of the economics of climate change a decade ago. now there are dozens of modeling groups worldwide. economic computer models permit governments to assess costs versus benefits of the kyoto protocol and alternative approaches. nordhaus: we want to know what the relationship is, historically, between the economy and the forces that are leading to climate change. and then in the future, we want to get our best, best guess as to what's going to happen to the economy and to the climate, and to the impacts of that on human societies over the decades to come. it's as simple as that. one of the conclusions of these analyses is and was that the kyoto protocol was neher going to make a big difference, nor very efficient. woman: how do you put a cost on new malarial outbreaks that are as a result of mosquitos having a larger range that they can live in because of changes in temperature? or the fact that mosquitos bite more when temperatures are one to two degrees higher? how do you put a cost on the relocation of millions of people in bangladesh that live at or below sea level? it doesn't make sense to just completely overturn your entire economy, because this is just one of the problems, just one of the threats we face. eizenstat: the ice caps which are going to melt aren't going to somehow reformulate. the sea levels which rise aren't going to suddenly recede. so that the damages which are likely to occur are already on a trajectory. what we need to do is interrupt that trajectory before it becomes too late. so, sitting back and doing nothing is not a prescription for reducing costs. it's a prescription for having catastrophic economic as well as social and environmental impacts. schoumacher: as the debate continues, scientists are searching for more accurate ways to forecast climate change and pinpoint its causes. this in turn will allow economists to refine their assessment. in november of 2001, the european union, along with japan and canada, ratified the kyoto accords, but the united states pulled back. still, it is expected that the differences eventually will be overcome and the entire international community will work together. for more on cost versus benefit as a policy tool, economic analyst nariman behravesh. unfortunately, the debate about global warming has generated more heat than light. environmental groups assert that global warming is an irreversible disaster that overwhelms all other problems that modern society faces. opposing groups assert that the earth has been on a warming trend for the better part of the last 500 years and that manmade emissions have not contributed much to this trend. environmental groups minimize the costs of implementing the kyoto accords. many business groups are concerned that such measures would hurt growth and raise the unemployment rates. the key economic lesson here is that resources are, indeed, limited. this means that we need to figure out cost-effective ways of dealing with global warming, as well as all the other problems facing our global society, including but not limited to poverty, disease, education, and national security. the good news is that we have made progress over the last couple of decades in improving the environment. few people would disagree that further improvements are needed. however, the benefits of these improvements need to be balanced against their costs. one challenge for both the supporters and opponents of the kyoto accords is to come up with better, and less exaggerated, estimates of the costs and benefits. america didn't get dirty overnight, and it's not going to be totally pure tomorrow. but thanks to citizen protest and government response, the country's environment is cleaner and healthier than it was back in 1970 when we first celebrated earth day. and now the challenges are even greater. but along the way, we have learned that if we want a cleaner environment, the way to get it may not be to take every last bit of pollution out of the air, the water, and the earth, but instead, to look for levels of cleanup that provide adequate safety at a price we can afford. this is david schoumacher. i'll get that one. must be careful. well, that's a nice picture. come on, anna. ok. announcer: foreclosure doesn't affect just you. it affects your whole family, too. if you've fallen behind on your mortgage, we can help. call 1-888-995-hope. because nothing is worse than doing nothing. annenberg ♪ annenberg media ♪ they were immigrant garment workers-- uneducated, unskilled, and underpaid. how could they fight for a living wage? after publishing over a century, the prestigious new york herald tribune closed during a strike. did the union kill the herald tribune?

annenberg media ♪ annenberg media ♪ the american economic machine. one man, one company, had a monopoly of thamerican oil industry. could anything break it? at a time when the government was breaking up a monopoly in oil, why did it sanction a monopoly in the telephone industry? would antitrust laws still apply in a new economy whose major product is intellectual property? monopolies -- who's in control? with the help of our economic analyst richard gill, we'll find out on this edition of "economics usa." i'm david schoumacher. we like to think of our economy as one that runs on competition. for instance, we can choose the brand ofasoline we buy. if one station sets its prices too high, thene can simply go across the stet if one station for a lower price.o high, if enough drivers pass the high-price station by, sooner or later it goes out of business. of course, if in order to attract business a station sets its prices too low and can't cover costs, sooner or later it'll go out of business, too. but what happens to prices if one company, or one person, controls all the gas stations? that was what the country faced in 1890. the company was standard oil -- the man was john d. rockefeller. this was the infant oil industry john d. rockefeller saw after the civil war. drilling equipment was hand- and foot-operated in those days and available cheap. anybody could join the oil rh, and anybody di with thousands of small-scale prospectors, drillers, and refiners competing, the supply of oil was plentiful. prices were low, and so were profits. rockefeller had been doing well as a cleveland produce wholesaler, but he thought he could do better in oil. ruth sheldon knowles came from an oklahoma oil family. and her book "the greatest gamblers" told the industry's history. rockefeller stayed out of the drilling end because he didn't want to lose any money. he was the one who always wanted to -- he wanted to make the money. and when he saw that there was such a thing as drilling dry holes and you could lose money, it was obvious to him in the beginning, that there was going to be as much money lost in looking for oil as there would be made by finding it. schoumacher: rockefeller bought the oil that other men drilled, refined it, and sold it. by 1869, he had the largest refinery in the country. and a year later, standard oil of ohio was born. when competition squeezed profit margins, rockefeller squeezed the competition. willing competitors were bought. unwilling competitors found themselves cut off from railroads, pipelines, and credit. by having the monopoly that he had originally -- which in refining and in pipelining -- he was able to control the price of oil for the producers. and the independents hated rockefeller. for example, there was an incident of a farmer who stubbed his toe on a rock and he said "damn the standard oil company." everybody blamed the standard oil company for anything that happened. under rockefeller's "guidance," the industry quickly became less crowded. as competition dropped, then disappeared, rockefeller set prices where standard could make the highest profits. standard oil and other monopolies like u.s. steel, general electric, at&t, and international harvester, became price makers. but their methods left some bruises. georgetown university law professor thomas l. krattenmaker. the standard oil trust was formed in 1882, and that led to widespread public concern. and it was that public reaction to the trusts that led to the passage of the sherman act in 1890. the sherman act made it illegal for any one firm to obtain a monopoly. that is, to get complete control over the production of all the goods in one market. and secondly, the sherman act made it illegal for firms to get together and agree on the way in which they would compete. for example, by setting prices or dividing markets or determining which customers they would deal with. the sherman act was one of only several choices that could have been made in 1890. congress could have chosen to nationalize the trusts. it could have chosen to set up a large government department to oversee the behavior of the trusts or even to run the trusts in cooperation with private enterprise. and those are devices that are widely adopted in other countries around the world. instead, what they did is they harkened back to the american belief in leaving power in private hands, but dispersing that power. changing economic and historical trends is like turning around a huge ocean liner. it's not something you do quickly. congress may have set the course when it passed the sherman antitrust act, but it was 20 years and four presidents later before the supreme court