Recently I was riding on the Metra, the commuter rail system that connects the suburbs to downtown Chicago. I picked up “On the Bi-Level”, the flyer that Metra management makes available to riders and was browsing through it when I came upon this innocuous sounding statement:
I certainly will not argue that Metra is without challenges. Perhaps the biggest challenge, and one that will impact many of our plans, is our needs for more capital money to invest in our system. We estimate Metra will need about $9.7 billion over the next decade to achieve a state of good repair on the system, and we expect to receive about a fourth of that amount from traditional federal and state sources. Riders need to understand that fares help us cover our operating costs but have never been a significant source for capital expenses – we must rely on Washington and Springfield for that funding.
Within the utility community there is a concept called “generation equity”. This implies that you need to spread the burden of replacement and renovation across the life cycle of users, rather than hitting them all on the first riders, such as in the case of a train line. On the other hand, you cannot just ignore ongoing capital costs and let the system run into ruin by paying the minimal upkeep costs every year.
In this article, Metra lays bare the facts that:
- Fare costs (riders) only “help” them cover their operating costs
- Funding from other sources (and debt) helps them cover the rest of their operating costs
- Then they rely on largess from the state or Federal governments for about a fourth of their capital costs
- And who knows where they are going to get the rest of the funds for capital replacement
In fact, it would be impossible for Metra to re-build the train lines that they have today in the current regulatory and legal environment. Permits, lawyers, litigation, politically favored contractors, and a welter of archaic tools and practices would make the costs impossibly high and the deadlines incredibly long. By “capital” costs, they are generally talking about replacing bridges, stations and sections of existing track rather than “true” expansion, although they do occasionally add some incremental lines or stations.
It is important to understand that things have gotten more EXPENSIVE but they haven’t gotten BETTER. The infrastructure that we take for granted might as well have been built by the ancient Egyptians given how herculean the task would be to replace them. Americans will never see another major dam built in the USA and likely few to no additional incremental nuclear or coal plants in the next 25 years. Even major transmission lines are going to be few and far between, which will only be built because it is absolutely necessary to get electricity to new population centers. This is all due to the layers of process and regulations and lawyers that we have overlaid atop the simplest tasks, and you can see the contrast when you go to China and see cities being built overnight.
At some point we are either going to need to radically re-structure how we build and pay for things or go to a completely private system where you pay for what you receive in terms of capacity, reliability and performance. States and cities that make it impossibly expensive to build and expand will inevitably suffer relative to other locations that are freer in terms of rules and regulations, unless (as is likely) the entire US is burdened with Federal regulations that make it impossible to escape this yoke.
Posted in Big Government, Chicagoania, Economics & Finance | 9 Comments »
Posted by Carl from Chicago on 16th November 2013 (All posts by Carl from Chicago)
Recently there was an interesting article in the NY Times called “How I Helped Teachers Cheat” about an academic ghostwriter. While I have no experience with ghostwriting, I found the following quote from his article interesting, which I will get back to later in the story:
In 2004 it was revealed that more than 500 students in a Birmingham, Alabama high school had been urged by teachers or principals to drop out of school before the test, for fear they would bring the school’s test scores down.
I was a teaching assistant (TA) in graduate school. This was back in the days of chalk blackboards (we didn’t even have dry-erase boards) and we had just gotten rid of mimeograph paper and gone to regular copies for printing. At that time, grades were kept in a little book, by hand, and that is how results were calculated. I was the first TA to try to calculate grades on a computer in my field of study.
I don’t remember a lot about teaching but I remember the first day pretty clearly. I was teaching an introductory accounting course that was required for graduation by many schools at my university, and it also held a lot of introductory accounting majors that could be described as highly motivated. Thus when I stood in front of the group it was a mix of fifth year seniors trying to get this course done so they could escape the university and first semester sophomores taking their first accounting class to get started on their profession. Since I graduated undergraduate early, I was younger than probably half the students in my class (the fifth year seniors).
