Carl Icahn 80s Interview by The MacNeilLehrer NewsHour

Good evening. These are the main news headlines today. The State Department rebuked Israel for non-cooperation in the U.S.-Israeli spy case. Libya claimed Egypt was preparing an invasion, but Egypt denied it. The African National Congress announced a generalized escalation of its war on apartheid. Shuttle astronauts made the first test of future space construction. Details of these stories coming up. Judy Woodruff is in Washington. Judy?

After the news summary, we have these major focuses on the NewsHour tonight. First, a Wall Street analyst joins us to explain what's behind this week's surge in stock prices. Then, a profile of a man who's helping change the face of corporate America, takeover artist Carl Icahn. Next, a documentary report on the reaction by Northern Ireland's Protestants to the recent Anglo-Irish Accord. And finally, a look at and a talk with Ralph Nader, 20 years after he launched his consumer crusade.

Funding for the MacNeil/Lehrer NewsHour is provided by AT&T. Whether it's telephones, information systems, long-distance services, or computers, AT&T. Funding also is provided by this station and other public television stations and the Corporation for Public Broadcasting.

The Reagan administration had unusually strong words for Israel today over the spy case that is causing mounting friction between the two allies. State Department spokesman Charles Redmond said Israel has failed to provide information it promised about Jonathan Pollard, the Navy security analyst arrested for spying for Israel.

Let me start by saying that I want to reiterate our distress. This case of espionage against the United States in which Israeli officials are involved has occurred. We've asked the Israeli government specifically for their full cooperation with our law enforcement officials in providing us with all information it has in connection with this case, including the return of any documents and access to Israeli officials involved. The Israeli authorities have assured us of their willingness to cooperate. However, they have not yet provided the full and prompt cooperation we requested a week ago. On November 27th, Israeli officials informed us that two Israeli officials had left the United States on Friday, November 22nd.

We have no explanation for that departure. We were not informed. We are dismayed that the government of Israel was not as forthcoming as we would have hoped and expected. But the important point now, and the crucial point, is that we have prompt access to those involved.

Israeli television reported that Prime Minister Shimon Peres had written to Secretary of State George Shultz, calling the affair a regrettable mistake, but hoping it would not lead to a crisis between the two countries. The New York Times reported today that Pollard was working as an intelligence operative for a secret Israeli counterterrorism bureau. Quoting a highly placed Israeli source, the newspaper said the Israeli investigation's preliminary findings assert that Mr. Pollard approached Israeli officials and not they him. The paper said Israel has given these preliminary findings to the U.S. Judy?

Libya claimed today that Egypt was preparing to invade it, but Egyptian officials called the report purely propaganda. The official Libyan news agency said the Egyptians had finished a military buildup along the border with Libya and were planning an attack. The Libyans also claimed that U.S. forces in the Mediterranean had increased their surveillance of the Egyptian-Libyan border to help the Egyptians plan the attack. Egypt's foreign minister said that his country had increased its troops along the Libyan border, but he said it was as a result of the hijacking of an Egyptian airliner last weekend, which Egyptian officials have tied to Libya.

The African National Congress today announced what it called a generalized escalation of its war on white minority rule in South Africa. The banned organization said its guerrillas were responsible for yesterday's rocket attack on an oil installation and the planting of land mines on the border with Zimbabwe. A statement said the guerrillas were based inside South Africa and denied a government claim that they had infiltrated from Zimbabwe. Police reported anti-apartheid rioting in seven regions, including an incident near Cape Town where snipers fired on a police patrol.

Another first was scheduled for the space shuttle Atlantis astronauts today. Two of them took a working space walk to find out how hard it is to build structures in space, a first step toward building a permanent space station someday. The construction job began early this evening and is scheduled to last six hours.

There we go. OK, Brian. Brewster's getting ready to raise 9. Go ahead.

Let's go. It's hard to tell, but it looks like it moves about half a foot or so back and forth with a period of about one to two seconds.

For retailers, today was probably the busiest of the year, the unofficial opening of the Christmas shopping season. This year, it will be six days shorter than last year, but merchants predict better sales. In spite of cold, rainy weather, the shoppers were out in large numbers in New York today, partly because it was a holiday for many workers. One Wall Street analyst predicted that sales would be up about 6% in the department stores this year, and profits even higher. He explained that retailers have not loaded their shelves as heavily as they did in 1984, and the stores will not have to mark down their goods as much. For appliances and home electronics, the forecast is even more optimistic.

Sales more than 10% higher and profits 3% higher. But Christmas shoppers in several western states may be slowed down by snowstorms this weekend. Winter snow watches are on for much of Utah, Colorado, Wyoming, Nebraska, and northern Arizona.

Coming up on the NewsHour, a Wall Street analyst on what's behind this week's surge in stock prices, a profile of corporate takeover king Carl Icahn, a report on how Northern Ireland's Protestants are taking to the recent Anglo-Irish Accord, and a newsmaker interview with Ralph Nader. While other economic statistics have been all over the map lately, the stock market has been a clear gainer. Although the Dow Jones Industrial Average slipped a bit today, it reached an all-time high on Wednesday, closing at 1475.69. In all, the Dow has surged almost 200 points since the bull market began in late September. Here to tell us more about what's driving the market upward is Robert Stovall, a leading market analyst.

