Before I post my own thoughts in several posts, I'd like to add one more important link, not necessarily important for explaining the current economic troubles, but generally important nonetheless.
I'm only 22 years old, part of what I've heard called "generation sloth" here.
Now in addition to those troubles with moral coaching from on high forbidding children to work, consider this.
I really think these kind of laws and attitudes are part of what is eroding the good characters of youth and eroding the moral foundations of our society.
And when domestic moral self-righteousness becomes popular enough to prevent children from eating in societies where they would have been working, there is a problem to discuss.
There is nothing inherently evil and terrible about children working, and we should consider how these laws and beliefs can actually harm children.
Sunday, December 12, 2010
The argument against optimism right now
This is a look at why the market will not be entering a sustainable bull market any time soon. This is the view I agree with.
Jobless recovery?
The crisis is ongoing.
Along the same train of thought.
Jobless recovery?
The crisis is ongoing.
Along the same train of thought.
Gold
The advantages of gold.
The very nature of a gold standard makes it abhorrent to bankers, governments, big business, and the horde of rent-seeking special interests looking for a handout.
The very nature of a gold standard makes it abhorrent to bankers, governments, big business, and the horde of rent-seeking special interests looking for a handout.
The IMF
This is merely a brief article that should make it very clear that it is important to understand the IMF.
http://mises.org/daily/3746
http://mises.org/daily/3746
The argument against war[s]
This is a timeless argument against war (for the US). It is a specific argument the points for which are by and large specific to the United States' situation. One could argue the publishing date makes it antiquated. But consider the difference in intensity between the threat posed on the world by terrorists and the one posed on the world by the Axis, and one can being to sense the timelessness of many of these uniquely anti-"American War" arguments.
Still, our best defense is not offense. It is defense.
http://mises.org/daily/3746
Still, our best defense is not offense. It is defense.
http://mises.org/daily/3746
The argument for optimism
This man gives probably the most solid argument for optimism, even if he has proven incorrect a year later. Shortly, I will present the argument for pessimism, which is unfortunately the camp that I stand in.
Because this "recovery" is different in that there is not real recovery in sight. All signs of "recovery" are driven merely by monetary inflation propping up prices. But whereas some of that may have worked for awhile, we are honestly getting much closer to the collapse of the current unsustainable system. The difference is that many of the more astute market participants can sense this.
It is possible that we will see a temporary lift in some indicating factors, but it is nearly certain that the fundamentals like job growth are going to remain anemic at best for the near future. This is not a confidence problem in the sense that there are real reasons for low confidence. Namely the problems that the recession is supposed to have exorcised from the system have not been filtered out..
because prices have not been allowed to drop, bankrupt businesses were not allowed to go bust and public money is pouring in to areas of the economy that private money is fleeing (so the new destinations for private money are not allowed to surface). The reason both cannot grow is that this time there is a huge hulking fed gov't that's getting to the breaking point and is making no room for the future. And the portion of wealth it is eating with continuing malinvestments is reaching the magical limit wherein it is too much for the profit producing sectors to carry.
Namely, people see that the bills on public losses haven't been paid yet and will need to be in the near future -- in the form of inflation. Further, the bad debt must be liquidated, and many investors have remained invested in publicly propped up bankrupt firms.. and many investors remain deeply in debt themselves.
This specter of doom, and the bankrupt firms' wealth destruction, is keeping enough money from finding new investments and creating jobs. Add to this uncertainty from new legislation, and it is fairly clear why investors are sitting on their funds and saving.
I would argue that any "recovery" can't last long because the problems with the previous boom have still not been ironed out.
Nonetheless, the soundly reasoned positive outlook:
http://online.wsj.com/article/SB10001424052970204518504574420811475582956.html
Because this "recovery" is different in that there is not real recovery in sight. All signs of "recovery" are driven merely by monetary inflation propping up prices. But whereas some of that may have worked for awhile, we are honestly getting much closer to the collapse of the current unsustainable system. The difference is that many of the more astute market participants can sense this.
It is possible that we will see a temporary lift in some indicating factors, but it is nearly certain that the fundamentals like job growth are going to remain anemic at best for the near future. This is not a confidence problem in the sense that there are real reasons for low confidence. Namely the problems that the recession is supposed to have exorcised from the system have not been filtered out..
because prices have not been allowed to drop, bankrupt businesses were not allowed to go bust and public money is pouring in to areas of the economy that private money is fleeing (so the new destinations for private money are not allowed to surface). The reason both cannot grow is that this time there is a huge hulking fed gov't that's getting to the breaking point and is making no room for the future. And the portion of wealth it is eating with continuing malinvestments is reaching the magical limit wherein it is too much for the profit producing sectors to carry.
Namely, people see that the bills on public losses haven't been paid yet and will need to be in the near future -- in the form of inflation. Further, the bad debt must be liquidated, and many investors have remained invested in publicly propped up bankrupt firms.. and many investors remain deeply in debt themselves.
This specter of doom, and the bankrupt firms' wealth destruction, is keeping enough money from finding new investments and creating jobs. Add to this uncertainty from new legislation, and it is fairly clear why investors are sitting on their funds and saving.
I would argue that any "recovery" can't last long because the problems with the previous boom have still not been ironed out.
Nonetheless, the soundly reasoned positive outlook:
http://online.wsj.com/article/SB10001424052970204518504574420811475582956.html
A very important question to ask..
There is a significant bubble in certain specialities of higher education. I can personally attest to the fact that even graduates of specialities where there is less of a bubble (like civil engineering) are having trouble finding work. .. this depression isn't helping, but the fact of the matter is that at some point there are too many people expecting to work outside of the manual labor trades, and not enough in them.
This is a main argument for more liberal immigration laws, and ones not centrally controlled by the Federal Government (states used to have control over this issue), but I digress.
So, eventually we come to the key uncomfortable question:
How many graduate students is too many?
http://mises.org/daily/4832
This is a main argument for more liberal immigration laws, and ones not centrally controlled by the Federal Government (states used to have control over this issue), but I digress.
So, eventually we come to the key uncomfortable question:
How many graduate students is too many?
http://mises.org/daily/4832
Tuesday, May 11, 2010
As with the answers to most questions, history holds the answers to questions about our economic troubles.
Alas, the conspiracy theorists overlook the true conspiracy within American history. As the public begins to learn the truth about the main reason for our country's decay in wealth, look for the government to continue to push to regulate the internet. There is much at stake for them should the public become sufficiently educated.
I present to you Zeitgeist's section on the Federal Reserve, which does a pretty good job. However, the video, in other parts, also details war conspiracies, the information about which I cannot attest to the accuracy of. Additionally, 911 is talked of as an inside job, and I'm not prepared to stand behind that claim. I do think, though, that it is important that ALL Americans question their government and its motives, for politicians are merely people with personal interests and concentrated power:
Alas, the conspiracy theorists overlook the true conspiracy within American history. As the public begins to learn the truth about the main reason for our country's decay in wealth, look for the government to continue to push to regulate the internet. There is much at stake for them should the public become sufficiently educated.
I present to you Zeitgeist's section on the Federal Reserve, which does a pretty good job. However, the video, in other parts, also details war conspiracies, the information about which I cannot attest to the accuracy of. Additionally, 911 is talked of as an inside job, and I'm not prepared to stand behind that claim. I do think, though, that it is important that ALL Americans question their government and its motives, for politicians are merely people with personal interests and concentrated power:
Saturday, May 8, 2010
Chicago: A Microcosm of Public Policy Failure pt 2. Like Ike's Turnpikes?
There are a few cities in North America that have been letting their expressways meet the wrecking ball. Toronto and Milwaukee are two such cities. Now, it is true that both of these expressways were less important -- Milwaukee's expressway had low traffic, and Toronto's was an unfinished stub that was previously the beginning of a larger project.
But, looking at inner city Toronto, it's clear that there's really only one expressway in the inner city. Yet Toronto is one of the richest cities on the continent.
Chicago doesn't need its expressways. Building them was a mistake. Here's why:
In Henry Hazlitt's "Economics In One Lesson," the lesson is as follows:
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
America is a HUGE country. Even now our population density is merely 83 people per square mile, good for 178th. Germany is 55th, and has 594 people/mi sq. France is 96th with 295. United Kingdom? 51st with 660.
The famous Autobahn runs about 6,800 miles. The US Interstate system includes 46,837 miles. For every mile of Autobahn there are approximately 12,075 Germans. For every mile of interstate, there are only approximately 6,555 Americans. The numbers for France? 8,356 French people per mile.
