Chicago’s land tax and how the city survives being such a fiscal mess

But wait, isn’t Chicago a fiscal mess? How about the state of Illinois?  It remains the case that living in Chicago is still remarkably affordable, and many of the neighborhoods have wonderful food, buildings, and offer a relatively safe (not always) and walkable environment.  You may even hope to find a parking spot.

I would put it this way: there are many ways to impose a Georgist land tax, fiscal insolvency being one of them.  Very wealthy people and institutions know that if they relocate to Chicago, they will be required to ante up for the final bill.  And so they stay away.  For a city of its size and import, Chicago just doesn’t have that many billionaires, nor do I think a rational billionaire should consider moving there.

In other words, there is a pending wealth tax.  Either directly or indirectly, this will place fiscal burdens on Chicago land, the immobile factor.  And this keeps down rents in Chicago now.

Overall, I do not recommend this fiscal course of action, and Chicago may well become a worse city due to eventual insolvency at the local and state levels.  Still, if you are wondering how it is that Chicago is so affordable — and wonderful — right now, this is part of the answer.

I also should note that not every neighborhood in Chicago benefits from this equilibrium, as in some parts gentrification is difficult to come by.

Comments

A "Georgist" land tax is a single tax on land to replace all other or most other taxes. There's no evidence at all that Chicago's notoriously corrupt political machine is considering a single tax on land to solve its fiscal insolvency problem. Given the influence of real estate interests like the Pritzkers in Chicago, there's little chance that Georgism will be tried in Chicago.

Yes, good point, I thought the weakest part of TC's argument is that Chicago has some sort of de facto or pending de jure land tax, but in fact a quick Google search yields: "Nov 13, 2015 - Chicago homeowners pay less in property taxes than the vast majority of their suburban neighbors, even with Mayor Rahm Emanuel's record property tax increase applied. But business properties are taxed differently in Cook County, resulting in higher tax rates" which means only Cook County, and only for business taxes, has a high (by Illinois standards, 8%) real estate tax.
I guess therefore that TC is saying Illinois has higher than average land taxes, and true enough, a search for real estate taxes by state shows that Illinois is over double the national average of 1% of assessed value, and strangely Texas is not far behind, at 1.9%, greater than New York state's 1.6%. But I don't think most people worry too much over 1% extra tax, if, as I think is the case, property values are low in Chicago (compared to the coast cities).

Illinois is a high property-tax state; and Chicago has some of the highest property tax rates in the country. And it is increasing because that is where the money is. Chicago cannot tax incomes, and its sales tax rates are already the highest in the country. Last year, the average Chicago tax payer saw a 10-percent increase in property taxes over the previous year.

And there is a distribution issue, studies have found that homes in poorer neighborhoods are often overvalued, while properties in wealthier areas are undervalued. This appears to be due to who files tax appeals.

Poor New Jersey, debt is worse and rent is not even cheap https://www.mercatus.org/statefiscalrankings/newjersey

What if the dining guide would have ranked Newark at the top? Would the hypothesis hold?

Right. I had to spend two weeks working in downtown Chicago in August 2014. The hotel was nice enough and restaurants OK - tho I don't get the deep dish pizza thing.

Unlike NYC, Chicago doesn't impose rent controls. Maybe that's a cause for affordable rents . . .

I wouldn't liver there. Even in the glorious, prosperous Obama days, his homeless peeps were everywhere.

I am sure you would live in Manhattan...in the glorious prosperous Trump days!!

Fantasy claptrap from Tyler! Not one word of evidence for this conjecture.

Hes compared Chicago to Gary Indiana which is right next door across the line in low tax, low regulation conservative GOP Indiana.

Gary has been growing at 20% per year from businesses fleeing the crushing taxes of Chicago for Gary, and soon Gary's GDP will be ten times Chicaago's.

I don't get it. You're positing that it's a relationship-specific investment. Two that you aren't really answering:

(i) why do the ultra-rich care about this proportionally more than the middle-class? the top 1% spend a smaller proportion of income on housing/property as the top 10%

(ii) what's stopping people from renting? in theory, if a "wealth tax" is expected to occur, owning a rental property would not be as profitable, but the rent price itself still depends on the amenities of living in the city for that period, and so Chicago's rents should be pretty high and have no reason to be affected by the factors you propose

Seems like the real answer isn't some magical Lucas rational expectations story, but that Chicago has less stringent restrictions on housing supply.

+1

Anecdotally, I think you’re right. It’s amazing how many enormous new high rise apartment buildings there are in the loop and river north. Fifty floor buildings are a dime a dozen, and the apartments are generally huge by comparison to other cities. It really seems to be a supply phenomenon. Plus the L radiates our from the center of the city in a fairly efficient manner, making outer neighborhoods convenient to the commute. Those neighborhoods are on an efficient grid system all the way out to the outer suburbs — there isn’t a lot of wasted space in the form of quarter acre lot communities on winding streets. Compared to DC, for example, with its building height restriction and completely inefficient suburb structure in even close-in suburbs like Arlington, there’s just so much more supply.

