Carl from Chicago

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

Indonesia’s New President is a Fan of Metal

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I’ve had a long relationship with heavy metal. I remember being a kid for a show at the Aragon Ballroom back in 1986 – I think it was Yngwie Malmsteen (who is often known as Yngwie “F@cking” Malmsteen for his reputation as being a jerk) and we waited outside all day for a general admission show. At that time the Uptown neighborhood was dangerous and populated at all hours by drunks and bums. Some of the more clever fans had stolen lawn chairs along the way so they’d have something to sit on during the long hours of waiting. We watched the minutes click by oh so slowly at a big bank across the street. And of course everyone in line was drinking or smoking or doing something else to pass the time. Many people passed out not once but twice in line, shook themselves off, and went back to what they were doing (one guy in a big mud puddle). Later a kid had a limo drop him off in front of the venue and walked out towards the line. That was a big mistake as the entire crowd was jeering him as one. A few homeless people came by asking for change and someone had the idea to toss a quarter at them and soon the whole line was hurling their change in a shower. Towards the end they installed barricades to segment the crowd so that the entire line of a couple thousand people wouldn’t all surge forward at once when they began letting people into the venue. At that point you were penned in like veal in a cage packed next to other leather jacketed rowdy and drunk fans. The grizzled Chicago street cops eyed the crowd with disdain… you could tell that if they had their way this whole bunch of bums and idiots would get taken into custody…

Over the years I don’t go to as many metal shows as I used to and won’t spend all day in line, obviously. But I still feel affection towards the music and the no-compromise attitude of those that have stuck with it regardless of the fact that it gets no radio airplay, little iTunes action, and is on the fringes of the “general” entertainment landscape. Of all the genres of music, metal can live on because it doesn’t need any of these things, just fans who are dedicated, and these fans revel in the fact that they are outsiders.

Indonesia just elected a new president, a “man of the people” named Joko Widodo who took on the establishment tied to the former dictator. I am astonished to see that he is apparently a fan of metal, and even a fan of bands like Lamb of God, whom Dan saw recently in Madison and described their show as “insane and sonic”. All of this comes from this Noisey article (Noisey is part of the awesome Vice media empire). It is unthinkable that a US presidential candidate would ever admit to being a fan of metal, especially the non-cartoony metal bands like Lamb of God. Lyrics are NSFW (if you can understand them). Here is a clip…

Cross posted at LITGM

High Rise Construction Views – And Taking Down A Crane

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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.

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Adding to Illinois’ Debacle

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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

Incentives and Economics

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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).

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Parrot AR.Drone 2.0

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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.

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