Now, Russia and the Scandinavian countries are mostly less dense than America. But in Finland, for example, the highway miles comparable to the Interstate system are very low -- as seen here:
http://en.wikipedia.org/wiki/Highways_in_Finland
The point is that the number of miles of highway for each American taxpayer is wholly unsustainable. Before Eisenhower had the system built, many of the state highways he was in effect replacing were small roads with a single lane, or were unpaved altogether. America doesn't need the highway system we have today at the cost we're paying for it -- we're not getting as much benefit as more densely populated places.
In fact, America's infrastructure is crumbling in no uncertain terms. We're in bad shape, as seen here:
http://www.ritholtz.com/blog/2009/10/crumbling-of-americas-infrastructure/
The interstate system's planners failed to consider the longer term sustainability of the system (I mean the word sustainability in a wholly different way than the green lobby does). It cost a fortune to build, but it will also cost a fortune to prevent it from collapsing under itself. By forcing future generations to deal with this problem by either dismantling the system or continuing to pay for it each passing year, the present has taxed the future.
Further, such vast changes in the fundamental working of the national economy -- in terms of the movement of goods and people -- always benefits some at the expense of others. It was a huge government intervention which altered the basic assumptions upon which business is to be done.
But Cook County is dense. Even ignoring the foolhardiness of the system as a whole, or its legality at the Federal level for that matter, doesn't the system make sense for dense areas? Perhaps for transportation from Chicago to Milwaukee, and perhaps for transportation among Chicagoland suburban centers. But not for Chicago proper. And, in fact, Urban America would be just as well off without the system; better off, I dare say.
When Chicago was growing fastest around the turn of the 20th century, it was in no small part due to its strategic location in the center of the country -- and consequently its status as one of the nation's two main railroad hubs (the other being St Louis). Chicagoland railways also caused a substantial number of suburbs to develop around Chicago along the tracks. In the 1930s one could drive from one suburb to another, or drive in to the city. But a large portion of daily commuters walked or drove to the train station and rode in to the city. Rail fares were cheap and trains fast enough.
In fact, imagine if a company were to buy up all of the land, without eminent domain, and build an expressway through Chicago! Imagine how much they would have to charge in order to break even, considering maintenance costs as well. If those costs showed up in the price per mile of expressway use, people would never have paid it. Rail would have a HUGE competitive advantage. Even today, beyond a certain distance it is cheaper to ship an intermodal container on a train than a truck. For example, from Chicago to the twin cities. How much larger would this competitive advantage be if people had to directly pay the real cost for highway use??
Of course, the point here is that in real terms and without socialized costs due to taxes, the highway is still less efficient than trains, and by quite a large sum. Highways could be privatized now, but only because the cost to build them and to forcibly buy people's land from them was socialized.
Indeed, were passenger railroads still private and highways privately built, it would still be far cheaper to travel from Chicago to Milwaukee by train than by highway.
As it is, the Interstate Highway Act forced an economic reorganization that would never have happened naturally! That is, the forces that would have produced a private highway system did not exist until after the public system was already built. In fact, they existed BECAUSE of the economic reformation that had to occur in response. The system was not previously needed. And, in fact, were it not built there it would never have been needed in urban areas. The difference in time and mobility of cars over trains can not be denied, but the case for a highway increasing speed vs a large boulevard is more dubious when the consumer has to pay for the difference. Traveling on main roads in to town is just not burdensome enough to justify a large price difference.
And, in fact, the highways themselves create the traffic problems American society is supposed to be unable to solve without them. It's the socialized costs and the concentration of traffic, which would exist in some part anyway, along one route which cause the problem. Whereas prior to the new infrastructure cars and trucks would travel along any number of main roads in to the city, now all of them concentrate on one superhighway.
Think of the way you travel to work, in Chicagoland or elsewhere. In all likelihood, you travel to the freeway and then get on it. Then you find your exit and travel some distance away from it. You've got to travel to one route where traffic is concentrated.
But Chicago was set up by Burnham to afford any number of important and intelligently placed thoroughfares -- the city is relentless in its logic. It doesn't need highway infrastructure. If not for the expressways, Chicagoans would drive along any one of Chicago's endless straight streets. Or they would take a local train.
I've thus far made the case that the highway system's benefits to Chicago are not significant. After underscoring my point with pictures, I'll examine the system's costs for the city's people.
These are the routes that Chicago's expressways take through the city. The glaringly obvious point is that the routes were already covered by major thoroughfares! And in fact when the highways were built the roads they replaced needn't have been. The huge suburban populations only arose in response to the illusory low cost of highway travel.
This is the Stevenson Expressway in red, and Archer Ave in yellow.
Here is South Chicago Ave in yellow, and the Chicago Skyway in red.
The Kennedy essentially replaces Milwaukee Ave. Additionally, when I-94 turns North it essentially replaces Cicero Ave, and then Skokie Blvd after Cicero's transformation. The Kennedy is in Red, and the other streets are in yellow. Milwaukee Ave is the diagonal street
And of course, the Congress, and afterwards the Eisenhower is most glaringly useless. It's as if it's a poster child for the whole interstate system. The Ike replaces any number of East West streets which previously carried its traffic. Of course, there is Congress which is right next to or completely replaced by the Ike. Or Van Buren, or Madison, or Lake, or Roosevelt, or 5th St running SW from Madison. This highway has sapped much of the traffic from these previously busy streets.
The Eisenhower Expy/Congress Pkwy is in red, and all other noted streets are in yellow. These streets are, from North to South, Lake, Madison and 5th, Congress, and finally Roosevelt.
Additionally, the Dan Ryan replaces Halsted while it passes the Loop. After it is South of the loop, the Dan Ryan steals traffic from State, Wentworth, King, Halsted, and others.
Halsted and Roosevelt, before the city had the expressway built and then bulldozed the whole area for UIC, at one time had the highest land values of any intersection outside of the loop. (ref. Homer Hoyt "One Hundred Years of Land Values in Chicago..")
This one act, the Interstate Highway Act, completely changed America's economic structure. Yet people wonder about the Midwest's decay? The balance was swiftly shifted from water and rail traffic to truck traffic. Rail and nautical infrastructure remains important to this day. But the extent of the existing infrastructure is such as to meet a demand that no longer exists -- and largely as a result of the highways.
The rules of the economic game shifted so suddenly as to a provoke a near complete restructuring. It is no wonder cities are in trouble.
What the Interstate system has done is artificially and unsustainably lower the costs of living outside of the city. It benefits suburbanites, not Chicagoans. Chicagos entire land use structure was based around the railroads. Slow shifts allow adaptation, but sudden restructuring forces dramatic economic changes and extreme shifts in land values. Areas that were previously suitably developed are now overbuilt for example. Vacancies increase in areas as goods and people flow along other avenues (sometimes literally).
Cars that used to drive along Archer Ave now take the Stevenson. Archer, fifty some years later, is a shadow of its former glory and fading still. And this particular area is not overly poor. Yet buildings are falling apart, storefronts are empty, the street wall is pockmarked and incomplete where it used to be full and cohesive.
But of course, Archer is not the only business thoroughfare to suffer. The highway reroutes commuters around businesses all over the city. No longer does a resident of Cicero pass by a business on Madison Ave on his way to his job in Uptown. Now he gets on the Eisenhower and drives to his job. He spends his money in Cicero and patronizes businesses in Cicero. Far from benefiting from the highway system, Chicago suffers.
Businesses on South Chicago Ave, on Milwaukee, on Lake, and on any number of previously important streets like King Drive or Pulaski (formerly Crawford) have the same problem. Traffic has been completely rerouted such that the old urban land uses are not suited to the new economic model. The economic environment has been changed such as only coercion can do.
The benefits of the city are no longer unique to the city. Suburbanites can get the benefits by proxy. The main business advantage in locating in the city is the pool of skilled labor that it affords (more on how unions have further damaged the Midwest in a future article). But with highways, Chicago business can locate anywhere in the area and have access to the same labor force. Good for business, bad for Chicago.
Additionally, the highways split neighborhoods in half. Oftentimes the wealth differential between one side of a highway and the other is substantial. Eminent domain tore apart communities, rending them in two and displacing thousands of families that were firmly tied to their land, to their sense of place. The character of these communities -- blue collar neighborhoods and ethnic enclaves -- has been changed forever. Gas stations, convenience stores, and large big box retailers spring up around the highway, and Chicago loses its sense of place, its authenticity in context, its history -- that which makes it unique and different from anywhere else. This uniqueness is what makes people love their homes and neighborhoods, what makes them take pride in their communities and fight to protect them. Additionally, displacing tens of thousands of residents that grew up in the city or who've lived there thirty years devastates the nature of the place. It becomes less Chicago, more somewhere else. The highways irreparably damage the unique urban nature of this particular city.
