The S&P has been rocked over the last week with value off nearly 20% as of this morning. But how far has this put the market back? The answer may surprise you.
August 26th last year.
That’s it. We have only given up the gains of the last six months. How much better or worse off were you at the end of August? I’m guessing that your answer is “pretty much the same.” Keep that in mind.
The Corona Virus is very dangerous, but not because dozens of people will die from it. Thousands of people die from the regular old flu each year. The danger is that fear of the Corona Virus will make people stay home from work, provide an excuse to skip that conference they kind of didn’t want to go to anyway, postpone starting a new deal, etc. All these seemingly one-off, innocuous, changes in behavior will add up until people start losing their jobs, their retirement savings, and their homes.
So if you want to protect yourself and your community from the real dangers of the Corona Virus, do your job, pursue opportunities, walk to Starbucks – do everything exactly like you were doing last August.
I really love this concept but question its potential without some toothy legislation to support it. Truman’s sends cleaning supplies via Fedex or UPS in a cardboard box which you refill with concentrates that they also send you – via similar albeit smaller chipping containers. I heard the product described as “only slightly more expensive than the better cleaning products you get in the store.” I will add that they are also significantly less convenient.
If the question is feeling good about our personal footprint, these green (ish) but inconvenient products may allow us, affluent societally-conscious city-dwellers, to do something and send the right message to our children, but most Americans cannot afford to pay many times more than dollar-store prices, and jump through a bunch of hoops, to attain one-percenter benefits.
On the other hand, if the question is reducing the amount of waste society creates, the right answer is to support reusability with meaningful garbage collection fees calculated by usage – in other words, charge people for what they throw away. This would require an entirely new model for waste management. Garbage cans or trucks might need scales and geometric volume scanners for calculating each house’s waste. If you throw away a lot of stuff, you are going to pay a lot of money. If you reuse and repurpose everything (don’t get me started on recycling), you could pay close to nothing. Sounds like a fun home-ec game to play with the family, and it offers real cash prizes!
Of course there are the political obstacles. The exact same politicians who would hop all over the green elements of this concept would oppose its regressive taxation appearance. Regressive taxation is one that hurts poor people and is insignificant to rich people. But that too is manageable if collection rates vary by neighborhoods with lower rates in poor neighborhoods and exorbitant rates in rich neighborhoods (similar to property taxes). The program only works if everyone feels it when they don’t comply, so it would need to feel relatively expensive to everyone across the spectrum.
I am a firm believer that government should stay out of the way of self-interest. But where government is effective and needed is in preventing people from pursuing self-interest that harms others (that’s why we have police and courts for example). I think garbage creation – as necessary as it is – can fit this category. And who knew there were so many great Simpson’s GIFs about garbage!
Much has been said today about President Trump’s ban on transgenders in the military. I have been listening to NPR and it seems to be the only story worthy of coverage. I want to call in and suggest that, in their own best interest, they just stop.
In the six months leading up to the last election, it seemed that the top story that liberal politicians or the left-leaning media wanted to cover was which bathroom transgenders can use. While the Republicans were acknowledging the loss of opportunity, shrinking family buying power, and fears of national security, the Democrats were myopically focused on bathrooms for less than 0.3% of the population.
Before I continue let me say that I believe that transgenders deserve the exact same rights as all Americans, and if they are competent and wish to serve their country, they should be allowed to do so. But my point isn’t one of rights, but rather how political parties accomplish their objectives.
The simple fact is that issues around transgenders hurt Democrats. The press has been quick to point out that the amount the military spends on healthcare for transgenders – Trump’s reason for banning them – is really small. Yet they fail to acknowledge that part of the reason it is small is that there just aren’t many of them in the military. In fact, there aren’t many of them anywhere. This group isn’t getting anyone elected. Meanwhile, the really really big group that the Democratic party counts upon, middle-America union workers, lower-middle-class families, and veterans, simply isn’t supportive of this issue.
But the intellectual liberal protectors of the Democrat party see this as an attack on their interpretation of the Democrat ideal. Equal rights are not negotiable, and when given the opportunity to stand self-righteous, they will rise to the call even if it puts them at odds with the majority of their party.
Trump didn’t put a ban on transgenders in the military because he thinks it makes the military better. He did it because he knows that it further fractures the Democrat party and distracts American voters away from the things they care about – like the President’s own failed promises on health care and immigration.