Mr. Stovall was formerly head of investment policy for the brokerage firm of Dean Witter Reynolds. He now runs his own New York-based investment company. Mr. Stovall, well, you're here to talk about the overall increase, but let me ask you first about what happened today. There was a slight decline. Why did that happen?

The market went down a bit today because I think there was a bit of pre-advisement. By that I mean the Friday after Thanksgiving has been an up day for the stock market in 29 out of the last 33 years. And that particular statistical phenomenon got so much attention early in the week that people did their buying apparently on Wednesday. Wednesday was a remarkably strong day in terms of prices and volume when you consider that many people went away for a four- or five-day weekend.

So in other words, it was supposed to go up and everybody thought it would go up, but it...

Exactly. I think today's action was essentially meaningless. The averages were flat to down. Two of them were up, two of them were down. Didn't mean much.

Well, overall, we want to focus on the upswing. What's behind it?

We began to see a watershed change or a sea change in investor psychology about ten weeks ago when Mr. Volcker was smilingly present at that Group of Five conference of central bankers from around the world who agreed that the dollar was too high and that they should intervene against the dollar, and that signaled that interest rates were going to be easier. We were going to see an accommodative Federal Reserve Board. And that persisted two weeks later in Seoul. The Treasury Department said American banks should loan money to Third World nations. That also signaled flat to down interest rates. And both stocks and bonds like interest rates to go down, particularly when they're accompanied by no increase in inflation.

And those two things are just about the prime motivators of security prices.

So it's mainly interest rates, but we've also had some bad economic news. I mean, a drop in retail sales.

Retail sales haven't been good. Orders for heavy equipment, indications of capital spending for next year, all flat to negative. But the market seems to be sensing something more fundamental underway. It's not just that interest rates and inflation seem to be moving in the right direction, but it seems that our government is moving perhaps toward a policy of easier credit, easier money availability, lower interest rates, while we move toward tighter fiscal policies, less heavy spending on the part of the Congress in the years ahead.

Do you share the view of the market on that score?

I've thought all year that the market would close above 1,400 in the Dow Jones this year, but the market has gotten ahead of my expectations. What's really changed and built this big momentum in share prices since late September, in my opinion, has been that psychology has shifted to the point of view that stocks and bonds, but stocks in particular, are the place to be for the next year or so. Real estate looks dull, and you can only lose money in diamonds and gold and silver. Hence, by default, people are running to stocks. At least that's what it seems to be.

So you think this is going to continue?

It'll continue, but it's gotten ahead of itself. I wouldn't be a bit surprised to see some rather shocking down days coming along over the next fortnight or so. Perhaps double-digit declines in the Dow Jones Industrials for a day or two, because too many people now accept this optimism as a lock, as a sure thing. What do you mean? I mean that they see the market since late September moving up almost every day, and when it doesn't move up, it just sort of marks time, such as Friday's market today, and people just don't seem to be prepared for any change in that direction. That usually, in my experience, is a sign that the market will do whatever it has to do to make the majority look stupid.

Which stocks have been doing well and which ones have not been doing so well?

In general, Judy, the stocks that have done the best are stocks that are what are called interest-rate sensitive—stocks that go up when interest rates go down and vice versa: savings and loans, banks, fire-casualty insurance, life insurance, food, and utilities to a lesser degree. They've done well. Also, stocks that have done well have been those that are linked to the dollar. American companies with lots of action overseas, such as tobacco, food, soft drinks, cosmetics, and particularly pharmaceutical stocks—they'll earn a lot more U.S. dollars when the dollar weakens versus foreign currencies. So these stocks have been strong.

How much of this activity that we're seeing is activity by the small investor and how much of it is big institutions?

In the main, it's large investors, upstairs traders or professionals working for brokerage houses are perhaps 20-plus percent, and the public is another 30 percent. And the balance are institutions, pension fund and mutual fund managers in particular. The mutual fund business has been the growth story of the investment business in the last year. A lot of money going into mutual funds.

Let me just ask you one final thing. In general, how good a predictor of economic activity do you think the stock market is?

Going back over a great many business cycles, the stock market usually predicts what's going to happen anywhere from four to eight months ahead. And this market is predicting a better business, better earnings, and better dividends sometime by mid-1986.

And so in other words, it'll be true to form.

If it works, what we have not seen yet is earnings and dividends rising. They've been very disappointing for the last 18 months. Here in 1985 is supposed to be an economic recovery year, but we're going to see an absolute decline in industrial earnings, in corporate earnings, rather. That's not so good. If that doesn't improve, the stock market perhaps will turn out to have been giving us a false alarm, but it's much too soon to say that.

So you're not going to stick your neck out right now and tell us which way it's going to go?