It's time to end the highways. They do not benefit Chicagoans. They damage their communities, fundamentally and artificially alter the economic conditions that created the city (forcing swift and radical change on the urban environment), funnel money around the city to the suburbs instead of focusing it in the center, divert traffic around the city, dilute Chicago's sense of place, and weaken Chicago's economic advantages. Additionally, they are financially unsustainable for the public sector -- Illinoisans and Americans cannot afford them.
Chicago would do better without them. Traffic would fall back on its old routes, equilibrium would be reached as some move back in to the city to balance longer commutes, traffic problems would be less concentrated and extreme, local railroads could again become profitable and come off of the county's tax rolls, thousands of old buildings would be pulled from abandonment and reused as their reasons for being are restored in the present. Chicago should demolish all of them within city limits but Lake Shore Drive, which largely avoided eminent domain -- LSD should be privatized.
City leaders should realize that the city is suffering from the differential between the economic basis on which it was created and the radically transformed environment which the highways and other factors have forced upon it. It all could have been avoided with a little respect for the private property rights guaranteed in the Constitution -- highways are not one of the very limited things which Washington has authority to take land for.
But, looking at inner city Toronto, it's clear that there's really only one expressway in the inner city. Yet Toronto is one of the richest cities on the continent.
Chicago doesn't need its expressways. Building them was a mistake. Here's why:
In Henry Hazlitt's "Economics In One Lesson," the lesson is as follows:
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
America is a HUGE country. Even now our population density is merely 83 people per square mile, good for 178th. Germany is 55th, and has 594 people/mi sq. France is 96th with 295. United Kingdom? 51st with 660.
The famous Autobahn runs about 6,800 miles. The US Interstate system includes 46,837 miles. For every mile of Autobahn there are approximately 12,075 Germans. For every mile of interstate, there are only approximately 6,555 Americans. The numbers for France? 8,356 French people per mile.
Now, Russia and the Scandinavian countries are mostly less dense than America. But in Finland, for example, the highway miles comparable to the Interstate system are very low -- as seen here:
http://en.wikipedia.org/wiki/Highways_in_Finland
The point is that the number of miles of highway for each American taxpayer is wholly unsustainable. Before Eisenhower had the system built, many of the state highways he was in effect replacing were small roads with a single lane, or were unpaved altogether. America doesn't need the highway system we have today at the cost we're paying for it -- we're not getting as much benefit as more densely populated places.
In fact, America's infrastructure is crumbling in no uncertain terms. We're in bad shape, as seen here:
http://www.ritholtz.com/blog/2009/10/crumbling-of-americas-infrastructure/
The interstate system's planners failed to consider the longer term sustainability of the system (I mean the word sustainability in a wholly different way than the green lobby does). It cost a fortune to build, but it will also cost a fortune to prevent it from collapsing under itself. By forcing future generations to deal with this problem by either dismantling the system or continuing to pay for it each passing year, the present has taxed the future.
Further, such vast changes in the fundamental working of the national economy -- in terms of the movement of goods and people -- always benefits some at the expense of others. It was a huge government intervention which altered the basic assumptions upon which business is to be done.
But Cook County is dense. Even ignoring the foolhardiness of the system as a whole, or its legality at the Federal level for that matter, doesn't the system make sense for dense areas? Perhaps for transportation from Chicago to Milwaukee, and perhaps for transportation among Chicagoland suburban centers. But not for Chicago proper. And, in fact, Urban America would be just as well off without the system; better off, I dare say.
When Chicago was growing fastest around the turn of the 20th century, it was in no small part due to its strategic location in the center of the country -- and consequently its status as one of the nation's two main railroad hubs (the other being St Louis). Chicagoland railways also caused a substantial number of suburbs to develop around Chicago along the tracks. In the 1930s one could drive from one suburb to another, or drive in to the city. But a large portion of daily commuters walked or drove to the train station and rode in to the city. Rail fares were cheap and trains fast enough.
In fact, imagine if a company were to buy up all of the land, without eminent domain, and build an expressway through Chicago! Imagine how much they would have to charge in order to break even, considering maintenance costs as well. If those costs showed up in the price per mile of expressway use, people would never have paid it. Rail would have a HUGE competitive advantage. Even today, beyond a certain distance it is cheaper to ship an intermodal container on a train than a truck. For example, from Chicago to the twin cities. How much larger would this competitive advantage be if people had to directly pay the real cost for highway use??
Of course, the point here is that in real terms and without socialized costs due to taxes, the highway is still less efficient than trains, and by quite a large sum. Highways could be privatized now, but only because the cost to build them and to forcibly buy people's land from them was socialized.
Indeed, were passenger railroads still private and highways privately built, it would still be far cheaper to travel from Chicago to Milwaukee by train than by highway.
As it is, the Interstate Highway Act forced an economic reorganization that would never have happened naturally! That is, the forces that would have produced a private highway system did not exist until after the public system was already built. In fact, they existed BECAUSE of the economic reformation that had to occur in response. The system was not previously needed. And, in fact, were it not built there it would never have been needed in urban areas. The difference in time and mobility of cars over trains can not be denied, but the case for a highway increasing speed vs a large boulevard is more dubious when the consumer has to pay for the difference. Traveling on main roads in to town is just not burdensome enough to justify a large price difference.
And, in fact, the highways themselves create the traffic problems American society is supposed to be unable to solve without them. It's the socialized costs and the concentration of traffic, which would exist in some part anyway, along one route which cause the problem. Whereas prior to the new infrastructure cars and trucks would travel along any number of main roads in to the city, now all of them concentrate on one superhighway.
Think of the way you travel to work, in Chicagoland or elsewhere. In all likelihood, you travel to the freeway and then get on it. Then you find your exit and travel some distance away from it. You've got to travel to one route where traffic is concentrated.
But Chicago was set up by Burnham to afford any number of important and intelligently placed thoroughfares -- the city is relentless in its logic. It doesn't need highway infrastructure. If not for the expressways, Chicagoans would drive along any one of Chicago's endless straight streets. Or they would take a local train.
I've thus far made the case that the highway system's benefits to Chicago are not significant. After underscoring my point with pictures, I'll examine the system's costs for the city's people.
These are the routes that Chicago's expressways take through the city. The glaringly obvious point is that the routes were already covered by major thoroughfares! And in fact when the highways were built the roads they replaced needn't have been. The huge suburban populations only arose in response to the illusory low cost of highway travel.
This is the Stevenson Expressway in red, and Archer Ave in yellow.
Here is South Chicago Ave in yellow, and the Chicago Skyway in red.
The Kennedy essentially replaces Milwaukee Ave. Additionally, when I-94 turns North it essentially replaces Cicero Ave, and then Skokie Blvd after Cicero's transformation. The Kennedy is in Red, and the other streets are in yellow. Milwaukee Ave is the diagonal street
And of course, the Congress, and afterwards the Eisenhower is most glaringly useless. It's as if it's a poster child for the whole interstate system. The Ike replaces any number of East West streets which previously carried its traffic. Of course, there is Congress which is right next to or completely replaced by the Ike. Or Van Buren, or Madison, or Lake, or Roosevelt, or 5th St running SW from Madison. This highway has sapped much of the traffic from these previously busy streets.
The Eisenhower Expy/Congress Pkwy is in red, and all other noted streets are in yellow. These streets are, from North to South, Lake, Madison and 5th, Congress, and finally Roosevelt.
Additionally, the Dan Ryan replaces Halsted while it passes the Loop. After it is South of the loop, the Dan Ryan steals traffic from State, Wentworth, King, Halsted, and others.
Halsted and Roosevelt, before the city had the expressway built and then bulldozed the whole area for UIC, at one time had the highest land values of any intersection outside of the loop. (ref. Homer Hoyt "One Hundred Years of Land Values in Chicago..")
This one act, the Interstate Highway Act, completely changed America's economic structure. Yet people wonder about the Midwest's decay? The balance was swiftly shifted from water and rail traffic to truck traffic. Rail and nautical infrastructure remains important to this day. But the extent of the existing infrastructure is such as to meet a demand that no longer exists -- and largely as a result of the highways.
The rules of the economic game shifted so suddenly as to a provoke a near complete restructuring. It is no wonder cities are in trouble.
