The Crumbling City

Everywhere you go in Chicago you'll find signs of urban decay. Not the sort of middling decay you find in most cities but decades-old, ground in, well-worn and surprising decline. But crumbling walls, fragile sewers, rusting struts and wobbly bridges are not the sort of fabric upon which a thrusting and growing 21st century city is built upon.

So the task at hand for the new Mayor, Rahm Emanuel, is catch up with the long-overdue repairs to his city, while making the necessary improvements that will make sure that people want to move into the city rather than out of it. The city has little or no money, and citizens are against the idea of raising taxes. The state is broke too. Dribs and drabs come from the federal government. So how does one fund a serious $7 billion improvement program?

Besides borrowing more money, the answer in Chicago is to do something rather like a private finance initiative. This is to ask the private sector to come in and invest in projects that deliver some steady returns over a number of years.

Chicagoans have been rather anxious about this new idea. Rather ironically private finance of public projects is actually more common in "socialist" Europe. But in Chicago particularly, everyone remembers the parking deal that went bad. The time when a previous mayor sold the lease to the city's parking meters for 75 years for a fraction of its value. This is not the same idea. Nobody is talking about selling off the city's assets. The Chicago Infrastructure Trust wants to match private finance with investments in the city that will yield ongoing returns.

That is not to say that the idea is without risk, there are many things that can go wrong with private financing deals. The public side can end up taking on more risk than it realises when it has to pick up the pieces (a half finished school for example) when things go bad. (See Wikipedia on Criticism of PFI.) And if the investment depends on user fees (say a toll road), sometimes these can be uncomfortably high. And the costs of the project can be too high as well, as experience with school and hospital building has shown in Britain.

But if it is done properly, it absolutely does work--as experience with Britain's new Treasury building shows. And let us not forget how badly public-financed projects can go wrong. The new Scottish parliament building was originally supposed to cost 40m GPB ($64m), but actually cost 400m GPB.

So there are risks, and there are huge potential rewards. While there is anxiety, few appreciate the fact that Chicago needs to act quickly. It lost 200,000 people in the last decade. If this sort of pattern picks up in the next census, rather than reverses, it will be a disaster. Chicago could become just another one of those hollowed out former industrial Midwestern cities, with the wealthy taking refuge in the suburbs and the city loosing its energy and dynamism. Chicago has to be the place that people seek out in the Midwest, not flee from.

So when the mayor says that the city cannot afford to wait for the federal government to act with regards to infrastructure investments, he probably means it. By the time the next census comes around in a decade from now, the city needs to have stemmed or reversed this trend of population decline. Its a tough nut to crack, but this probably explains why the new major has been like a hyperactive squirrel in the last year, scurrying from new project to new project. Time is of the essence.

Restoration drama

Restoration drama - by Natasha Loder, The Economist print edition

America’s under-appreciated community colleges hold promise 
Apr 28th 2012 | CHICAGO AND BOSTON 

COMPARED with its world-famous universities, America’s community colleges are virtually anonymous. But over half of the nation’s 20m undergraduates attend them, and the number is growing fast. Poor, minority and first-generation-immigrant students are far more likely to get their tertiary education from community colleges—where two-year courses offer a cheap route to a degree—than from universities. And, increasingly, many policymakers are wondering whether more attention to the colleges might be a low-cost way of resolving the nation’s shortage of skilled workers.

America’s problem with training was laid bare in a report published last year by Deloitte, a consultancy firm, and the Manufacturing Institute. It identified 600,000 positions that were going unfilled because there were too few qualified skilled workers. Too many colleges, it seems, still fail to align themselves with the needs of local employers, a mismatch that is bad both for the employers and for potential employees, though arguably universities are even worse at doing this. [More...]

• Really good comments on this article, including one that points out an important flaw in using graduation rates as a metric of success in community colleges. Not sure what the answer to this is.

America's crazy healthcare system

As an outsider here, one of the things that is wryly amusing to me is how many Americans are convinced by the vast superiority of their own healthcare system. I've even been told how awful the British National Health Service in Britain is and actually pitied by a grandmother at a Rick Santorum rally.