Oh, sure. My neck's always out anyway. Of course, the $1,400 plus on the Dow has been achieved. I think we'll see $1,500 at least by the end of next month with an interruption along the way. I think that IRA and Keogh money and other savings money coming into the market next year will come more into stocks and into bonds. It had been coming into bonds and certificates of deposit, but I think the stock market will be popular for a while longer.

Robert Stovall will hold you to that. Thank you for being with us. Robin?

And now we have a profile about business. Carl Icahn is back in the news. Icahn is the man who's been changing the face of American business with his threatened or actual takeovers of dozens of companies. Recently he arranged a blockbuster deal to take over Trans World Airlines. The price is now close to a billion dollars, which he's still raising. This week he was reported out scouting for another half a billion dollars, perhaps to finance further acquisitions. Carl Icahn is not an easy man to get near. He rarely gives interviews, none that we know of on national television. But correspondent June Massell got Icahn to talk for this NewsHour profile.

Staff gave me this toy plane to commemorate the TWA deal.

I don't know what the future holds, but I'm sure it's going to be a fast-moving future with Icahn. Things are going to happen that before never would have happened in this airline.

Icahn is the most worthy adversary I think I've ever faced. The man's business is taking over companies. He works very, very hard at it, and he's very, very good at it.

Elliot Schnall, known as Uncle Elliot, helped Carl Icahn get started. In 1968, he loaned Icahn $400,000 so he could buy a seat on the New York Stock Exchange. Icahn began with options and arbitrage. Then in 1979, he had a new idea: takeovers. He told Uncle Elliot he was going to start going after undervalued companies.

I thought he was crazy. I said, "Well, what do you know about undervalued companies?" He says, "Look, I'm going to do it." I said, "Carl, forget it. I think you're taking too many risks." And Carl said, "In risk there is reward, and I'm going to do it."

Well, he's told me I was crazy a lot of times in my life, so he's been wrong a lot of times. He told me I was crazy, so I wasn't too dismayed by that.

Uncle Elliot soon changed his tune. He's been investing with Icahn ever since. Today, a wall in Icahn's office is covered with the annual reports of target companies Icahn and Company has gone after. Most of the targets fought back, either finding a more friendly suitor to merge with or paying Icahn to go away, buying back his stock at a premium price. That's called greenmail, and Icahn has been widely criticized for it.

This is another horror story from a client.

But Icahn and others on Wall Street say he hasn't accepted greenmail in a while. And Icahn maintains he never asked for it; management offered. Plus, he says other stockholders sometimes benefited as well. He has a favorite story about a meeting he had with executives of a company he was buying stock in.

And the investment banker said, "Come on outside, Carl." So I come outside with him. He said, "Look," he said, "they don't like you at all. If you start buying more stock, we're going to dilute the hell out of you." He said, "Now on the other side of the coin, we'll give you—you don't have the stock too long—we'll give you a $10 million profit to walk away." He looks at me, he says, "Do you want some time to think about it?" I said, "No, I'll take the $10 million."

Icahn and Company has accumulated enough capital now that they don't have to sell back. Icahn's senior vice president, Al Kingsley, is constantly on the lookout for new deals. Somewhere under all this paper sits the germ of a new idea. The Icahn strategy is to look for undervalued stocks, stocks that sell below the true value of the company.

I only buy stocks that are down related to assets. If the stock goes up, you don't see me around because there's no bargain. And I only buy a bargain.

While Icahn has waged many hostile takeover battles, he's only actually taken control three times. But in all cases, his company has made money, as much as $25 million on a deal. The first target Icahn went after was Tappan Stove. That same year, 1979, he bought his first small company, Bayswater Realty. Next came a series of lawsuits and raids on some big names, like Marshall Field, Hammermill Paper, Dan River, and American Can. In 1984, he bought his second company, ACF, a Fortune 500 railroad car manufacturing and leasing firm. After that, more takeover battles for Phillips Petroleum, Uniroyal, and TWA. In September of '85, he signed his third merger agreement with TWA. Ironically, just one year earlier, TWA's in-house magazine ran a story called, "Who's Afraid of Carl Icahn?"

Apparently, they found out. TWA is Icahn's biggest coup. It's the largest international airline serving the North Atlantic. And taking it over helps Icahn change his image from being primarily a speculator in companies to someone who actually buys them.

I think his reputation on one level certainly has improved. I think more people see him as a man of his word and as a credible acquirer of companies than perhaps they did a year ago. He has to be considered as a true takeover threat.

Michael Zimmerman is a partner at Salomon Brothers, a New York investment banking firm. He's worked on hundreds of takeover deals and recently represented TWA's management against Icahn.

Of the people in his business, people in the business of taking over companies, there's no one who is more persistent and more determined in what they do than he is.

But determination was only part of it. Icahn managed to get something TWA's management could not get, labor concessions. The unions, pilots, and machinists agreed to approximately 20% in salary cuts in exchange for a small piece of the company if Icahn took over. They wanted Icahn to come in because TWA had announced a merger with Texas Air President Frank Lorenzo. Lorenzo was known for being tough on unions.