What the Interstate system has done is artificially and unsustainably lower the costs of living outside of the city. It benefits suburbanites, not Chicagoans. Chicagos entire land use structure was based around the railroads. Slow shifts allow adaptation, but sudden restructuring forces dramatic economic changes and extreme shifts in land values. Areas that were previously suitably developed are now overbuilt for example. Vacancies increase in areas as goods and people flow along other avenues (sometimes literally).
Cars that used to drive along Archer Ave now take the Stevenson. Archer, fifty some years later, is a shadow of its former glory and fading still. And this particular area is not overly poor. Yet buildings are falling apart, storefronts are empty, the street wall is pockmarked and incomplete where it used to be full and cohesive.
But of course, Archer is not the only business thoroughfare to suffer. The highway reroutes commuters around businesses all over the city. No longer does a resident of Cicero pass by a business on Madison Ave on his way to his job in Uptown. Now he gets on the Eisenhower and drives to his job. He spends his money in Cicero and patronizes businesses in Cicero. Far from benefiting from the highway system, Chicago suffers.
Businesses on South Chicago Ave, on Milwaukee, on Lake, and on any number of previously important streets like King Drive or Pulaski (formerly Crawford) have the same problem. Traffic has been completely rerouted such that the old urban land uses are not suited to the new economic model. The economic environment has been changed such as only coercion can do.
The benefits of the city are no longer unique to the city. Suburbanites can get the benefits by proxy. The main business advantage in locating in the city is the pool of skilled labor that it affords (more on how unions have further damaged the Midwest in a future article). But with highways, Chicago business can locate anywhere in the area and have access to the same labor force. Good for business, bad for Chicago.
Additionally, the highways split neighborhoods in half. Oftentimes the wealth differential between one side of a highway and the other is substantial. Eminent domain tore apart communities, rending them in two and displacing thousands of families that were firmly tied to their land, to their sense of place. The character of these communities -- blue collar neighborhoods and ethnic enclaves -- has been changed forever. Gas stations, convenience stores, and large big box retailers spring up around the highway, and Chicago loses its sense of place, its authenticity in context, its history -- that which makes it unique and different from anywhere else. This uniqueness is what makes people love their homes and neighborhoods, what makes them take pride in their communities and fight to protect them. Additionally, displacing tens of thousands of residents that grew up in the city or who've lived there thirty years devastates the nature of the place. It becomes less Chicago, more somewhere else. The highways irreparably damage the unique urban nature of this particular city.
It's time to end the highways. They do not benefit Chicagoans. They damage their communities, fundamentally and artificially alter the economic conditions that created the city (forcing swift and radical change on the urban environment), funnel money around the city to the suburbs instead of focusing it in the center, divert traffic around the city, dilute Chicago's sense of place, and weaken Chicago's economic advantages. Additionally, they are financially unsustainable for the public sector -- Illinoisans and Americans cannot afford them.
Chicago would do better without them. Traffic would fall back on its old routes, equilibrium would be reached as some move back in to the city to balance longer commutes, traffic problems would be less concentrated and extreme, local railroads could again become profitable and come off of the county's tax rolls, thousands of old buildings would be pulled from abandonment and reused as their reasons for being are restored in the present. Chicago should demolish all of them within city limits but Lake Shore Drive, which largely avoided eminent domain -- LSD should be privatized.
City leaders should realize that the city is suffering from the differential between the economic basis on which it was created and the radically transformed environment which the highways and other factors have forced upon it. It all could have been avoided with a little respect for the private property rights guaranteed in the Constitution -- highways are not one of the very limited things which Washington has authority to take land for.
On Skeptical Perspective
I wrote this a long while ago. Due to what I've written here, I believe it's very important to draw attention to the links to the left; what I write was invariably somebody elses idea first. It follows:
In the modern day, as larger portions of the population in developed countries become educated, academia has increasingly gained a revered status in our civilization – partly due to the self-reverential nature of these increasing numbers of academics. One might say that this admiration might have got too far, almost jumping to dogmatism. Somewhere along the way people begin to forget that everybody is merely a product of their environments.
Yesterday I read a paper on the origin of ideas, and of invention (source A). The article talked about the affect of long term and short term memory in creativity. It referenced the same idea as a similar article about invention as related to patents (source B). That is, the contention that each new invention is a conglomeration of past inventions that make them possible. The airplane, to use the same example as in the article, is a combination of the wheel, the metallurgical manufacturing process, the idea to standardize bolt diameters, the engine, internal combustion, and even fire. The list is limitless, going back to the beginning of time. (On a somewhat unrelated note, it could be argued that a patent merely patents a novel combination of other people's ideas, which is unfair to them, and also prevents further innovation for a few years by keeping people from putting this new idea, which is really just other people's ideas, to use as part of another new concept.)
In the same way, the first article talked about how creative solutions to problems are derived from all of the other ideas we've been exposed to. Logically, this might also apply to opinions and ideologies. That is, the opinions and ideas central to a person's beliefs are the direct result of what ideas and opinions they grew up around, and what contentions and ideologies they've chosen to surround themselves with after that. If this is true, then a person can essentially choose what they believe in and stand behind. At first you might think this is fairly obvious, but consider that a person doesn't just wake up and choose to get religion on a particular day, doesn't suddenly choose to fully stand behind a particular ideology. The formation of a belief founded ideology is a slow one. In this light, perspective becomes even more important since it is clear that people choose their perspective to a great extent, just by choosing who to listen to and what to read. And it is perspective that provides the filter for new ideas, and predisposes an individual to accepting some and rejecting others.
This becomes crucially important for understanding academia. In academia, students are taught by individuals with viewpoints and perspectives, and their viewpoints and perspectives are similarly taught to them by their forbears (and later changed and modified by they themselves). Schools are highly opinionated and biased places. What teacher wants to teach something they themselves think is incorrect?
For example, in high school economics class I was taught Friedman's economics with a more or less Keynesian view on monetary policy. In American History it was the mainstream liberal American view. Bear in mind that at the time it was supposed by the students that these subjects were simply objective views of history and economics. The point, however, is that contrary to the assumptions of many publicly educated people, scientists and academics have pre-existing dispositions and ideas. They are not neutral. Often, they are quite the opposite. Money talks, and money for scientists, and public high schools and colleges, comes from Washington. It is ridiculous to simply ASSUME that these leading scientists, researchers, and professors are anything more objective than ideologues seeking to use their area of research or study to prove a conclusion they had already come to. Add in the aforementioned money and often this preconceived conclusion is the one that results in the most funding/profit for them.
Bear in mind the argument here is not for any specific viewpoint, but rather against simply taking someone else's. Many, many people assume that because somebody is more educated about a particular subject than they, their opinion is more reliable and factual than their own might be. Unfortunately there is no such thing as an objective human being, and the output fits the inputs. Again, since we screen the inputs we want to allow, the opinion of anybody, no matter their education and experience level, must be allowed for both perspective and agenda. It is important to remember that the same set of data, the same set of facts, can be presented in different ways and then used as the basis for many different claims. Sometimes all that is necessary is the movement of an axis or an alteration in scale. Sometimes all that must be done is data inundation, from which one picks out what they want to draw attention to and ignores what doesn't support their conclusion.
Al Gore's climate presentations are a fantastic example of this. He, for example, has a graph of historic terran temperatures that, if one accepts the questionable basis of using trapped ice bubbles for modeling the temperature of an entire planet and atmosphere, still strikes the viewer as manipulative. He takes his model for historic temperatures and ignores all but the last few years, and then extrapolates that isolated trend. It is only his chosen data which supports the conclusion he'd already decided to come to beforehand.
Consider history. Let's say I contend that the largely American phenomenon of moving out of the parents' house as soon as possible is due to the longer lifespans created by modern medicine. Since America did not exist long before recent advances in medicine, keeping our ancestors in our house never became an established custom here. As evidence, I offer that it makes sense since while before the generation before would die off, leaving the new generation the chance to live the last twenty years of their shorter lives with the house to themselves, now a person's parents can survive until they are in their late sixties.
This seems to be at least logical. But consider the relative use of the words 'long before.' Americans' life expectancy didn't begin jolting up until about the last century, leaving plenty of time for the formation of uniquely American ancestral customs. Even if one accepts the logic, there is no way that I could convincingly support the claim that it is definitely due to better medicinal procedures, and not the infinite other factors and variables separating the formation of American tradition from the history of other countries. I could easily argue that it is due to the radical new perspectives that mixed groups of people have from ancestors who came from more homogeneous, older countries. That each successive generation in America becomes more American and less... whatever culture their parents are. Thus, the differences between generations force children out of their homes faster, since their own perspectives are so radically different from those of their parents.
