Carl from Chicago

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

The Olympics Are In Bed With the Devil

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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

How A Simple Train System Lays Bare Our Impending Decline

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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.


Cross posted at LITGM

Thoughts from a (Brief) Teaching Experience

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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.
Cross posted at LITGM

Apparently Illinois Vote Rigging Doesn’t Count… and a Glimmer of Hope From California

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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

Illinois and the Perfect Democrat

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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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