I think Icahn's done everything he told us he would do. He's never reneged on anything he said he'd do. And he's a breath of fresh air, you see, in the business for us.

I really believe that one of the problems in the industry is, and TWA is guilty of this, was guilty of this, that the real high echelon of management, the real top management, don't get into the pits and sit down with these guys and negotiate with them.

Icahn spent the summer in negotiations, frequently on weekends and frequently till 6 o'clock in the morning. While investment bankers and lawyers were with him advising him, Icahn believes his presence kept negotiations going.

And if I weren't there, they'd say, wait a minute, fellas. And I'd go to my lawyers and say, hey, fellas, come on. This is childish. Will you sit down? I'm paying your bill. Will you get down here? And the lawyers say, OK, Carl, sure. Then I go and I see the pilots and I say, come on, you're being childish. So the lawyer said this and you said that because, you know, you're working for 18 hours at a time. Feelings get high. But obviously I had a lot riding on this because I wanted to do it.

One man who didn't want Icahn to do it was Ed Meyer, former president of TWA.

Carl Icahn had 17 or 18 practice runs before he started in on us. And so it's a very unsettling thing. It's very time consuming. It's very emotional, without a doubt. And at the same time, you're trying to run a company. So it's a difficult thing to go through.

Good afternoon, Icahn and Company. Despite the emotional difficulties for the management in charge, Icahn says he's helping the real owners of the company, the shareholders, by driving the price of the stock up.

When we bought TWA, started buying it less than a year ago, the stock was eight. We're ending up paying 24 for it. They tripled the value from the time we started buying, so I think the shareholders love the situation.

On Bruce's immediate left is Robin Hood. I'm sorry, Carl Icahn. I never said I was Robin Hood. You hear that? He never said he was Robin Hood.

Last spring at a seminar on hostile takeovers for the legal community, Icahn got a chance to explain his takeover philosophy. He believes that corporate America should be shaken up, that most companies are poorly managed and have too much bureaucracy, and that that frequently accounts for low stock prices.

Why is there the great divergence between real value of a company and what it's selling for? Ask yourself, why will somebody be willing to pay $60 for a Phillips Petroleum without management, but only $35 with management? What does that say about management? It's sort of simple. A corporation plus management is worth half of what a corporation is worth without management.

Icahn also attacks what he calls the corporate culture, with its perks of jet planes, golf courses, and high salaries.

An aristocracy has arisen in this country. It's a corporate aristocracy. Once a man gets to be at the level, gets to be in the corporate suite, it's sort of a nirvana for him. If you try to meet one of these guys, hey, I'll be out of pocket for the next three days. I'll be out of pocket. I don't know where they go when they're out of pocket. But they're always out of pocket.

Icahn, who is known for being very witty, first complains about executives on golf courses, then switches gears and suggests that maybe it's not a bad idea if they stay there.

He further amused his audience with humorous anecdotes to support his thesis.

He loves to tell a story about the blunders of a major Park Avenue company.

A real estate agent who I'm friends with told me incredulously, he said, you know, up on the 30th floor, they have a women's gymnasium. And I said, well, that's sort of lousy. He said, you know, they spend $100 a foot to have a whole floor that's a women's gymnasium. This is a true story. And I said to him, well, you know, it doesn't sound too good, but what the hell, they all do that. He says, no, no, the point is they have no women up there. Okay? He said they didn't.

Not everyone finds Icahn amusing. Andy Siegler is a spokesman for the Business Roundtable, an association of major American corporations and the chairman of one of them, Champion International.

I'm sure somewhere there is someone that's playing too much golf. But the work ethic and the performance ethic and the pressure to perform in our economic system is very, very, very high. To say that we're all stupid, that we're out messing around, and that these particular individuals who have had absolutely no experience whatsoever of running things, I'm not talking about investing and making judgments, but running things, are making judgments that the company, the management of the larger companies in this country is just crazy.

Ed Meyer, the former president of TWA, thinks Icahn's philosophy is a disguise for more fundamental motivations.

He's not interested in managing. He's not interested in reforming managers. He's interested in making money. You can tell he likes the game he plays. He's interested in it for that.

Part of my values is to make money, and I can't change my values. I mean, some people love art, you know, love to paint. If a great painter loves to paint, well, what do you do, criticize him because he likes to paint? Well, hell, I was brought up with my values to make money. But what makes me happy or fulfilled about it is that I also believe that I'm making money by doing the right thing. Hey, how you doing?

Icahn is a wealthy man today. He won't say what he's worth, but some estimate it's in the hundreds of millions. He lives in a large estate in a New York suburb and sometimes finds the time to play tennis at home with a friend. The only child of a middle-class family, Icahn did not always enjoy such prosperity.

Growing up, there were no private tennis courts or English gardens to walk through.

Icahn grew up in New York, here in the Bayswater section of Queens, geographically a short distance from Wall Street, but psychologically a totally different world.

Neither of Icahn's parents was involved in the world of business or finance.

