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    High Rise Construction Views – And Taking Down A Crane

    Posted by Carl from Chicago on 21st July 2014 (All posts by )

    In River North, during the many years we’ve lived here, the skyline has been transformed with the addition of new high-rise buildings. Construction slowed after the 2008-9 crash, but is back now with a vengeance. A new apartment building is being built near my condominium. This is a view of the building while the construction workers were pouring concrete on the roof (you can see the concrete pouring arm) the same night of the “Derecho” storm which hit Chicago at the end of June.

    I’ve always wondered how they take down the crane and we got a chance to see it up close and personal. The process took all weekend, and they closed down a nearby street on Saturday and Sunday while they dismantled the crane. They put the metal “box” (it is steel colored) with three sides around a vertical crane “segment” and then the crane pulls that segment out through the gap. You can see the crane holding the segment if you look closely – which it then lowers to the ground.

    Read the rest of this entry »

    Posted in Chicagoania, Real Estate | No Comments »

    Adding to Illinois’ Debacle

    Posted by Carl from Chicago on 17th July 2014 (All posts by )

    This billboard is in my River North neighborhood in Chicago. It is an advertisement for a mall and entertainment location in Rosemont, a small city near O’Hare airport.

    Rosemont was profiled by the Chicago Tribune in this excellent article. A single family has run Rosemont for generations, and they benefit from a levy on taxi rides from O’Hare and spend this money on no-bid contracts for friends, family and politicians as well as large entertainment complexes underwritten by large amounts of debt.

    The suburb is digging itself deeper into debt to subsidize a new bar district, professional softball stadium and outlet mall. With $370 million in taxpayer-backed loans outstanding, Rosemont has one of the top debt loads in the Chicago region.

    Another Chicago suburb, Bridgeview, hosts a stadium for the Chicago Fire, a major-league soccer team. Their debacle is chronicled here, in a typically great Bloomberg article.

    The mayor of Bridgeview, Illinois, said building a taxpayer-financed arena for the billionaire owner of Major League Soccer’s Chicago Fire would bring hotels and restaurants to his suburb. Instead, the town has more than doubled property taxes and may raise them again to pay more than $200 million in stadium debt.

    One of the big problems in Illinois is that we have so many various overlapping public bodies, many with the ability to issue debt and all of whom have expensive board members, employees, and often public contracts doled out to associated cronies. This article, from the “Illinois Policy” web site, describes the myriad overlapping public entities in the State of Illinois and how we dwarf ALL states and especially neighboring (and much better managed) states like Indiana.

    Illinoisans suffer from the second-highest property tax rates in the nation.

    Their state is the third most corrupt in the nation.

    And driving this expensive and corrupt reality on the local level is the fact that Illinois has more units of local government than any other state in the nation. With 6,963 units of local government, Illinois beats its nearest competitor by more than 1,800.

    When Illinois finally hits the wall, and we won’t be able to issue new debt (and thus an immediate fiscal crisis will occur), we will have to have a reckoning with all of these various entities, each of whom has their own debt problems and the ability to create NEW problems by issuing MORE debt. On one hand, the market will constrain their ability to sell debt by the fact that these insolvent entities survive through the “implied” promise that they will be bailed out by some higher power, whether that is a county, state, or Federal government.

    The act of unwinding all of the problems of the inter-related corrupt and insolvent entities will be a herculean task, made even more difficult by the fact that there will be little incentive for the politicians to solve the crisis if the end result is that they won’t have these same public entities for no-bid contracts, jobs for themselves, and their campaign workers and donors once the clean-up is complete.
    The only thing for certain is that the lawyers in the state will feast at the trough of lawsuits from all parties. They just need to make sure that they find a way to get paid themselves on a timely basis…

    Cross posted at LITGM

    Posted in America 3.0, Big Government, Chicagoania, Illinois Politics | 11 Comments »

    Incentives and Economics

    Posted by Carl from Chicago on 14th July 2014 (All posts by )

    A few years ago I went to Norway and had a great time. In this post I described how expensive everything was in Norway due to their highly valued currency (tied to oil riches) combined with the relentless decline of the US dollar (tied to ZIRP and other dubious economic moves). In the simplest terms, a fast food meal or a beer in Norway cost over $20 USD which is complete madness.

    Business Insider discussed the Scandinavian economic experiment, where high taxes are applied to goods and services in order to fund a vast social safety net. From the article:

    In Norway, a burger and fries at a fast food joint will set you back $23. A six-pack of warm grocery-store beer is nearly $30.
    These hefty price tags are due, in part, to high wages for low-skilled service jobs. But high taxes play a role too.
    Most products have a 25 percent value-added tax, which means that $5.50 of the cost of that burger goes to fund Norway’s generous social programs.
    As a visitor, you get little for the added price. But, as a resident, your daily spending helps to fund an expansive package of benefits, including health care, child care, high-quality education, pensions, and unemployment insurance.

    Some are now proposing this high-cost method, with large taxes embedded in everyday prices, as a solution to the inequity in incomes and wealth that is discussed widely in politics and economics today.

    From the perspective of someone who is highly interested in economics and tax policy, my two rules of thumb are:
    1) that the tax policy raise the money that it intends to raise
    2) that the tax policy not significantly distort economic activity

    Any society that implements high taxes such as Norway needs a comprehensive surveillance model in order to collect these taxes. It is difficult to avoid taxes that are broadly assessed on fast food, for instance, because each corporate location will set up cash registers and controls to remit these taxes onto the state. The same types of processes can be installed in liquor stores, formal bars and nightclubs, grocery stores, and restaurants.

