More failure of CTA to collect its earnings

CTA Holiday Train
2006 version of the Holiday Train at Belmont —                    Image credit: Tony CC BY-NC-ND 2.0

I recall a couple years ago, the first time I saw the CTA Holiday Train enter a station.  It was packed, mainly with grandparents/aunts/uncles/cousins taking small ones for a ride.  Probably generated a lot of revenue. Forward to 2020, a train crowded with people who breathe isn’t desired, so what to do?

Well, they could have just cancelled it, but that’d be dropping yet another tradition, and I suppose reducing overtime for union employees.  So they’re going to run it empty, and instead of crowding the train, folks can crowd the platforms– probably a bit less close breathing.

But CTA trains run every day with people on them– the problem is the crowding. Why not sell tickets? How much would people pay for a ride in a semi-private car, restricted to, say 10 people per car? $25 for a 2-hour trip? $100? I don’t know, but it’s nontrivial.  Maybe $1000/trip/car, $4000/trip/train, $160,000 assuming each space is sold just twice per operating day.  Now, $160,000 is probably not quite enough to operate one bus for a year.  But why not collect it?

Ideally, CTA would use the money to pay the cost of operation, and apply any left over to its growing deficit.  But it might be more acceptable to have some sufficiently progressive charitable organization– United Way?– devise a system for distributing the proceeds to a politically-balanced array of groups actually assisting impoverished people.  CTA could even reserve a certain number of tickets for actual impoverished folks who’d like to ride.

I wonder how much money a lobbyist could attract if paid $160,000?

How many deaths did the Covid response cause?

image credit: Tyler Merbler (CC BY 2.0)

Thanks to Center Square via Wirepoints  for alerting me to a (weekly?) mortality tally from the CDC. It provides weekly counts of death by underlying natural cause, for each state.  For Illinois, unredacted Covid-19 deaths started with the week ending March 21, and the report covers the 22 weeks thru August 15.  Counts for 2019 as well as 2020 are shown.  My tally below attributes to Covid those deaths where it is an “underlying cause.”

             Covid      All other     Total

Year 2019             N A                       43,223                  43,223

Year 2020            6,779                     46,537                  53,316

So if I am interpreting this correctly, we seem to have had 46,537-43,223=3314 excess deaths, not due to Covid, but possibly due to the plandemic lockdown measures.  Given that most Covid victims had co-morbities, which might for some have proved fatal without Covid, this figure must be an understatement. Further, if some excess deaths are due to people not getting routine screening or treatment during the lockdown, those might not show up until some time hence.

Not the first daylight robbery, but a good one

I’ve long considered Dominic Frisby, perhaps the only working comic who’s also a financial writer, to be a Georgist.  Several years ago he posted a nice video explaining the land value tax.  Now he’s gone deep into a history of taxation and its effects, in  Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future   Readable and succinct, but somehow by the end Frisby has forgot about his video.

The title is appropriate, so good that over a dozen older books already carry it, but the subtitle may be unique.  Frisby asserts quite a few facts new to me, and for the most part provides references (altho some are a bit summary, showing only the domain name such as, or, where one might need to search around a bit).

The book starts with the story of Hong Kong, a British colony which prospered thru free markets and lower taxes (The point stands, even tho in recent years external demand pushed housing costs to obscene levels, and in recent months political and governmental interference made conditions even more difficult.) Going thru tax history, Frisby of course discusses the effects of the window tax (“daylight robbery”), and explains why it was considered to be fairer and easier to administer than its predecessor. He tells us about tax revolts and England’s first income tax, all records of which were apparently destroyed (source citation is a two-volume history that I can find only in Latin).  He explains the cause of the U S War between the States (which Lincoln waged more for revenue purposes than in any opposition to slavery.)  He notes that Hitler was tax-exempt, and the Guardian used a Cayman Islands entity to (apparently legally) avoid taxes.

After lots more stories about taxation and its role in history, moving to modern times, Frisby explains (as if any of us need to know) the burden that taxation of productive activity places on people trying to, well, be productive. He talks about the digital nomads and crypto currencies which make collection of production tax more difficult, and about digital transactions which make the collection easier.

