Carl from Chicago

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

On the 606 Trail

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The “606” trail in Chicago opened recently. It follows an abandoned railroad track that starts in Bucktown / Wicker Park and heads west from there. I am very familiar with this track since I used to live in Bucktown a decade ago and stared at the crumbling bridges that split the neighborhood.

The trail is named after “606” which is the first 3 digits of the zip code in these neighborhoods. I guess that is an OK name but it’s kind of an obscure reference. Does anyone even send mail anymore? The park is sometimes compared against the High Line trail in NYC but the High Line is way cooler since it moves through a heavily urban area. But the 606 is a massive upgrade from just a crumbling set of train tracks.

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A Car for $89 / month

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For years I was proud to be the owner of a 1998 Altima which ran forever, never broke, and required no upkeep. I passed on the Altima (it is still going strong in our family) and eventually ended up with a 2011 Jetta that I purchased new.

I knew I had made the right purchase decision when I saw this article in Bloomberg titled

Jetta Leases as Cheap as Mobile Phones shows VW’s US Travails

From the article:

The $89 a month it takes to lease a Jetta at some U.S. dealerships is about as low as the price of using an iPhone on some mobile-phone plans. It’s also a sign of how Volkswagen AG is grasping to turn around its fortunes in the U.S.
The bargain deal — available after a down payment of about $2,500 on the $17,325 Jetta — runs over a three-year term.

I paid about $17,000 for my Jetta and it has been a great purchase. It is a roomy 4 door car with solid handling – one time I had to lock up the breaks at 65 mph when a lunatic decided to get off the highway from the left lane and exit – the car saved my bacon and stopped on a dime, straight and clear.

When I drive people around in the car they are astonished at how nice it is for the money; in most instances a car is a terrible investment and minimizing your initial purchase not only saves you direct costs it also saves you on taxes, service costs, and insurance. Recently I had a tire issue (Chicago has terrible potholes) and I just went and bought all four tires and had them installed for $550 including taxes. I have friends where it costs almost $1000 for EACH tire… much less all four.

There are many good reasons why you may have to invest a lot in a car; if you have to cart around a lot of kids, or need to transport a lot of equipment or materials in the bed of your truck. Most of the time, however, a car is a status symbol, and people pour money into their car because it seems cool or attracts attention. That logic is fiscally irresponsible and it is interesting to see how much cheaper this Jetta is against the competition when for almost all normal, functional commuting purposes, it functions identically to cars that cost 2-4x.

Cross posted at LITGM

Use of Netatmo to Measure Wealth in Chicagoland

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Netatmo is a personal weather station that you can buy which is wifi connected and “joins” the netatmo network worldwide so that your information contributes to the grid of stations. I wrote about my experience in detail here.

Here is what Netatmo looks like on your phone – you can see the temperature inside and outside your house (it is also connected with weather alerts) and if you turn your phone sideways you can also graph data along many time series. I find it to be very cool and check it a lot on my cell phone or ipad when I am bored and want to kill some time.

I started looking at the Netatmo weather map on my phone and it also becomes a visual map of wealth and technology adoption in Chicago. While you can’t see all the individuals who might buy an iWatch on a map, the Netatmo weather station becomes a clear signal and it is tied to a clear physical location. Note that when you “drill in” to the map you will see many weather stations in an area such as River North – however if an area is devoid of stations entirely it comes up blank. And there’s Chicago! You can see the stations in the north side, a completely barren west side, and a mostly barren south side, except for the dot along the lake which represents Hyde Park.

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The End of the European Welfare State As a Comparison Point for the USA

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For years articles about everything from family leave to medical benefits started with the premise that

The United States is the only modern Western economy that doesn’t do or provide “X” for their workers

Thus the premise was the our economies were roughly equivalent and the USA was “mean” or “backwards” because we didn’t provide all those benefits and worker protections that the other countries were (apparently) able to absorb.

In the Sunday Business of the NY Times we can see where this has finally led, however – in an article about retraining European workers titled “Fake Jobs with Real Benefits” this is the end statistic:

But in a reflection of the shifting nature of the European workplace, most are low-paying and last for short stints, sometimes just three to six months. Today, more than half of all new jobs in the European Union are temporary contracts, according to Eurostat.