Icahn's mother was a schoolteacher. His father, a lawyer and a cantor, never accomplished his real goal in life, to become a Metropolitan Opera singer. But he gave his son piano lessons, and Icahn inherited his father's love for classical music. Icahn spends many hours in his home office working and listening to music. In college, at Princeton, he was a philosophy major and won a prize for the best senior thesis, a complex work on the empiricist criterion of meaning, something Icahn says he could never understand today. What do you think is more complicated, this or putting together a TWA deal?

Well, I got to tell you, looking at this, I think this is...

Icahn was supposed to be a doctor, but he dropped out of medical school after two years and headed for Wall Street instead. What did your mother say when you dropped out of medical school? Was she disappointed?

That's a euphemism. I always say you're putting it euphemistically.

What did she say?

Well, you know, you needn't come home anymore. You made the great mistake of your life.

Icahn's mother is proud of him today, but Icahn feels his late father, a champion of the lower classes, might have some reservations.

He would love that I'm shaking up the establishment. Love that. I mean, maybe he would say, well, what are you making all the money for? You know, he might object to the fact that you have more money than a lot of other people.

Icahn's wife is a former ballerina from Czechoslovakia. She wishes her husband would slow down instead of going from one deal to the next.

Sometimes I feel there is no reason he really should work anymore. But then, where is he going to go from here? Regular family, the husband works, and there's always something, at least financially, to look forward to. They're building. I mean, here, it's not... I mean, how much more he makes, it's not going to make any difference. The point is that he doesn't need any more money. But it's the game, as he says. What do you need this for?

What do you think the answer is?

It's like in a game. I mean, the money is like the chips or the points or something. I think it's not just the money. No, it's part of the game. But you sort of really are, in a sense, fighting a very strong establishment. And it becomes exhilarating to see if you can outmaneuver them.

Still ahead on the NewsHour, a documentary report on the reaction to the new Anglo-Irish Accord among Northern Ireland's Protestants, and a look at and a talk with Ralph Nader, 20 years after the start of his consumer crusade. The reaction has been anything but quiet since Britain and Ireland signed a historic accord two weeks ago. It gives the Irish government a role in governing Northern Ireland, the six counties that have been controlled by the British and separated from the rest of Ireland since 1921. Criticism has come from both extremists on the Catholic side, who want an even greater role for Ireland, and more strongly from the Protestants in Northern Ireland, who want nothing to diminish the current close ties with Britain.

Here is a report from special correspondent Anne Tyerman.

Irish Protestants on the march in Belfast, Northern Ireland. Their tunes haven't changed in 60 years. Neither have the political views they convey. They parade their pride in their own brand of Britishness. But now a discordant note has crept into their relationship with their government, the British government. Their faith has been shaken by what they see as an attempt to undermine their position as part of the United Kingdom. Ulster's Catholic minority, British citizens too, have had less reason to bless the Union, discriminated against in housing, jobs, and education. For the past 16 years, the security forces have struggled to contain the mutual hatred and bitterness. As the summer marching season comes round, the Protestant Orange parade provides an annual focus for discontent.

Catholics are provoked by what they see as the flaunting of Protestant Ascendancy. The Irish Republican Army has gained in support from the disaffected. Over 2,500 people have died. Tens of thousands have been wounded, traumatized, disillusioned. A whole generation has grown up knowing nothing but this tragic pattern of intolerance. The rest of the British population has grown weary of the unending violence which has affected everyone. Two weeks ago, a historic agreement was reached between the British and Irish governments. It attempts to reconcile the fears of both communities, to bridge the chasm between the alienated Catholics and the Protestant majority. For the first time, it gives the Irish government a consultative role in Northern Ireland to protect the interests of Catholic nationalists, while at the same time it guarantees the status of the Protestant majority as part of the United Kingdom.

Initial reaction from Protestants was one of outrage at not being consulted. Nearly one in 10 of the entire Protestant population of Northern Ireland thronged to Belfast City Hall last weekend to express their concern. To them, it looked like the thin end of the wedge, the first step on the road to a united Ireland. All shades of Protestant opinion have rallied behind the populist leadership of Ian Paisley, a clergyman and member of the British Parliament who will spearhead their campaign. Their request for a referendum has been refused, so now their members of Parliament have pledged to resign their seats, in effect, to turn the ensuing by-elections into a test of public opinion on this issue.

The sight from this platform is significant, historic, and symbolic. Tens and tens and tens and tens of thousands. We are proud that we are free-born citizens of the United Kingdom. British we are and British we will remain.

It was a family occasion too. Farmer Trevor Lutton was there with his three young children and wife Agnes. Far from the madding crowd, Trevor farms 30 acres as his father did before him. His view of the Anglo-Irish Agreement was typical of most Protestants.

Mrs. Thatcher has, up until now, always said that if there was any change in the status of Northern Ireland, that change would only come about with the consent of the Northern Ireland people. Now we, having studied this Anglo-Irish Agreement, believe that the agreement itself is a change in the status of Northern Ireland, in that we are no longer to be governed as United Kingdom citizens solely by the United Kingdom government. We will now be governed by the United Kingdom government and the Irish Republican government.