finally broke up standard oil. even then the court didn't outlaw all monopolies, just those that were unreasonably anticompetitive, the so-called "rule of reason." but by the turn of the century, mighty standard was under attack on another flank. the enemy -- a ragged band of texas and oklahoma wildcatters d roughnecks. their ammunition -- vast new southwestern oil discoveries. the first battleground -- spindletop. the year was 1901. dallas oilman robert goddard. my father, charles goddard, moved down here from ohio in 1901 when spindletop opened up. well, he was a driller at first. you'd call him a tool pusher, i guess. he was the one that ran the rig and that knew how to drill for oil. and there were a very few people in those days that drilled. the oilmen had to move where the oil was. and usually there was no city there. tent cities sprung up. and, uh, little communities with dirt streets. and maybe some board sidewalks. but, uh, it was a rough place to live in. schoumacher: what difference did spindletop really make? goddard: the biggest difference was the amount of production that they found they could obtain out of one well. if you can make 100 barrels a day or 1,000 barrels a day, now you're in an economic -- a viable business. you really have a product to sell. once you had real production, i would say, that was the end of any monopoly. by 1911, rockefeller's command of the market was shattered, competition from western oil, from refiners like gulf and texaco, had broken the standard monopoly. and the sherman act had ended the era of the big trusts. the market and the people had delivered the same message. free enterprise depended on competition for resources like oil and for consumers' dollars. monopoly power over production and prices couldn't be tolerated. economic analyst richard gill explains why monopolies like standard almost always result in low production, high prices, and high profits. the complaints against standard are based on the central economic critique of monopolies. they keep output too low, and their prices and profits are too high. when rockefeller went into the oil industry in the 1860s, it was competitive. thousands of competing firms, each of which was too small to affect the price of its product -- oil. they were price-takers, as economists called them. meaning that their price was set in the market by supply and demand. if the economy-wide demand curve for oil looked like this and the supply curve looked like this, then price would end up at this level -- $9.50 a barrel and output would be here, say, 2 million barrels. because of competition, each firm would be able to make only ordinary profits. that is to say, just to cover its costs. now the thing about monopolists, like rockefeller in the late 19th century, is that they happily take control of the whole market. faced with the power of such a giant firm like standard oil, competitors find entry into the industry virtually impossible. this means that this single monopolist faces the same economy-wide demand curve as all those thousands of competitive firms had. the only difference is that he doesn't have to take the market prices given. he is a price-setter and not a price-taker. and he will certainly find it in his interest to set this price well above the competitive supply and demand level. he does this, say, by restricting output to here and selling at this price of $14 a barrel, well above the competitive level and well above his costs. this means he will be making not just ordinary or normal profits, but excess profits. but why does he stop at $14? why doesn't he raise the price up to $15, $16, perhaps way up here? one fairly obvious reason is that after a time the loss in sales may hurt him even more than the higher price gains him. he is ultimately trying to maximize profits, not to take the consumer for all he's worth. still, there is no doubt that the consumer will be gouged pretty well, that output will be restricted, and that profits will be abnormally high. on all three counts the robber barons of the old days stand convicted. though, as we shall see, there is a bit more to the monopoly's story than just this. ♪ hello, central, hello, central ♪ ♪ can't you see ♪ kindly hurry, kindly hurry just for me ♪ ♪ please do get me san francisco ♪ ♪ someone's waiting all alone schoumacher: perhaps more than any other company,llo the phone company made the connections that pulled us together. but ma bell was a monopoly. on the other hand, is there such a thing as a good monopoly? and if there is, how do you control it? and if the government allows a monopoly, is it committed to it forever? well, for more than 60 years, the government gave the telephone company one set of answers. alexander graham bell's original patents expired around the turn of the century. almost every city had two or three telephone systems, so callers needed two or three phones to be sure of being able to call around town. competition meant lower prices and lower profits. and bell fought back. it slashed rates to undercut some competitors and bought others out. others were cut off from equipment or from the long distance network, which bell controlled and which only bell could afford. wounded independents began asking the government to take bell to cot under titrt laws the way it had standard oil. then in 1914 at&t president theodore vail sent at&t vice president nathan c. kingsbury to washington. he set up a deal that would create what vail called "a natural monopoly." we asked picard wagner of at&t what was in the kingsbury commitment. the key part of it, of course, was the commitment to refrain from buying up any more independent telephone companies, that it would provide long distance connections to the independent, which means the non-bell companies, which then existed. mr. wagner, what do you think prompted theodore vail to give up the fight, so to speak, and decide to go into an agreement with the federal government? at&t got the government off its back. and with the kingsbury commitment, we were able to go ahead and set up the long distance network. and we were assured that the government was not going to come in and take away from us that long distance network. schoumacher: henry geller, former general counsel of the federal communications commissio was one of the government's key telephone policymakers. well, i can understand what was in it for the phone companies, buy why did the government buy this arrangement? the government bought it because what he promised them was universal service. he as going to -- at reasonable rates -- he was going to -- as a monopoly he could expand, give this integrated end-to-end service. it was good service. remember, it's not a cliche -- the u.s. had the best telephone service, and still has the best telephone service, in the world. when you consider back then with the mkrers and l of the trustting that was going on, this almost seemed to run counter to the currents of those times. well, but even then, i want to go b back something. vail may actuay have been right. remember that the only technology then is the wire. how many of them are you going to string? it's very expensiveonly technoloto string it.e wire. you're not going to string two down the street. there are economies of scale. and you will end up with one company buying out the other. schoumacher: how did the other side of the kingsrycommitment work? w effectively did the goveme regu the phone company? of the kingsrycommitment work? , if you thategulationllysm gosg of telsystemecame veryifcuo doextremely difficu. in a nutshell, i think that regulation failed at all times. schoumacher: this was the at&t we grew up with, the benevolent ma bell holding families together. and why are you crying? because joey said "i called just 'cause i love you, mom." schoumacher: but by the 1970s and80s, not everybody thought that mother new best. what on earth are you crying for? have you seen our long distance bill? if your long distance bills are too much, call mci. sure, reach out and touch someone, just do it for a whole lot less. the bell monopoly began with technology. and then technology from the bduring wor war ii,nded it the bell labs had developed microwave technology, the ability to send sound 2. but then in the 1960s a couple of men namedjackn came up with an idea on how to use those microwaves. i came up with this idea to put this microwave fromhicago to st. louis, not compeith at&t, but expan our two-way radio busiss find more customers. so we filed an appcation with the fcc. and within a few weeks, at&t, illinois bell, southwesrnel geratelephone eleconics, ananwestern union,eeks, at&t, alfid petions bell, toeny ouapications. so to get the money to build this thing, in '68 we brought bill mcgowan in to do the financing. when i investigated it i thought at the concept, if iwas change could make sense not indidual ones, but a naonwide sysmhooked . the ability to be able to provide as aompetitive service to what had been up to then a mopoly, awhatou had was aevolutiononer. inowelecommunications went about its business of switching and of communicating betw. d the revolution - the were really availableve, thto everybo. -- it wasn'liketringing aire. and that made possible the competition. but if the bell ng distance monopoly is dead, the idea of a natural monopoly lives on. across