    In a less-homogeneous society such as the USA, we already have major problems with tax evasion on cigarettes and likely liquor, and these are in responses to our sales taxes. The problems would be compounded if we placed value added taxes on all goods at a higher level and on services such as restaurants, hair care, etc… Smuggling would become rampant and informal or barter methodologies would increase in size and scope. These sorts of costs would have to be applied across the USA or some areas would become uncompetitive and see an out-migration of economic activity, starting with incremental additions (no one has opened a new manufacturing plant in Illinois in years, for instance) and eventually leading to the lock, stock and barrel out migration of existing industries (such as the exodus of car manufacturing out of the Midwest and California to the American South).

    Read the rest of this entry »

    Posted in Big Government, Economics & Finance, Public Finance, Taxes | 33 Comments »

    Parrot AR.Drone 2.0

    Posted by Carl from Chicago on 21st June 2014 (All posts by )

    Recently I had a chance to operate a Parrot AR.Drone 2.0. The drone is a “quad” helicopter with four rotors that you can control through your iPad. I was extremely impressed with the technology and had a lot of fun operating the drone. Below is a photo of the drone in flight.

    And below is a picture of the drone at rest. The “bumpers” that protect the rotors are not being used because we are operating the drone outside free of obstructions.

    The drone represents a remarkable confluence of various technological capabilities into a small and cost efficient package. The drone has its own wi-fi network that you use to connect your iPad to the device. Thus you are basically leveraging wi-fi to provide a network and this is a likely range limitation on the helicopter, although due to other more pragmatic concerns this is not as significant a problem as it may appear (the craft does not do well in modest or high winds, and only has about 12 minutes of battery time so long range flight is effectively infeasible).

    By using your iPad as a control, the manufacturing and costs of the quad helicopter have dramatically been reduced. You do not need a dedicated device with unique controls to master – simply load software onto your iPad and you are off and running. You are also able to easily upgrade the controlling software on your device (just like updating an app) as well as update the quad helicopter itself via that same method.
    Read the rest of this entry »

    Posted in Diversions, Tech | 2 Comments »

    My Books and the End of My Printed Books

    Posted by Carl from Chicago on 7th June 2014 (All posts by )

    An important event in my household is the spring planting of everything that is going into our garden on the balcony of our condo. They are grown inside under a grow light (mostly, except for items like lettuce and carrots) and then they get put outside.

    The tomato plants grow by leaps and bounds! So what is used every day to keep up with their vigor? Why my old books, of course.

    There you can see the usual suspects on my nightstand… some WW2 (Van Der Vat is a great author), of course America 3.0 by our good friend Michael Lotus, and “Africa’s World War” on the Congo. Then you have a couple of architecture books and finance books like the classsic “The Myth of the Rational Market”.

    I’ve switched over (mostly) to the kindle now and haven’t been buying new books in hardcover. I bought a book on New Yorker cartoons in hardcover since I figured that would be the type of coffee table book that people might actually pick up and look at. I also might buy an occasional architecture or infographic book in softcover or used, as well. But that’s about it.
    Read the rest of this entry »

    Posted in Blogging, Book Notes, Business | 18 Comments »

    I Give Advice… And They Don’t Take It

    Posted by Carl from Chicago on 1st June 2014 (All posts by )

    For many years I worked as a consultant across a variety of industries. While there are many ways to describe the type of work I did, my favorite (when talking to a teenager or child) was

    I give advice, and they don’t take it

    This article from Today’s NY Times titled “Why You Hate Work” provided a pithy antecdote that summarized this situation:

    Several years ago, we did a pilot program with 150 accountants in the middle of their firm’s busy tax season. Historically, employees work extremely long hours during these demanding periods, and are measured and evaluated based on how many hours they put in.

    Recognizing the value of intermittent rest, we persuaded this firm to allow one group of accountants to work in a different way — alternating highly focused and uninterrupted 90-minute periods of work with 10-to-15-minute breaks in between, and a full one-hour break in the late afternoon, when our tendency to fall into a slump is higher. Our pilot group of employees was also permitted to leave as soon as they had accomplished a designated amount of work.

    With higher focus, these employees ended up getting more work done in less time, left work earlier in the evenings than the rest of their colleagues, and reported a much less stressful overall experience during the busy season. Their turnover rate was far lower than that of employees in the rest of the firm. Senior leaders were aware of the results, but the firm didn’t ultimately change any of its practices. “We just don’t know any other way to measure them, except by their hours,” one leader told us. Recently, we got a call from the same firm. “Could you come back?” one of the partners asked. “Our people are still getting burned out during tax season.”

    This brief example has it all:
    1) the client has diagnosed the situation (people are getting burned out and quit)
    2) the consulting firm develops an alternative course of action
    3) the pilot was successful
    4) the client disregards the recommendation (over some period of time) and is back where they started

    While there are many jokes about consultants such as “they borrow your watch and tell you the time” it is important to note that every consultant needs a client and the clients are the “root” of the problem. Why commission a study if you don’t intend to follow through on the results?

    Lots of reasons. For starters – the act of “trying to do something” or “conducting an analysis” buys time and inaction, which is a precious commodity at most companies. It is very difficult to get something done, and it is even MORE difficult to get something done when an alternative hypothesis is under way (such as a consulting effort). In the end, usually the client knows how to solve the underlying problem, but the effort that it would take and the corresponding rewards to those managers tasked with carrying out the solution is too meager to justify the organizational resistance that will occur.

    All of these organizational problems are compounded by short-term thinking; executives want results NOW, this quarter, not improved performance 2-3 years down the road. They may talk about the long term, but the short term consumes 90% of their waking hours, and the next quarterly earnings release. Changing a culture or implementing a wrenching solution that differs from the status quo 1) is hard 2) takes time 3) is met with systemic and subtle resistance at every turn. The final bullet in change internally are external events; even if you can somehow make progress against your current ills, a “new” external shock will take away the focus and organizational oxygen from YOUR issue unless you can implement a rapid and permanent solution (i.e. close something down, sell it, “burn the ships”) before your organizational capital melts away.