This idea, that Brits are suffering under the NHS, besides being funny, is actually part of a meme that was promoted in the US in order to attack the new healthcare laws. The British NHS, so the story goes, is awful "socialised" healthcare. I know the NHS has many flaws, but the longer I spend in the US the more I realise how utterly brilliant it is at delivering pretty universal coverage to the entire population at far less cost than in the US.

Why are healthcare costs so high? Americans will sometimes say that the quality of their healthcare is higher and they have better service. On the latter point, they are almost correct. It is easy to shop around for doctors and each doctor is far more specialised. We don't have a family GP any more, we have an internist, pediatrician, and an "obgyn" (women's things).

On the subject of quality, I am not so sure. For one thing there is the problem of "too much choice". In many ways, life would be far easier if the entire family could go and visit a local GP for everything and get referred as necessary. The family is an health ecosystem in itself. It doesn't make sense to me that if I and my son catch the same flu  that we both have to go and see different doctors. One tends to form long-term relationships with the family doctor--and this is very helpful. On top of this there is NHS Direct, a telephone  helpline that means you can speak to a nurse 24 hours a day, and if necessary be referred to a doctor or hospital.

It is also clear that in the US testing is overdone, and medical bills are greatly inflated. On the matter of tests, my son's dentist wanted to give him routine X-rays (there are no problems with his teeth). He is five. We objected and she said she wasn't sure if she could treat our son without doing routine X-rays. We said we would go elsewhere and suddenly it was possible after all. Dental X-rays are not a good thing, especially if you are a young child. I've since read more about  the link between dental X-rays and brain tumours.

On the subject of medical bills, now that I've seen the cost of the same treatment in different countries I can see that the costs doctors charge insurers are ludicrously high. We've paid privately for work on my back in the UK and received something similar under insurance in the US. The cost of 20-30 minutes of spine manipulation was about $145 at a posh private hospital in London, and $490 in a downtown corporate office.

Similarly, our pediatrician charged our insurers $1,600 to register and do a check up on two children. I can't say whether or not her time was worth this, but I can say that having the same job done on the NHS would have been a fraction of the cost. Of course the $64,000 question is whether all that extra expense was necessary--a question that is far more difficult to answer.

Updated: This blog was tidied up on 24th April.

The NRA’s star may be on the wane

Opinion from the Economist blog: Democracy in America

Apr 19th 2012, 20:25 by N.L. | ST LOUIS

 ONE of the things Europeans find incomprehensible about America is its love of guns. There are two reasons they don’t get it. One is that Europeans live in a much more urbanised, regulated and crowded part of the world. More importantly the concept of owning a gun as an essential civil liberty is entirely absent. There is no second amendment guaranteeing the right to bear arms, and there is little sense that it is up to the individual to defend one’s family and property.

The organisation most associated with America’s culture of guns is the National Rifle Association (NRA). The NRA’s lobbying arm, the Institute for Legislative Action, and the American Legislative Exchange Council (ALEC)—which drafts model legislation—have been enormously successful at pushing pro-gun laws in state legislatures. These days the debate is no longer whether assault rifles ought to be banned, but whether they should be allowed in bars, churches and schools. One group, Students for Concealed Carry, even argues that carrying concealed weapons on university campuses would be an effective means of self defence. [More...]

Arms and the man

Despite legislative victories, the NRA is under pressure 

Apr 21st 2012 | ST LOUIS | from the print edition

“TAKE a sticker,” urges the woman from Ambush Firearms. “We are giving away two free guns every day to people wearing them.” What your correspondent would do with an semi-automatic rifle, let alone one that also comes in pink, was not obvious. Welcome to the annual convention of the National Rifle Association (NRA)—this year held in St Louis, Missouri. It is a yearly celebration of freedom, the Second Amendment right to bear arms, and, above all else, a festival of guns. Seven acres, to be precise, of guns and gear.

Americans like firearms. According to a report from the Congressional Research Service there were 294m guns in the country in 2007, up from 192m in 1994. More guns might be expected to mean more influence for the NRA, except that the number of households with guns has actually declined fairly consistently since 1973. The people who buy guns, it seems, are usually those who already own them. One probable cause of this decline is a shift to urban living. Moreover, safety-conscious Americans are increasingly aware that, statistically, a gun is a far greater risk to friends and family than it is of potential use in self-defence. [More...]