While you could use the word “teaching”, it really was just a Friday TA session and the main work was done in giant lecture halls on Monday and Wednesday by a professor. We were supposed to go through problems and discussion tied with the course curriculum, and go through problems with the students.
I had no training whatsoever and little preparation. Oh well. I just kind of winged it. Unlike regular classrooms you don’t have discipline problems or any of that when you are teaching accounting… this wasn’t some sort of “hard knocks” episode.
There were a few major tests and a project required to calculate the grade. After the first exam, I looked at my section against the 25 or so other sections (this is a big university) and noticed that the average score of my section was near the bottom.
Even though there wasn’t any pressure on me to be a good teacher or even to help my students get better, my competitive streak kicked in and I was not happy that my section was low on the list. So I sat down and looked at the types of students that I really had in my group:
- first semester accounting sophomores – these students aced everything and were great. Frankly many of them likely knew a lot more about the details of the material than me
- fifth year general majors, particularly agriculture – these students were a mix but generally on the low end. They were just trying to get through this class and get out of the university
- Students who were clearly failing, not attending class, and not trying
Based on these three groups of students, I devised a strategy to try to improve my section score and move up the rankings.
- Sophomores – Ignore them. They were doing well anyways. They always asked the hardest questions, for example problem #55 (out of 1-55), where all the assumptions were reversed because it was a corner case. But it turned out that when I answered THEIR hard questions, the rest of the class was completely lost because they didn’t even understand questions 1-10 (the easy ones). Those kids even asked me for more comments on the homework I graded. If I had enough sophomores like this, I’d cruise to the top of the rankings anyways because they were all self-motivated
- Fifth year seniors – Teach them. The fifth year seniors were people that I saw at the bars around campus and actually could learn if you talked to them. So I would call on them in class and basically humiliate them a bit. ”Do you understand this problem?” A few seconds would prove that they didn’t. Then I would say “Why don’t you ask a question?” and after a few sessions of this they would mostly perk up and put a little bit of effort into this. No one wants to be humiliated by being asked direct questions in front of a class and then heckled
- Failing students – Get them out. At the time in order to get funds to stay in school you had to go past the “drop date” and then you’d get your state money. Apparently it didn’t matter if you were failing or not because they’d just take my class and not drop and be failing. Whenever we had exams (which apparently they had to sit for?) I would say hello to them loudly in front of the section and ask where they had been in class and everybody laughed because I would start class by calling attendance only on the students that never attended, so people recognized their names. I don’t know if I succeeded in getting them to drop faster but it was all I could do since they didn’t come to class and apparently didn’t care about failing. The last power I had left was to call them out
Based on these (primitive) tactics, my section moved up against all the other sections and by the end of the year we were above average, which is all I ever could have accomplished when you match up 5th year seniors in the agricultural college from actual accounting majors in the prime of their motivation. That felt good.
But I could sympathize with the teachers who were trying to get students to drop who weren’t even trying. I’m sure that there is some book or process somewhere about how everyone can learn and you can reach them through superhuman methods but when you are up there teaching and trying and they aren’t even showing up, that’s frustrating too. In no way was my tiny TA stipend at risk through poor teaching or poor results, it was just my own competitive nature that was pushing me to actually try to improve the net results of my team. And that’s the end of my brief (formal) teaching experience.
Posted in Education | 22 Comments »
Posted by Carl from Chicago on 16th November 2013 (All posts by Carl from Chicago)
Recently I wrote about how the district I live in is perhaps the most gerrymandered district in the entire country. Great pains have been taken by the Democrats that run Illinois to ensure that my vote can’t count and the legislator that runs our state district doesn’t even have to bother courting voters like me. Even among Illinois legislators (not exactly the highest quality bunch) my guy is famous for not even voting to impeach Blago. Literally we have the worst of the worst representing us, but he is effectively immortal since all he has to do is win the Democratic party primary and he’s in, due to basic mathematics and party-line voting.