Much of the difference between common sense conservatives and common sense liberals is how much faith each group has in the government’s ability to solve problems. Liberals tend to think that a group of thoughtful politicians can influence people’s behavior through properly crafted legislation. Conservatives tend to believe that even well-meaning legislation is likely to be botched by unintended consequences. It is tough to imagine a law that makes the conservative point more soundly than Chicago’s ban on disposable shopping bags.
The problem, as it was described by the City Council and advocates is that too many disposable plastic shopping bags are produced, used and discarded. These flimsy menaces create litter, increase our carbon footprint, fill our landfills, and are largely unrecyclable.
The solution was to require retailers to offer only bags with handles that could be reused at least 125 times. The thinking is that stronger bags are less likely to be discarded and could be reused many times. Stores are given the choice between selling them and giving them away. Most give them away and those that don’t charge such a negligible amount for them – say 5-10 cents – that no one notices.
But this foolish law which regulates only bags and retailers seems to be predicated on the assumption that bags reuse themselves and fails to acknowledge the actual decision maker in the problem – the consumer. Some consumers have long chosen to reuse bags and others throw them out.
The law does not provide any incentive for those who chose to discard their bags to change their behavior. As a result, those who reused bags before the law continue to reuse them and those who discarded them before the law continue to discard them. Many pet owners depend on shopping bags to discard pet waste and have little option but to continue the practice. Even well-intentioned shoppers often forget their bags and after accumulating more than they need are forced to discard bags. The difference is that now they are throwing away thicker, bigger bags, with larger carbon footprints, and which take up more space in the landfill.
As a result, this well-meaning piece of legislation has likely accomplished the opposite of what it intended – due to unintended consequences or just lack of intelligent conception.
Let’s be clear, I support a law that accomplishes the goal of reducing disposable bags. It’s easy to design and it looks like this:
All bags must be made out of cloth or pressed cloth-like material.
All bags must be a standard size so customers don’t have to store multiple sizes.
All bags must be sold at a price which incents consumers to hold onto them – say two dollars each.
Cheaper or free plastic or paper bags cannot be sold or offered as an alternative at checkout.
But the problem with a properly-crafted disposable shopping bag ban is that it is effectively a regressive consumption tax. Because the value of the goods put into bags by poor people tends to be lower, they pay a higher tax rate than their wealthier neighbors which isn’t cool with our City Council.
So now we see that the problem as it was described was only half the problem. The other requirement was that it could not place a larger burden on the poorer south and west sides – areas that couldn’t care less about disposable plastic bags – than it does on the North side – where the wealthier residents and image-conscious mayor were seeking a solution. Creating a Chicago-wide law that accomplishes both of these objectives is simply not possible. They are in conflict. As a result, we end up with a stupid law that penalizes all citizens equally but offers benefits to no one.
This point goes to the common sense conservatives.
Following the San Bernadino shooting a few weeks ago, the FBI bungled the investigation of the shooter’s telephone and now wants the court to compel Apple to crack it open so that their investigation can continue. Apple is refusing as they should. This is an important over reach of the government that anyone with common sense should oppose.
First, don’t believe what the FBI is telling the press. They say it is only for this one phone and it is only five lines of code. Those two statements are contradictory. If it is only five lines of code that need to be written, then either that five lines of code can be reused or edited to work with every other phone. Even if all 5 lines had to be completely rewritten, it’s still just 5 lines! Of course it could be repeated if required and it would be required over and over.
Second, Apple has built a phone that offers security to a market that requires it. The government is asking Apple to make the phone do something contrary to this required feature. This is akin to the government subpoenaing Tesla to make straight gasoline powered cars or Boeing to make planes that don’t fly.
Third, it is a dangerous precedent. Once these 5 lines are written for this project, then there are going to be 5 for another project, 50 for the one after that, and more and larger projects to follow – at Apple’s expense. There is nothing to stop the subpoenas once the gate has been opened. Eventually Apple may need to create an entire department to do the FBI’s job for them. In fact, every tech firm may suffer the same expensive requirement.
This is not Apple’s problem and their involvement increases expenses, reduces the value of their brand, weakens important features, and increases the risk that a government – out of their control – will subpoena additional potentially crushing exercises in the future. Instead, the FBI, DOJ, and NSA need to learn how to do their own jobs. We’ve been hearing things about the awesome power of the Government’s computer black ops for years. Assuming that wasn’t a ruse, I am pretty sure they can solve this problem.