Stalled in Motor City

Detroit skyline: Shawn Wilson, Wikicommons

A desperate tussle over whether the state of Michigan should take over Detroit

Apr 7th 2012 | DETROIT | from the print edition, co-written Rosemarie Ward.

APART from more money, what the city of Detroit needs most is certainty. Both are in short supply at the moment. On March 21st a state-appointed review team unanimously agreed that it is suffering a “severe financial emergency”. The day before, Moody’s had downgraded more than $2.5 billion of the city’s debt, citing its lack of cash. Amid this deepening financial crisis the state of Michigan, local unions, the mayor, the city council and the courts are battling over the future of Motor City.

The simplest solution, a state bail-out, is tricky. Both the governor of Michigan, Rick Snyder, and the head of the state’s House Appropriations Committee, Chuck Moss, argue that yet another infusion of cash will not solve Detroit’s underlying problems. To prove his point, the governor recently reminded citizens that the city has borrowed $600m since 2005 just to get by. It is also planning, with some state support, to issue $137m in bonds in order to refinance its debt and create cashflow that will allow it to totter on until the end of the financial year. [More...]

Born to be wild

Buffalo about to be released. Credit: NL

Buffalo are coming back to the American prairie 

Mar 17th 2012 | BLAINE COUNTY, MONTANA | from the print edition

IN A quiet spot in eastern Montana, on rolling golden prairies and under vast skies, 71 buffalo calves charge out of a corral. Kicking up dust as they run, they quickly join a herd of several hundred American buffalo of all ages. The calves had arrived by road from Elk Island reserve in Canada; they are pure descendants of the buffalo that once lived in this area. At the end of the 19th century just a few were saved from American hunters and bred, in peace, on the other side of the border.

Before Europeans arrived in North America as many as 60m buffalo are estimated to have ranged across the Great Plains. From around 1830, however, they were systematically killed until only a handful remained. Buffalo were taken for their hides, or simply because they were getting in the way of settlers. Men like Buffalo Bill slaughtered thousands.

At the end there was also a deliberate policy of wiping out the lumbering giants in order to remove the staple food source of Native Americans and to force them on to reservations. Last week’s buffalo “homecoming” was an emotional event for the Gros Ventre and Salish-Kootenai tribes who witnessed it.

Ultimately it is logic and enormous ambition that lie behind the return of the buffalo to Montana. The idea, says Sean Gerrity, president of the American Prairie Reserve (APR), a charity, is to create the largest wildlife reserve anywhere in the contiguous 48 states. Mr Gerrity wants to rebuild a vast native prairie of 3.6m acres (1.46m hectares) where an enormous herd of wild buffalo can roam free once again.

Recreating America’s version of Africa’s Serengeti means thinking big. A sustainable ecosystem needs to be able to cope with fires, disease and icing over of parts of the ground in the winter. But such a reserve would be of international significance. Grasslands, which are economically valuable as farmland, are enormously underrepresented in nature reserves in America and worldwide. Temperate grasslands have the lowest level of protection of the world’s 14 recognised “biomes”, or habitats.

APR is currently spending about $6m a year, largely on land. By autumn it will own or lease 270,000 acres. One of the first jobs APR has to do when it obtains land is to remove the fences. A single ranch can easily have more than 800 miles of barriers. APR will ultimately be able to stitch together a network of private and public land to create its reserve. But even though the land is cheap, at around $450 an acre, APR will need $330m to set up the reserve and a further $120m for an endowment to maintain it and pay for grazing rights.

Buying land in eastern Montana is not difficult. Thanks to its lack of water, ranching in the area is hard work, often marginal and increasingly unpopular with the children of ranchers. Those ranches that are still in business are in effect subsidised by the government, which charges grazing fees of just $1.35 a month for each cow on federal land.

In only 14 years from now, thanks largely to the buffalo’s natural fecundity, APR will have over 5,000 buffalo, the largest conservation herd on the planet. Significantly, this herd will be entirely free of cattle genes—unlike most existing buffalo herds in America, which have interbred with domestic cattle. Officially, the American buffalo is now a type of livestock. But one day, if Mr Gerrity gets his way, his buffalo will be declared wild animals again.