    Here’s the part where someone often asks “what’s the solution?” and tries to summarize it all up. I don’t know. It is hard enough to figure out the long term arc of consulting, a multi billion dollar business, and how it survives jibes and efforts to extinguish it, without trying to think about how to make it better.

    Generally the types of corporations that rely on consultants to do their thinking for them don’t last long, unless they are somehow protected from competition (government, non-profit, unionized, utilities, much of financial services, etc…). It is these sorts of enterprise, along with the dying, that provide much of the consultants’ income. You don’t hear Google and Amazon or even GE talk about how consultants are helping them; they solve their own problems. I guess this is the underlying solution – be a better company.

    Cross posted at LITGM

    Posted in Business | 4 Comments »

    Baseball’s Chance to Come Back from the Dead

    Posted by Carl from Chicago on 25th May 2014 (All posts by )

    Baseball is dying. Usually I include a photo of a game with a post on baseball but I haven’t been to a single game yet in 2014, and the season if more than a quarter done. It is poor form to extrapolate from your own experience across the entire population but for the topic of baseball, I think it is appropriate.

    The buzz on baseball here in Chicago is zero. Absolutely zero. I don’t hear people talking about baseball, or even mentioning baseball.

    There are some semi-unique circumstances in Illinois tied to the fact that the Blackhawks are still in the playoffs and there is a lot of excitement about the Bears. On the other hand, NBA basketball suffered with the loss of Derrick Rose (again) and college football here is nothing compared to what you’d see in SEC country (Division Zero as Dan and I refer to it).

    Not only are the games for Chicago mostly terrible (the White Sox are more competitive than expected, and the Cubs’ fate is worse than expected, but neither are close to being contenders), the games usually seem to be very long and on late at night. When I check my mobile in the morning I can see the updates that I get every 3 innings and at the conclusion of the game and they often end after midnight, especially if the games are on the West Coast. There seems to be a lot of bad, slow moving, cold and night baseball being served. As a fan, that’s an awful concoction.

    Some good news for Chicago fans is that Mark Buehrle, a great former pitcher for the White Sox, is now tearing it up for the first place Toronto Blue Jays. He is 8-1 with a great ERA. He had a rough couple years with the disaster down in Miami but Toronto is doing well and so is he. I hope that he makes it to the Hall of Fame in the end, even if it isn’t with the White Sox.
    Read the rest of this entry »

    Posted in Sports | 17 Comments »

    Calling All Photographers…

    Posted by Carl from Chicago on 24th May 2014 (All posts by )

    I am looking for an online site to store and edit photos. I switched one of my main machines from PC to MAC but I still run a 50% PC environment at home and now I’ve given up with the share drive model and am considering the cloud.

    Google+ seems like a strong option. Today I use Picasa for photo editing (it’s free and works on MACS and PC’s) but I think Google is phasing it out and users are being encouraged to move to Google+ for photos. There is an app for IOS so they can be uploaded from phones and iPads too.

    There are other tools out there, too. I used to use Shutterfly but I don’t really like how hard it is to get your photos OUT of there. It is more for making books rather than just storing everything from all your sources.

    I also use Google for some other things like Blogger but don’t want to link the two. Blogger is also pretty crummy (we use at at LITGM) and probably at some point we will just move that over to hosted word press (which is awesome), but that’s a different (boring) story. I’d get another ID.

    Since many, many of the photographers here are probably in the same boat I am looking for advice. I know that the pros will always have photoshop on a hard drive so I am thinking more of the advice for amateurs like me ;)

    This WSJ article discusses photo storage and also likes Google+, but there are other contenders as well.

    Posted in Photos | 9 Comments »

    An Unmentioned Fact on the Crimea Situation

    Posted by Carl from Chicago on 16th May 2014 (All posts by )

    As someone who has studied WW2 history for over 40 years (on an amateur basis), as soon as the Crimean situation occurred I went over to my bookshelf and pulled out my favorite book that covered the Crimean campaign – “Stopped at Stalingrad” by Hayward. The book is highly recommended and covers air / ground coordination in that era and has an excellent overview of the ground campaign in the crucial 1942-3 time period.

    The scale of today’s troop movements and activities is so small relative to that era. Only a few thousand troops can decide an entire campaign. The days of millions of soldiers on all sides of the wire have been relegated to the past.

    While this volume focuses on the military aspects of the campaign in WW2, many other books talk about ideological motivations and logistics, notably the horrifying “The Wages of Destruction” by Tooze.

    The contrast between today’s situation and the “total warfare” that existed really from the end of WW1 and through the civil war in Russia as well as the horrors in the Ukraine in the 1930′s and then on both the German advance and Russian re-capturing of the various regions is very instructive on one key dimension – as Putin takes over Crimea, he actually intends to FEED the population.

    It is important to realize how poorly civilians have always been treated in these Eastern campaigns by all sides. To say that people were viewed as an afterthought is a giant understatement. Civilians were second to territory, resources (oil), or ideological objectives.

    Today by most accounts Putin realizes that he needs to actually administer the region and needs to take steps to build up morale, keep the economy functioning (on some level), and that this will be a financial burden on Russia. The days of just stripping off assets, turning locals into slave labor, and siphoning off any agricultural products (I am not just talking about “surplus”, I am talking about everything) are apparently past us. I am no fan of Putin and in no way want to appear to be in favor of his activities, but feel that this is a fact worth mentioning.

    By the abysmally low standards of twentieth century Eastern warfare, the Crimea incident likely had the least impact on civilians.

    Unfortunately the situation in Western Ukraine has the potential to be closer to a “typical” historical Eastern event with mass bloodshed, significant disruption to the economy and population, with civilians caught in the middle and having their needs ignored.

    Cross posted at LITGM

    Posted in Russia | 28 Comments »

    Glassware Synergy

    Posted by Carl from Chicago on 21st April 2014 (All posts by )

    Dan and I often go back and forth with awesome (or awesomely awful, such as a great beer in a Coors Light cup) glassware synergy. Recently I was in Brooklyn, New York and found two great examples.