Both of those are logical. But logic and evidence are not enough to prove an idea. I could research and start throwing out facts and figures to support either contention, but the fact remains that these are merely perspective based ideas presented in a highly subjective, persuasive manner. I'm again only acknowledging the variables I want to be significant. Of course, this is obvious, and my intelligent reader is likely to realize much of this. But this response is to the often religious way in which people blindly believe those with a letter after their name or a few published works. Viewed from an outside perspective (although no such perspective exists in the real world), it becomes clear at this point that right and wrong are relative, evidence subjective.
The sound perspective is a skeptical one. Hear and read with suspicion. There is nothing sacred or omniscient about scientists, researchers, or academics, and for every view supporting a particular contention, there is another opposing it, although one or the other is often more publicized. Scrutinize and analyze ideas yourself. Find what your truth is, for this too is relative, and remember that your life becomes you just as others' ideas, if let, become yours.
SOURCES:
Source A: http://mises.org/story/3461
Source B: http://mises.org/story/3406
An additional source: the introduction to 'Human Action,' by Ludwig von Mises.
In the modern day, as larger portions of the population in developed countries become educated, academia has increasingly gained a revered status in our civilization – partly due to the self-reverential nature of these increasing numbers of academics. One might say that this admiration might have got too far, almost jumping to dogmatism. Somewhere along the way people begin to forget that everybody is merely a product of their environments.
Yesterday I read a paper on the origin of ideas, and of invention (source A). The article talked about the affect of long term and short term memory in creativity. It referenced the same idea as a similar article about invention as related to patents (source B). That is, the contention that each new invention is a conglomeration of past inventions that make them possible. The airplane, to use the same example as in the article, is a combination of the wheel, the metallurgical manufacturing process, the idea to standardize bolt diameters, the engine, internal combustion, and even fire. The list is limitless, going back to the beginning of time. (On a somewhat unrelated note, it could be argued that a patent merely patents a novel combination of other people's ideas, which is unfair to them, and also prevents further innovation for a few years by keeping people from putting this new idea, which is really just other people's ideas, to use as part of another new concept.)
In the same way, the first article talked about how creative solutions to problems are derived from all of the other ideas we've been exposed to. Logically, this might also apply to opinions and ideologies. That is, the opinions and ideas central to a person's beliefs are the direct result of what ideas and opinions they grew up around, and what contentions and ideologies they've chosen to surround themselves with after that. If this is true, then a person can essentially choose what they believe in and stand behind. At first you might think this is fairly obvious, but consider that a person doesn't just wake up and choose to get religion on a particular day, doesn't suddenly choose to fully stand behind a particular ideology. The formation of a belief founded ideology is a slow one. In this light, perspective becomes even more important since it is clear that people choose their perspective to a great extent, just by choosing who to listen to and what to read. And it is perspective that provides the filter for new ideas, and predisposes an individual to accepting some and rejecting others.
This becomes crucially important for understanding academia. In academia, students are taught by individuals with viewpoints and perspectives, and their viewpoints and perspectives are similarly taught to them by their forbears (and later changed and modified by they themselves). Schools are highly opinionated and biased places. What teacher wants to teach something they themselves think is incorrect?
For example, in high school economics class I was taught Friedman's economics with a more or less Keynesian view on monetary policy. In American History it was the mainstream liberal American view. Bear in mind that at the time it was supposed by the students that these subjects were simply objective views of history and economics. The point, however, is that contrary to the assumptions of many publicly educated people, scientists and academics have pre-existing dispositions and ideas. They are not neutral. Often, they are quite the opposite. Money talks, and money for scientists, and public high schools and colleges, comes from Washington. It is ridiculous to simply ASSUME that these leading scientists, researchers, and professors are anything more objective than ideologues seeking to use their area of research or study to prove a conclusion they had already come to. Add in the aforementioned money and often this preconceived conclusion is the one that results in the most funding/profit for them.
Bear in mind the argument here is not for any specific viewpoint, but rather against simply taking someone else's. Many, many people assume that because somebody is more educated about a particular subject than they, their opinion is more reliable and factual than their own might be. Unfortunately there is no such thing as an objective human being, and the output fits the inputs. Again, since we screen the inputs we want to allow, the opinion of anybody, no matter their education and experience level, must be allowed for both perspective and agenda. It is important to remember that the same set of data, the same set of facts, can be presented in different ways and then used as the basis for many different claims. Sometimes all that is necessary is the movement of an axis or an alteration in scale. Sometimes all that must be done is data inundation, from which one picks out what they want to draw attention to and ignores what doesn't support their conclusion.
Al Gore's climate presentations are a fantastic example of this. He, for example, has a graph of historic terran temperatures that, if one accepts the questionable basis of using trapped ice bubbles for modeling the temperature of an entire planet and atmosphere, still strikes the viewer as manipulative. He takes his model for historic temperatures and ignores all but the last few years, and then extrapolates that isolated trend. It is only his chosen data which supports the conclusion he'd already decided to come to beforehand.
Consider history. Let's say I contend that the largely American phenomenon of moving out of the parents' house as soon as possible is due to the longer lifespans created by modern medicine. Since America did not exist long before recent advances in medicine, keeping our ancestors in our house never became an established custom here. As evidence, I offer that it makes sense since while before the generation before would die off, leaving the new generation the chance to live the last twenty years of their shorter lives with the house to themselves, now a person's parents can survive until they are in their late sixties.
This seems to be at least logical. But consider the relative use of the words 'long before.' Americans' life expectancy didn't begin jolting up until about the last century, leaving plenty of time for the formation of uniquely American ancestral customs. Even if one accepts the logic, there is no way that I could convincingly support the claim that it is definitely due to better medicinal procedures, and not the infinite other factors and variables separating the formation of American tradition from the history of other countries. I could easily argue that it is due to the radical new perspectives that mixed groups of people have from ancestors who came from more homogeneous, older countries. That each successive generation in America becomes more American and less... whatever culture their parents are. Thus, the differences between generations force children out of their homes faster, since their own perspectives are so radically different from those of their parents.
Both of those are logical. But logic and evidence are not enough to prove an idea. I could research and start throwing out facts and figures to support either contention, but the fact remains that these are merely perspective based ideas presented in a highly subjective, persuasive manner. I'm again only acknowledging the variables I want to be significant. Of course, this is obvious, and my intelligent reader is likely to realize much of this. But this response is to the often religious way in which people blindly believe those with a letter after their name or a few published works. Viewed from an outside perspective (although no such perspective exists in the real world), it becomes clear at this point that right and wrong are relative, evidence subjective.
The sound perspective is a skeptical one. Hear and read with suspicion. There is nothing sacred or omniscient about scientists, researchers, or academics, and for every view supporting a particular contention, there is another opposing it, although one or the other is often more publicized. Scrutinize and analyze ideas yourself. Find what your truth is, for this too is relative, and remember that your life becomes you just as others' ideas, if let, become yours.
SOURCES:
Source A: http://mises.org/story/3461
Source B: http://mises.org/story/3406
An additional source: the introduction to 'Human Action,' by Ludwig von Mises.
Two Good Links
Although links are not the best way to engage the layman blog reader, I present two that are well worth visiting, but don't really fit the model demanded by a blog list roll at the end of the page.
Firstly, a free market look at how to fix Cleveland, and many other suffering midwest cities for that matter (like Buffalo, Detroit, and St Louis). With Drew Carey!
http://reason.tv/video/show/1046
Secondly, a collection of COLOR 1940s photographs by Charles W Cushman. They show Chicago and many other US cities as they were.
http://webapp1.dlib.indiana.edu/cushman/index.jsp
Firstly, a free market look at how to fix Cleveland, and many other suffering midwest cities for that matter (like Buffalo, Detroit, and St Louis). With Drew Carey!
http://reason.tv/video/show/1046
Secondly, a collection of COLOR 1940s photographs by Charles W Cushman. They show Chicago and many other US cities as they were.
http://webapp1.dlib.indiana.edu/cushman/index.jsp
Chicago: A Microcosm of Public Policy Failure. Treating the symptom.
If you're an auto mechanic, and you want to fix a problem, you need to diagnose the source of said problem. It doesn't make any sense to simply mask the symptom. But treating the symptom is an all too easy trap to fall in to.
Public policy is a great example of this, but this is so obvious at the federal level that it's not even worth discussing here. Nonetheless, this is where sound economics should ideally come in to help guide public policy. Except many modern economists, and especially those in politics, have unwisely fallen prey to fallacious enthusiasm for top down decisions. This by its very nature treats the symptom, because the true source of the problem is likely government 'problem solving' itself. But those in power have a god-like belief in their wisdom, and thus make the assumption that any problem with the economy must be private in nature. Wrong.
