As the housing market tanked a few years ago, of course the price of farmland “ripe” for housing crashed along with it. Meanwhile, many investors, noting impending food shortages and low interest rates, bought farmland in rural areas. Now, no surprise, they’re selling their rural land and using some of the cash to again purchase suburban farmland, at the much lower prices. The profit, of course, is in buying and selling land, not producing anything. I am grateful to Mary Ellen Podmolik for her article in the June 19 Tribune, which provides some details.
Category: Chicagoland
Heartland podcast seeks government action
Heartland Institute publications and web pages usually position it as anti-government, or at least pro-less-government-than-we-have-now. But their podcasts are a bit less controlled, sometimes just providing an interesting take on something we might not have thought about (There was a great one about “how much does the Burning Man Festival have to pay for insurance?” that seems to have disappeared from Heartland’s site).
Now we have one insisting that the government needs to break the Google monopoly and vigorously enforce “privacy” laws against Google. The mp3 of this interview with Scott Cleland, author of Search and Destroy: Why You Can’t Trust Google Inc is here.
Cleland seems to want government to protect us from the threat that Google is. I agree that Google can be a threat, as they really do want to organize all the information about all of us, and seem to be pretty good at it. But I think the real threat will happen when Google and Government merge. Until then, we are probably best advised to use the good cheap or free alternatives to Google’s services, and to work without signing in to Google to the extent possible.
My own experience with Google Adsense, btw, occurred when trying to buy some traffic to the Henry George School web site. People concerned about “poverty” might be interested in us, so I tried that keyword. The problem was that most of the news articles Google coded as “poverty” were about crime and criminals. So I excluded some words, I think it was “gun”, “police,” and a couple others. Adsense failed to recognize these exclusions. On one of the google discussion groups I found other people who have experienced similar problems. Eventually, Google said something to the effect of “if you want to keep advertising with us you’ll have to pay more money per hit.” I guess we would have had to pay enough to justify having a Google Human get involved, and that was too expensive, so the project was put aside. The dollar cost was modest but the benefit was more modest.
New horizons in corporate subsidies
I thought it was a scandal when, years ago, businesses were given subsidies– free money– in exchange for doing the community the favor of employing people. I thought it was a bigger scandal when retailers were allowed to retain sales taxes, paid by their customers, to pay for capital equipment used in their business. I thought it was about the biggest possible scandal when Continue reading New horizons in corporate subsidies
Grant funding and transit efficiency
A couple of years back I attended a conference where somebody– I think it was a couple of Chicago payrollers– reported on the bus rapid transit system of Curitiba, Brazil. It’s considered by many (and I have no information to the contrary) to be a cost-effective implementation of pretty good transit service (better than we have, anyhow) at modest cost. They actually got to compare notes with the former Mayor who is considered most responsible for the design of the system. He was quoted as saying, “I’m glad we don’t have as much money as you have in Chicago, because surely we would waste it.”
What reminded me of this most recently is this release from Sen. Durbin’s office, anouncing or reannouncing the awarding of various grants. In particular:
Illinois Department of Transportation (Chicago Metro): $341,694 in TIGGER II funding to install automatic shut-down and start-up systems in an estimated 27 locomotives in the Metra fleet, which operates in the Chicago metro area. Metra estimates that by shutting down instead of idling the locomotives, the automatic systems could save an estimated 800,000 gallons of diesel fuel and reduce CO2 emissions by an estimated 80,000 tons per year.
If the information is to be believed, an investment of $341,694 “could save” 800,000 gallons of diesel per year. Now, I don’t know how reliable that estimate is, but let’s assume it’s way too high, really only 200,000 gallons will be saved. And what does Metra pay for diesel, surely not less than $2.50/gallon. On these very conservative assumptions, it would take less than 9 months’ fuel savings to pay for the devices. (And that’s not even considering the savings from not having to go thru the grant process.) And if they lacked the cash, they certainly could have borrowed it, paid extortionate interest, and still come out ahead in a year.
So why didn’t Metra do that? Are they stupid? Or corrupt? Of course I have no way to know, but I think there’s another reason. I can imagine how the decision was made:
Technical staffer: We can buy shutoff devices, pay for them with fuel savings in less than a year. May I place the order?
Manager: Would this qualify for TIGGER funds?
TS: Huh?
M: It’s a grant program. I don’t remember where the acronym comes from, but it’s federal money we can spend on things that save energy and reduce emissions. This sounds like it would qualify. The Board prefers that we use federal money instead of Metra’s “own” money.
TS: I suppose it would qualify. What do I do now?
M: Go talk to the Metra Department of Getting Grants. They’ll take care of it, you’ll just have to get them some pictures, brochures, maybe some other paper. Shouldn’t take you more than a week or two.