Finally he proposes a Utopian tax system.  Is it collection of all economic rent as the sole source of public revenue?  Not really.  He wants VAT (not to exceed 15%, and including narcotics) and income tax (also not to exceed 15%).  So the record-keeping burdens and complexities of those will remain, tho perhaps a bit reduced because the impact of error is less.  To these he wants to add L U T (Location Usage Tax), which is basically LVT but with perhaps a clearer name, and which would be set at some percentage of the land rental value.  He wants voters to choose the percentage, apparently a single rate nationwide. And since he aims to keep governmental expenditures below 15% of GDP, it’s unclear that there would be any L U T at all.

“The location usage tax does not apply just to land, but to any asset granted by nature — the airspace the mineral wealth, and even the broadcast spectrums.”  He doesn’t seem to have any problem with private collection of rent for “intellectual property,” even tho I P is a privilege granted and protected by the government, thus straightforward to track and assess– if there’s any justification for I P at all.

It seems that much of the land in Britain is “unregistered,” in that the owner isn’t known, and in Utopia this will be remedied by identifying every  owner.  I’m not sure why that’s necessary.  A tax bill could be posted for each parcel, and a copy mailed to the owner should s/he request it.  After due and repeated notice, If the bill isn’t paid, the land could be taken over by the Crown (or whatever they call it over there), and auctioned to somebody willing to pay the tax. (If nobody’s willing to pay the tax, it needs to be reduced.)

Would I like to live in Frisby’s Utopia? Well, of course here in the U S we have no VAT, and the retail sales tax is generally less than 15%. But income tax can be higher, and we have various other taxes which Frisby proposes to eliminate.  And LVT has other benefits in addition to the revenue it generates.  So on the whole, it’s a better deal, a step in the right direction. But Utopia? Go back and watch the video.

(Note: This review is of the 2019 edition of the book.  The Publisher’s web site indicates that a new edition will be released later in 2020.)

Having no expertise in epidemiology nor politics…

…I still feel qualified to express opinions regarding COVID-19

Here’s a chart from the excellent 91-divoc site:

(The country you can’t see, overwritten by Switzerland, is Canada.)  What I make of this is that maybe the Swedish approach, relatively unrestricted, works about as well as the Illinois approach, pretty locked down except for big demonstrations. Otoh, if the Danes are similar to Swedes, then the former nation’s lockdown might have been quite helpful in reducing deaths.  To a level almost as low as Texas, tho we’ll see how that works out in the coming month or so.

Go play with the site, recently enhanced to allow comparisons between U S states and nations.  It’s great fun.

Who should be defunded?

Image credit: Rodney Choice/Choice Photography (CC BY-NC-SA 2.0)

I was only a bit surprised to find that Chicago’s 2020 police budget is $1,778,002,408, or $660 for each of the 2,693,976 folks that DJ Trump’s Census Bureau estimates live in Chicago.  This doesn’t include $737.5 million for the police pension fund, nor $204,867,834 for the Office of Emergency Mgt and Communications, nor $135 million for “judgments and settlements against the City,” (including but not limited to police misbehavior), nor the police-related portion of the City’s capital budget, which seems to include the “joint public safety training academy” ($85 million, but just $15.75 million in the current year), and some other facilities.  All told, and without doing the detailed analysis which I wish the Civic Federation would do, it seems the the City spends something like $1000/person/year for police.  That doesn’t necessarily mean that police should be defunded in whole or in part; after all, reported crime has for the most part been declining, so perhaps we are getting something for our money. But it gives some idea of the dollars involved. (And it turns out that, as I was writing this, the Civic Federation produced a post covering much the same ground, with better context and detail and colorful charts, and noting that I failed to include some undetermined but substantial benefit costs among the cost of police.)

Compare police costs to Chicago Public Schools.  CPS is a separate unit of government, but controlled by the Mayor and funded mainly by Chicago property tax payers.  For the current year, it’s planning to spend $7.84 billion, or $2910 per Chicago resident.  Enrollment continues to decline, 13% in ten years (roughly the same amount as reported crime, but that might just be a coincidence).

