Georgist tax– another Cook casualty

 What could be more Georgist than a tax on sulfur dioxide emissions?  Well, maybe something else, but at least it would be a move in a Georgist direction.

Such a tax was introduced at the Cook County Board, to raise a little badly-needed revenue while providing incentives to reduce emissions.  It actually passed, with votes from the machine commissioners (Butler, Daley, etc.), as well as Mike Quigley, but opposed by “reformers”  Claypool and Peraica.  It passed, 10-6 but was vetoed Monday by Pres. Stroger.

Mixing poor syntax with bad economics, Stroger wrote:

“I oppose this Ordinance on the grounds that said emissions should not attempt to be controlled through a Cook County tax but rather, said emissions should be regulated by the County, State, and Federal Government in order to fully protect our environment and the health of our citizens. “

Probably there’s more politics here than meets my naive eye.

Thanks to Bill Wendt for the report, DJWInfo for the vote tally, and Mike Pitula of LVEJO for pushing (whether he knows it or not) a good Georgist reform.

Increasing value of taxi medallions

Today’s Tribune asserts that Chicago taxi medallions — a requirement if you want to operate a taxicab in the City– now cost $77,000 each (“Chicago hails two driven cabbies” Tribune, 2/8/07) . That’s up from “over $40,000” in 2004 (“City says cab agent misused $100,000, Tribune, 4/25/04) and $28,000 in 1991 (“Metro Briefings”, Sun-Times, 7/17/91),

Of course, fares were raised 11.7% in 2005 (“Cab riders turned off by rooftop ‘not for hire’ light: Survey finds most favor old off-on signal”, Sun-Times, 12/9/05; “Increased taxi fares quietly take effect,” Tribune, 5/12/05), 16% in 2000 (“FOR TAXI DRIVERS, FARE HIKE IS NOT WITHOUT A PRICE,”Tribune 12/1/00), about 15% in 1997 (“Taxi fares get a boost”, Sun-Times, 1/14/97), and about 9% in 1994 (“City Cab Fares Go Up Today, Sun-Times, 1/18/94).

Let’s do a little math here. Looks like since 1991, fares are up 48%, and the price of a medallion is up 175%. So medallion owners seem to be taking an increased share of revenue produced by the cabbies. For reference, the Bureau of Labor Statistics says consumer prices rose 48% between 1991 and 2006.

Meanwhile, in New York, medallions are going for over half a million dollars and there has been an effort to set up a working medallion exchange, where medallions can be traded on margin.

Misdirection of Development Incentives

This is not really news, but it does seem to be an additional example. Washington-based “Good Jobs First” has released a Ford-funded study showing that subsidies for “job creation” tend to go to communities that have low unemployment. Of course, dummy! It’s easier to create jobs there.

Now the only reason I found this was that I was looking for the study released yesterday by “Broadway in Chicago,” asserting that their operations have an “annual economic impact” of $635 million in Illinois. I haven’t seen the details of how this is measured, but most likely it assumes that, if there were no BIC operation, then the theatres would remain dark, nothing else would be built in their place, and nobody who came to Chicago and saw one of their productions would have found any other reason to come. Furthermore, none of the people who serve these visitors, or the theaters, would have found any other work. Crains says that “Mayor Daley’s administration has invested about $60 million into the downtown theater district,” but doesn’t indicate how much went to BIC and what other subsidies they may have received. The Tribune assigned a theater critic, not a business or economic reporter, to the story.

Even Off the Books, you still need a space

Finally got a copy of Sudhir Venkatesh’s Off the Books, courtesy of a suburban library. It’s a study of a poor ghetto area within Chicago. Few are “employed,” but many are working, hustling to make a living.

“I soon discovered that the seemingly random collection of men and women in the community…were nearly all linked together in a vast, often invisible web that girded their neighborhood. This web was the underground economy.”

So how are these folks making a living? Pretty much any way you could imagine. Of course some of the work is illegal– prostitution, drugs– but much would be legal if it was performed in accordance with applicable laws and ordinances. People are selling clothing, food (some of it home made), used equipment (some of which may have been stolen), maybe providing security services for local stores and even apartment building owners. Sure, off-the-books activity can avoid some taxes, but among the underground services is the preparation of income tax returns. (Thus the preparation of the books is off the books). Life is difficult, because almost everyone’s poor and public services are, well, not uniformly superb.

