Carl from Chicago

Business executive interested in history, economics, taxation and energy policy.

Michigan Employment

by

When I was back in college they had on campus interviewing. At the time in the very late 80’s we were in a midst of a recession and I was pretty open to talking to virtually any company.

I received a call from a recruiter and he started talking to me about an opportunity with Ryder trucking. Then he said something that I’ll never forget

“It’s in Detroit and don’t hang up”

The words ran together very closely and with urgency so it is obvious that this was a common problem, even then – as soon as people even heard the word “Detroit” they simply hung up the phone as a non-starter. I didn’t hang up on the guy (I was too polite back then) but I certainly viewed it as some sort of last ditch, about-to-be-homeless type of opportunity.

I have since worked near Detroit (in the vast suburbs) and I don’t want to slam the place based on stereotypes. The suburbs are very nice and the whole area seems to function OK – you might go into the city proper for a sporting event (which has security) but that’s about it.

This Wall Street Journal article reminded me of that time with the recruiter as it describes how white collar employees, often managers with years of experience in fields like marketing and technology, are finding themselves being laid off from the auto makers and related industries in Michigan. I’m sure that many, if not most, are hard working people just trying to do their best in a difficult situation. Since the housing market in Detroit has pretty much collapsed as well, people can’t sell their houses (except at a huge loss), and it isn’t obvious where they’d go, so they are just remaining in the state and are trying to make ends meet however they can. One former manager that they profile is now a janitor.

Read more

Can’t Even Clear Brush

by

I am used to writing about how our country can no longer site any sort of electricity transmission line or coal, nuclear or hydro generation plants because of our broken system that allows for endless delays and legal challenges. And pretty much any kind of significant public infrastructure project like a new highway or subway line takes literally decades from design to implementation, if they occur at all.

But I didn’t really realize how bad it had gotten until I read that a possible cause of the wildfires raging in California is that this sort of situation is so bad that you CAN’T EVEN CLEAR AWAY BRUSH. From this article titled “Feds Didn’t Clear Brush In Wildfire Area”

Steve Brink, a vice president with the California Forestry Association, an industry group, said as many as 8 million acres of national forest in California are overgrown and at risk of wildfire. He said that too few days provide the conditions necessary for larger, prescribed burns and that the Forest Service needs to speed up programs to thin forests, largely by machine.

“Special interest groups that don’t want them to do it have appeals and litigation through the courts to stall or stop any project they wish. Consequently, the Forest Service is not able to put a dent in the problem,” Brink said.

This story pretty much speaks for itself.

Cross posted at LITGM

Danny Davis My Representative

by

When you see the tall buildings of Chicago and hear the history as a dynamic, leading center of industry and innovation, you’d expect that our local representative in the US House of Representatives would embrace measures to keep this sort of talent and engine of growth humming at high efficiency. But instead we get… Danny Davis, our 7th Congressional District representative (D).

Our Illinois districts have been completely gerrymandered so that the south side of Chicago and a slice of the suburbs going west, along with the loop and River North itself, fall into a single district. Here is a map link if you want to see a veritable “case study” in gerrymandering. Thus the representative, Danny Davis, treats the loop with its engines of economic growth as an afterthought and concentrates on the other constituents, mostly the poor, who reside in the rest of the district.

From the latest newsletter, discussing issues raised to Danny Davis:

They have been concerned about jobs, about the economy, about foreclosure, about education, about health care, about the wars in Iraq and Afghanistan, about torture and Guantanamo, about our policies in Latin America, about immigration, about youth violence, about criminal justice reform, about taxes, about family assistance

While certainly these are valid issues to be raised by constituents, no where is mentioned the types of policies that would keep the Loop, THE DISTRICT HE REPRESENTS, a leading beacon of business. These items would likely include:

Read more

“Candy” Tax – or how not to raise taxes

by

Recently I wrote about incentives and how to review tax programs on these two criteria

– Effectiveness – does the tax program raise the revenue in a manner that is cost-effective and have the lowest level of harm and distortion to the overall economy?
– Incentives – if the tax program is designed to promote a certain type of activity or “deter” a different type of activity, do the incentives actually drive the behavior that the law is intended to achieve?

The photo above is from an excellent Chicago Tribune article about a change in the Cook County (Chicago) sales tax rules which mean that “candy” is taxed at the highest rate (10.25%) rather than as “food” which is at a significantly lower rate (2%).

This tax shows the “down the rabbit hole” elements of tax complexity when incentives and effectiveness go haywire.

From a complexity standpoint, this makes no sense. Lots of items contain flour and are thus counted as “food”, but for the small shop owner, explaining this to staff and customers will be a difficult and time consuming process. For large retailers it likely won’t be as big a deal because this is all calculated by the register.

From an incentive standpoint, this makes even less sense. Since sales taxes are highly regressive, which means that they sock the poor harder than the rich (since the poor consume almost all of their income, and pay a high percentage on food), you could understand how the state might want to exempt food. But the line between candy and food is now blurry and complicated.

Read more