the country, when cities and states decide to set up the ground rules for local phone service or electric power, they generally decide that under tircumstances, a regulated monopoly is their best buy. w hend his colleagues view this term "natural monopoly." basically what we're talking about here is a fall in cost as we produce more and more of a product, what economists call economies of scale. in most industries, after a certain level of pr, a business firm's costs peunit of output tend to rise. but they may not do so. because telephone customers need to be connected to each other, it may be very expensive to have several small-scale telephone networks servicing a region instead of just one larger one. foe same kind of reason, a in producing electricityrr a instead of just one larger one. than a much gger one wou. that is to say that over the relevant range of production, the costs per unit, the average cost of production, might look like this, sloping downward as one company produces more and more units of telephone service or electric power. when we have falling average costs like this, we have a naturamonopoly. it doesn't make sense to bring in competitors since then everyone will have to produce not here, but at low levels of output, that is, up here, where costs are high. incidentally, although natural monopolies, like at&t in the old days, are often huge firms covering the entire nation, theyeed not be so. it really depends onhe sizeng tof the market involved. thus you couldave falling average costs for local telephone service in a given region, or for an electric utility serving a paicular city. where natural monopolies exist, as in these cases, some form of regulation does seem to be the correct answer, indeed, the only way to ensure that necessa services are available at reasonableoes prices and fair rates of return. indschoumacher: cnces arensure if you're using a computer anywhere in e world, it's running on a microsoft operating system. microsoft corporation is the world's largest software company. it's in these lastver six y, technology has really swept the worl schoumacher: every year for the last decade, microsoft's share of the mke fopeonal computer operating systs has stood above 90%. was microsoft's unprecedented success due to its superior innotion and marketing prowess, or was iabusing its monopoly power to stifle competitio some of microsoft's business practices raised serious questions with its competitors and with the government. the united states government decided to file an antitrust lawsuitgainst e microsofcorporation. the standard oil case in 1911n the united states government decided to file in the industrial age. an antitrust lawsuitgainst e microsofcorporation. but could the government to the1scentury economic or? apply thentu law it all started in 1975 when bilgates and his friend paul allen formed a partnership.we c. schoumacher: the software and operating systems created by two youngen in a garage and the company they founded played a major role in the information revolution. microsoft realized early on at thenter d become a major iun r consumers to buy access to the inrnet was , mifirst successfully deloped by the netscape corporation in 1994. this posed a threat to microsoft, in that a browser d the potential to replace its operating system. microsoft decided to develop its own browser, internet explorer, and incorporate it into the windows operating system. man: microsoft was pursuing a strategy that was intended to drive nthe browser business --by i and puing it into the operating system so that an independent browser could not possibly remain on sale. and that'sn fact what happened. scumacher: may 18, 1998, the justice department brought microsoft to court. those facts show a monopolist engaged in predatory and anticompetitive behavior that was notimply its intent, ladies and gentlemen, that was its effec they set out to accomplish what ty wanted to do, which was to make sure that no one came near eroding theimonoly positio on the windows desktop operating system. was this the antitrust case that wou define competitors may get the rules of competition in the information age? competitor mayall by the waysi, but as long as tt is in the service competitor mayall by the waysi, e antiust lawsetitio but celebrate at.,, it is when companies thats for consumers iner to distort the competitive ocess that tonduct is laleanticompeti. all the testimony was that tscape navigator worked wonderfully on windows. the was no proof that microsoft did anything to prevent pc manufacturers from installg netscape navigator on computers. both microsoft and standard oil used its power to require its suppliers, their suppliers, to give special deals to them that they did not give to competitors. both required some of their suppliers not to do business with their competitors. both tied one product to another in order to restrict competition. the law that was developed, you know, 50 or 100 years ago, and is taught, of this kind, is sll valid today. in order to restrict competition. but what makes it so hard in e computer industry to apply and is taught, of this kind, is sll valid today. in order to restrict is that we don't know, in the case of a new compurn e compusoware program, apply whether the program is oneroduct or two. and that is the guts of the question. i don't necessarily want to install a spell checker into my word processing program. i don't necessarily want to install a calculator into my operating system. so the firm does it for you, and in that way economizes on your time and better suits your needs. schoumacr: the court bate we on for three years. microsoft was found to have violated section ii of the antitrust law. the court ordered the breakup of micsoft. but that was overturned on appeal. finally, t u.s. court of appeals ordered both parties to settle. and inctober of 2001, the government and microsoft reached an agreement. with the proposed settlement being announced today, the department of justice has fully and completely addressed e anticompetitive conduct that was outlined by the court of appeals agait microsof e anthat the govnment fes cod harm consurses that was outlined are proscribed, arprohibed, while allowing microsoft to continue to innovate and design its own products. i think one of t things the microsoft case established is that e antitrust laws can applied high-ch iustries. at mea that consumers in a wide variety oindustries is that e antitrust laws can applied wi be better offecausef the microsoft case. because now they'lge e befit of competition r more analysis ofonopoly, weeaom nariman behravesh. the u.s. government's case against crosoft in t end will be seen as the opening salvo in a broad based attempt to curb the software maker's monopolistic practices. aol time warner, the current owner of netscape, and sun microsystems have launched separate, pvate suits against microsoft. european antitrust authorities the anticompetitive behavior haveof the software giant.tail however, the biggest check on microsoft's monopolistic behavior could well be the rapid pace of howevetechnological change the computer, software, anonline industries. already, microsoft s had to tnsformtsf a couple of times to keep pace with theea chaes in the information technology markets. one goal of the government's antitrust case was to prevent microsoft from suppressing either the development of new tecologies or denying access to these new technologies to its competitors. this type of a lock on techlogy is one of the most damaging types of anticompetitive behavior and can perpetuate a monopoly. monopolistic practices arelive and may even be thriving in the 21st century. but fortunately, so are e market and legal forces that can curb them. as in the past, the trick is to remain vigilant against these practices. what robert frost said about walls is true of monopolies, too. someing there ishat does not lo a monopoly, if aonopoly is required guarantee the avaibility ofn esseial service such as leones or electricity at an affordable pce, then mospeopilage tothe kinds e t almost aentuer economistsnd mostof test ofs spindletop a standard oi el prey much aseople did backn.olies one company controing an industry gis that comny el prey much aseoptoo much powerlies to control output and set prices too much power to earn higherrofits thanompetionould aow to control output and set prices too much power thiss davannenberg mediaÑÑogÑ ♪ annenbergeemed like the perfect car. it never wore out, never went out of style. how could it be beat? the tva and other electric companies bought hundreds of mlions of dollars worth of eipment every year. what lengths would the manufacturers of this equipment go to to make sure that the price was right? for 40 years, regulation protected the airline industry from the hazards of competition. have 25 years of deregulation been an improvement? to paraphrase calvin coolidge,

annenberg media. for information about this and other annenberg media programs, call... and visit us at... funding for this program was provided by... in el salvador a bulldozer accidently strikes the remains of an ancient settlement. and deep below the surface archaeologists open a time capsule 1,400 years old. here, in a broad valley in central mexico, stand the ruins of what was once the largest city in the new world.