Chicago (metro area) also has few geographic barriers to expansion. Lake Michigan prevents expansion to the east, but everywhere else the metro area just sprawls out across the prairie.

Although the inner suburbs were built-out decades ago, there's still plenty of "greenfield" building sites available in the further-out suburbs, which thus sets limits on what people will pay to live in the City itself. Plus the opportunity to rebuild these inner suburbs at a higher density, combined with extensive commuter and urban rail systems.

Plus, expansion Southeast goes into Gary Hammond in low tax, low regulation Indiana.

Low taxes and low regulation has mad Gary Hammond grow at 20% per year and it will soon be ten times the economic power of Chicago.

According to economists.

Maybe it's cheap land. I assume land is cheap because the city has lost 60% of its population over the last half-century.

"that Chicago has less stringent restrictions on housing supply" FTW.

So the price of first class cabins on the Titanic were really affordable after that little problem with he iceberg?

I also should note that not every neighborhood in Chicago benefits from this equilibrium, as in some parts gentrification is difficult to come by.

As Steve Sailor has pointed out, the Democratic Party in Chicago is working hand-in-hand with powerful developers to drive Blacks out of the nicer parts of the city and enable gentrification. I don't see that any part of the city worth living in will withstand this alliance. After all, even Barack Obama was friendly with property developers. It is the Chicago Way. Unfortunately slums are a bit of a zero-sum game. So if some inner Chicago neighborhoods are gentrified, it means that some other perfectly nice if poor areas outside the city are about to be dumped on from on high.

Quite what this has to do with George I do not know - except it shows that he is wrong. The rise of property prices is not unearned. Nice people make for nice housing values. Not-nice people make for slums. I do not see the moral justice in punishing the people who make their neighborhoods nice places to live.

Incidentally, no city with Chicago's murder rate, no city that tries to define every car jacking as a misdemeanor, is a good place to live.

I suspect that some journalists will have an unexpectedly comfortable retirement.

Bobby Kennedy's son, Chris, who is running for Governor, said something similar:

“I believe that black people are being pushed out of Chicago intentionally by a strategy that involved disinvestment in communities being implemented by the city administration. And I believe Rahm Emanuel is at the head of the city administration and therefore needs to be held responsible for those outcomes.”

“The city is becoming smaller, and as it becomes smaller, it’s becoming whiter.”

Now, Kennedy thinks this is through disinvestment, but the reality is that tax rates are going up while public spending is going down, or at least more of the spending is going to pensioners that may be investing their money in Florida.

Now do NYC. or SF. Same pattern, but further advanced there.

I recall sitting an an Urban Economics class in college in Hyde Park in 1985. The Prof (not a "Chicago school" guy) drew concentric circles of declining property values around a city center. I puzzled to square this with what I saw in Chicago and knew about other "inner cities" of the time.

Since then, these concentric circles have started to reassert themselves.

Of course George is right and the rise is unearned. All of the slums aren't owned by slumlords. Some of the slums are owned by slummy not nice people who live in them. Gentrification increases the property value of these not nice people as well. Moreover, the lion's share of the rise in property prices does not go to the nice young people who move in en masse to make them nice places. Most of them are renters, who pay rising rents. The lion's share goes to a smaller number of real estate interests, connected pols, etc.

Too cold and while the dining scene is much better than it used to be it is highly overrated.

You probably walked up Michigan Avenue one December day when Chicago was showing that it is indeed the Windy City. Once was enough for me.

Cowen is all in on the economy built on rising asset prices. It's the thing. All that wealth reflected in NYC real estate, is it real or just a state of mind? All that wealth reflected in Bay Area real estate, is it real or just a state of mind? All that wealth reflected in the stock market, is it real or just a state of mind? All that wealth reflected in cyber currencies, is it real or just a state of mind? When the bubbles burst, there's an enormous tax to pay, the tax being the inevitable losses suffered from an economy built on rising asset prices. "In other words, there is a pending wealth tax."

Coogle "Cambridge Capital Controversy", Counselor.

https://www.washingtonpost.com/opinions/jerome-powells-challenge-at-the-fed/2018/02/04/1d51f1ba-09bf-11e8-8b0d-891602206fb7_story.html

Here is Cowen's view of rising asset prices (from his column today in Bloomberg): https://www.bloomberg.com/view/articles/2018-02-05/why-a-dip-in-asset-prices-might-be-a-good-thing. As for his thesis, this is how he introduces it: "We’re familiar with the contention that dangerous bubbles should be popped, but is there another way of justifying this contrarian intuition? I’d like to lay one out, keeping in mind that this is speculation and not an endorsement." Speculation, indeed! The man has a sense of humor.

And so they stay away.

Didn't Boeing move to Chicago not so long ago?

If 17 years ago is "not so long ago", then yes. Maybe a more apt example would be McDonald's, which is moving from the suburbs into the city this year.