While I know writing posts like this is just like shouting into a toilet Rolling Stone recently came out with an article about Red State gerrymandering. While my district in the article above was in the state legislature, our Illinois US House of Representatives balance has been similarly adjusted to ensure that a 50/50 or so state leans completely blue. Of course the entire article acts as if this is a Republican phenomenon, when in fact both parties are equal opportunists at this sad game.
There is a shred of hopefulness in all of this in some electoral advancements coming out of California, of all places. They have a system where the two top vote getters in the primary battle it out on election day, even if they are from the same party. In this sort of system, the Democrat or Republican that reaches out to the constituents in the middle from the other party has a shot at beating a stone ideologue that will generally cruise through the party primary (like my state representative). This solution was “California Proposition 14“. In parallel, they also have a citizen’s commission to draw districts so that they make more sense rather than be amazing gerrymander constructions. It is too soon to tell if California’s results will help that much but it seems like a step in the right direction.
Cross posted at LITGM
Posted in Chicagoania, Illinois Politics, Politics | 10 Comments »
Posted by Carl from Chicago on 3rd November 2013 (All posts by Carl from Chicago)
I live in the River North district of Chicago, a vibrant area full of professionals, high rise buildings, and a large service economy. We are adjacent to the Loop (and many of the people who live here chose this area so that they could walk to work) which employs many of these residents in an internationally competitive group of companies, both public and privately held.
In my interactions with these residents, few are political, and I would say that most Illinois citizens I’ve met over the year could be considered middle-of-the-road. However, due to factors unique to the state of Illinois, the state is dominated by Democrats who control most of the levers of power at the state, city, county and local levels. As such, a state of mostly moderate individuals is set up, governed, and managed as if it was the most left-leaning state in the country.
Ken Dunkin is our Illinois State representative for the 5th District, and he helpfully sent me this brochure that outlines his goals and accomplishments as a state legislator. This update provides a great window into the mindset of an Illinois Democrat.
Ken Dunkin is famous for being the only Illinois legislator to skip Gov Rod Blagojevich’s impeachment hearing, and thus being a de-facto loyalist to the bitter end. It is really hard to add anything more to that sort of fact; even his fellow Democrats finally came to the conclusion that Blago had to go, but not Ken.
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Posted in Chicagoania, Illinois Politics, Politics | 14 Comments »
Posted by Carl from Chicago on 2nd November 2013 (All posts by Carl from Chicago)
As a long time city of Chicago resident I have seen the immense growth of new buildings and new residents in areas near downtown which previously had been office buildings, warehouses, dilapidated structures, or simply abandoned. From time to time when I am in an architectural bookstore I glance at books about “new urbanism” or various similar concepts that authors and “urban planners” use to overlay atop the actual growth of a city (or decline, in the case of other parts of Chicago).
If you are from a smaller town or relatively slow moving US city and haven’t been overseas to see “real” growth somewhere like Hong Kong, China, or India, then Chicago’s growth over the last decade or so that I’ve lived near down is pretty astonishing. In River North, where I live, literally dozens of high rise buildings > 15+ stories have been built and are filled to the brim with owners and renters. The entire South Loop has been renovated not only with town homes and large buildings, but huge retail spaces like Target, Costco, and giant movie theaters. While there were many restaurants in River North when I first moved here, we had to walk far and wide to find even a place open for a decent breakfast; now we have a dozen to choose from within 6-8 blocks.
Since there are train tracks downtown for the Metra commuters which arrive from suburbs from all directions (except East, where the lake is) and many of these tracks are on ground level, the streets are cut up and there are sidewalks I used to take under viaducts with few people around. Now, however, immense apartment buildings have popped up (over 40+ stories) and in the morning there is a huge population of well dressed professionals walking along these routes and sidewalks, where previously there was just debris and parking lots. If I go to work late it is either single women walking dogs or nannies pushing single babies in strollers.