annenberg media. for information about this and other annenberg media programs, call... and visit us at... funding for this program was provided by... human beings are all one species. we are all equally capable of language, creativity and thought. the differences among us lie in our cultures, our beliefs, how we organize our societies and how we make our living.

annenberg/cpb project captioning performed by the national captioning institute, inc. captions copyright 1986 educational film center nenberg media ♪ for information about this and other annenberg mediaearner.org.

annenberg media ♪ provided by: for information about this and other annenberg media programs call 1-800-learner and visit us at www.learner.org. usted tiene el derecho de permanecer callado. usted tiene el derecho de ser escuchado. cualquier cosa que usted diga... lo que usted diga será escuchado con dignidad y respeto. usted tiene derecho a información y asistencia. sin justicia para las víctimas de crimen, no hay justicia. i think it breaks a little to the left. uh-uh. to the right. nope. straight. girl: come on! i told you it was going right. ♪ get up, get up, get up ♪ and be a playah ♪ get up, get up, get up ♪ get up, get up, get up ♪ and be a playah players: get up and play. an hour a day. announcer: for fun play-time ideas, go online-- just don't stay long. ♪ get up, get up, get up okay, guys, thank you. we're talking about electricity and magnetism. remember that time i took the rubber rod and i charged it up, okay? well, pretend this is the rubber rod charged up. and now i shake it through space. when i shake it back and forth, is that not an electric current, charged in motion? what surrounds an electric current? begin with mf. - magnetic field. - magnetic field. how many say, "oh, that magnetic field is probably very, very steady"? how many of you know the magnetic field changing? what's a changing magnetic field induce? begin with ef. electric field. electric fields. what's a changing electric field induce? begin with mf. magnetic field. how many are starting to catch on? what does this changing magnetic field induce? begin with ef. electric fields. what does the changing electric field induce? begin with an mf. magnetic field. how many are getting the idea? okay. it turns out these waves will regenerate one another. so if you have a shaking charge, honey, you get electromagnetic waves throughout space. where the electric field makes the magnetic-- the electric, magnetic-- at the speed of light-- that's what light is. that's what light is. light is electromagnetic wave generated from a shaking charge. if i take this stick and i put it in the water, and i shake it back and forth, won't i disturb the water? won't water waves travel out? you can understand that. but what i'm saying is you take a charged object. well, just take a charge, shake it back and forth and guess what you generate, gang. begin with a w. - waves. - waves. and these waves are electric and magnetic fields, so guess what kind of wave. electromagnetic. electromagnetic wave. that's right. and that's what we're gonna talk about now. electromagnetic waves and the very, very small part of the electromagnetic waves. you get the whole spectrum of waves. let's start way down with the radio waves, really long, long waves. and the radio and the frequency will get a little higher, a little higher. and pretty soon, those waves-- for example, your radio antennas downtown are shaking waves up and down like a few millions times per second. that's your fm waves. a few thousand times per second, that's your am waves. but if you shook the electrons in your radio antenna up and down like a million, billion cycles per second, honey, the waves that are generated are gonna activate what? begin with ey and get the e on the end of it. eye. your eye, that's right. [laughs] remember we had the tuning forks that time and hit one tuning fork and made the other one ring? well, in your eye, you got tuning forks there too, and guess what frequency they ring at, gang? million, billion cycles per second. million, billion hertz and that's light. and light, when that light comes in your eye, it make--that sight. would you like a profound statement for a party sometime? sure. when you want to say something, and everyone will say, "wow, heavy, man, heavy." [laughs] would you like that? would you like to hear one? yes. here it is. you probably will want to put this in your notes. here it is. light is the only thing one can see. [laughs] ooh. you saw a lot of substance to that, huh? would you like another one? yeah. just as good? sound is the only thing that one can hear. ooh. you have people following you after that. they'd say, "hey, this guy's-- dude is heavy," okay. you get the idea. anyway, we get all these waves, gang, and a little narrow, narrow, narrow band of those waves, starting off with the low frequencies that look to the eye to be a color. guess what the color be for the lowest frequency? begin with an r end with a d. try it. red. excellent. red. and then let's shake it a little bit more and guess what the frequency is. orange. orange. okay, some people. shake it a little bit more. what color are you gonna get? yellow. a little more. green. more. blue. more. violet. more. indigo, black. violet. violet. you can't be seeing. you can't be seeing it, okay? that's not light anymore. we call it beyond the light. we don't say beyond. some would say, "what is beyond the violet?" we don't say beyond the violet. what do we say, gang? ultra. ultraviolet, okay. and those waves you don't see. and many even go further still, higher frequencies like x-rays. when x-rays were discovered, it wasn't known what they were. so guess what they call them? no, not y, not z, but what? x. and it turned out, lo and behold, x-rays are high frequency electromagnetic radiation. and then beyond the x-rays, you get what's called gamma rays. but there's a whole smish-smash of waves, okay? less than 1% we can see, and we call that light. here, gang, i have a prism, all right. this is a prism brought in by roger, okay? this is a roger prism, all right? and this prism will also take the light and bend it into a rainbow. later, we're gonna take some white light shining in here, and, boom, you're gonna see on the other side, what? begin with r and with b. - rainbow. - a rainbow. and that rainbow is another word for spectral-- spectrum of colors, yeah? and this will give us spectrum of colors too. it turns out it will give a spectrum of colors because it turns out different colors of light will travel at different speeds-- right. --through this material or any material. did you guys know the speed of light is less in glass and water than it is in air? and how come the light slows down when it gets to the glass or when it gets to the water or anything? and here's another thing. this used to bother me years ago. if the light slows down when it gets in the glass, how's it speed up when it comes out the other side? it seemed if you want to get light to slow down, get it on a piece of glass plates and at the end, you can just catch it in a bucket. that keep dribbling down, yeah? but how does the light speed up again? how does light get through glass? let me give you a little scenario of something like how that works. light is a throbbing spark of electromagnetic energy, huh? and that throbbing spark of electromagnetic energy has a certain frequency, at a certain frequency at which it throbs, yeah. and when that, whoom, hits into a piece of glass, that glass got any atoms in there? how many say, "oh, no, the glass probably don't have any atoms"? come on, the glass got atoms. and what's the atom have around its nucleus? begin with e. - electrons. - electrons. and guess what those electrons will do when that electromagnetic energy hits it like this. hit, boom, they'll start moving the same way. they'll be set into vibration, okay? now, what's a vibrating electron do? oscillating. did we talk about that before? what's a vibrating electron do? what does it emit? oscillates. an electromagnetic wave. so that light will be captured by the atom. and them, boom, the atom will vibrate. and, foom, send out its own light wave. that catches the next atom. when that light wave hits that atom, what's that atom do? how many say, "oh, it probably don't vibrate"? come on, it vibrates, too, all right? so, boom, it's absorbed. now, what's the vibrating atom do? boom, spit, burp, bam, bam, bam--it cascades, when it gets to the end. here's your piece of glass like this, yeah. here's your first atom just sitting like that. here comes a wave--choo, choo-- okay, hoop, i spit. next atom, boom, okay, boom. hit, boom. here's the atom right on the edge over here. whip, boom. this one, hit, boom, and then foom, free space. how fast did it throw it out? free space. you know what the speed of the light was in between atoms? 