So many people have died in Northern Ireland to oppose the IRA, to help put them down, to keep us British. And now we are giving the Irish Republic a say in our affairs. Why have those people died? Can you explain to a bereaved family why the father or why the brother or the son has died?

The IRA have already said that it's their cutting edge of violence that has brought them so far. And to give, as this Agreement does, the Irish Republic a role in Northern Ireland, in our opinion, is a step towards a united Ireland. And surely the IRA are going to increase their violence and put on more pressure to get what they finally want, which is a united Ireland, and something which Unionists will never accept.

But extremist Catholics take no heed. Their disaffection has grown. IRA outrages have escalated, and more Catholics have turned to its political arm, Sinn Féin, who have had unprecedented electoral success this year. Sinn Féin regard the Anglo-Irish Agreement as irrelevant. They want nothing less than a united Ireland. But there are moderate Catholics who pin their faith on these new bilateral arrangements.

The Anglo-Irish Agreement really is designed to accommodate the divided loyalties in Northern Ireland. But it also has the important element that it has told the nationalist community that for the first time, if there is a majority in favour of Irish unity, then the British government will facilitate that. And it also gives the Irish government a role in Northern Ireland in resolving difficult issues in the areas of human rights in particular and security areas with the British government and consulting with them.

Its purpose is to try to bring together and to support all of those people in Northern Ireland who wish to end violence and to proceed in a democratic way.

Our purpose is to secure equal recognition and respect for the two identities in Northern Ireland. Nationalists can now raise their heads knowing that their position is and is seen to be on an equal footing with that of members of the Unionist community.

One Protestant farmer's wife takes a different view. Ethel Smyth is a prosperous businesswoman living in a small country town.

We are here tonight to make a peaceable protest and to exercise our rights under the law to protest.

Ethel Smith has found herself increasingly involved. This summer, the local loyalist march was banned for fear of provoking the Catholic community. But the loyalists went ahead anyway. Ethel Smith saw the ban as a sign that the tide was turning. Catholic sensibilities were being taken more seriously than ever before. So, she and other like-minded Protestants formed the Loyalist Action Front. They are starting Ulster Clubs in towns throughout the province to combat what they call the threat of Irish nationalism. Their motto: 'Hope for the best, prepare for the worst.'

The Ulster Clubs are preparing and training. We have the involvement of people who are teaching first aid. We have the involvement of people who, in a doomsday situation, will help with welfare. We have other involvement also, which I'm not prepared to reveal on this program. Arms? I won't say at this time.

But you don't deny that people are training with arms? I don't deny that it has been discussed. And so, do you and the Ulster Clubs actually regard it as your responsibility to act on behalf of the loyalist population in fighting against the Agreement?

Well, we feel that we have a right, and indeed a duty, to our children and to those who come behind us to make a stand before it's too late.

And you'll discover it's not the miners you're dealing with, Mrs. Thatcher. It's not the Argentinians you're dealing with. You're dealing with the Protestant people whose fathers' sepulchers are in this land, who have been born and bred on this soil, who have suffered and sacrificed to keep the British presence in Ireland. And we will continue to do that. So if she wants to take us on, she can. But she cannot win.

They have been, if you like, locked into a situation where a border was drawn, giving them what was supposed to be security and giving them a majority. But, in effect, what that did was that it gave them a siege mentality, because the only way they see that they can protect their own ethos and their own position is by maintaining that sectarian solidarity and that majority. And, if you like, that does, in effect, explain the reason for the discrimination against Catholics over the years, because it was in their interest to defend themselves, to ensure that Catholics had to emigrate, didn't get jobs, and were kept in their place so that they could remain a majority. So, in many ways, they're prisoners of the situation.

A handful of frustrated Protestants took the opportunity last week to vent their anger at the so-called British sellout on the man responsible for British policy in Northern Ireland, Secretary of State Tom King. He was manhandled on the steps of Belfast City Hall and punched in the stomach. Many Protestants were shocked by the futile personal attack. However, the deep sense of betrayal is being felt throughout the Protestant community. Would the Lennons, too, in the last resort, be prepared to fight to defend their position?

Well, I mean, we fought two World Wars because of the threat of an aggressive state. And it wasn't even on our doorstep. This is on our doorstep. So if it came that length, I think we'd have to face up to it.

We will resist the way the Czechoslovakians resisted Russia and the Poles resisted Russia. The same way, and we die in the attempt of resisting. Well, we're prepared to shed our blood rather than surrender our principles and our liberty.

When we rise, it'll be a huge majority of people rising up, and I believe it'll envelop the whole of Ireland. The whole of Ireland will be enveloped in a bloody and all-out civil war. And may God help us.

No one can predict how significant this movement will become. The latest opinion poll shows that a majority of Protestants are against the Anglo-Irish Agreement. Only a minority, however, say they would actually take up arms against it. The British Parliament has just ratified the agreement. Only the 15 Ulster Unionist MPs and a handful of Conservatives voted against it. The government hope is that the outcry is just initial overreaction. But it may prove to be merely the opening round in a bitter campaign to make the province ungovernable.