There must be 50,000+ well heeled urban residents packed into this place, all arriving from somewhere else whether it is a suburb, another state, or another country. None of them are poor – you can’t be – since rents are in the thousands and move up rapidly, and every new building coming up has more amenities than the competitors in order to attract residents. The demography is very fluid because many of the condominium owners rent out their units, and then the newer buildings have been built as apartments since the real estate crash of 2008.
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Posted in Chicagoania, Real Estate, Urban Issues | 5 Comments »
Posted by Carl from Chicago on 29th October 2013 (All posts by Carl from Chicago)
Recently one of my all time favorite bands, The Replacements, got back together and played three shows at Riot Fest. Of the four original members, one of the Stinson brothers is dead, their replacement guitarist Slim Dunlop has a life threatening disease, and their drummer Chris Mars is a full time artist. So the last two Replacements, Paul Westerberg and Tommy Stinson, played shows to rapturous reviews by fellow Gen-X’ers.
I am just kicking myself in the rear that I didn’t go see those shows. The Chicago show conflicted with a bunch of other things but in hindsight I could have gone off and seen them in Denver (maybe). Now I am waiting to see if they get back together (or even record some more music) and this time I’ll be sure to go, where ever they play.
After watching some of the songs on You Tube I went to put some more replacements on my iPod while working out and realized that I only had a few snippets from their albums in my collection. Back when I first ripped the Replacements CD’s a long time ago I only put a few songs from each CD on my computer (trying to save space) and of course the quality was low, at 64 bit. I realized that I didn’t even have “Tim”, my favorite album, at all.
I started looking around on itunes and now I need to buy these songs for a THIRD time. I had them all on albums, then CD’s, and now I need to buy them AGAIN, on iTunes? Really? And all the while I can hear Dan’s voice in my head saying that he doesn’t buy any music anymore, relying on the internet and services like Pandora / Spotify and for me at least, Sirius / XM (I have it in my car and house and started paying a bit more to stream it and play on my “Jambox” speaker through my iPod or iPhone).
In this case I knew where my old CD’s were… I gave them all (more than a thousand) to my brother, and he was ripping them in some high fidelity manner. He looked through the stack (they were all out of order because of a flood) and found three CD’s, which I took back, and I will re-rip again and put on my iPod. After I got home I realized that I didn’t get “Let it Be”, probably my favorite, and I don’t have all the songs on my iPod. Oh well, I may have to buy a few here and there.
But how long before I don’t buy any music at all? It can’t be too long. I don’t buy too many books anymore, and I probably buy less eBooks than I used to buy of the equivalent hardcover variety. I am consuming paid media at a fraction of the rate that I used to, and can probably see a day when I get rid of everything (I got rid of all my CD’s a while ago, so these three are the last three in my house).
Cross posted at Chicago Boyz
Posted in Music | 7 Comments »
Posted by Carl from Chicago on 21st October 2013 (All posts by Carl from Chicago)
Last night I saw a documentary about the 1985 conflict in Philadelphia against the “Move” organization which featured a shootout and finally a helicopter dropping a bomb on a fortified building and 60+ row houses in a heavily populated city leveled by fire. The documentary was called “Let the Fire Burn” and it was primarily based on archival video from an inquest that the city of Philadelphia had after the sad incident, vintage news footage that was “live” at the time, and videotaped depositions of the survivors.
One angle that I found intriguing is the relative lack of sophistication of the police in 1985. Prior to the 1985 bomb incident, there was a 1978 incident where “Move” supporters were involved in a firefight with police where a policeman was killed and many others were shot. When police captured one of the “Move” members that surrendered, they beat him up on camera, in what was likely one of the first incidents filmed in this manner (the police were found not guilty). Thus during the 1985 incident, the Philadelphia police were heavily armed and on their highest guard when it came time to attack the “Move” compound.
“Move” built a bunker on the roof of a row house, apparently out of wood but reinforced with metal, with firing ports to command the street. When the police attacked, they used a water gun from a firetruck, but it wasn’t powerful enough to knock the bunkers off the roof.