300,000 kilometers per second, the speed of light that you get in a vacuum. 'cause guess--we think of a vacuum as void, right? take a piece of glass, take a piece of water, what's in between the atoms? how many say airspace? no, no, no, no, no. no airspace. what's in between there, gang? begin with a v end with oid. try it. - void. - a void. and guess how fast that light wave go or that light particle or that light goes in between atoms? the same as it goes outside. how come light slows down when it goes through? i wonder there could be maybe a time delay between being absorbed and spitting it out. if there is a time delay, wouldn't that, in effect, slow down the light getting through? hmm? let's suppose i have, like, a little toy soldier that can walk like this. and the toy soldier walks at only one speed, only capable of one speed, okay? let's suppose that toy soldier walks over and touches another one, choo, choo, choo, choo and the other one starts walking, choo, choo, stops. choo, choo, choo, choo. see what i'm saying? the toy soldier that comes out the end here is not the toy soldier that went in. you see that? a little time delay. if there's a lot of interactions, does that mean a lot of time delays? that means a color of light that would interact a lot will probably move slower than a color of light that doesn't interact so much. does that make sense? and guess what color of light interacts a lot with glass. violet or red? violet. blue. you don't be knowing that yet. let me tell you something. the resonant frequency of the electrons in there are like ultraviolet. and when ultraviolet light comes in, and hand, when that sets that electron in the move and, it is really moving so much it bangs into everything else. and the energy degenerates into? begin with a h end with a t. try it. - heat. - heat. and all that ultraviolet light gonna do, honey, is heat up that glass, because it's hitting that resonance. the resonance, the vibration is too much. so the resonant won't get through. but what's below that ultraviolet? begin with a v. violet. and that violet is close to the resonance. and the vibrations aren't enough-- degenerated the heat, but enough to interact here, here, here, here, here, here, all the way. and by time you--violet light is gonna take a long time to get through. red is way, way, way down underneath. you could, kind of, look at it like this, most of your atoms won't even do a darn thing when red comes by. so red just, vroom, skates right out by and only interacts here and there. guess which color should get through fastest? red. you see it's red? and a term we're gonna learn later on that when the different speeds will bend different amounts. and that's why this and rainbows you see above you, display the colors that we see. it has to do with different colors bending. and we know why they bend differently, because they got different speeds in the medium, different average speeds. the sun beats down, emits light. why does the sun emit light? honey, those electrons in that sun are shaking like crazy. all kinds of frequencies, okay? and so what you get is you get all kinds of frequencies of light coming down to us. and if we made a graph of the frequencies of light versus the brightness, we'd get something like this. we'd get something like this. over here, you can't even see, that's the infrared. over here, you can't see, that's the ultraviolet. but it turns out that right in here, that's the frequency of light that most of--that is emitted mostly by the sun. and that's right in the middle of our color spectrum. because we start down here with red, orange, yellow, green, blue and violet. and guess what's right in the middle, gang? begin with a g, end with a een. try it. green. excellent. all right, all right. green. it's green. green is right in the middle. it turns out a yellow green. a yellow green is what most of the sun emits mostly. it's like a chartreuse. when i was a teenager, honeys, i had a chartreuse convertible. you could see that thing 15 miles down the road, okay? and you know why you could see it so well? because most of the light from the sun is that color, and guess what we have evolved to see best of all? take a guess. - yellow green. - yellow green. we used to call it chartreuse. is that what why they paint fire trucks that color these days? did you notice that, paul? what are the new fire trucks? they used to be red. what are the new ones? - yellow green. - yellow green. and why they be yellow green, honey, huh? why? because you want to see those things coming down the road. and so they find you and said, "hey, let's paint them a color that human beings can see the most." and, yeah. do you notice the color of your street lights? what color they'd be, gang? - yellow. - yellow. a little greenish, a little yellow greenish, mostly yellow, right? why the streetlights yellow? they used to be incandescent lamps that used to glow white. now, they're making them yellow. one strong reason it has to do with, guess what we can see most? yellow and green. let's suppose you got a hundred-watt lamp, and it's white. and you're saying that a lot of this is coming out, and a lot of this too, right? so you're spreading it along all of that, right? let's suppose you got a hundred-watts only of this. how about your eye, honey? you're gonna see more light, because it's hitting right where you can see best. now, those yellow lamps aren't very good for your complexion and that sort of thing, all right? but when you're driving at nighttime you're not into that. you're into what's on the road. you really want to maximize seeing. and, hence, that's one strong reason for the yellow-green lamps. and the yellow-green fire trucks. but, suffice to say, we could break this up into three regions. that's what happens in your eye. the low frequencies average out to be red. the high frequencies average out to be blue. guess what the middle frequencies average out to be. irish, what is that? now, try it. - green. - green. very good. when you're looking at your television set at home, gang, you've only got three colors of phosphorous that give you all that spectrum of color. and what are those colors, gang? - red, green and-- - red, green and? - blue. - yay. and i can, kind of, show you that over here with this light box. do you want to be seeing such thing? let's try this. can we--ted? all right, gang, what color is that? beginning with a b. blue. how many don't even need a hint? [laughs] hey, but you guys are calling that blue, right? can we be sure that everyone is seeing that color? didn't you used to wonder that when you were a kid? when daddy said, "that's blue." and you wondered your sister called it blue, too, didn't she? but how do you know that she wasn't looking at this, and she learned to call that blue? do you ever wonder about that? do