But less the general economics talk, the city of Chicago is a veritable microcosm of bad decisions and public policy disaster. The city is a living, breathing testament to the vitality of private activity and the life sapping drain of public power. .. if only bureaucrats would look past their overgrown noses.
I will soon order a book on a hundred years of land values in Chicago, ending in 1933 when it was published. It was exhaustively researched by a man called Homer Hoyt, who would soon be a successful real estate investor and urban economics academic. The maps and charts are hand drawn, and most of the data collected from the basement of the Cook County Recorder of Deeds, or the Assessor's Office.
It documents the land values, the real estate cycles, and the factors leading to what has to be one of the largest, swiftest urban population explosions in history. The growth of this city was remarkable. And what is amazing about this book is that it chronicles the reasons WHY the city grew in the particular ways it did, why certain areas came to certain uses.
Looking at his maps, at the Chicago of 1930, at the centers of high land value vs the city today, one is struck by the particular nature of the differences. In 1930 and before, intersections in Englewood and in Uptown had particularly high land values, being near major transportation networks and having grown in to satellite centers of business. The saddest thing is that in many, many places in the midwest it is the areas with the most important history and most magnificent architecture that are the most devastated.
In my view there isn't a lot of mystery as to the reasons for this devastation. If they're looking for answers, policy makers need only look in the mirror. It's hard to admit credit for the urban hell holes that are ghettos, for fields of empty grass that once held bustling business, brick apartment buildings, or mansions. Unintended consequences; one stubborn and universal economic law.
Major business centers were once connected via an extensive street car system. It seems to me that the major events leading to urban blight are:
1. The take over of the street car companies by the CTA, a public agency that cut service and dismantled the system under budget constraints. Less the public monopoly, the system would have responded to actual market demand more properly. Portions of the system would have gone down, but not in the same way.
2. The automobile.
3. The use of imminent domain for the federal highway system, which cut neighborhoods to pieces and made it possible to live outside the city while enjoying its benefits. It made owning a car more advantageous than mass transit because the latter still involves pay per use. The costs of owning a car are socialized, and unfairly levied upon those who were forced to sell property for 'public good.'
4. The use of imminent domain to clear out vast areas of 'blight,' or areas that white politicians did not like. The subsequent failure of public housing sent Chicago to some of the highest crime rates in the country. The city literally began rotting from within, with crime spreading to the areas around and essentially forced population shift out of and in to areas. With government indirectly manipulating land value so wantonly, creating huge problems, and conducting a huge racist social experiment at the expense of the 'benefactors' and everyone around them, a huge dis-incentive to city dwelling was created. The urban fabric created by private owners was ripped apart and rent in to ribbons, and the city barely resembled its former self. If the neighborhood is so sharply changed by political factors, families lose stock in the future of their area. By consolidating land ownership, those who care about the neighborhood are drawn down. History of ownership is powerful.
5. The exodus of manufacturing jobs. Truth be told, manufacturing in America is not endangered. But manufacturing jobs are constantly drawn down as more efficient methods of production are invented. This is exacerbated by the far higher taxes during the last century, during which the disinvestment in cities has occurred. Or rather regulations and price/wage controls, if you will. I particularly refer to programs affecting industrial jobs, the regulation of which grew at an unreasonable pace during the great depression. These programs, especially those strengthening labor, made hiring another employee less attractive. The corresponding and predictable loss of jobs hits especially hard for America's manufacturing and transportation capital.
Additionally, taxes on investment, which were up during the same time, hurt funds allowing these businesses to thrive and expand. Not hiring as many workers removes the main incentive for existing in a major population center -- that is, the availability of cheap and talented labor.
5. The war on drugs. With the exodus of manufacturing jobs, and the artificially increased marginal utility of mechanized solutions over human ones, jobs still existing in the city tended to stay in the hands of those who increasingly lived outside of the city. With little job creation, inner city areas held few jobs for residents.
The war on drugs incentivizes illegal business over legal. It makes it very profitable to break the law. Without prohibition (and wage/price controls), alternative jobs would have to, and then would, be created by those most in need of them, or by somebody who recognized the opportunity.
This illegal activity further destroys local commercial activity, communication with outside areas, and landlord building maintenance. Crime rises and the city festers in its own filth. Areas dependent on illegal drugs for their only income have few other options. But in a free market only legal establishments would exist because illegal options couldn't compete with a streamlined production process. Crime would be down and the city would begin to heal.
6. The compounding effect of job loss. The frenetic pace of construction was greatly slowed with much lower gross economic activity. After the fire construction and design talent was drawn from around the country to rebuild the city. With the loss of jobs in the great depression and ever after lower rates of recovery and job creation, the construction industry built cheaper buildings. Midcentury buildings stretch for miles upon miles, but they are small and cheap. Skilled labor was no longer in demand, and centerpiece corner buildings, urban and larger, were largely a thing of the past. Construction pace pushed out of stratospheric levels has a substantial effect on all other economic activity.
But more than that, as companies strove to make housing more and more affordable for the new middle class suburban resident, the average wealth of home owners continued to drop. And to provide for these people, land had to be cheap. Increases in purchasing power during midcentury were due not to increased average earnings, but rather to decreased price of middling quality goods better suited for a middle class. Cheap land and cheap materials are a big part of this.
7. Chicago's derelict property policies. The city under Washington and then Daley has a fast track demolition program which hastily demolishes buildings from which illegal activity comes or which are neglected by landlords or delinquent on taxes. The problems only spread to the next buildings, and this again treats a symptom not a root cause. Not to even mention the demolition company campaign contributions -- these neighborhoods are devastated beyond recovery. In many areas the prairie has returned. What was once a bustling neighborhood filled with stores, flats, and even mansions has only a few odd buildings per block anymore. And the policy continues... Areas cannot recover if their main resource -- their built environment -- doesn't even exist anymore.
8. Continuing unintended consequences.
The CTA loses lots of taxpayer money every year. The public transportation get progressively worse. And yet city leaders are unwilling to make people pay for living in the city. If you want to drive a car to work in downtown, you should logically pay for the infrastructure getting you there and housing your car -- as directly as possible. Right now there is little trade off between car and mass transit. The city has a new zoning code providing provisions for developers requiring parking. But they don't realize that it is this code itself that removes the incentive which would keep CTA viable, and therefore provide the advantage of city over suburbs -- that is, good and cheap transportation. Cars that do make it to the city would pay more at city parking facilities as well. Supply and demand. But the city is currently artificially forcing supply up above equilibrium, which is where developers would keep it were they given the option. Parking should be as expensive as it needs to be for it to be viable to build parking instead of units or commercial space.
The current policy destroys the urban character of prospective development and the viability and attractiveness of inner city neighborhoods. Further, it deprives the city of income as well as a profitable and viable public transportation system.
Drivers should have to pay for highways directly as well. Were imminent domain not used, then highways would be expensive to build through areas of high population where land values are high. But a private company could buy air rights, or rights underground, or progressively and strategically buy land on the market. Eventually one highway would be built, and fees would be high. Cost to users would be direct. Highways would cut a path through the least private land possible. In Chicago, this would probably be lake shore drive, as it is built on a lot of former rail yards.
Were this policy adopted, mass transit would again be in what is closer to fair competition as highways would directly cost money. Right now a driver has little incentive to switch to mass transit when he is already paying tax dollars for the highways.
Privatize highways! They are losing money. Privately maintained highways charging per use would use price as a means of finding traffic equilibrium. Highly maintained highways, and more reasonable levels of auto use, would result. Further, mass transit would become more viable and service would increase. The inner city would regain what was one of its crucial advantages.
One can see how public policy gaffes together create a logical and even likely set of diagnoses of various problems leading to the seen symptoms in Chicago. It is sad that they are purposely overlooked. It is even more sad that many of these gaffes would have been avoided had our federal government respected its charter.
Public policy is a great example of this, but this is so obvious at the federal level that it's not even worth discussing here. Nonetheless, this is where sound economics should ideally come in to help guide public policy. Except many modern economists, and especially those in politics, have unwisely fallen prey to fallacious enthusiasm for top down decisions. This by its very nature treats the symptom, because the true source of the problem is likely government 'problem solving' itself. But those in power have a god-like belief in their wisdom, and thus make the assumption that any problem with the economy must be private in nature. Wrong.
But less the general economics talk, the city of Chicago is a veritable microcosm of bad decisions and public policy disaster. The city is a living, breathing testament to the vitality of private activity and the life sapping drain of public power. .. if only bureaucrats would look past their overgrown noses.