At one point the police ran out of ammunition. During this siege they fired over 10,000 rounds into the house. A local news segment shows a county policeman showing up with a trunk full of ammo that is distributed to the police, in order to replenish their supply.
After giving up on randomly shooting into the building, and noting that the fire hose wasn’t working, they decided to drop explosives on the roof with a helicopter. The explosives didn’t blow up the bunkers. However, after 15 or so minutes, the building started to catch on fire until finally there were flames shooting ten stories tall (per a local news account). The title of the film “Let the Fire Burn” alluded to the supposed order (disputed by many) to let the fire burn in order to remove that bunker from the roof where the “Move” supporters could have fired on police. In the end, the entire building went up in flames and then 60+ buildings were burned.
It is interesting to consider how different this could have turned out in 2013. The police likely have many modern war veterans in their ranks who would be accomplished shooters (the modern war brought the sniper back to the fore) and could have likely picked off the “Move” supporters had they shown themselves anywhere without shooting 10,000 rounds to no avail. There are other ways to break into / destroy a fortified location, especially given that the order to storm the “Move” HQ was given in advance and they had time to prepare. The police are full of veterans who have stormed into heavy buildings and cleared them of enemies, basically “street fighting” experts.
The police accounts depicted in the documentary are often contradictory; no automatic weapons were found in the “Move” HQ and yet it seems that the original shots fired came from automatic weapons, implying that the police may have inadvertently started the shooting war.
I hope that a situation like this wouldn’t occur nowadays but I am confident that the police have the means to deal with an armed and fortified opponent, or could call in resources that could do this. By comparison the 1985 police in Philadelphia look outmatched by a simple bunker and a few older rifles. To fight them, the Philadelphia police ended up using the oldest of weapons, fire.
Cross posted at LITGM
Posted in History | 19 Comments »
Posted by Carl from Chicago on 30th September 2013 (All posts by Carl from Chicago)
In the NY Times they had an article on the possible partition of Middle Eastern countries in the wake of the Syrian uprising. It long has been taught that the borders of the Middle East are a “mistake” made by the Western powers when they carved the region up amongst themselves. The unspoken message is that all the “troubles” in the area would have been avoided had the Western powers split the countries up according to tribal, religious or other lines that could have resulted in more cohesive states. Much of this may be true – many of the borders appear arbitrary – and yet lands and territories changed hands many times across the historical record.
An area of interest to me is Eastern Saudi Arabia, which the NY Times listed (as conjecture) as possibly a separate country. On many dimensions that is logical; the population of that province has a large Shiite composition and this makes it distinct from the rest of Saudi Arabia (which is supposedly 95% Sunni, although figures are not necessarily to be trusted). Historically these Shiites faced heavy discrimination, (data is sketchy and incomplete) as summarized in this wikipedia article:
They have usually been denounced as heretics, traitors, and non-Muslims. Shias were accused of sabotage, most notably for bombing oil pipelines in 1988. A number of Shias were even executed. In response to Iran’s militancy, the Saudi government collectively punished the Shia community in Saudi Arabia by placing restrictions on their freedoms and marginalizing them economically.Wahabi ulama were given the green light to sanction violence against the Shia. What followed were fatwas passed by the country’s leading cleric, Abdul-Aziz ibn Baz which denounced the Shias as apostates. Another by Adul-Rahman al-Jibrin, a member of the Higher Council of Ulama even sanctioned the killing of Shias. This call was reiterated in Wahabi religious literature as late as 2002.
While these sorts of oppressive behaviors on the parts of the majority are generally tied to rebellion and are logical for the NY Times to think of as possible separate states, this neglects the key fact that the world’s largest oil field, the Ghawar Field, is located in that province. The idea that the Sunnis in Saudi Arabia would give up their oil, which accounts for 80% of revenues, is incredibly naive. The Saudis would never give up their oil, for it is the sole engine of their economy and standard of living. It isn’t known what they’d do if there was a serious rebellion in the area, but I would have to assume that they would take whatever steps were necessary to curtail it and keep the oil flowing. It should be relatively easy for the Saudi government to accomplish this due to their wealth and strength in numbers.