we all see the same, mm? do we all taste the same? do we all smell the same? do we all feel the same? differences, individual differences, huh? and how would you know? -- and look at what we got here, gang. red, green, blue, all together give what? begin with a w. - white. - white. and isn't that nice? isn't that nice? because now what you're doing is the low frequency part of the spectrum, right here, banging into your eye, the middle part of the spectrum, whip-boom, banging you right in the eye and the high part of the spectrum, whoop, and it all averages out to be the light isn't that neat? there's another thing, too, that's kind of neat. notice that the blue and the green mix together to give bluish green. isn't that wild, huh? isn't that wild, huh? wild. and notice that the red and the blue mix together to give a bluish red. isn't that wild? wild. no, that's not really wild. you would expect that. but how about this, the red and the green, where they overlap, they give yellow. wow. hc. why should they give yellow? now, you mix red and green paint. you get, like, brown, okay? [laughter] but that's color by subtraction. read the chapter on that. here we have light on top of light. and red and green hitting your eye at the same time, gonna give you what? - yellow. - yellow. why? --primary--between the two. that's right. yellow is right between the two. and these are gonna average out to be that, okay? isn't that nice? isn't that neat, gang? anyway, yellow--it's-- oh, look at this. we talked about three colors, red, green and blue adding to give white. is there such a thing as two colors adding together to give white? answer end with a p. yup. nope. no. try it. nope. nope. no, not a pe. just a p. - yup. - yup. yup. okay. it turns out two colors can give white. can anyone tell me what color mixed with blue will give white? - yellow. - yellow. do you see it? yeah. how many can't reason this? well, the yellow is the red and the green, huh? okay. well, let me ask this, what color--red and what color will equal white? cyan. - bluish green. - cyan. this color here, greenish blue. we don't call it greenish blue. we call it, what? begin with a c. - cyan. - cyan. that's right. and how about this, magenta, we call it. magenta and what give white? green. green. that's right. here's an interesting thing. can you do algebra? white take away red equals what? three. [laughs] white take away red... cyan. gives cyan. shall i do that again? yeah. there's your white. now, i'm gonna take the red away from it. watch where my finger is. i'll take the red away. whoops. [laughter] and what's it turned into? cyan. cyan. did you ever wonder why the sea water is a cyan color? it's green and blue. how many people have never wondered that? "so, well, it's cyan--" no, no, no, no, there's a reason why it had to be a cyan. can we have the lights please, ted? sure. -- it turns out that seawater, any kind of water, absorbs, like mad, infrared. in fact, if you take an infrared light and shine it on water, it'll heat up very, very quickly. and it also absorbs a lot of red. so when the sunlight comes down, all the colors, yeah, hits the water. guess what color gets absorbed more than any other. red. no. no, not green. okay. let's try-- let me give you a hint then. begins with r, ends with d. red. yeah, red. good. okay. some people said green. it turns out the red gets absorbed. when the red gets absorbed, is that the stuff that reflects to your eye? no, no. it's been absorbed. you can't absorb then reflect. you take your pick, honey. so if the red gets absorbed, what does the white light become? green and blue. shall i do it again? shall we put the lights off and do it again? yep. and turned-- no, i'm not gonna do it again. [laughter] it turns out to be that cyan color, see? if red plus cyan equal white, your problem is what's white take away red? and that's why the sea water is the color "a". isn't that nice? that's why sea water is that color. different colors of-- different temperatures of waters, different nutrients in the water, then different shades of that cyan, too, right? having a lot to do with different amounts of red being absorbed. so the color you see in things around you are not the colors that are being resonated off. they're the colors that-- that's a leftover of colors being absorbed. you see this green, this cyan shirt here. guess what color is being absorbed by that? begin with a r. red. red, okay? now, where's someone with a-- you see, this red over here, this red shirt? guess what color is being absorbed. begin with a c. cyan. cyan. all right. could you do without the hints? yeah. well, no. okay. you get the idea, yeah? isn't that kind of neat? colors, fascinating. red lamp. what color is the shadow? black. black. why is it black? because there's no light there. is that mysterious? no. how many say, "wow, far out man. what a shadow. is this black?" we all see it's black, yeah? all right, now, i'm gonna put on the green lamp. the green lamp, what's the color we're getting on the background? green, yellow. well, the green is a little closer. but strain your eyes, begin with a "y." yellow. yellow. now, i put my hand, boom. "hey, this was the black shadow before, now it's green. how it turn green?" "there's no reason for that. it just happened to turn green. "i don't know why when the green light hit the black shadow, it turned green." why did it turn green, gang? because the green light's shining on it. but green light is making a shadow too, this one over here, but it ain't black. red. why is it red? because the red light is shining on it. how many say that's mysterious? nobody-- you see that--ain't that neat? now, watch this. would like to see three lamps at one time? wow. i can show you. blue, now what color we get through the screen? white. white. bam. now, the one that was green before in our screen, it ain't green anymore. now, it's greenish-blue. why is this one greenish-blue? because green and blue light are hitting the black shadow. mystery? all right, now this one over here is not red anymore. it's red now. but the red light is hitting-- and not only the red light hitting, but the blue light is hitting it. so what is it? reddish-blue? is it a mystery why this shadow is reddish-blue? no, because the only lights hitting it are red and blue. magenta, you get? --and look at it over there. what color shadow we're getting in the far left? yellow. why is it yellow? it ought to be black, because of this shadow here. but the green and the red are hitting it. and when red and green hit the black shadow, they mismash to be what? yellow. isn't that nice? there's your yellow, magenta and cyan. these are your complementary colors, gang. red, green a blue, and the complementary colors, yellow, red and cyan. isn't that nice? ain't that nice? do you like it? [applause] if you get the right shade of blue and orange. let's try this. let's catch that light again, ted. this is sort of like a sky blue. and here's, like, a sunset orange. and these two are complementary. that particular shade of blue and that particular shade of orange give a white, okay? now, let me ask you a question. if i take that blue away from the white, what will the white turn? orange. orange. isn't that neat? look at that. let's try it again, okay? white take away the blue, turns... orange. orange. can you remember that? how about if it goes the other way, what if i said white take away orange, turns blue. remarkable? well, the effects of that are kind of nice. ted, the lights, please? would you ever be wondering why the sky is blue? how many say, "well, it's probably the reflection of the water." no, now, i go to minnesota. now, i go to kansas. what's the color of the sky in kansas? well, it's usually yellow-green, right? come on, what is it, gang? it's still blue. why is the sky blue? because it's absorbing all the