I will soon order a book on a hundred years of land values in Chicago, ending in 1933 when it was published. It was exhaustively researched by a man called Homer Hoyt, who would soon be a successful real estate investor and urban economics academic. The maps and charts are hand drawn, and most of the data collected from the basement of the Cook County Recorder of Deeds, or the Assessor's Office.
It documents the land values, the real estate cycles, and the factors leading to what has to be one of the largest, swiftest urban population explosions in history. The growth of this city was remarkable. And what is amazing about this book is that it chronicles the reasons WHY the city grew in the particular ways it did, why certain areas came to certain uses.
Looking at his maps, at the Chicago of 1930, at the centers of high land value vs the city today, one is struck by the particular nature of the differences. In 1930 and before, intersections in Englewood and in Uptown had particularly high land values, being near major transportation networks and having grown in to satellite centers of business. The saddest thing is that in many, many places in the midwest it is the areas with the most important history and most magnificent architecture that are the most devastated.
In my view there isn't a lot of mystery as to the reasons for this devastation. If they're looking for answers, policy makers need only look in the mirror. It's hard to admit credit for the urban hell holes that are ghettos, for fields of empty grass that once held bustling business, brick apartment buildings, or mansions. Unintended consequences; one stubborn and universal economic law.
Major business centers were once connected via an extensive street car system. It seems to me that the major events leading to urban blight are:
1. The take over of the street car companies by the CTA, a public agency that cut service and dismantled the system under budget constraints. Less the public monopoly, the system would have responded to actual market demand more properly. Portions of the system would have gone down, but not in the same way.
2. The automobile.
3. The use of imminent domain for the federal highway system, which cut neighborhoods to pieces and made it possible to live outside the city while enjoying its benefits. It made owning a car more advantageous than mass transit because the latter still involves pay per use. The costs of owning a car are socialized, and unfairly levied upon those who were forced to sell property for 'public good.'
4. The use of imminent domain to clear out vast areas of 'blight,' or areas that white politicians did not like. The subsequent failure of public housing sent Chicago to some of the highest crime rates in the country. The city literally began rotting from within, with crime spreading to the areas around and essentially forced population shift out of and in to areas. With government indirectly manipulating land value so wantonly, creating huge problems, and conducting a huge racist social experiment at the expense of the 'benefactors' and everyone around them, a huge dis-incentive to city dwelling was created. The urban fabric created by private owners was ripped apart and rent in to ribbons, and the city barely resembled its former self. If the neighborhood is so sharply changed by political factors, families lose stock in the future of their area. By consolidating land ownership, those who care about the neighborhood are drawn down. History of ownership is powerful.
5. The exodus of manufacturing jobs. Truth be told, manufacturing in America is not endangered. But manufacturing jobs are constantly drawn down as more efficient methods of production are invented. This is exacerbated by the far higher taxes during the last century, during which the disinvestment in cities has occurred. Or rather regulations and price/wage controls, if you will. I particularly refer to programs affecting industrial jobs, the regulation of which grew at an unreasonable pace during the great depression. These programs, especially those strengthening labor, made hiring another employee less attractive. The corresponding and predictable loss of jobs hits especially hard for America's manufacturing and transportation capital.
Additionally, taxes on investment, which were up during the same time, hurt funds allowing these businesses to thrive and expand. Not hiring as many workers removes the main incentive for existing in a major population center -- that is, the availability of cheap and talented labor.
5. The war on drugs. With the exodus of manufacturing jobs, and the artificially increased marginal utility of mechanized solutions over human ones, jobs still existing in the city tended to stay in the hands of those who increasingly lived outside of the city. With little job creation, inner city areas held few jobs for residents.
The war on drugs incentivizes illegal business over legal. It makes it very profitable to break the law. Without prohibition (and wage/price controls), alternative jobs would have to, and then would, be created by those most in need of them, or by somebody who recognized the opportunity.
This illegal activity further destroys local commercial activity, communication with outside areas, and landlord building maintenance. Crime rises and the city festers in its own filth. Areas dependent on illegal drugs for their only income have few other options. But in a free market only legal establishments would exist because illegal options couldn't compete with a streamlined production process. Crime would be down and the city would begin to heal.
6. The compounding effect of job loss. The frenetic pace of construction was greatly slowed with much lower gross economic activity. After the fire construction and design talent was drawn from around the country to rebuild the city. With the loss of jobs in the great depression and ever after lower rates of recovery and job creation, the construction industry built cheaper buildings. Midcentury buildings stretch for miles upon miles, but they are small and cheap. Skilled labor was no longer in demand, and centerpiece corner buildings, urban and larger, were largely a thing of the past. Construction pace pushed out of stratospheric levels has a substantial effect on all other economic activity.
But more than that, as companies strove to make housing more and more affordable for the new middle class suburban resident, the average wealth of home owners continued to drop. And to provide for these people, land had to be cheap. Increases in purchasing power during midcentury were due not to increased average earnings, but rather to decreased price of middling quality goods better suited for a middle class. Cheap land and cheap materials are a big part of this.
7. Chicago's derelict property policies. The city under Washington and then Daley has a fast track demolition program which hastily demolishes buildings from which illegal activity comes or which are neglected by landlords or delinquent on taxes. The problems only spread to the next buildings, and this again treats a symptom not a root cause. Not to even mention the demolition company campaign contributions -- these neighborhoods are devastated beyond recovery. In many areas the prairie has returned. What was once a bustling neighborhood filled with stores, flats, and even mansions has only a few odd buildings per block anymore. And the policy continues... Areas cannot recover if their main resource -- their built environment -- doesn't even exist anymore.
8. Continuing unintended consequences.
The CTA loses lots of taxpayer money every year. The public transportation get progressively worse. And yet city leaders are unwilling to make people pay for living in the city. If you want to drive a car to work in downtown, you should logically pay for the infrastructure getting you there and housing your car -- as directly as possible. Right now there is little trade off between car and mass transit. The city has a new zoning code providing provisions for developers requiring parking. But they don't realize that it is this code itself that removes the incentive which would keep CTA viable, and therefore provide the advantage of city over suburbs -- that is, good and cheap transportation. Cars that do make it to the city would pay more at city parking facilities as well. Supply and demand. But the city is currently artificially forcing supply up above equilibrium, which is where developers would keep it were they given the option. Parking should be as expensive as it needs to be for it to be viable to build parking instead of units or commercial space.
The current policy destroys the urban character of prospective development and the viability and attractiveness of inner city neighborhoods. Further, it deprives the city of income as well as a profitable and viable public transportation system.
Drivers should have to pay for highways directly as well. Were imminent domain not used, then highways would be expensive to build through areas of high population where land values are high. But a private company could buy air rights, or rights underground, or progressively and strategically buy land on the market. Eventually one highway would be built, and fees would be high. Cost to users would be direct. Highways would cut a path through the least private land possible. In Chicago, this would probably be lake shore drive, as it is built on a lot of former rail yards.
Were this policy adopted, mass transit would again be in what is closer to fair competition as highways would directly cost money. Right now a driver has little incentive to switch to mass transit when he is already paying tax dollars for the highways.
Privatize highways! They are losing money. Privately maintained highways charging per use would use price as a means of finding traffic equilibrium. Highly maintained highways, and more reasonable levels of auto use, would result. Further, mass transit would become more viable and service would increase. The inner city would regain what was one of its crucial advantages.
One can see how public policy gaffes together create a logical and even likely set of diagnoses of various problems leading to the seen symptoms in Chicago. It is sad that they are purposely overlooked. It is even more sad that many of these gaffes would have been avoided had our federal government respected its charter.
Why the American political spectrum differs from that overseas
The difference between left and right, and between liberal and conservative, is confusing for a lot of students, as well as many other people. It should be. The terms have been anything but consistent over the course of American history. In the past I've often heard 'liberals' talking about their Democratic Party as the party of liberty and the American dream, and without a hint of irony. I laughed and pointed out their blatant collectivism. But after reading more about American history for myself, and several historians' opinions on the matter, I've now come to a different understanding of the political spectrum in America.
Here's a spoiler: Obama is conservative.
So here's the rub on the true state of American politics. It's really about Jeffersonian vs Hamiltonian, not left or right, which according to Hayek are both essentially the same in the end. Up until about the beginning of the 20th century the Democratic Republicans, and then later the Democrats, were the party of Jefferson. The opposition, in the form of mercantilist "conservative" Hamiltonians, was first the Federalists, then the Whigs, and finally the Republicans.