There are several reasons why it’s difficult to escape to a better life, one of which is that underground work doesn’t produce a credit rating nor, really, a resume. And many people are simply afraid to leave their familiar community.

A few community leaders help keep things functioning, but receive little benefit.

“It is by working off the books, in back rooms and behind the scenes, that local residents come up against the limits of their [work]…Because they have done this surreptitiously…they are implicated in the very dangerous and destablilizing activities they are trying to address…[and] they can never really show themselves to those in the social mainstream– phiilanthropists, advocates, employers, and so on– who would otherwise find their work courageous and worthy of acknowledgement and reward. It is nearly impossible for the press and political leaders to recognize their work…Thus, in the long run their success as mediators does little to help them advance personally.”

And

“Even in a depleted ghetto, there will be collective actors in place who attend to neighborhood affairs, and it is important to … note that their time and energy are taken up by matters that do not always make it onto the radar of the wider world. They may be working in the immediate present to make sure that children can walk safely on the widewalk or through the park…To do so, they may have to find the pimp, car mechanic, or other hustler and iron out the problem themselves. Doing this repeatedly can mean reduced time to prepare funding proposals… Unlike their suburban counterparts who are more likely to have decent city services and far fewer shady types roaming about, they do not have the time to luxuriate and plan for the future.”

What does a Georgist see in this book? Of course it is that land is key; one needs a place to produce, and even just to live.

Underground entrepreneurs possess skill, business acumen, and tremendous potential for innovative skills and strategies. What most lack is a physical space to ply their trade….Some have equipment that must be housed, others need a place to sell…others need sites to advertise…Private, sheltered, decent space is at a premium.”

“To hustle, one does not simply set up shop in an alleyway or on a street corner. Chances are that others have already claimed that spot. Moreover, it is likely that any claim to use turn and earn revenue will be contested by other entrepreneurs” such as block club presidents or precinct captains. “In the ghetto, one must negotiate public space before one can hustle.”

“Very few middle-class Americans see an alley as a venue for monetary gain; but in the ghetto these spaces are full of possibility. “

“Street hustlers can offer various services to merchants including security, cleaning up, advertising. “[H]ustlers who offer merchants these services are not necessarily looking for additional income…Many have other entrepreneurial schemes…and so need a private sheltered space. James Arleander[a pseudonym] articulates a typical hustler viewpoint:

“You can always make money…But getting a place is priceless. That’s the hardest thing, to just have some place to keep your [tools and belongings] and … hide from…people who may be upset at you.”

 

It’s a book worth reading if you’re interested in how some poor people manage to survive, or even just another perspective on how the city works. Unfortunately, Harvard University Press has done a terrible job of copyediting, from page 1 (where a woman is introduced as a “widower,” or is this a new kind of political correctness?) , though the discussion of “subway” stations on Chicago’s south side (there actually are none south of Roosevelt Rd), and the “Department of Parks and Recreation” (no such agency in Chicago, folks, you mean the Chicago Park District), to the hustle that pays $50/night, or is it $50/week, depending on which part of page 312 you believe. Maybe that can be fixed in the next edition.

What poor people need…

…is access to land.  Henry George noted that in the 19th century, and here’s Harold Henderson reviewing Sudhir Venkatesh’s new book:

what “James Arleander” needs is a piece of alley to do his off-the-books car repair, something he’s not going to find in a squeaky-clean mixed-income community.

Exactly.  Every kind of economic activity requires land, and if you can’t get the use of any you can’t produce anything.

From this review and others I’ve seen, the book seems to go way beyond the land issue, telling us, first, something about the “underground” economy by which many folks support themselves, and second, some of the reasons why it really isn’t a good thing that they must do so.

Yeah, I’d like to read the actual book, but it seems that the entire Chicago Public Library system has only one copy, and Amazon says it’ll be 4-6 weeks before they can deliver it.