red. a little bit different phenomenon going on here. let me just tell you about it. it turns out that light coming down from the sun-- [makes noise] --showers itself upon the atmospheric molecules. now, we got big ones, we got little ones, we got all sizes up there, okay? and these molecules will scatter off the frequencies of light. it's called scattering. now, what frequencies will be scattered? let me give you an example. let's suppose i have a couple of bells here. here's a little bell, and here's a big bell. when i disturb these things, they're gonna scatter sound off in all directions and what will the sound be, high-pitched or low? let's try the little one right here. [makes noise] do you hear that? now, let's try the big one. [makes noise] [laughs] is that right? no. how many are saying, "no, i got that wrong"? wrong. wrong? okay. you know, that's completely wrong. it turns out the little bell will-- [makes noise] --and the big bell- [makes noise] isn't that true? guess what behaves the same way up in the... sky. sky. the what? molecules. what do you suppose a little tiny, tiny, tiny ones will ring: high frequency or low frequency? high. high frequency. how about great, big ones? low. low frequency, okay? now, what are the size of the molecules in the sky, large or small? begin with a s. - small. - small. and then nitrogen and oxygen mostly, isn't that true. o2, n2. and when that sunlight comes beating down on those things, it scatters off, light scatters off. and it turns out the color of the sky is the color of all those little bells, all those little optical tuning forks, all those little vibrators. and they're vibrating at mostly, what frequencies, gang? high frequency. how many know what high frequency looks like to the human eye? blue. blue. and higher frequency even violet. let me tell you something, the sky really scatters off more violet than it does blue. but you know what? we're not so good at seeing violet. we're a lot better at seeing blue. so guess what our eyes tell us the color of the sky is? begin with a b. blue. you could have done that without the hint, okay? and it's blue because the tiny, tiny particles are scattering off the high frequency, so we see a blue sky. okay, interesting enough. now, you look straight up at the sun, straight up above, you see the sun white, yellowish-white, okay? okay, a little bit of filtering coming through, but not very much. how about that sunset, gang? it's sunset, when you look at the sun, it isn't white anymore. how many would say, "well, it's sort of like an orange, "but there's probably no reason for that. it's just characteristic of sunsets and sunups to be orange. how many already see why it is that the sun is kind of orange at sunset? let's take a look. there's the earth there. here, you're out standing right here. here's the sun at noon. somehow, light comes down, hits the air, scatters off to your eye, scatters off to your eye, and you're seeing what? what mostly scattered as blue, so you look up and you see blue all around. but you look directly at the sun, that white light-- [makes noise] --overwhelms, a little bit scattering going on, and you see a white sun, whitish, okay? so at noontime, boom, you see the sun whitish, huh? how about at sunset? what happens at sunset? can we do this next week and do this experimentally? we can do this experimentally. i tell you what? let's just do it right here. here's the atmosphere of the world right here. here's the atmosphere of the world, huh. no. let's do it this way. here's the atmosphere of the world, and here's the sun. now, the sun, red, orange, yellow, green, blue, violet, okay? [makes noise] --swoosh, what do you guys hear? well, let me just do it now. i'll do it again. red, orange, yellow, green, blue, violet-- [makes noise] --what do you got here? blue. white, do you know why, huh? all the frequencies together give you white. isn't that true? right? so you hear what? what's the color of the sun? begin with a w. white. end with ite. try it. - white. - white. all right, whitish, anyway, all right? white sun, all right? here's our atmosphere down here. the atmosphere, these tuning forks, blue, blue, blue, blue, violet, violet, blue, blue, red, blue, blue, pink, blue, blue, chartreuse, blue, blue, get the idea? what do you think might happen, let's say, i'm gonna ring all these? [makes noise] --what do you guys hear? blue. blue. you all heard blue. that's right. now, there's a little bit of red in there, yeah, a little bit green in it. but mostly what? blue and violet, and you heard blue, yeah? okay, let's try the sunsets. can i have a volunteer? would you stand right here, put your ear right down here, and i'm going to hit these tuning forks. no, right behind, right behind, i want to go out there. i'm gonna hit these tuning forks. this is the sun, 150,000 kilometers away, and the sunlight gonna come down to the atmosphere- [makes noise] and maydell standing on the ground, and here's the sky between her and the sun, yeah? here we go, gang. we do, by experiment, one of the beauties of science is you do by experiment, huh. you don't just do it all in your head. here we go. [makes noise] oh, oh, first of all, i should say this, you guys get the white again. let me put a reflector here. so all this beam energy goes down here, and this beam energy is gonna scatter off here, all right, okay? [makes noise] what color do you guys hear? blue. do you hear blue? you all get it? good. maydell, what color do you hear? white. yeah, she heard white. why did she hear the white? because she's standing right next to the-- that's right, honey-- some, some, filtering. she could have come right at her. it's a good thing you didn't have your eyes there. [laughter] oh, god, no, no, don't. let's get your ear in there. just get your ear, okay? you heard a white. isn't that true? okay. here we go. okay, like that. now, we are at sunset, gang. sunset, uh-huh, all right? air is thicker, huh? what color do you guys hear? blue. white. orange. yellow. [laughter] paul, would you pass out the q-tips? let me remind you, we got, blue, blue, blue, red, blue, blue, chartreuse, blue, blue, red, blue, blue, pink, all right? a reminder, huh, all right? now, you put your ear right behind. you're gonna need with your eye now, sorry? what color do you guys hear? blue. blue. what color do you hear, maydell? orange. yeah, all right. maydell, right here. right here, honey. beautiful. great. you've been a sport. let's hear it for maydell, all right? [applause] now, let me ask you a question. how come you guys heard blue and she heard orange? -- check your neighbor. check your neighbor. check your neighbor. how come she heard orange? hey, is this not neat? is this not neat? at sunset, of course, you're gonna see orange. because at sunset that light is coming through many, many, many, kilometers of air. and what color is being scattered out all along? blue. blue. blue is coming-- all these people looking up see the blue sky. they're seeing the blue that would have got to you. and by the time that light gets to you, honey, it's all tuckered out in high frequencies. almost no high frequencies left. and so what finally gets to you, high or low? - low. - low. and so it turns out the atmosphere is transparent to the low frequencies but not so much to the high. the highs have scattered. and that's why you see the nice colors at sunset. isn't that neat? it, kinda, makes sense, doesn't it? here's another thing that makes sense too. when you look at the clouds, what color are the clouds normally? white. they're white. but there is no reason for that. did you know that? yes. there's no reason for the cloud being white is there, right? come on, come on, can anyone see why the clouds are white? if the clouds are white, what are you got to see, low frequency or high? [shouting] but what is gonna-- but if the clouds are all little teeny, teeny, teeny particles that will scatter high. so why aren't the clouds blue? because they don't-- my premise was off. i said, "if the clouds are little tiny, tiny, tiny particles." if the clouds, gang, is all tiny, tiny, tiny, particles, what are the clouds in fact? how many say, "well, in a cloud, "there's a whole assortment of sizes. "some get so big they absorb and they turn dark. and, honey, that's a thunder cloud coming up"? how many can see that? in the cloud, you get all kinds of sizes, yeah? all kind of sizes, all kinds of scattering, yes? and all kinds of scattering gonna look to you to be what? white. yay, yay, yay. feel good? yeah. isn't it right, okay? any questions? what about after the sun sets, instead of red-- oh, the green flash. how many people here have seen the famous green flash? 