Summing the police and school expenses, Chicago spends $3910/person.  For the hypothetical family of four, that’s over $15,000.  I wonder how many two-worker households would prefer to have one stay home, help educate the children, hiring tutors as needed, and keep an eye on the neighborhood, if their income increased by that amount.  Just a thought.

Update September 27:  It turns out I’m not the only one suggesting that we spend too much on government schools.

High land prices as a banking problem

image credit: Ann Priestley (cc) via flickr

Here’s an (audio) interview with economist Richard Werner, who remarks on the problems high land prices have posed for the Japanese economy in recent decades, and the relevance for the U S and other nations.  Dropping interest rates supports higher land prices, as well as facilitating financial engineering, but does little for actual investment in the real economy.  Small businesses, who actually provide useful goods or services, still have trouble borrowing because big banks don’t want to deal with them. The number of small “community” banks, more likely to actually meet the needs of small businesses,  in the U S has been declining.  He suggests that having more local banks, especially co-operative banks, would be an effective way to make loans available.   This seems plausible, as ILSR says that “In 2018, community-based financial institutions made 52 percent of all small business loans, even though they controlled only 16 percent of banking assets.”  Yet it seems there’s no shortage of local banks, as least in medium and larger cities.

In this interview he never mentions the possibility of a substantial land value tax as a way to curb land speculation.  As Keizo Takagi wrote in 1989, Japan’s land value tax “has been so low that [it] has not functioned properly as a holding cost,” [p. 129] thus failing to control speculative prices.

Perhaps deliberately or perhaps ignorantly, the Bloomberg interviewers didn’t bother to bring this up in the interview. Werner’s conclusion seems to be that, rather than ZIRP, interest rates should be allowed to rise to a level where local banks could more easily find loans profitable.  I suppose that might be better than nothing.


Distributing privilege differently

Some land in Woodlawn (15 years ago). Image credit: Eric Allix Rogers CC BY-NC-ND 2.0

A D Quig reports in Crains that the City of Chicago’s Housing Commissioner  says “everyone who lives in Woodlawn now should be able to stay in Woodlawn.”  This can be a challenge as housing costs in the area rise.  According to Crains (not corroborated by any press release I can find on web sites of the Department of Housing or the Mayor’s Office), support for housing affordabiity in the area will involve six strategies:

  • Right of refusal for large apartment building tenants if a landlord seeks to sell his or her building
  • Helping apartment building owners refinance properties to keep renters in place with affordable rates
  • Giving grants to long-term homeowners to help with home repairs
  • Financing the rehab of vacant buildings
  • Setting guidelines for how city-owned, vacant, residentially zoned land can be developed into affordable or mixed-income housing
  • Requiring developers that receive city-owned land to meet enhanced local hiring requirements

Details, of course, are yet to be defined, and the whole thing requires action by the City Council.  Still, assuming that the program is effectively structured and implemented, what we have is the designation of a privileged class– people who live in Woodlawn– receiving benefits that might otherwise accrue to another privileged class — people who own land in Woodlawn, with a new layer of bureaucracy established (or repurposed) to administer it, including investigating and monitoring the reported income and behavior of the people who are granted permission to live in the area.

Whereas, under a land value tax, the area would now have little vacant land, presumably a lot more housing, probably quite “affordable.”

Of course if you’re the Mayor, you do what you figure is politically feasible and within your power, not what is morally right and economically efficient, but would require persuading a lot of uninformed voters and obtaining cooperation from quite a few other governmental actors.

Who Owns Silicon Valley?

View of Silicon Valley in 2012, showing major employers
Vintage 2012 view of Silicon Valley showing major employers. “Silicon Valley IT Company Topography” by Wayan Vota is licensed under CC BY-NC-SA 2.0

Or more precisely, who owns Santa Clara County? With the cooperation of local officials including the County Assessor, a consortium including the Mercury News has determined who owns the greatest value of real estate in the County.  Tech giants Alphabet and Apple are second and third, but the number one owner turns out to be Stanford University.

Some other important information:

Proposition 13 is mentioned, but the incentive which keeps old people in their homes which become unaffordable to most families is not explored.

Local opposition to development, preventing housing construction which might otherwise occur, is discussed.