Part of the restoration project requires the return of another crucial species: the prairie dog. This “dog” is actually a small ground squirrel that forms large underground colonies. More important, it is the Chicken McNugget of the prairie—a convenient snack food for almost every creature, from burrowing owls and ferruginous hawks to foxes and even wolves.

Prairie dogs are hated by ranchers, who say their burrows pose a danger to cattle. So they are poisoned on a large scale. APR is in the early stages of developing a wildlife-friendly label for beef produced on ranches that are friendly to such prairie wildlife. In many parts of the world, such labels allow producers to command premiums for their produce.

Mr Gerrity says that the reserve will take decades to complete. But one day, he says, Americans will be able to come on safari in their own country and roam across the prairies, unencumbered by fences, to view abundance rather than emptiness.

When the explorers Lewis and Clark arrived in Montana in 1805 they found more wildlife than they had seen in any other part of their journey; elk, antelope, deer, beavers and grizzly bears. The buffalo came in “gangues” of tens of thousands. Restoring the abundance seen by early explorers, and with nothing more than private money, is a worthy gift to any nation.

[More...]

Cuyahoga Falls, Ohio, March 2012

Protester at Rick Santorum campaign event, Cuyahoga Falls, Ohio. Credit: NL

No end in sight

Minor contribution to this lead in the US section.

There was something for all the contestants to hang on to on Super Tuesday. But Mitt Romney still looks like the eventual winner 

Mar 10th 2012 | ATLANTA, WASHINGTON, DC, AND YOUNGSTOWN, OHIO | from the print edition

“WE’RE counting up the delegates for the convention, and it looks good,” declared Mitt Romney on March 6th—“Super Tuesday”—the biggest single day in the race for the Republican presidential nomination. And so, up to a point, it did: Mr Romney, the front-runner, won six of the ten states holding primaries or caucuses, including a narrow victory in Ohio, the most fiercely contested. He performed just as well in terms of delegates to the Republican convention in August, where the nominee is formally selected, securing over half of those on offer. He now has well over twice as many delegates as his closest rival, Rick Santorum, and is over a third of the way towards the 1,144 needed to prevail. And yet it was still a lacklustre night, in many ways, for the presumed but unloved nominee. [More...]

Mitt Romney dodges a bullet

But the narrowness of his victory in Michigan portends a long struggle ahead 

Mar 3rd 2012 | NOVI, MICHIGAN, COLUMBUS, OHIO, AND NASHVILLE, TENNESSEE | from the print edition

Jointly composed with Jon Fasman and Christopher Lockwood. I reported from Novi, Michigan.

ON FEBRUARY 28th a trickle of Democrats arrived to vote in Michigan’s Republican primary, as permitted under the state’s primary rules. They came to defeat the presumed Republican front-runner, Mr Romney. Democrats see him as the most dangerous opponent to Barack Obama, and relished the chance to promote Rick Santorum, a social conservative whom they think would be a lot easier to beat. In what became quite a nasty contest, with plenty of mudslinging all round, Mr Santorum encouraged the ruse.

Despite it, Mr Romney snagged a modest victory in Michigan, beating Mr Santorum by 41% to 38%, as well as romping home in Arizona, by 47% to 27%. A loss for Mr Romney in Michigan might well have been fatal. Not only did he grow up there, his father was a popular former governor. But Mr Romney also badly needed to demonstrate his appeal to the Midwestern voters who will be crucial in any general election. Scoring such a narrow victory means that he failed to do so very convincingly.

Michigan is a big and diverse place, with everything from the kind of rich suburbs that Mr Romney grew up in to grim, distressed industrial cities such as Flint, Pontiac and Detroit. Little wonder then that it is a vital swing state, with a useful 16 votes in the electoral college that actually chooses the president. On the face of it, Mr Romney’s stronger economic credentials might seem to commend him to voters looking for a turnaround for America. But matters are more complex in a state where the car companies are crucial—and where many voters believe that Mr Romney would have preferred their industry to go bankrupt than to get money from the government to help it survive.

Exit polls showed that Mr Romney’s Michigan voters were older, wealthier and better educated than Mr Santorum’s. In other words, when Mr Santorum called the president a “snob” for wanting to send everybody in America to college, he was making a naked, and rather successful, appeal to class resentment. [More...]