    This glass is from a “Kolsch” beer. The guy next to me at the bar started telling a story that in Germany, Kolsch is barely even considered beer, and you have to put your coaster atop your glass else they will just keep filling it indefinitely. Funny I was able to “authenticate” that story on the ol’ intertubes here. I really like that Kolsch beer and would be glad to find somewhere around Chicago that has it on tap; I also really dig getting Kronenbourg 1664 on tap, as well (a French beer).

    The second is from Ommegang Abbey Ale. I took the photo from my mobile so it isn’t perfect on the logo but you can definitely make out the dancing monks.

    Cross posted at LITGM

    Posted in Diversions, Photos | 2 Comments »

    Bohemian Hall in Queens

    Posted by Carl from Chicago on 19th April 2014 (All posts by )

    Over the years I’ve traveled to New York City many times but never the borough of Queens. In your head you have a mental picture of the NYC map as if Queens has a “hard” border but really it is just attached to Long Island which goes out to the East.

    We met a friend in Queens and went to Bohemian Hall which is one of the best beer gardens in New York City. It is over 100 years old and was built by immigrants from Eastern Europe. We went straight outside since it was a beautiful day in 70 degree weather (one of the first nice days of the year in mid April) so I didn’t see the interior of the building.

    It opened at noon and soon was full of young and trendy new York types – not the downtown all-in-black types, but the borough crowd that was forced out by incredibly high costs and also those with young children. We saw a lot of strollers and kids running around, it sort of reminded me of Wicker Park over the last few years.
    Read the rest of this entry »

    Posted in Photos, Urban Issues | 10 Comments »

    On the Internet

    Posted by Carl from Chicago on 18th April 2014 (All posts by )

    Recently a few loose threads have come together on the Internet and some “old school” high tech companies.

    Yahoo! – Yahoo! (I guess I need the exclamation mark) has a value that is less than the sum of its component parts. The market capitalization of Yahoo! comes in the fact that it owns a significant portion of two Asian internet companies. Per this pithily titled article “How Is Yahoo So Worthless“:

    Yahoo is huge. It is the fourth-biggest Internet domain in the United States. It is the fourth-biggest seller of online ads in the country. It is the most popular destination for fantasy sports, controls one the most-trafficked home pages in news, and owns the eighth-most popular email client. In the last three months, it collected more than $1 billion in revenue. It’s very rich.

    It’s also totally worthless.

    Technically, it’s worse than worthless. Worthless means without worth. Worthless means $0.00. But Yahoo’s core business—mostly search and display advertising—is worth more like negative-$10 billion, according to Bloomberg View’s Matthew C. Klein.

    The math: Yahoo’s total market cap is $37 billion. Its 24 percent stake in Alibaba, the eBay of China, is worth an estimated $37 billion (Alibaba hasn’t IPO’d yet, so this figure will vary), and its 35 percent stake in Yahoo Japan is worth about $10 billion. That means its core business is valued around negative-$10 billion.

    This isn’t just a random business article; there is some actual financial science behind this analysis. At my trust fund site Yahoo! is one of the stocks I selected since I believe that their new CEO Marissa Meyer is a badass but according to the math she is still losing the battle.

    At one point in my career I worked for a public company that had $300M in cash on hand and a market value of $200M. Your business plan could be to fire everyone and drink in a bar all day and you’d be much closer to $300M than $200M (after all, how much can you drink). The market is anticipating that bad things are going to happen or that Yahoo! won’t be able to successfully sell and repatriate the cash for these investments. It is like that famous postcard my relatives in Montana had that said “If I won a million dollars I’d just keep ranching until it was all gone.” That is what the market today thinks of Yahoo! – even if they successfully extracted the cash from these investments, they’d invest it into something of less value (by $10B or so, apparently).
    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech | 16 Comments »

    The “Grand Budapest Hotel” and History

    Posted by Carl from Chicago on 30th March 2014 (All posts by )

    Today I watched the movie “The Grand Budapest Hotel” by Wes Anderson. While the movie was not intended to be an historical record, in some ways a fictionalized representation of life in the 1930′s and early 1940′s is a better way to humanize the elements of the conflict that can be lost broader sweep of the cataclysmic events known to all. The movie also works to include the postwar elements and even the post-communist years into a long a complicated narrative.

    After the movie was done I started explaining how I saw the movie to fellow movie-goers and, to them, I almost seemed like the narrator that the movie didn’t include. I just overlaid my own understanding of the participants in that era and, since it is fiction, my own interpretation is likely as sound as anyone else’s.

    I will try to limit the “spoilers” in this post and recommend that anyone interested in Zweig (to whom the movie was dedicated) and / or that era in history go to see the movie. You have to be a fan of the Wes Anderson style of movies and his set pieces are clearly not supposed to be realistic but they are tools for great visual cues and inspired situations.

    The protagonist in the movie, Ray Fiennes, plays a concierge for a major hotel in the capital city of a declining empire in the 1930′s as war time approaches. He mainly seduces older women but also is open to other sorts of encounters with men. Ray is plainly an intellectual and stickler for protocol and process in an era where that is reaching the end of the line. He and his fellow concierges represent the type of society that Zweig would fondly recognize (as does the process-following attorney who runs into serious trouble later).

    The country could be an Austria or Czech type republic that is about to be swallowed by Germany. The borders are in the process of being closed to adjacent countries due to political challenges and incipient war. In an early scene, soldiers in grey accost and check the papers of the concierge and his “lobby boy” (who is non-white and obviously from one of the provinces) on a train and start to beat them up when they are stopped by Edward Norton, who plays an aristocratic officer who recognizes the concierge. To me this officer clearly represented the orderly and (relatively) law abiding German army. He even wrote a note giving safe passage to the lobby boy.