To demonstrate how much they don't like the new accord, all 15 Protestant members of the British House of Commons resigned yesterday, one day after that body approved the new agreement.

Many things happened in the '60s that changed this country, and one of them was Ralph Nader. The Nader phenomenon is 20 years old tomorrow, and Ralph Nader is with us tonight. Before we talk, correspondent June Cross reminds us of his record.

Ralph is Ralph. There is nobody like Ralph. He believes in what he's doing, and he has enough confidence to accomplish it. Ralph Nader is really one of my heroes.

They were known as Nader's Raiders—underpaid, hardworking, dedicated to the cause of consumer rights. They took their name from the man many of them considered to be their patron saint, Ralph Nader. Last week, Nader and his Raiders celebrated 20 years of consumer advocacy. Nader was presented with a symbol of his beginnings, the hood of a 1966 Corvair, and he offered some insight into his own motivations.

When I came home from the fifth grade one day from school, she asked me the question, "Well, Ralph, what did you do today? Think or believe?"

Until Ralph Nader started thinking about it, few people in America paid attention to safety issues. Then Nader, a young lawyer just six years out of Harvard Law School, sat before Congress in the winter of 1966. He charged that US auto manufacturers, and General Motors in particular, were deliberately building dangerous cars. Nader cited as a case in point the GM Corvair. He described in detail how the top management and engineering staff at GM had designed a car so unstable that it was liable to go out of control even at low speeds. Joan Claybrook has worked closely with Nader these last 20 years.

He so irritated General Motors that they decided to investigate him. And this caused a major national debate over the whole issue of auto safety and got a law enacted and made Ralph Nader a household word for a number of years.

But Nader didn't stop with cars. The public interest groups he founded pushed for a series of reforms that touched the lives of nearly everyone in America.

We have cleaner meat and poultry. We have control over radiation, both in television sets and X-ray devices and so on, that we didn't have before.

Public Citizen, the group Joan Claybrook now heads, laid the groundwork for many of these reforms. Now, Public Citizen is the holding company for a conglomeration of public interest groups, groups that are responsible for pages and pages of regulations designed and passed through Congress starting in the early '70s and lasting through the Carter administration. Congressman Henry Waxman, Democrat of California, worked closely with Ralph Nader in getting much of that legislation passed.

Well, his style was one of zealotry, of idealism, of mobilizing a lot of forces that ordinarily are not powerful in the legislative framework. Rather than representing a lot of different special interests that give a lot of money to campaigns, he represented a broader public interest and reminded politicians that ultimately the people vote for them, not these special interest groups.

For a while, the tide of public opinion and the votes in Congress were both working with Ralph Nader, but by the time President Reagan was elected, the public had grown weary of Nader's brand of consumerism. Critics charged that he had spread himself too thin, that he was too strident and unwilling to compromise, and worst of all, that his dream of reform had instead resulted in a nightmare of bureaucracy and regulation. Marvin Kosters is a former economic advisor to Presidents Nixon and Ford. He still drives his 1964 Corvair to work each morning. He credits Nader for making people more aware of safety issues, but says Nader's approach places too much faith in government as a watchdog.

I think there's too much emphasis on command and control, as people say, with enforcement that tries to make firms criminals for the side effects of some of their activities. I think that that approach has proven to be cumbersome, not effective in terms of achieving goals, too costly.

Ralph Nader, what do you say to that criticism?

I think it's wrong. I think we need law and order for corporate misbehavior, whether it's corporate crime, fraud, pollution, negligence. We're not getting enough of it. The evidence is in the Wall Street Journal every day. Savings and loan failures due to speculation and fraud, price fixing, corporate pollution, midnight dumping of toxic waste, violation of occupational safety standards, and on and on. You see, it's easy to make a generalization based on a mood. Reagan came in, and they reflect the mood. The fact of the matter is, and the evidence, the overwhelming majority of the American people want strong health and safety regulation. They want competition. They don't want monopoly.

Let me quote you a piece written in the Washington Post by Michael Kinsley, who says he once worked with you. It's a very unusual tribute. It's almost as gritty as it is adulative. He says, yours is the classic zealot's worldview, paranoid and humorless, and his vision, meaning yours, of the ideal society: regulations for all contingencies of life, warning labels on every French fry, and a citizenry on hair-trigger alert for violations of its personal space. How accurately is that you?

When I read that, I could hardly stop laughing. First of all, I don't want labels on French fries. I want labels on polluters in the workplace and in the community, the right to know what toxic chemicals people are being exposed to. Quite more serious than labels on French fries. But more seriously is, you know, when an individual is determined, uh and has a persistence level they call them zealot or they call them paranoid i think general motors is paranoid and zealotry and here's a company that has suppressed its own engineers life-saving devices like airbags you're talking about still or or then yeah still i mean here's a company whose own engineers developed it it's in 10 000 gm cars for over 10 years worked beautifully former president of gm ed cole was all for airbags as standard equipment his successes in the mid 70s reversed the policy all out attack on all government

law and order dealing with the auto industry. How do you call that? Just because it's a big company, we don't use the word zealotry, you know, paranoid. I mean, I'm mild compared to what is going to come after if we bequeath to future generations a poisoned country—air, water—fraud in the marketplace, and a few corporations dominating the whole political economy from Congress to Wall Street.

