POSTED: Assessor candidates debate

An mp3 audio file of the debate is now (February 2, 11 PM CST) available for download here.  At least two of the candidates  (Robert Grota and Sharon Strobeck-Eckersall, of the Green and Republican parties respectively) will be on the November ballot.  The two Democrats, Ray Figueroa and Robert Shaw, may (according to incomplete returns) have been defeated by a third candidate, who did not participate.

Inconveniently, the debate was held less than five days before the election, and it took our co-sponsor  more than four days to produce the audio file. Perhaps next election we will achieve better scheduling. It is also possible that most voters would not choose to listen to a 101-minute discussion on this subject, but at least we had hoped to provide the opportunity.

I will have some comments on the content of the debate subsequently.

Going to the candidates’ debate

Cook County Assessor candidates, that is. Five folks will be on the ballot, 3 Dems (one of whom will emerge from next Tuesday’s primary), one Green and one Repub.  Can you say “pandering to real estate homeowners?” Of course people hate to pay taxes, but whose burden is hardest to bear, those who own real estate or those who must rent their abodes? What it comes down to, of course, is that homeowners vote, and real estate tax bills have big black numbers.  Whereas renters are much less likely to vote, and are nickled and dimed (make that $5 and $10) by sales tax and income tax that are harder to see.

Anyhow, the debate is this Thursday, at the Union League Club (65 W Jackson), 4:30 PM.  It is open to the public without charge, but you must register in advance (by calling 312 435-5946) and you must dress in nothing less than business casual attire.  A bit more detail here.

Housing cost trends around the world

A great little interactive tool compares house price trends to income trends and general price levels for twenty countries. Be warned that it is flash-based.  Most series seem to go back to 1990.  Relative to incomes, Holland and Belgium show the greatest increases, while the big decliner was Japan.  Thanks to Steve Keen for finding it and providing the link, originally from The Economist. And of course we know that house prices mainly represent the cost of land (including the cost of permission to build).

Car price trends

I don’t have a car, don’t want one, can’t afford one, always figured they are just way too expensive for intelligent folks to waste money on.  But someone close to me has “always” had a car, and when her twelve-year-old one became less reliable and more expensive to maintain, decided to get a new one.  Same make, essentially the same model, a Toyota Sienna van.  Of course, over twelve years there were some changes, mostly improvements and extra features (power doors, stability control).  To me, the amazing part was:

  • Cost of new car in 1998: $27,370
  • Cost of new car in 2010: $27,133

The above are current dollars, include all taxes and invented fees, and were the result of negotiation by an informed customer. . Now, in 1998 this was a new model, they were hard to get.  By 2010, production was more in line with demand, inventories at local dealers were limited but there was some choice of color.  The 2010 price was net of a $1,000 rebate, which of course is just Toyota’s way of cutting prices temporarily..

It turns out that this does reflects the general state of the auto industry:  Our friends at the Bureau of Labor Statistics say that car prices in November (the latest available) were 2.8% below the 1999 annual average (Earlier figures apparently aren’t available on weekends.)

Of course, auto manufacturers have a big investment sunk into their plants, and prefer to lose a bit of money to keep them active, rather than taking a bigger hit by closing them down.

It would be interesting to compare these figures to the cost of transit rolling stock.

Rentiers are welcome in the U S

Some Americans may not be aware that U S Citizenship– or at least, lawful permanent residency– has long been for sale, legally and aboveboard. It’s called the EB5 program, and essentially provides that any foreigner “investing” $500,000 to $1 million in a U. S. business can become a legal permanent resident.  And, of course, entrepreneurs have found the niche market, setting up businesses in which foreigners may invest, without taking an active role in management of the enterprise.

A Chinese and American joint venture is “converting the dormant Northridge mall in Milwaukee into a regional shopping center featuring merchandise from Chinese retailers” according to Milwaukee Business Journal.  Presumably, each of the 200 Chinese retailers expected could support one or more EB5 visas.  300-500 local residents are expected to be hired, tho I think it’s a bit imaginative to suggest that these jobs would be “created” by the project.  Rather, like most economic development incentives, they are simply shifted from elsewhere.