    In the early scenes the soldiers are in Grey and when they stop the train their have early model armored cars. They are not intended to be realistic per se but they seem like vintage 1930 era inspired vehicles.

    During the contesting of the will, a lawyer who also represents the old era brings a process and fairness to the executor’s role (along with a Kafka-esque level of bureaucratic documents) until he meets up with a thug in a black trench coat who clearly represents the evolving SS. That individual, played by Willem Defoe, engages in more and more grotesque crimes throughout the movie and is not impeded by morals or the rule of law. At one point the Edward Norton character orders the civilian Dafoe away from an investigation that Norton is running, but it is clear that Dafoe is not intimidated and is part of the (hyper violent and aggressive) new order.

    Later the protagonist against the concierge is seen to be in a long leather coat and is obviously a civilian leader of the Nazis. They have 2 letter flags and armbands in the SS “style” but the movie does abstract them so as to not be completely blatant. The hotel becomes a barracks for the military regime, and the standards of the staff decline as the hotel is militarized.

    When the train is stopped again later in the film the “death squads” are taunted by the concierge with results that are far less pleasant than the early encounter with Norton. The soldiers in black and the more sinister looking hulking vehicles (which seem to be gun mounted half tracks) are also in black and this clearly represents the SS militarized and not the old nobility-led military.
    Read the rest of this entry »

    Posted in Europe, Film, Germany, History | 4 Comments »

    Your English Major Kids May End Up Serving Tables In Chicago

    Posted by Carl from Chicago on 8th March 2014 (All posts by )

    I live in the River North area of Chicago, which is full of restaurants of every type and description. There is also intense competition among many of the smaller restaurant groups, since apparently some level of scale (5+ or more restaurants) is helpful and these restaurants tend to have very high levels of food quality and service, based on my experience.

    When you interact with the bar staff, hostess, and server you can usually tell if you are working with someone who is “going through the motions” or someone “who is good at their job”. There are many subtle details that are much larger than “getting your order right” – they include knowledge about the food and presentation, recommendations based upon your input, and generally anticipating needs and solving problems without having to be prompted many times.

    Recently I’ve come to the preliminary conclusion that many of the waitresses and servers in these higher end restaurant groups must have gone to college and are well educated. When you talk with them they are very sharp and quick and they seem to have the type of drive or energy that could make them successful in a variety of careers. I would never ask them directly because that’s none of my business and it could embarrass them.

    This article form Bloomberg titled “College Graduates Taking Low Wage Jobs Displace Less Educated” confirms at least my anecdotal impressions here in Chicago.

    She got a job as a hostess at Blackbird, a One Off restaurant, while pursuing a bachelor’s degree in Germanic studies and communications at the University of Illinois at Chicago in 1999. “The formality of classes, papers and grades did lend a hand in where I am today because I had a broader sense of cultures, interactions and interpersonal skills,” said Galban, who is now also a partner at the restaurant Nico Osteria, one of seven Chicago restaurants managed by One Off. Of the company’s more than 700 employees, more than 60 percent hold college degrees or higher, yet fewer than 10 positions require a degree, Galban said.

    The willingness of college educated adults to take on these jobs will likely cause at least three side effects, one of which was the “main” topic of the Bloomberg article I linked to above:

    1. These restaurants will be more competitive than typical restaurants, because the higher educated and higher skilled workers will drive customer satisfaction and drive efficiencies within the food and drink serving processes. As these workers move “up the chain” at the restaurants, they will also offer career paths for other college degree holders as well
    2. Less-skilled workers will have less opportunities because they won’t be able to compete with these individuals. It would be a simple “screen” to give preference to individuals with a degree who apply for jobs, even if it isn’t a requirement of the job. In the past the assumption was that if someone “over-qualified” would work at your restaurant or business, they would leave immediately when a new opportunity arises, but in today’s stagnant economy (especially in Illinois) there don’t seem to be a lot of opportunities for them to “jump to”.
    3. Since the cost of higher education is so high today, parents need to think of how they will feel when their liberal arts (or lackadaisical business) degree holding children are potentially serving them in a restaurant, and if this is worth the vast expense and financial impact of the degree that they are seeking

    Another side effect to consider is that these restaurants are not just randomly seeking out applicants from the pool. Their employees are not only young, they are disproportionally above-average looking. Perhaps if you aren’t college educated you can make up for it in attractiveness.

    Cross posted at LITGM

    Posted in Business, Chicagoania, Education | 17 Comments »

    In Another Era, She’d Be a Gigantic Star

    Posted by Carl from Chicago on 25th February 2014 (All posts by )

    At the Gene Siskel Film Center in Chicago they have a lot of great films. In addition to interesting and artistic films, I also enjoy the fact that they have very few previews and no commercials as well as the fact that you can buy a beer while you are watching a movie.

    Bettie Page Reveals All is a documentary about the iconic fashion / fetish model Bettie Page. For me, the most interesting facet of the movie was not discussed at all; what would have happened had Bettie Page been a modern celebrity instead of one who retired from public life in the late 1950s.

    When Bettie Page stopped doing photo shoots, she simply fell off the face of the earth. In those days it was easy to hide; records weren’t online, the web doesn’t provide a central place for people to (inadvertently) pool information, and it doesn’t take an instant to upload a stalker photo to twitter. She never provided any other photos after her shoots, so that’s how the world knows her today. As George said in Seinfeld, she “left on a high note”.

    Bettie Page, however, had actual skills and intelligence. In the documentary they showed her high school transcript and she barely missed being the valedictorian of her high school class which would have given her a college scholarship. Unlike modern “celebrities” who became famous solely due to a “s*x tape”, Bettie Page designed and sewed many of her own costumes. She also had a lot of personality and took control of the photo shoots and could (sort of) act. Compared to 99% of the “celebrities” today, she had talent.