The big problem is that since Woodrow Wilson the Democrats are very similar to mercantilist republicans, only they want to redistribute wealth differently than the republicans.
The confusion results because the Democrats took to calling their new ideology liberalism when it is not and was not. Liberalism is what it was before Wilson, in the 19th century.
Further confusion results from aberrations in the Republican party as true liberals-in-the-American-tradition-of-small-government attempt to use the party that at least hasn't FDR in it as a vehicle of opposition against the ideology of both the Republicans and Democrats, who are really both conservative.
These people include senator Taft, and presidential candidate Barry Goldwater. They are more correctly called liberals, or if you prefer, classical liberals. This is even more confusing because they often called themselves conservatives.
Republicans pay penance to the true American liberal Jeffersonian tradition in order to attract those who oppose both the Democrats' agenda and, unknowingly, would oppose Republicans' true agenda as well.
Unfortunately for Americans there is no real opposition party representing the Jeffersonian ideology. It was high jacked by the statists a century ago. Until there is such a party, the cause of liberty has little hope.
There are those who believe that the most realistic way to create this party is to co-opt the Republican party, which is lost and directionless at the moment. This seems to have real promise behind it as it avoids all of the obstacles to third parties put in to place by the dominant two.
The most organized source of momentum is currently, for better or worse, in the hands of Ron Paul's Campaign for Liberty, which remains independent from the Republican Party but intent on using it as a means to Jeffersonian ends.
So what does one call oneself if he believes in small government? Perhaps liberal, but one in disagreement with all other 'liberals.' Perhaps it's safest to simply stick to Jeffersonian.
Sources:
http://thomasmullen.blogspot.com/2010/02/conservatism-is-not-what-we-need.html
http://mises.org/daily/3859
"The Revolution Was" by Garet Garrett. This can be read here:
http://www.lewrockwell.com/orig5/garrett1.html
Among others.
Here's a spoiler: Obama is conservative.
So here's the rub on the true state of American politics. It's really about Jeffersonian vs Hamiltonian, not left or right, which according to Hayek are both essentially the same in the end. Up until about the beginning of the 20th century the Democratic Republicans, and then later the Democrats, were the party of Jefferson. The opposition, in the form of mercantilist "conservative" Hamiltonians, was first the Federalists, then the Whigs, and finally the Republicans.
The big problem is that since Woodrow Wilson the Democrats are very similar to mercantilist republicans, only they want to redistribute wealth differently than the republicans.
The confusion results because the Democrats took to calling their new ideology liberalism when it is not and was not. Liberalism is what it was before Wilson, in the 19th century.
Further confusion results from aberrations in the Republican party as true liberals-in-the-American-tradition-of-small-government attempt to use the party that at least hasn't FDR in it as a vehicle of opposition against the ideology of both the Republicans and Democrats, who are really both conservative.
These people include senator Taft, and presidential candidate Barry Goldwater. They are more correctly called liberals, or if you prefer, classical liberals. This is even more confusing because they often called themselves conservatives.
Republicans pay penance to the true American liberal Jeffersonian tradition in order to attract those who oppose both the Democrats' agenda and, unknowingly, would oppose Republicans' true agenda as well.
Unfortunately for Americans there is no real opposition party representing the Jeffersonian ideology. It was high jacked by the statists a century ago. Until there is such a party, the cause of liberty has little hope.
There are those who believe that the most realistic way to create this party is to co-opt the Republican party, which is lost and directionless at the moment. This seems to have real promise behind it as it avoids all of the obstacles to third parties put in to place by the dominant two.
The most organized source of momentum is currently, for better or worse, in the hands of Ron Paul's Campaign for Liberty, which remains independent from the Republican Party but intent on using it as a means to Jeffersonian ends.
So what does one call oneself if he believes in small government? Perhaps liberal, but one in disagreement with all other 'liberals.' Perhaps it's safest to simply stick to Jeffersonian.
Sources:
http://thomasmullen.blogspot.com/2010/02/conservatism-is-not-what-we-need.html
http://mises.org/daily/3859
"The Revolution Was" by Garet Garrett. This can be read here:
http://www.lewrockwell.com/orig5/garrett1.html
Among others.
Waking America
I christen this space thusly.
Americans have woken and forgotten their dreams, thanks in no small part to the new (read: 25 years old) top down education system. For around one hundred and sixty years the Americans dreamt most vivid dreams, chiefly to conquer their new land and let freedom reign o'er it. Let no one abridge the only American heirlooms -- land and liberty!
But in the 1930s American romanticism turned populist under a new kind of ruler the likes of which America had never seen -- a man born to be a king. And the Americans dreamt all the more vividly! But now as this turn of sorts reveals its ugly mug, Americans awake and dream no more!
The American Dream, my countrymen, is on life support. We killed it four generations ago in our lust for romantic empire! And now we wake to the unassailable fact that our forbears fought for an America that is fading to memory. We wake to responsibility for romanticizing the dream long after it had been corrupted -- for allowing ourselves naive seduction by a new sort of "common dream." The day of reckoning, long delayed, has come.
We are waking to the sorry state of current America, with all of its much discussed troubles. But now we must decide not to return to fallow dreams of utopia where individuals' dreams are coercively sacrificed to the shared vision, and instead to remake our sphere that we may yet dream American again. We must properly identify the path to current plight so we may retread our steps and begin anew. This is the only way to again make our country safe for the dreamer of American dreams.
How did this happen? It is not merely the story of an ambitious and irresponsible man with a loud and inspirational voice. Nay, the answers are many and are hard -- but we must find them, for this land and people are not without an ounce of the promise held in times gone by. These answers must come from America, not its self-anointed leaders in academia and politics. For it was our fathers, and not their similar forbears, who had made America great beyond our own imaginations.
So let us reminisce, and think about what may yet be if we allow ourselves not to forget.
To a time when America's heart, the Midwest, beat with a vitality not seen since.
To a time when men rose and fell of their own labors and ingenuity, and not somebody elses.
To a time when our nation was of law and not men.
To a time when possibilities were unfettered by anointed kings.
To a time when cities were places of promise, activity, commerce, and beauty.
To a time when men were men and women women, and when men wore hats.
And to a time more American than our own -- a nation which had an identity now faded. The identity of heterogeneous commonality. A people with one thing in common -- individual liberty.
This is for waking America, that it remembers the splendor and ingenuity which is uniquely American, and yearns to dream again.
Americans have woken and forgotten their dreams, thanks in no small part to the new (read: 25 years old) top down education system. For around one hundred and sixty years the Americans dreamt most vivid dreams, chiefly to conquer their new land and let freedom reign o'er it. Let no one abridge the only American heirlooms -- land and liberty!
But in the 1930s American romanticism turned populist under a new kind of ruler the likes of which America had never seen -- a man born to be a king. And the Americans dreamt all the more vividly! But now as this turn of sorts reveals its ugly mug, Americans awake and dream no more!
The American Dream, my countrymen, is on life support. We killed it four generations ago in our lust for romantic empire! And now we wake to the unassailable fact that our forbears fought for an America that is fading to memory. We wake to responsibility for romanticizing the dream long after it had been corrupted -- for allowing ourselves naive seduction by a new sort of "common dream." The day of reckoning, long delayed, has come.
We are waking to the sorry state of current America, with all of its much discussed troubles. But now we must decide not to return to fallow dreams of utopia where individuals' dreams are coercively sacrificed to the shared vision, and instead to remake our sphere that we may yet dream American again. We must properly identify the path to current plight so we may retread our steps and begin anew. This is the only way to again make our country safe for the dreamer of American dreams.
How did this happen? It is not merely the story of an ambitious and irresponsible man with a loud and inspirational voice. Nay, the answers are many and are hard -- but we must find them, for this land and people are not without an ounce of the promise held in times gone by. These answers must come from America, not its self-anointed leaders in academia and politics. For it was our fathers, and not their similar forbears, who had made America great beyond our own imaginations.
So let us reminisce, and think about what may yet be if we allow ourselves not to forget.
To a time when America's heart, the Midwest, beat with a vitality not seen since.
To a time when men rose and fell of their own labors and ingenuity, and not somebody elses.
To a time when our nation was of law and not men.
To a time when possibilities were unfettered by anointed kings.
To a time when cities were places of promise, activity, commerce, and beauty.
To a time when men were men and women women, and when men wore hats.
And to a time more American than our own -- a nation which had an identity now faded. The identity of heterogeneous commonality. A people with one thing in common -- individual liberty.
This is for waking America, that it remembers the splendor and ingenuity which is uniquely American, and yearns to dream again.
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