Mr. Kinsley makes another point. Reasonable people don't move the world. Do you believe that you have to go, again to use his phrase, too far to go far enough?

No. Let me tell you why. I consider most of my charges, in retrospect, understatements. Unsafe at Any Speed is a book full now of understatements in terms of what was later revealed about auto company dereliction and defects. Things you didn't know, or because you didn't know, we just scratched the surface. And this is true again and again in what we're doing if you look backward on what we said 5, 10, 15 years ago. Also, you don't get through the media. I mean, you know, as better than I, that if you make wildly exaggerated charges, you don't get a chance to go on the mass media very often with that kind of brand of communication. I think we've been very accurate, very responsible, and the record is clear on that.

But you see, when someone like Kinsley wants to praise, he's got to back and fill and snort and charge and, you know, use words like, 'I want to label French fries.' He really has a sense of humor.

He says, 'You have no pleasure in a French fry itself. Your only concern is whether there's nitrite in it.' Actually, he says hot dog. I'm sorry, not French fry. Hot dog.

When a doctor goes to a hospital, he's worried about illness. He's worried about cancer. We are consumer advocates. We're worried about hazardous chemicals in food, contaminated drinking water—serious problem in this country—radioactive waste, transport and storage problems. Of course, that's what we're working on. Speaking of going back to the context of going too far, did you go so far as to create a back—a political backlash against you, do you think? Oh, yes, but it wasn't very far to cause that. The backlash started with the formation of the Business Roundtable in the early '70s. Then came a hugely expanded Chamber of Commerce. Then came the political action committees, and they created a kind of perception that

government was on people's backs when what we wanted is government to get on misbehaving corporations' backs so that these corporations take their hands out of people's pockets. And I'll tell you, Washington is gradually losing touch with reality. What's reality in Washington is perception. Did you help elect Ronald Reagan? Well, I would like to say no. I think he would have been elected regardless of the citizen groups' efforts. I think basically when you're down to one of two candidates, the one with the cleverest ads, with the freshest slogans, catchy slogans, and the most money, and the symbols, is going to win. We don't really discuss concrete issues of power in presidential elections. We have now what might be called Miller-time politics.

Where do you sense the political wind is blowing now? Our correspondent, June Cross, said that at the time of Mr. Reagan's election, it seemed to be blowing against the kind of regulation that resulted from your campaigning. Where is it blowing now? Is it still blowing against regulation?

No, the tide is turning. There are a lot of bankers who would like to re-regulate banks and the safety of the banking system. They want deregulation to slow down or stop. You're seeing now a backlash against political action committee finance. You're seeing a sweeping spread of mandatory seatbelt use laws, supported even by Ronald Reagan now at the state level. We're seeing, after all, James Watt has left, Anne Gorsuch of EPA has left. I think we're going to see a tide the other way. I think people want the federal cop on the corporate beat.

Looking ahead, what's going to be the biggest health, consumer, and safety issues 20 years from now, do you think?

I think the workplace and environmental cancers, whether it's radiation or chemicals in the workplace, drinking water contamination, pesticides—I think it's a very serious problem. It's really the major source of mortality in this country that's increasing.

Make a couple of predictions for us. If you look ahead 20 years, what about, will it be illegal to smoke? Will it be illegal to drink? Will there be more restrictions on driving cars or building cars? What do you see as the kind of society in this context we'll be living in?

Twenty years, I think we'll see people be able to survive 60-mile-an-hour crashes into trees with airbag inflation and much more crashworthy cars. I think we're going to see an enormously quiet dimension of the consumer movement with more people stopping drinking, with anti-smoking clinics available in every community and with a sharp decline in smoking. It's going to go out of style. Already you can see it going out of style with the rise of the non-smoker lobby. I think a lot of good signs: more diet concern, nutrition concern, physical fitness, all is part of the consumer movement.

Briefly, what does the next 20 years hold for you? What do the next 20 years hold for you personally?

I still have my goals on auto safety and environmental health, but I'm more interested now in giving millions of people organizational mechanisms so they can band together as citizens, as tenants, as consumers—electric, telephone, gas service—so they can defend their rights and enrich the democracy. Politics is like a tree, and the people are the root and the trunk, and the politicians are the branches.

Okay, we have to leave it there. Ralph Nader, thank you.

Now it's time for tonight's Lurie cartoon on one of the day's top stories, so...

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And now for a final look at today's top stories. The Reagan administration accused Israel of not cooperating in the investigation of a Navy analyst suspected of spying for the Israelis. The Libyans accused Egypt of preparing an invasion, but the Egyptians denied it. And the space shuttle Atlantis astronauts tried their hand at a little construction in outer space. Good night, Robin.

Good night, Judy. That's all for tonight. Have a nice weekend. We'll see you on Monday night. I'm Robert MacNeil. Good night.

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