    Alas, like many of the modern celebrities we wouldn’t name her because we don’t want the traffic, she was bi-polar and ended up spending several years in a mental institution after she stabbed her landlord in a psychotic episode. In the end her story had a semi-happy ending because Hugh Hefner found her a lawyer who got her royalties for all the various things being made with her iconic image on it so that she at least had some money in her retirement years.

    Cross posted at LITGM

    Posted in Biography | 6 Comments »

    Pollution In India

    Posted by Carl from Chicago on 26th January 2014 (All posts by )

    The NY Times recently had an article about the high levels of pollution in India’s capital city, Delhi.

    Beijing’s air pollution has reached such toxic levels recently that the Chinese government is finally acknowledging the problem – and acting on it. But in New Delhi on Thursday, air pollution levels far exceeded those in Beijing, only without any government acknowledgement or action.

    When I was in India in late 2012 I too was overwhelmed and amazed by the level of smog and pollution in the capital. When you blew your nose, particulate matter came out in your snot. This photo taken below is out the window of our tour bus and you could not see large office buildings along the roadside a few hundred feet away.

    The tuk-tuk in the photo (it is a three wheeled semi-motorcycle used as a taxi) is green and yellow because those are the official colors of vehicles using CNG, designed to reduce pollution, which are also used for city buses. Unfortunately the streets are clogged with traditional gas powered vehicles and myriad ancient looking diesel trucks which more than make up the difference.
    Read the rest of this entry »

    Posted in China, Economics & Finance, Energy & Power Generation, Environment, India | 7 Comments »

    NY Times Admits Illinois Gerrymandering

    Posted by Carl from Chicago on 26th January 2014 (All posts by )

    The NY Times today had an article called “Don’t Blame the Maps” which discusses the fact that, even though the Democrats won the popular vote, the Republicans still won the majority of votes in the House of Representatives. For most Democrats, this majority is viewed as an artifact of Republican gerrymandering, and the article points out that this isn’t true. As someone who lives in Illinois, a state that works hard to saddle the Republicans with no voice in their one-party rule, it is nice to see that “ensuring my vote doesn’t count” is mentioned, even in passing.

    But keep in mind that Democrats play this came as well. For example, by artfully dividing up Chicago into pie-sliced districts extending from Lake Michigan into the suburbs, the Illinois Democrats have done better for themselves than the outcome of our nonpartisan solutions.

    Here is a post I wrote about the fifth district of Illinois, my district, and a contender for the most Gerrymandered district in the entire country. And our representative, a man so lax in his duties that he couldn’t even be bothered to vote to impeach Blagojevich.

    Cross posted at LITGM

    Posted in Illinois Politics | 7 Comments »

    San Francisco and a Sneaky Win for the Red

    Posted by Carl from Chicago on 25th January 2014 (All posts by )

    In San Francisco recently there has been a minor hubub about the buses that ferry technology workers from San Francisco (where they live) to Silicon Valley (where they work). “Activists” have been blocking the city bus lanes where the technology companies pick up workers, and the city of San Francisco recently voted to charge the buses $1 for each time they stop in the bus lanes to pick up passengers, per this article. However, the “real” challenge isn’t with the buses, but the impact of Google, Facebook and other technology companies in the valley that are contributing to a rapid gentrification of the entire city

    But while logistical details of the pilot program were the reason for having the hearing, they also had nothing to do with it. For many residents, the high-ceilinged room at City Hall was a forum for airing much bigger grievances about inequality, for articulating angst against an industry attracting bands of well-paid workers to town while long-term residents are losing their homes. “These companies are filthy rich,” said a resident born in San Francisco. “We need to squeeze them for everything they’re worth.” Some speakers wanted the buses to be banned and for companies to take the money spent on shuttles and funnel it into the city’s transportation budget — advice the committee approving the proposal didn’t find too compelling.

    A similar difference in approach played out at the protest that morning. While some activists made careful arguments about the tornado of wealth, growth and housing shortages that has thrown the city into an affordability crisis, others held a giant sign with a much less nuanced message: “F*** off Google.”

    This thread crystalizes two key threads that I’ve noticed in my visits to California for work and for pleasure (Dan and I have been there a couple of times to run the Presidio 10) and I often travel to the valley to visit various companies as part of my job. The first item is that San Francisco has been completely remade, from top to bottom, and there are almost no “bad” neighborhoods left in the entire city. I’ve walked through most of the city or taken the streetcars, or driven, and since the 2008 bust the entire city has been part of an enormous revitalization as wealthy tech workers and related professionals have bought up property in the city. There still are a bunch of drunks in the Tenderloin, aggressive panhandlers everywhere, and some projects and worse neighborhoods in the corners of the city, but by and large it has been completely upgraded.

    The second thread is that the workers in Silicon Valley are so completely opposite of these “activists” that it is difficult to know how to begin the comparison. At all of the companies I’ve visited the professionals are engaged in their work and have a very “capitalistic” view of being the best and beating the competition. While California is a completely “blue” state on the map, these technology professionals couldn’t be more “red” on the issues of free markets, access to capital, and the nature of the world-wide competition that they face (I don’t know about social issues because we’d never discuss that sort of thing). These firms leverage overseas workers without a second thought, and ruthlessly prune inefficient parts of their organization to focus on their core differentiators.

    While the world was focused elsewhere San Francisco transformed into a post-industrial city full of aggressive technology workers and professionals. Due to some remaining elements of rent control there are still some of the characteristic “activists” milling around but the relentless and unstoppable force of high property values will find solutions and will eventually demolish and buy out their remaining haunts until it is just the ruthless face of the post industrial economy that can afford to live in the city.

    The “activists” will end up packing their belongings and heading over to Oakland or somewhere else where the rents are affordable and they can pick up their protests there. Unfortunately for them San Francisco’s compact size, beauty, and absence of large scale government subsidized housing will drive them completely out of the city. The college students will likely pick up some of the protests but since they don’t really vote or build a substantial power base up the wealthy firms will soon control local government and then policy and reality will align.