One way to do this would be just to hire mercenaries, which is a tool that the (minority) government in Bahrain is using to hold onto power. Bahrain’s situation is trickier since the Sunni government is a minority in this oil-rich country, but the use of force and violence has been enough to keep the rebellion at bay. One tool for the Bahrain government has been to hire Sunni mercenaries:
For decades, the Bahraini authorities have been recruiting Sunni foreign nationals in the security forces from different countries, including Egypt, Jordan, Syria, Iraq (Ba’athists), Yemen and Pakistan (Baluch) in order to confront any popular movement that usually comes from the Shia majority.
The idea that governments will give up valuable resources in the name of minority rights is a laughable Western idea. The NY Times map is a non-starter. The wealthy and powerful will not give up the (sole) source of their wealth without a tremendous fight from a determined and powerful enemy.
Cross posted at LITGM
Posted in Energy & Power Generation, History, Middle East | 10 Comments »
Posted by Carl from Chicago on 28th September 2013 (All posts by Carl from Chicago)
I saw the movie “Inequality for All” starring Robert Reich, the former labor secretary for Bill Clinton and a very short guy (he’s 4′ 11″) who is pretty personable and funny. Reich uses his day job as a university professor while teaching a class to illustrate his thoughts on inequality from the movie.
In the movie he attempts to link:
- decline in average wages, in “real” terms (adjusted for inflation)
- growth in the highest wages (the top 1%)
- with various factors, including globalization, automation, declines in unions, and the financial bubble
- income inequality with lower marginal tax rates on the rich
There are certainly some concepts in here than anyone can agree with. It would be good if more people in the USA earned a higher salary, had better educations, and were more productive.
In the movie he mentions Warren Buffett, who famously pays a lower marginal tax rate than everyone else in his office, which is due to the fact that he receives long term capital gains and dividend income which are taxed at a lower rate. This is grist for the “raise taxes on the wealthy” discussion, as Buffett plays the likable old man. However, what he fails to mention is that Warren Buffett is the very candidate that the ESTATE TAX is designed to catch… rather than nickel and dime him every year on his assets as they rise in value (and cause friction and force him to sell them off to meet the tax bill), the estate tax would be levied on the super rich and it would effectively make up for the lower marginal rate during his lifetime by taxing increases on his wealth at a rate of 40%, for all amounts greater than about $5M. However, Warren Buffett is choosing to “evade” these taxes by setting up trusts and / or giving it away to his favorite causes; if Warren couldn’t avoid his estate tax through these loopholes (the same way you or I can’t avoid the payroll or sales taxes) then 40% of his $60B estate ($24B) would go to the Federal government, to fund the “investments in people” that Robert Reich is so passionate about. Funny that Reich didn’t call that out (didn’t follow his narrative, apparently).
Another element he fails to mention is the growth in illegal immigration in the USA, and the havoc that this causes with unskilled labor (as they are willing to work for far less). It is funny because two professions he specifically mentions, meat packing and short order cooks, are magnets for immigrants and their arrival is a direct cause for falling wages in these fields. Not surprisingly, Reich didn’t want to alienate a core Democratic group.
There is a rich “pillow manufacturer” who makes $10M+ / year who also describes how ridiculous it is in his opinion that his marginal rate isn’t higher. That same entrepreneur says that he invests in “funds of funds” and due to this he makes money without creating any jobs. That is quite a statement – what do you think those hedge funds invest in? They invest in commodities, stocks, real estate and debt (I’m assuming). When you are an investor and you provide money for stock and debt you are supporting companies that, in turn, hire staff. I can’t believe that Reich let this comment slide, but since it was what Reich wanted to hear, why interject?
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Posted in Academia, Big Government, Economics & Finance, Taxes | 27 Comments »