Stanford’s existing holdings include commercial property, but their current acquisitions seem mainly to provide housing for some of their elite employees.  These people are able to buy houses at favorable prices (relative to the area), however Stanford retains the land and retains the right to buy the house back eventually. Local non-Stanford people complain, of course, but do not offer to sell their properties at a discount.

Apparently California practice is to assess all real estate, even that which is exempt.  This enables meaningful estimates of ownership even tho $13.3 billion of Stanford’s $19.7 billion in real estate is exempt.

Several local officials were interviewed.  They don’t discuss how it feels to know that your opposition, Apple and/or Google, has control of much of your communications and might be monitoring them.

Well worth a read for those interested.


Costs of medical services still out of control– and some ideas for improvement

book coverIt’s pretty well-known that medical care is absorbing an increasing proportion of GDP, and putting many Americans into financial (and, in many cases, medical) distress.  One source of the problem is poverty– people whose incomes are too low to afford decent housing, food etc. are unlikely to have much left over to pay for medical treatments.  And another cause might be an aging population who demand advanced treatments to further extend their lives.  Both important issues, but this post focuses on another, probably more important one: The medical system is full of rentiers and other thieves, who, pretending to improve health or efficiency, impose tolls or promote unnecessary treatment, resulting in higher and rising costs.  That’s the book Marty Makary (MD) has written.

Using a conversational style, well-organized, packed with personal anecdotes, Makary, a cancer surgeon at Johns Hopkins, works his way thru some of the reasons medical care costs so much.  Sources are meticulously cited in endnotes.  I think his findings can be pretty well summarized:

  • Some medical professionals offer screenings and other promotions to entice folks to get treatment they really don’t need.
  • Hospital charges are, not quite random, but pretty much void of any relationship to actual costs or what other customers pay for the same service.
  • Some hospitals take advantage of their quasi-monopoly status to charge excessive prices, and aggressively sue customers who don’t pay promptly.  On the other hand, at least a few hospitals in similar circumstances find they can prosper while charging more reasonable prices.
  • Air ambulance (and, to some extent, surface ambulances) have been largely taken over by private equity firms, and impose excessive (mostly unregulated) charges on people who are in no position to bargain.
  • Some doctors are outliers in terms of types of birth delivery and various surgeries, meaning that they perform invasive and/or expensive procedures at a much higher rate than the norm.  This may be because they’re selfish and inconsiderate, or maybe they just haven’t thought about it and, when shown the data, mend their ways.
  • The opioid problem, as reported elsewhere, is partly due to some doctors prescribing more pills than really necessary.
  • Overtreatment is a problem; often a more conservative approach is more effective (as well as less expensive).
  • A few organizations have managed to rethink how medical care is provided, giving more autonomy to practitioners as well as more support to patients. Also, a few payers (meaning, typically, employers who pay for insurance) are managing to learn the charges imposed by various providers, and incentivizing their insureds to choose less costly providers.
  • “Health insurance,” which is really a care financing arrangement and not insurance in the conventional sense, is an even sleazier business than I thought, and insurance brokers are incentivized to maximize costs.
  • Pharmacy benefit managers may have seemed like a good idea at one time, but basically are toll collectors between the payer and the drug provider.  Similarly, “group purchasing organizations” charge a toll on hospital purchases of equipment and supplies.  In both cases it’s rarely possible to get accurate data on who is paying who how much for what.
  • Then there’s the “wellness” industry. Of course sensible diets and some exercise are good things, but “wellness” seems to have evolved to divert attention from the main causes of escalating costs.

The book concludes with a few recommendations, mostly for providers and legislators, but also for consumers, who are encouraged shop around, and ask for prices before agreeing to treatment.

A few important concepts are missed.

  • The scandal of “Certificate of Need” laws, which protect hospital monopolies and still exist in several backward states, isn’t mentioned.
  • While the cost of drugs receives attention, no mention is made of the patent games by which the U S Government enables drug manufacturers to extend protection, and collect rents, far beyond the statutory period.
  • Little attention is given to the history of medical care in America, including lodge practice and the role of wealthy foundations in choosing how medicine developed.

Finally, I hope the next edition will avoid doubling the populations of Missouri and Wisconsin (page 79).