TS: Well, OK. Will I get a bonus for this?
I have no idea who will get a bonus, but I know who is spending more and waiting longer than necessary for a cost-effective investment.
Missing from Chicago’s Transportation Platform
Eight area advocacy organizations have issued “Chicago’s Sustainable Transportation Platform,” recommending public policies for a better transportation system. Since I’m a paying member of at least two of the eight, and on the mailing list of a well-funded third, I had hoped that maybe a few sensible things would be included. You can decide for yourself which of the ideas are sensible (“Design streets that are safe and convenient for all users.”). Pretty much all of them could be construed as “Create additional jobs and funding opportunities for us and our friends,” but that’s true of most public policy discussions.
I’m mainly concerned about what’s missing, for instance:
- Obtain transit funding from those who benefit from transit service– the owners of land and other privileges in areas served by transit.
- Reduce the number of free and subsidized parking spaces provided at public and nonprofit facilities, including libraries, police stations, educational and medical institutions. Use the resulting revenue to reduce taxes on productive activity.
- Improve transit governance by requiring the majority of governing boards of CTA, Pace, Metra, and RTA to be regular transit users, and no board member who takes fewer than five transit trips in a month can receive pay for that month.
Other ideas?
Bank bails itself out
The subhead of this (1/1/11) Tribune article summarizes well:
$15 million Marquette Bank program offers subsidized home loans to buyers who purchase homes in subdivisions of client builders
You’re a bank. You made some construction loans (or were they even land acquisition loans?) to residential builders who are now unable to repay. If you repossess the land you surely will have to recognize a loss; maybe your capital ratios will be endangered. What do you do?
You lend money to buyers on favorable terms, which they use to buy houses in those subdivisions. You hold the loans in your own portfolio, so they need not conform to recently-tightened underwriting standards. Win-win, at least for the bank and the borrowers.
Speculators pay > $250,000 for Chicago taxi medallions
Chicago Dispatcher reports that the City of Chicago has auctioned another 50 taxi medallions. Ten of these were reserved for working cabbies and went for $150,599 to $180,101. Of the remaining 40, half were bought by Paul Widmarck for $259,999 each, and the other half by Leonid Sorkin for prices ranging from $252,800 to $254,700. I assume that the total proceeds, something under $12 million, will be used to help plug the City’s current budget deficit. I suppose that’s better than giving medallions away, but a policy of collecting annually the rental value of a medallion would provide a continuing income stream to the City and prevent speculation.
The ten owner-operator medallions “are designated, and must remain, Owner/Operator Medallions.” It will be interesting to see how this is enforced over the years.
The speculative prices over $250,000 compare to past sales which, to my knowledge, have never exceeded $200,000. Shortly before the sale, Chicago Dispatcher provided a graph of medallion price trends. Certainly looks like a speculative bubble to me. But you probably should ignore me. Had I had been prescient enough to know what would happen to medallion prices, I would have bought a couple dozen (on credit) five years ago.
Georgists at the Barber Shop
Thanks to Abu Bakr Nurruddin for contriving to get us invited to The Barber Shop Show on the strange enterprise that is vocalo.org. The audio can be streamed from here; I don’t see any way to download it tho. Very nice folks run this show. It’s difficult to get much economic wisdom into 20 minutes, but we expect to be invited back.
Medallion prices now posted by Chicago Dispatcher
Now that Chicago Dispatcher is posting Chicago taxi medallion sales prices in a defined area of their web site, it may no longer be useful to post any of them here. (Chicago Dispatcher’s print edition was the source for all recent reports I posted, but posting of the information on the web wasn’t consistent.) They continue to calculate an “average” monthly price; unfortunately it seems to be a mean or mode, not a median. At last report (pdf), this figure was $183,000, indicating little change in recent months.
Let’s you and him pay to maintain my land value
Chicago Metropolis 2020 has issued a new report about Illinois transportation. (Right now, the report is on their front page; I don’t see a permanent link.) Their stated objectives are things I support, including better and more attractive public transportation as well as a more efficient freight system. They acknowledge that coordination and planning need to be improved, and that good transportation is an important component of a strong economy.
They also point out that much of the current system is in bad shape, and that billions of dollars would be required to bring it up to a reasonable standard. They quote estimates of $45 billion over ten years to refurbish and expand Chicagoland public transportation, and $171 billion over 30 years for transit and highways statewide. They propose to pay for this using an increased motor fuel tax, increased and more market-sensitive tolling, and innovative financing techniques (about which more is below). They do not claim that these sources would be fully adequate to the “need.” (My own opinion of fuel taxes is that, yes, they ought to be increased, but whatever amount is raised should be devoted to the budget of the military, who spend a lot of money attempting to maintain petroleum supplies. ) Continue reading Let’s you and him pay to maintain my land value