A China Daily report on the project indicates that the Chinese investors might not be familiar with primitive North American travel conditions.  Milwaukee “is only an hour away from Chicago,” says the developer. Maybe someday.

Of course, the poor would-be immigrant has no similar opportunity.  She cannot say “I will work to build a business that will employ Americans,” nor even “I will borrow a half-million dollars to invest,” as the program doesn’t permit this.

So, as existing Americans, are we better off inviting a bunch of rentiers, or a bunch of hardworking laborers?  Too many people believe that the latter will drive down American wages– which may appear to be true, only because we fail to consider what the immigrants can produce.

If we insist on inviting rentiers, we have chosen an inefficient way to do it.  Instead of requiring $500,000 invested in a business, when plenty of American entrepreneurs are already able to supply capital, we could simply require $500,000 paid toward reduction of the Federal debt.

Why campaign contribution limits can’t work

This is from House Banking Committee Chair Barney Frank, specifically on the subject of whether car dealers should be subject to regulation in regards to auto loans, but the significance is much more general:

“I have not had a problem because of campaign contributions. The problem is democracy: it’s people responding to people in their districts: community bankers, realtors, auto dealers, as I said, end users, insurance agents.”

“The local auto dealers are very popular in their districts,” Frank says. The more an interest group can make an issue district-specific and the more it can relate on an everyday level, Frank argues, the better it will do. “That’s why the realtors always beat the bankers. The bankers sit and they go [Frank makes a dour face, leans back in his chair and tightly folds his arms, miming an aloof posture]. The realtors are out there joining the Kiwanis and sponsoring little league.” The same is true with John Deere, dairy farmers and other back-slapping boys from back home.

How can we overcome this? Of course Realtors are going to support their own interests, ditto farmers [or, more likely, farmland owners], and other groups. One solution would be for us to treat government as a service administering common assets for the common benefit, rather than a means of transferring wealth to ourselves or our favorite groups.  Not easy, but at least it’s right.

Also relevant to this article, HGS students may remember this passage from Social Problems (1883).

The map of the United States is colored to show States and Territories. A map of real political powers would ignore State lines. Here would be a big patch representing the domains of Vanderbilt; there Jay Gould’s dominions would be brightly marked. In another place would be set off the empire of Stanford and Huntington; in another the newer empire of Henry Villard. The States and parts of States that own the sway of the Pennsylvania Central would be distinguished from those ruled by the Baltimore and Ohio; and so on. In our National Senate, sovereign members of the Union are supposed to be represented; but what are more truly represented are railroad kings and great moneyed interests, though occasionally a mine jobber from Nevada or Colorado, not inimical to the ruling powers, is suffered to buy himself a seat for glory.

Compare to this, from the  Huffpo article, Frank talking about his 71-member(!) committee:

“What’s happening now is the pro-regulation forces are being out-grassroots-ed by the antis,” Frank says. One member, he says, represented tons of title insurance companies. Another came from the headquarters of credit unions. A third’s district is home to LexisNexis; another to Equifax. Each of those entities received special treatment because their representative sits on the committee — and the more members on the committee, the more special treatment is needed.

HT, Felix Salmon

More bad news on seating

We have known for years that the new CTA railcars would have longitudinal seating.  Not particularly comfortable, but allegedly provides more standing room, and more wheelchair space.  A few new cars are now on the property and undergoing testing, so now we know that:

  • the new seats are the  regular substandard width, contoured kind, probably the least comfortable for bench seats;
  • the design fails to efficiently use even the limited space available.

