Tag Archives: monopoly

Putting government pension costs into perspective

Wirepoints recently issued a helpful report showing state and local government pension debt per Chicago household.  They estimate the burden at $144,000 per household.  This is a big number, but one could suppose that a prosperous household, over decades, could bear such a burden.  Some could, but probably not those below poverty level.  Take them out of the picture and the per household amount rises to $172,000.  Excluding households with incomes below $75,000, or below $200,000, and the per-household amount rises further, to $393,000 and $2,022,000 respectively.

Here’s their chart: pension debt chart

Of course this doesn’t consider land values, nor businesses.  If prime Chicago land is worth $1,000/sq ft, that’s 5.38 sq miles.  But more typical land value is much less, probably no more than $25/sq ft. (it seems that nobody has tried to estimate citywide values). That would be 112 square miles.  Once we subtract land owned by governments, churches and other exempt nonprofits, we might be approaching the total value of all land in Chicago. And that’s just for pensions, not bonded debt, nor needed capital improvements.  Real estate buyers know, or certainly should know, about these encumbrances.

Of course money can be raised from business taxes, but that’s hardly a way to grow economic opportunity for Chicagoans. I would consider any tax revenue from “gaming” as a kind of business tax.

The lesson Wirepoints draws from this is that pensions have to be downsized somehow, which required amending the state constitution.  And they go further, comparing government salaries to those of the private sector:

some local gov't salaries compared to average workers

So it looks like we’re going to have to confront a large number of people with guns and firehoses and control over our children, who have been getting a lot of money from us for years and may prefer not to moderate their demands.

Tho I don’t know how, this problem will be solved. Maybe MMT will yield a continuing stream of funds to bail us out.  Maybe inflation will accelerate such that the fixed 3% compounded pension increase isn’t a burden.  Maybe Chicagoans will decide that they just don’t want so many government “services.”  Maybe politicians will decide to remove all taxes from productive economic activity, taxing only the value of land and other privileges (such as the private monopoly over street parking fees), which will grow the economy (while reducing the need for emergency services) sufficient to make pensions a non-issue.

And when it is solved, those who own land and other privileges will benefit most.

Getting back to blogging — just in time for football

Football Cake by Sweet Pea 0613 via flickr(cc)

Football Cake by Sweet Pea 0613 via flickr(cc)

After a couple of months’ diversions, I hope I am getting back to something like regular blogging, starting with a nice article — as far as it goes, at least– by Gregg Easterbrook about the subsidies and political favors governments provide for professional football. A lot of this, on stadium subsidies (not just for football), has been covered in the past by Heartland, most recently here (pdf). But Easterbrook covers some additional ground, noting the federal favors done for the football business. I hadn’t been aware that NFL has a special anti-trust exemption (I thought it was just one of the many many cases where feds choose not to enforce laws.) And I’d never made the connection between stadiums paid for by the public, and the “intellectual” “property” of football game images, which of course are government-created privilege.

Easterbrook does seem to be a football fan, which is a skill (affliction?) far beyond my capabilities.  My preferred remedy for “sports” subsidies has always been for the audience to go away and do something else.  But even tho I’m just as happy watching an amateur softball game, many people evidently get pleasure from seeing the professionals in action.  Easterbrook suggests that it’s necessary that “public attitudes change.”  Great idea, but as long as the public feel compelled to watch these games, it’s difficult to imagine any politician willing to risk the wrath of those who control them.

Ideas come from the community

In his 2003 book Copyrights and Copywrongs: The Rise of Intellectual Property and How it Threatens Creativity, Siva Vaidhyanathan notes that creative works always build on previous (often traditional and/or public domain) creative works, and that creativity will become nearly impossible if writers (or those who “own” their output) are permitted to exercise absolute monopolies over use of their products.  Potential remedies include shorter and looser copyright terms, placing works into the public domain, licensing them as open source, or using another of the Creative Commons licenses.

Michele Baldrin and David K. Levine, in Against Intellectual Monopoly, provide numerous historical examples of patents retarding, rather than promoting innovation, and note the finding (p. 92, regarding the software industry) that patents were not an encouragement to research and development, but rather a substitute for them.

Now, in  Where Ideas Come From (in Wired Oct ’10) Kevin Kelly and Steven Johnson sort of combine these two ideas by asserting that innovations are not the products of individuals, but of communities.

It’s amazing that the myth of the lone genius has persisted for so long, since simultaneous invention has always been the norm, not the exception … [T]here’s a related myth, that innovation comes primarily from the profit motive… If you look at history, it comes from creating environments where [people’s] ideas can connect.”

And they tie this into another kind of property rights:

One reason we have this great explosion of innovation in wireless right now is that the U S deregulated [allowed unlicensed use of parts of the] spectrum.  Before that, spectrum was something too precious to be wasted…But when you deregulate– and say, OK, now waste it– you get Wi-Fi.

All in all, a very Georgist article, the authors of which have also written what I hope are very Georgist books (both coming out next month):

Steven Johnson, Where Good Ideas Come From

Kevin Kelly What Technology Wants

Cab medallion prices continue to rise

Fifteen months ago, I noted that Chicago taxi medallions were selling for about $77,000.  Now, per the May ’08 issue of Chicago Dispatcher,  the median price increased in April (based on data thru April 22) to $125,000.  That’s a 62% increase in 14 months– with no increase in fares (altho a gas surcharge which was allowed subsequently doubtless was anticipated).

Of course the medallion owners, as such, contribute nothing to the provision of transportation, but they do impose a cost on passengers and/or drivers.  Limiting the number of cabs doesn’t increase the earnings of drivers.