    If you really want to look at long term opportunities I’d recommend property in Oakland. Oakland has a great location, it just needs to be terraformed via gentrification and rising property taxes until every activist and poor person is driven out, just like it is occurring today in San Francisco. Maybe this is a 20-30 year vision, but it will happen.

    Cross posted at LITGM

    Posted in Big Government, Economics & Finance, Tech, Transportation | 24 Comments »

    Why The Post Office Is Doomed

    Posted by Carl from Chicago on 20th January 2014 (All posts by )

    The United States Postal Service (USPS) is in bad financial shape. The service is currently losing money and is unable to pay some required payments to the government for employee retirement benefits. While the USPS has retained its first class mail monopoly, it sends only a small percentage the ecommerce packages that are the backbone of the physical internet economy.

    The real failure of the postal service, however, is encapsulated in the photo above. In our River North neighborhood, where the population density is high (local residents in high rise condominiums plus innumerable tourists) and the value of real estate is high, too, there is one institution that you can count on to not shovel their sidewalk or take care of their property. The US Postal Service.

    The employees of the USPS are unionized and likely no one has the job of shoveling the sidewalk, or it isn’t in their job description. Thus it isn’t shoveled, and you need to trudge through it which becomes treacherous as the snow melts and re-freezes. Since many of the people who actually might want to use the postal service in this area are elderly, the dangerous sidewalks are even harder to defend.

    They also used to have two mailboxes in the “drive up” section where you can pull your car up to the curb in front of the River North post office. Recently when I attempted to mail Christmas cards (we don’t like to leave them with the mailman in our condominium building because we’ve heard horror stories) at the post office, I couldn’t stuff them into the mailbox, because they reduced capacity down to a single mailbox. There were a few other potential customers milling around fuming as well, since the outdoor mailbox had apparently been jammed beyond capacity for some time.
    Read the rest of this entry »

    Posted in Big Government, Business, Chicagoania, Economics & Finance | 25 Comments »

    Divvy Bikes and Logistics

    Posted by Carl from Chicago on 26th December 2013 (All posts by )

    Divvy bikes came to Chicago this year towards the end of the summer and they seem to be a big hit. We see people riding Divvy bikes all the time and they have a distinctive “flash” light on the front (like a strobe) that is visible from far away, even from our condominium high up over River North.

    I often walk near the train station and I noticed the Divvy van loading up bikes when the obvious hit me; Divvy bikes came from all over the city and ended up near the train station. These vans were redistributing the bikes back to other stations so that the next days’ rush hour could repeat the process.

    The stations seem to have a solar powered panel; they should connect each of the bikes to a sensor and then broadcast to a central station so that they can map out bike usage in regular intervals and use this information to improve their bike distribution algorithm. I assume that they can also make some stations larger than others; this way you could collect many bikes downtown and then redistribute them to stations that they came from (presumably on the north side) during the day. Here is an article I found about the Divvy “Rebalancers“.

    Perhaps some day they could alter pricing in some sort of “congestion” model to charge people more who drop bikes off at popular stations and charge people less to ride those same bikes in the opposite direction to less popular stations. This could supplement the “rebalancers” with market forces. Grist for an MBA case study perhaps?
    Read the rest of this entry »

    Posted in Chicagoania, Economics & Finance | 4 Comments »

    Happy Holidays

    Posted by Carl from Chicago on 26th December 2013 (All posts by )

    Happy Holidays from Chicago! And I want to give a special thanks for the writers of America 3.0, who are taking time out from their busy lives and mercantilistic duties in order to try to bring a positive set of recommendations for the future.

    Posted in America 3.0, Chicagoania | 2 Comments »

    ZIRP Embodied

    Posted by Carl from Chicago on 15th December 2013 (All posts by )

    ZIRP or “Zero Interest Rate Policy” has been in effect in the USA since late 2008. From that point forward, the effective interest received on money from CD’s, banks, and non-risk bearing debt is very low, especially when taxation is taken into consideration.

    Recently I was standing at an ATM when I saw this receipt casually left on the ground. It showed over $300,000 left in a low or non interest bearing account. To me, this embodies how ZIRP has turned the world on its head.

    When I was growing up, inflation was high and interest rates were high, too. I distinctly remember my grandfather having an argument with someone else when he said that interest rates would never go below 10% again (they were nearly 20% at the time). If you had any money, you had to put it to work to get the benefit of “compounding interest” which is basically interest earned on interest, which would make your assets grow quickly. In parallel, of course, inflation was making everything cost more, so you were probably treading water, but that is a different issue entirely.

    In the age of ZIRP, there is no point instructing anyone about the advantages of compounding interest, because the effects are too small to be believed. In the portfolios I run for my nieces and nephews, they receive ZERO CENTS most months on the cash held in their account, and the cumulative year end totals are too small to receive an interest 1099 from the IRS. The SEC fee, which amounts to a few pennies per trade, actually is a larger cost, so I am just likely to ignore both elements.
    Read the rest of this entry »

    Posted in Big Government, Business, Economics & Finance | 16 Comments »

    My Review of America 3.0

    Posted by Carl from Chicago on 1st December 2013 (All posts by )

    First of all I want to thank Michael Lotus and James Bennett for taking the time and energy to write and promote America 3.0. It cannot be underestimated how much work this book took to research, write and publish and these 2 gentlemen (I really only know Mr. Lotus, but I am making assumptions on Mr. Bennett) are very busy individuals who have to earn a living for themselves and their families.

    Throughout, they made a giant effort to make the book positive, upbeat and solutions-focused. This approach is radically different than the “conspiracy theory” or “single issue” approach that mars most books of this genre (although there really aren’t a lot of books that spring to mind when I think of likely comparisons). Even though the book would generally be classified as politically on the “right” by the general public, the authors go out of their way to not characterize their opponents as “bad people” and show the fundamental (positive) motivations that drive some of their actions, even if the results ended up being disastrous or misguided.