Now, you geeky guy over there with the glasses. Go back to your desk, do your job, and stop bothering Tim Cooke. He’s a busy man, and probably working on some new wearable piece of technology that no one wants. Leave him alone.
Most Chicago readers have never visited Rockford Illinois – although many say they have. “Yeah, that’s the place with the Clock Tower.” Yes. It has a clock tower. Yes, you drove by the clock tower while you drove by Rockford, but you did not visit Rockford. And I’ll be honest, three’s not much reason to do so.
Rockford has a long and storied history of depression. Starting in the 1980s when unemployment hit 22% it started getting ranked as the worst city to live in the nation. Over the last 35 years it has stayed on many of those lists bouncing up or down, jockeying for position with Flint, Detroit, and Baltimore. According to the Bureau of Labor Statistics, the current unemployment rate is 6.9% – 25% higher than the national average. Wages are on average 10% lower.
In the early part of the 20th century, however, Rockford was a thriving community. For many years, it was the second largest city in Illinois and supported many companies in aerospace, hardware, and machined metals. Amerock, Ingersoll, Sundstrand, Barber Colman, and Woodward Governor were the bedrocks of this manufacturing community, and the downtown bustled with shops, restaurant, theaters, churches and lots and lots of people! In 1940s and 1950s it was a picturesque American town.
I can only guess, but it may have been that appeal that lead the mid-century civic leaders to make the mistakes they did. As automobile transportation and trucking logistics began to shape the American suburbs, Rockford’s leaders elected to eschew a highway that went through town in favor of one that went around town. Their thinking was likely that the eminent-domain acquisition and demolition of property followed by the scarring construction would disrupt Rockford’s quaint urban appeal. And they were right.
But what they didn’t realize was that the new highway built along the outskirts of town would be a powerful draw and many of those businesses would move toward the outskirts taking with them all those people. Mega in-door shopping malls were built, businesses moved to improve access to transportation, and people simply lost their reasons to be downtown. It began to die. The department stores and restaurants began to suffer.
Meanwhile, there was another powerful demographic shift at work. The manufacturing industry that provided the jobs for Rockford’s working class was moving to Mexico and China where labor was cheaper. One by one the major corporations closed their manufacturing centers. Today, only Woodward Governor is still a presence.
The image in the upper right corner of this blog is some of what is left of the Barber Colman plant. I think it looks like a scene from Fallout 4.
This is when Rockford’s civic leaders made their second grand mistake. Thinking they were taking a page from a European playbook, and hoping to return vitality to the downtown area, they – get this – paved over the streets and created a “walking mall” (what the what what?). The unanticipated consequence of no cars was no people. Of the 50 or so business that were there, all but two closed. The “pedestrian mall”, as they called it, became a no-pedestrian wasteland. The theaters and churches hung on a little longer but eventually they went away too.
They church buildings are still there and you can buy them. My childhood church which is referenced in a previous post recently sold for about $500K.
Rather than admit defeat, the City leaders defiantly erected a huge (I mean 30 ton!) contemporary sculpture called “The Symbol” by Alexander Liberman that the citizens hated.
There was no precedent for modern art appreciation in Rockford. With their hubris, the city leaders were shoving their misinterpreted definition of modernity down the citizens’ throats. No matter how many times they barked with unconvincing bravado that “this sculpture represents the intersection of culture and manufacturing blah blah something else blah” the people of Rockford still saw no reason to call it anything other than the “The Monstrosity.”
Soon after this the Rockford Public School Board (more civic leaders) was caught in a funding scandal and the ensuing lawsuits decimated the boards coffers ensuring that Rockford’s children would receive second rate educations for generations to come. Most recently Rockford built a $8MM bridge from one park that no one goes to to another park that no one goes to. One has to wonder, when will it end?
Meanwhile many of the valuable downtown buildings that were abandoned when I was a kid in the 70s and 80s still sit in shambles. These beautiful buildings deserve to be developed and could be great projects for community investors. A truly revitalized downtown could bring business, people, artists, civic pride, and best of all tax dollars. Unfortunately the continuing weak civic leadership has only been able to:
Tacitly encourage a pocket of retail development at State Street and the river. This effort and the city’s commitment to it ebbs and flows with seeming revitalization some years and decay in others.
Encourage social service organizations to occupy the buildings downtown bolstered by state, city, and federal grants. The problem with this is although social services are important to every community, they do not build a neighborhood and their presence tends to repel the they crowds that the residential, retail and restaurants developers are trying to attract.