1, 2, 3, 4, 5, 6. how many people are saying, "what are they talking about?" green flash, man. the green flash. i have never seen the green flash, okay? the green flash happens when you're looking at the sun, special conditions, you see the sun set, set, set, set, and it's really a kind of a bright reddish, yeah? and all of the sudden, boom, a flash of green and down she goes. how does that happen? i'm so eager to see the green flash. but i think it goes something like this. this whole sky here acts like a prism. you know how a prism will put the colors out into the component if white light coming in like this. and this fan out and you get the red and the green and the blue like that with all the colors in between. you'd be knowing about that? well, the whole sky acts like a prism. and light will come in like this, boom, like that, and the green will get right to you. oh, wait a minute. let me do this again. the prism's higher in the sky. light coming up from the sun comes in, refracts and give you green right in your eye and the red parts up here. but up here, light is coming in, doing the same thing. the red is like that, and the green is missing you. and the blue which should ordinarily cut in here and cut that green into bluish-green is just about not there. but down below here, light coming in here does the same type of thing, green like that. i mean, no. yeah, green like that, but red, not bending so much, red comes in and smudges it out. and too bad, honey, right here, the green is overlapped by the red. so what does that look like to the eye? red and green. oh, you don't remember that. yellow. yellow. all right, okay? yellowish anyway, yeah. and so you're not gonna be seeing any green. but you only see the green when the sun sets, when it gets way down. you see, like, up in here, okay? green hitting-- take this whole thing and move it down, so this part is buried, and you only got the tip, and the green is hitting your eye, and you don't have that red up here and coming and smudging, because the ground is in the way. i don't have this drawn very well, but you kind of get the idea? when the tip of the prism comes down, you don't have that red from below messing up your green. so you see momentarily a little green flash-- so it'd be like on your frequency diagram, where you can see the very top of the bulge. you're just seeing right here. you're seeing this green. the blues, they'll never get to you anyway. and the reds, usually getting the red and green together. that's what happening, you're getting the red and the green together. and this thing goes right down at the tip. it cuts off, so you don't get the red, and you only get the green but only for a moment. it's like standing with a thin slip in the prism, getting all these colors. you get a red on, yellow-green, okay? now if the slope is wide, you know, smudged all white, huh? but, i mean, it's very, very wide. but it's a little, thin, thin slip will come in and just give you the green and the red is gone underneath and that can't mess up your green anymore and you get that little flash. watch for it sometimes, gang. it's supposed to be quite interesting. it turns out when i was a kid in school, i remember in the second grade, i was doing some drawings. the art teacher came by, and i was drawing mountains. and i was drawing very distant mountains, and i was making the mountains brown. and i made them brown and sort of green, because mountains have brown dirt and the green trees. and the art teacher says, "oh, no, no, paul, you don't do that. what you do is you make the mountains bluish." i said, "bluish?" "yeah, because they're far away. and faraway dark mountains is gonna look bluish." i can't remember if i asked her hc. but i don't know if she would have known the answer. do you guys know why it is that a dark, dark mountain far away looks bluish to the eye? how many people are familiar with that anyway? distant distance, things in the distance look bluish. how many say, "i've never looked any further than just around my local--" come on, come on, okay? and there's another thing too. you guys don't be knowing about- distant, distant mountains that are covered with show that are very, very bright, far, far away, don't look white. they look, kind of, yellowish. like, some of the blue didn't make it to your eye. i wonder how come distant bright things look yellowish, and distant dark things look bluish? in fact, when you look up at the sky, it's all blue. guess what the background is, the darkness of outer space. the astronauts get up. they're looking down to the same sky. they're looking straight down. here's the globe right here. did they see the blue? no. they don't see the blue. what do they see? the color of the earth. we look out, we see blue. they look down and say, "i don't see no blue." they wouldn't say, "i don't see no blue," that means they do see blue, yeah? they see that off at the edge, okay? but what's going on here, gang? think about these ideas. we'll be talking about it again, okay? [music] travel advisories to small business loans. retirement savings to medicare coverage. id theft protection to contacting elected officials. student loans to taxes on-line. whether you have information to get or ideas to give, usa.gov is the official place to connect with your government. from surplus car auctions to finding a new job, our new mobile apps will keep you updated on the go. so from marriage records to passport applications, veteran's benefits to birth certificates, patent applications to energy saving ideas, product recalls to home buying tips, check out usa.gov. because the country runs better when we stay connected. action. spike lee. aahhh! no one's gonna say, "we're gonna take a chance on you." i never thought that would happen. so out of frustration, i wrote "reservoir dogs." hollywood is not very alluring to me. i am not susceptible to swimming pools and porsches. i got a '79 chevy. it's runnin' good. i'm a film outlaw, and i think that's a good thing to be. annenbergtrg budgets. if they succeeed, they can g a chance to make hollywood pictures, like quentin tarantino and "pulp fiction." but gog hollywood has its price, one that some of these filmmakers won't pay. in this program, narrated by frances mcdormand, we willook at some visions from "the edge." aaahh! (big band music playing) independent films are the most important there are in the usa. they're the lifeblood of the industry. they set the new standards and the trends, and they have the wildest ideas and most interesting stories. and they're usually the best of the pictures in the country. you're not mr. purple. some other guy is mr. pule. you're mr. pink. these independent directors have their own vision and they want to create a movie that reflects their vision. that's the most important thing. (julie dash) i think we're all a little bit crazy. i think all of us ha been traumatized by something and then we have this need, this obsession to tell stories and to rework the world within our o