The Chicago way

Capital of corruption

Feb 25th 2012 | CHICAGO | from the print edition

ON MARCH 15th the former governor of Illinois, Rod Blagojevich, will start to serve a 14-year sentence for corruption in a federal low-security prison. In this part of America, he is treading a well-worn path. Over four decades, four governors (out of seven) have been convicted of corruption. [More...]

By Shankarnikhil88 (Own work)

Boffins wanted

Scientists are already helping to shape the Obama campaign

Feb 11th 2012 | CHICAGO | from the print edition

 There’s no escape Correction to this article IN A presidential election the incumbent enjoys many advantages. One of the less obvious may be the leisure to recruit a strong team of boffins. Team Obama has long been scouring the nation for scientists. It has sought out computing experts, mathematicians, programmers and statisticians. Many are already hard at work at the campaign’s headquarters in Chicago. [More...]

Photo: J.Crocker

Unionisation: Another one takes the plunge

Indiana becomes the 23rd “right-to-work” state

Feb 4th 2012 | CHICAGO | from the print edition

INDIANA, like many manufacturing states in the Midwest, has long felt the pain of seeing jobs go overseas. In his seven years as Republican governor, Mitch Daniels’s response has been to offer a strong diet of pro-business legislation. In the past few years Indiana has cut its corporate tax rate by nearly 25%, established one of the highest R&D tax credits in the country and started work on a $10 billion infrastructure-improvement plan.

Until recently, though, Mr Daniels had resisted calls to make Indiana what is known as a “right-to-work” (RTW) state. RTW legislation allows employees to decide whether to financially support a union. Without such laws unions can insist that all workers pay dues to help fund the cost of negotiating a contract with an employer, whether or not they wish to formally join the union. Now, however, Mr Daniels says he believes the state needs to sign up as well. The new legislation was passed by the state Senate on February 1st and was signed by Mr Daniels that very day, making Indiana the 23rd RTW state in America—and the first such state in the nation’s old manufacturing belt. [More...]

The pros and cons of Moon Base Gingrich

Jan 30th 2012, 21:38 by N.L. | CHICAGO (Online only)

AS VOTERS in space-mad Florida consider their options in tomorrow's Republican primary they may wonder if Newt Gingrich’s idea for a moon base is a shameless appeal to their parochial interests. But they'd be wrong to doubt his sincerity. For nearly three decades Mr Gingrich has been touting space colonisation; he co-founded the Congressional Aviation and Space Caucus and wrote a book that called for more space exploration. He is as space mad as the Floridians he hopes to win over. But that raises another question: how mad is this idea?

That depends. The idea for a moon base was a feature of George W. Bush’s space policy. But there is a world of difference between sending small groups of astronauts to a lunar base for months at a time, as Mr Bush envisioned, and having tens of thousands of people living permanently on the moon, as Mr Gingrich envisions. [More...]

Picture: Wikimedia Commons, dbking

Oiling the wheels

Jan 14th 2012, 18:09 by N.L. | CHICAGO Online blog only ..

ONE might have expected a humble presentation from Bob Dudley, head of BP, who spoke at the Economic Club of Chicago yesterday. In 2010, his company was responsible for a disaster in the Gulf of Mexico when an explosion on the Deepwater Horizon rig killed 11 men, injured 17 others, and released more oil into the ocean than any other accident in the history of the industry. But it was not to be that way. Instead, and reading between the lines, Mr Dudley had an interesting new year’s message for a country in the middle of hard economic times: you need us as much as we need you.

In the middle of 2010, BP’s reputation was in tatters. And let’s face it, 5m barrels of crude oil spilling into the Gulf were bound to upset the natives. But as the crisis unfolded, politicians made things much more difficult for BP by publicly tearing strips off the company. Eager to stay in tune with the nation, and cast off an image of impotence, the administration said it would keep its boot on the throat of BP, and the president even declared he was ready to “kick ass”. [More...]

Thinking big in space

Dec 27th 2011, 4:25 by N.L. | CHICAGO (Online only)

AS A small boy Paul Allen, the co-founder of Microsoft, dreamed of going into space. He even tried to launch the hollow aluminium arm of a chair, stuffed with propellant, into orbit. It didn't work out. But his latest adventure in space travel—a joint venture with Burt Rutan, a famous designer of aircraft—looks more promising. Earlier this month, the two of them said they will build an air-launched orbital delivery system. To do this, Paul Allen’s company Stratolaunch Systems will have to build the world’s largest aeroplane.