But with bold leadership, downtown Rockford could be the jewel in Northern Illinois’ crown. It requires municipal expenditures, but not much relative to what will ultimately be recouped by the entrance of sustainable tax payers.
First. Rockford needs to incent the social service organizations to move their operations out of the city hub. The focus needs to be retail, restaurants, and for-profit businesses and the end-goal needs to be up-market residential.
Second. Offer developers financing or TIF incentives to renovate whatever they can make a case for. Like many of the towns in which I have lived, this type of development starts with funky residential lofts and coffee shops. Some of this is already happening. With cultivation they will be followed by boutiques and apartment renovators. Then mid-sized and and start-up white collar offices. And finally Those huge old decrepit houses on Main street will become attractive renovation opportunities.
Third. Rockford needs great egress and ingress into the downtown area. There needs to be wide roads with properly timed traffic lights – fast streets that allow people who live there to get to work fast and allow people who want to visit a way to get there without hassle. Any remnant of that damned mall has to go. On a positive note, all the abandoned lots and demolished buildings means there is plenty of parking, so there’s that!
This strategy has proven successful in many cities throughout the US including Chicago and Omaha. In Chicago’s Bucktown/Wicker Park neighborhood it happened organically. Thirty years ago you couldn’t safely walk there and now people are investing millions of dollars in crumbling old mansions because the neighborhood housing market can support it. In Omaha, it happened intentionally when the city made investment attractive around a couple funky blocks called the Old Market and rejuvenated much of downtown.
For years Rockford’s leaders have blamed their problems on the migration of machine tool industry to other countries. But the truth is, these same leaders have done more damage with their terrible decisions – trying to protect something that was already dead – than any damage caused by the march of progress. The more Rockford unwinds these mistakes and embraces the best practices of similar communities, the better the chance of a real resurgence.
Thanks to my friends at Rockford Rocked inspiring for this post. You can visit them on Facebook. Antique photos from Bob Anderson.
There has been a lot of talk recently about the gap between the wealthiest Americans and the poorest Americans. If you listen to our President and Democratic candidates, it’s the biggest problem facing America. That is why, according to them, it is so important that we increase the minimum wage. But does increasing the minimum wage accomplish this objective? Is there a policy that does? Is this really the problem, or is it just some focus group tested rhetoric that polls well with Democratic voters?
To find out I ran some numbers on my own. It has been widely reported that the top 1% of Americans makes in excess of $300,000 per year. With that as our starting point, the proposal to increase the minimum wage from $7.25 to $10.10 would decrease the income gap by 2% (change in gap/gap). That’s not a noticeable enough dent to merit an increase on this issue alone. In fact if we increase the minimum wage to 15 bucks an hour as many progressives have called for, the decrease is still a mere 5 1/2%. So clearly increasing the minimum wage in-line with proposed legislation does not decrease the income gap in a meaningful way.
On the other side of the coin, there is a policy that dramatically decreases the income gap. If we cap incomes at 200K or institute a 100% tax rate for every dollar earned over 200k, we can decrease the income gap by 35%. Decrease the income ceiling to $100K and the income gap drops 70%. Clearly this accomplishes the stated objective, but no one in their right mind wants to see this sort of policy instituted. It would destroy aspirational productivity and decimate our tax base.
So if moving the bottom – i.e. increasing minimum wages – does not affect the income gap, and moving the top – i.e. capping wages – isn’t something even progressives want to do, then clearly the gap is not the problem. As long as we are lucky and our entrepreneurial spirit is in tact, people will always figure out how to make more money which increases the size of the pie and increases potential tax revenue so the top earners are not the problem.
The real problem is just poverty. People in poverty need options to move up and away from the bottom. They need better education and training. They need options when their schools are not meeting their needs. They also need jobs, and our neighbor states offer great lessons in how to create them – reduce costs, and reduce corporate tax rates (not sweetheart deals), and create a pro-business and pro-hiring environment. Growing companies need people. They also need a government that is more focused on job training than on welfare.
The minimum wage is going up. Some people will make a little more money and some companies will hire less. But it won’t affect the income gap, nor will it lead to people currently making minimum wage to making more than minimum wage. They will still be minimum wage workers.
So although the income gap is a convenient and emotionally satisfying rallying cry for the left, it obscures the real issue which is not that rich people make too much money, but that the poorest Americans – generally urban blacks – lack the opportunities and options to better their situation. Let’s get this minimum wage thing behind us so we can focus on the problems that really matter like public schools and job growth.