These jobs don’t have the famous protections for working mothers and stay-at-home dads and for medical benefits and pensions and everything else; they just set you up for a few months at a time and can just not renew your contract for any reason, including if you are legitimately hurt or ill. These are the ruthless “McJobs” that have been decried for years in the USA.

In parallel, Spain is now lurching into a political crisis similar to what is happening in Greece. Here are some statistics on Spain per this Foreign Policy article:

The Eurozone as a whole is a disaster. Whereas the United States’ economy is nearly 10 percent larger than it was seven years ago, the Eurozone’s is 1.5% smaller. And Spain is faring even worse; it’s economy is still 5 percent smaller. Nearly one in four Spaniards, and one in two young people, are unemployed. In the European Union, only Greece’s unemployment rate is higher. Many people have dropped out of the labor force (or immigrated to countries where there are jobs to be found). A lost generation is in the making.

And the governmental statistics are sobering:

Spain still has the largest fiscal deficit, as a share of the economy; in the entire EU: 5.8% of GDP last year. Public debt as a share of GDP rose by more last year than anywhere else in the eurozone and is set to top 100 percent this year.

The few remaining permanent full-time jobs are often in the governmental sector; this is closely linked to corruption. In Spain the corruption of the ruling parties contributed to their drubbing in local elections.

The net of all this is that comparing the USA to Europe is now mostly a fools’ errand. Not only has growth and productivity stalled across most of the EU, the cherished benefits that are held up as the “gold standard” are accruing to fewer and fewer workers as the young frankly have no work at all and many of the adults that do work are on these short term contracts where those protections rarely apply.

Whether or not the USA should enact various protections to our workers is a good question, with pros and cons on both sides of the ledger. However, the blanket statements that we are the last modern economy to not do “X” should be tossed in the dustbin of history, because it doesn’t apply anymore.

Cross posted at LITGM

Trains are Indefensible

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I remember as a kid watching “Lawrence of Arabia” where he led Arab raiding parties against the Turkish train lines in WW1.  Per this PBS article about Lawrence:

With the Ottoman army spread thinly across the empty vastness of the Arabian Peninsula, the Hejaz Arabs found it relatively easy to strike and sabotage Turkish lines of communication and supply. With the Red Sea firmly in British hands, the Turks had no option but to use the Hejaz railway to move their men, supplies and munitions.  

Lawrence and the Arabs spent much of their two years on the road to Damascus destroying sections of the railway. Small units of men laid charges on the track. Then as the Turks defended the track, Lawrence’s men formed large moving columns capable of rapid hit-and-run operations. 

In the recent train crash in the East Coast there are discussions of a “projectile” hitting the train and distracting the conductor.  While this hasn’t been confirmed, it is relevant to consider how difficult it would be to secure train lines from attack or sabotage.

This discussion is much more relevant in the context of “high speed trains”.  There is a broad theme among many that the US is behind because we have not invested large sums of public money in high speed trains, that we are “falling behind”.  Per wikipedia the Japanese high speed trains (similar to the Chinese high speed trains) typically have more than 1000 passengers on each of their trains.

The USA has far larger distances than the Japanese trains.  If you built a train from Chicago to New York, for example, it would be almost 800 miles long.  This is for a single rail line.  Obviously to connect the major cities of the USA you’d have thousands of miles of train lines.

How would these train lines be defended?  It would be easy for a terrorist to just cut through the fence somewhere and park a cement truck on the tracks, for instance.  The ensuing carnage would easily accomplish what 5-10 hijackings could accomplish.

If you think that the Homeland Security plans are over-reaching, just wait to see what it would take to defend hundreds or thousands of miles of track.  Instead of having a bottleneck at the airport, the entire line would be a potential point of attack.  Even if defenses were erected, they would only have to overwhelm them at a single weak link in order to assault the train.

No one is incorporating this into their cost estimates for high speed trains; they likely have fences and barriers but are not contemplating stopping a determined, armed attack by terrorists.  They should, because after one such attack a giant post-haste effort would emerge kind of like our early days of the TSA.  They should contemplate and include a giant, armed, unionized Federal bureaucracy in their midst and add this into their cost estimates and see how it compares against highways and aircraft.  The numbers, already dubious, would then be far, far in the red.

Cross posted at LITGM