The Stratolaunch, as the plane will be called, will be big. Really, really big. It will have six engines, a wingspan of 117 metres (385 feet) and weigh about 544 tonnes. (The wingspan of Boeing's 747 is around half that of the Stratolaunch.) Taking off will require 3.6km of runway, and the aircraft will launch its rocket—a shortened version of the Falcon 9 rocket, built by another private space firm called SpaceX—at around 9,100 metres. The whole contraption will be able to put about 6 tonnes of payload into low-earth orbit. [More...]

Correction: I am hoping by the time anyone else reads this article again the word "hanger" will have been changed to read "hangar". As anyone older than about eight should know, one is a place for clothing and the other is a place for aircraft. I do honestly know the difference but I don't know how it came to pass that anyone would be said to be looking to find a hanger big enough for a large aeroplane.

Shovel ready

Mr Emanuel’s feeling for snow Dec 17th 2011 | CHICAGO | from the print edition

THE city of Chicago is proud of its ability to keep going, with gritty determination, through the worst of the nation’s weather. Snow that would bring London or Washington, DC, to a halt is laughed off as little more than a light dusting. This year some are expecting particularly bad weather, a test for the new mayor, Rahm Emanuel. He must keep the city moving throughout the winter, or face the wrath of the locals.

Fortunately, Chicago is well prepared for snowfall which, for the past four winters, has been over 50 inches (127cm). A secure facility on West Madison Street known as “Snow Command” houses some impressive toys. On one wall vast display-screens reveal everything you might need to know about the city’s weather conditions: the whereabouts of the fleet of up to 500 GPS-equipped snow-moving trucks; views from some of the city’s 1,000 cameras; the readings from a dozen road sensors (which pick up icy conditions); and a live feed of the regional weather system. [More...]

Detroit nears bankruptcy

Nowhere to run 

The motor city flirts with fiscal disaster 

Dec 10th 2011 | DETROIT

IN THE 1960s, the first hit song from Berry Gordy’s Motown empire was “Money (That’s What I Want)”. It might well be an anthem for modern-day Detroit. On December 6th Michigan took the first legal steps towards a state takeover of Detroit. If it happens, it will be the largest American city to be taken over by a state.
The problem has been building for decades; declining property values and the flight of better-off people to the suburbs have hit revenues, while the cost of servicing a still-sprawling city has not shrunk proportionately. The effects of the recession, particularly severe in Michigan, have provided the trigger for the crisis. Detroit’s mayor, Dave Bing, now says the city will run out of cash in April 2012. [More...]

Taxes and disinvestment

Illinoyed 

Businesses are threatening to leave 

Dec 3rd 2011 | CHICAGO | from the print edition

 THE state finances in Illinois are an ugly mess of deficits, unpaid bills and tax refund backlogs. At the heart of the problem lies a public pension liability estimated at a present value of $80 billion. The state’s pension schemes are only 51% funded, the lowest rate among the 50 states. In January, in an attempt to grapple with its problems, the state raised corporate taxes from 7.3% to 9.5% and personal income tax from 3% to 5%. Although the tax hikes are theoretically temporary—and start to expire in 2015—both the rises and the continued failure of politicians to get to grips with the budget crisis are starting to worry businesses. [More...]

And Republicans in the house are now arguing for a reduction in corporate taxation to stabilise the business climate in Illinois.

The Chicago River

Reflected glory 

The Windy City will, at last, clean up its filthy river 

Nov 26th 2011 | BUBBLY CREEK, CHICAGO | from the print edition

THE old-timers down by Bubbly Creek were hoping to land catfish for dinner. On a sunny afternoon they were fishing on a southern fork of the Chicago River made famous by Upton Sinclair in his social-realist novel of 1906, “The Jungle”. Sinclair described how offal and waste from the meatpacking industry had created a river so vile that putrid gas bubbled up from the bottom and made the river literally combustible. Today, the river hardly ever bubbles but the pollution remains so serious that the federal Environmental Protection Agency (EPA) has ordered the state of Illinois to clean it up. Earlier this month, the EPA and the state finally agreed over how clean the river should be. [More...]