Regarding the latter point, if there is, say, an extra six inches in the space occupied by a row of, say, five seats, it is physically possible to space them an extra 1.5″ apart, providing a bit more space.  In fact, some CTA buses implement this concept on the rear bench.  But not the railcars.  The first pic illustrates this.
making a bad situation worse

One wonders what is expected to happen in the several extra inches at the end of the car.

Below are a couple more pics. These were taken yesterday at Howard, where a test train paused briefly at the platform. Sorry about the poor quality (of the images); they were taken thru thehigh-reflectivity glass used on these cars.

what your tax money buys
your tax dollars

Even if they operate well (of which there is no guarantee), it is evident that these are the most uncomfortable cars yet.  Unfortunately, the same has been said about every car order since at least 1972, and it is all too likely that captive riders will become accustomed, and the few noncaptives will depart.  (Or be made captive by decreasing incomes and increasing parking costs).

Crash recovery manual

After the Crash: Designing a Depression-Free Economy.  By Mason Gaffney, edited and with an intro by Cliff Cobb. Published by Robert Schalkenbach Foundation, 2009.

From time to time, a Georgist will suggest to me that one or another politician or academic, who seems sympathetic but ignorant about economics, should be given a copy of Progress & Poverty.  I usually reply that such persons are too famous and wise to be influenced by new ideas or logical analysis.  But now I might propose that, if one is serious about promoting wise economic policy, one might make the investment to give such a distinguished person After the Crash.

Georgists know that the crash could have been avoided by a simple policy of taxing privilege, not production.  But here we are, in a real economy which is doing poorly.  Mason Gaffney explains how we got here, and what needs to be done to get us out. Everyone who wants to understand the situation should read this book.  It is as long as it needs to be– a bit over 200 pages– and doesn’t seem to be available on the free Internet, so unfortunately some of the most vocal advocates won’t read it. Wealthy institutions– Lincoln, Cato, New America, EPI, etc.– could do no better service than to buy whatever rights are necessary to make it widely available.

Although it is listed on Amazon, Schalkenbach seems to offer a much better price.

Here are what appear to be the main points.

1. Speculation in land titles, and other types of privilege, was the main cause of the crash.  It was made more severe because banks and similar institutions financed it liberally.

2. For a job-rich recovery, we need to recognize that some types of capital investment create a lot more jobs than others. The best type of investment for this purpose turns over rapidly. Compare the number of jobs generated by a major infrastructure project— high speed rail, for instance— with the same amount of money invested by small scale businesses in working capital for inventory and payroll. Done properly, this analysis needs to cover the entire time period while the infrastructure project is amortized.

3. Current government policy at all levels focuses mainly on big projects that generate few jobs per million dollars invested.  This involves not only direct government investment, but tax laws and other practices that favor these kinds of investments.  One reason for this is that the beneficiaries– banks and monopolies– have the resources to lobby effectively.

4. Wise policy is to eliminate such programs, but not to create new ones subsidizing job-creating investments.  Rather, if we just let the market function, without taxing labor to subsidize the privileged, the recovery will be faster, broader, and more stable.

5. The “property” (real estate) tax has much better economic effects than income taxes or consumption taxes.  Even though it penalizes building construction, the effect is to channel more investment away from job-poor and into job-rich forms.

6. Banks have repeatedly got into trouble by lending on real estate, with the current crash only the most recent example.  Wise policy would insist that banks make mainly “self-liquidating” loans, such as for inventory or accounts receivable, and require that real estate purchasers provide hefty equity.

There is much much more in this book, and I started to write a much longer review, but will not complete it because no one (including me) would have the stamina to read it.  I will post some pieces of it later. Meanwhile, if you are concerned about our economic future, you should read this book.

Georgist History

Thanks to Bob Jene of the Better Cities Committee of Illinois for discovering the Henry George Historical Society of San Francisco. And thanks to Mary Lois Timbes for blogging at Finding Fairhope, and particularly for notice of a new book about one of Fairhope’s most distinguished. Browsing around her blog, it turns out that Timbes has written her own book about Fairhope, too.