    As a well-informed reader (by the standards of the world at large, if not always by the extremely high standards of Chicago Boyz, and often when I read Trent Telenko’s articles on military history I feel rather ignorant indeed) there were many areas of the book that were very new to me, increasing my interest in the topics that they raised. Given my focus on business, economics, energy, taxation, and military history, I really haven’t thought much at all about the role of the family and how it shaped America’s growth, but that topic was the seminal driver for the book. It felt very true and aligned with my experience, that the nuclear family and the ability of sons and daughters to marry off and “find their own way” contributed greatly to our successful outcomes. In the course of my business and travels I see the facts arrayed differently, and I can also see how individuals that I know from these countries have adjusted (and often embraced) this new, freedom-seeking and independent course of living.

    The idea that we can reform our institutions and have the Federal government take over tasks that it logically should hold while devolving other roles to state and local government makes a lot of sense. They also discuss the “great haircut”, a single event to reform our finances across all the institutions simultaneously, as a logical approach, along with new barriers to ensure that it doesn’t re-occur.

    I will think about the areas of my expertise and how they can be applied to concepts similar to America 3.0 in the future. There is a lot of de-centralization coming with energy and services and these can be aligned to the capabilities and responsibilities of our citizens, rather than being a top-down phenomenon in the process of disintegrating, which is the current trajectory.

    Thanks again to the authors for an excellent book, and they are a credit to this site and what the founders have attempted to portray, which is a positive, forward look at the issues that we face and how we can solve them with political, economic and personal freedoms.

    Cross posted at LITGM

    Posted in America 3.0 | 2 Comments »

    The Minimum Wage Debate and Tax Incentives

    Posted by Carl from Chicago on 30th November 2013 (All posts by )

    Originally when I started over at Chicago Boyz I used to write regularly about tax policy. I haven’t written as much lately on that topic because the news has been completely dispiriting… at every turn it seems that the Federal, State and Local governments have taken positions to make the system more complex, confusing, and dysfunctional.

    The goal of a tax policy should be to:
    1. Achieve the revenue goals that they set out to meet
    2. Do so in a way that has causes the least amount of distortions to the economy

    Recently the idea of “fixing” our tax policies and incentives, for me at least, is aligned with recent discussions on the idea of raising the minimum wage. The minimum wage is $7.25 / hour, although this varies with state and local laws as summarized here. A suburb in Seattle, near the Seattle-Tacoma airport (Sea-Tac), recently passed an ordinance to raise the minimum wage to $15 / hour. This ordinance is a bit more clever than most, since the airport is unlikely to close or take significant actions due to the immense capital costs and constraints associated with doing so, and has a strong public element (politicians can just try to pass the costs on to air travelers).

    These same discussions come up in Chicago, as fast food workers also have had some (small) demonstrations to try to raise the minimum wage to $15 / hour. While their campaign has sputtered out, it will likely re-surface and be championed by our governor.

    The obvious difficulty with raising the minimum wage is that employers are not sitting ducks. There are many low wage workers in River North, for instance, working in bars, restaurants, cleaning services, and in various security related occupations (virtually every building has a set of doormen). If you doubled the minimum wage, for instance, all of these businesses and institutions would immediately embark on a host of labor saving initiatives and automation efforts. I am not an expert in these sorts of automation experts but can imagine people being replaced by computers, call centers handling service, and moving to self-service for customers in other instances. It is highly unlikely that they would just attempt to pass on the price increases and keep the same level of staffing; that would be economic suicide, especially with their competitors scrambling to reduce their labor expenses. Efforts that could not be automated would rise in price, which would likewise discourage consumption, until an equilibrium was reached.
    Read the rest of this entry »

    Posted in Big Government, Taxes | 9 Comments »

    The Olympics Are In Bed With the Devil

    Posted by Carl from Chicago on 25th November 2013 (All posts by )

    A recent documentary on the 2014 Winter Olympics in Sochi, Russia is titled “Putin’s Games” and is summarized here. The movie has not been released yet but I intend to see it as soon as it becomes available. According to the web, the movie discusses the 1) bribes that Russia paid to win the games 2) the vast corruption occurring during construction 3) other ill effects of citing siting the games in a sub-tropical climate.

    The documentary interviews a billionaire Russian who fled to the UK after refusing to pay immense bribes during construction:

    “We received explicit threats: ‘You’ll be soaked with blood; drowned in blood,’” he said. “It was very straightforward. We know the history. Russia generally does not care much for human life.”

    As far as bribing Olympic officials to beat Austria in order to get the games originally…

    The money thrown around by the Kremlin to ensure that Russia was awarded the games is also revealed in the film. Karl Schranz, a former Austrian Olympic skiing champion and personal adviser to Mr Putin on bringing the Olympics to Sochi, talks about the big-money lobbying that went into the games – cash that Leonid Tyagetschev, the former head of Russia’s Olympic Committee, said was “practically unlimited.” The money was used to lobby for Sochi and against Salzburg, which was also in the running before, in 2007, the International Olympic Committee to give the games to Russia.

    The Olympic Committees are against the release of this documentary and per the article:

    Such was the displeasure of the International Olympic Committee when it heard of it that it refused to allow the use of the word “Olympic” in the title, or the use of any archived Olympic footage. They also wrote accusing the producers of making a “politically motivated” hatchet-job.

    After rewarding the games to serial human rights violators in China and Russia, how can the Olympics even pretend to have a shred of credibility? It is astounding that they would call a documentary filmmaker who explains how Putin’s Russia is a hotbed of corruption a “hatchet-job”. What did they think would happen when you chose Russia for the winter Olympics? They need to read the biography of Putin by Judah, since this fiasco was all preordained.

    Cross posted at LITGM

    Posted in Russia, Sports | 9 Comments »