Yes, and Caterpillar moved to Chicago, too -- but to a suburb rather than the city. Their new suburban headquarters was made available because another company moved downtown. But...what is the real risk exposure of these city-located companies? Can they really be made to 'ante up for the final bill'? Or could they pick up and move again with their exposure being limited to remainder of the leases on their office buildings (and their exit greased by other cities willing to shower them with benefits if they relocate)?

CAT didn't get any incentives that I am aware of. There have been a lot of HQs relocate to Chicago in the last 17 years, but they don't to pack much in terms of employment. Most of Boeing's management stayed in Seattle, and those that followed have been similar. CAT will have 100-300 employees in Chicago, and the location will be half the drive to the airport. The new globalist HQ appears to be an office the size of a medium law firm (or what would be medium in Chicago) that places a priority on access to a large international airport.

"The new globalist HQ appears to be an office the size of a medium law firm (or what would be medium in Chicago) that places a priority on access to a large international airport."

Access to a large international airport, perhaps (though top Cat execs were surely flying corporate anyway). But another factor may be that, well, what exactly is the point of being a high-level, fortune-500 executive if you have to live in Peoria? I know some folks from that area, and the rumor going around was the new CEO's wife refused to live there.

Heh, I have three generations of CAT workers in my family, and the CEO spouse story rings true.

Some of my thoughts derive from this article that discusses a lot of the recent HQ relocations to Chicago and how few jobs they bring:

http://www.chicagobusiness.com/section/hq

It doesn't mention the McDonalds relocation from the suburbs, or the new Conagra Foods HQ. If there is prestige associated with HQs, then Chicago is doing fine.

People are voting with their feet and leaving Chicago. A much better indicator of quality of life then a magazine ranking. The Black middle class is leaving in large numbers. Politicians get rich, very rich, as they have side jobs to help the rich and connected avoid high property taxes, Southwest side has seen big drop in livability in last 30 years. South and West sides are poor and violent. Gay community is increasing target of street crime. ( targeted not so much for being gay but because they are wealthy and on the streets at night, vibrant nightlife) Crime increasing in “safe” neighborhoods, Safe communities very expensive, Pension obligations a time bomb without any easy method to correct. Schools are mixed a few excellent but most are awful. Still living off institutions created during better rimes. How long they can milk that uncertain, large Hispanic community ( now about 1/3 of city ) is wild card, which way will it go, government dependency or job growth. Tolerate crime or fight for a brighter future.

Btw. The people you respond to a survey by Timeout magazine iare hardly representative of the citizens of Chicago.

If you have lots of disposable income Chicago has many ways you can spend it. The Let Them Eat Cake crowd is doing fine

>>> Voting with their feet?<<< Illinois college ed population growing 1% a year. Minn holding steady; rest of Midwest losing.

"State-by-State College Attainment Numbers "

https://www.ed.gov/news/press-releases/new-state-state-college-attainment-numbers-show-progress-toward-2020-goal

Here's the list of border states. Illinois is the middle of the pack. None of them are losing. Only one border state (Iowa) showed 0 growth.

2009 to 2010
=============
Michigan = +1.2%
Kentucky = +1.0%
Indiana = +0.9%
Illinois = +0.7%
Wisconsin = +0.5%
Missouri = +0.3%
Iowa = 0.0%

Education in Illinois

45 percent of CPS graduates begin their senior year not doing well enough academically to attend a four-year college. After graduating, a majority of these students are neither employed nor in school.

https://www.illinoispolicy.org/10-illinois-education-facts-you-should-know/

34.2% of Chicago residents over 25 have a college degree.
34.7 % of Cook County Residents over 25 have a college degree
31.4% of Illinois Residents between 25-64 have a college degree
28.8% of US residents over 25 have a college degree.

That includes associate's degree so numbers are inflated

JWatts numbers includes associate’s degree so numbers are inflated

In 2016 21.8% of Chicago Residents over 25 had Bachelor's degree
In 2014 20.4%
in 2010 19.3%

In 2016 32.9% of San Francisco Residents over 25 had Bachelor's degree
In 2014 32.2%
In 2010 31.5%

In 2016 19.7% of New York Residents over 25 had Bachelor's degree
In 2014 19.1%
In 2010 18.3%

In 2016 19.7% Of DC Residents over 25 had Bachelor's degree
In 2014 19.1%
In 2010 18.3%

In 2016 19.7% of Seattle Residents over 25 had Bachelor's degree
In 2014 19.1%
In 2010 18.3%

What does that tell you. Not much really

sorry Seattle is
2016 29.9%, 2014 34.4% 2010 33.2%

DC is
2016 23.4% 2014 23.3% 2010 22%

"Chicago was the only city among the nation's 20 largest to lose population in 2016 — and it lost nearly double the number of residents as the year before, according to newly released data from the U.S. Census Bureau.

It's the city's third consecutive year of population loss. Chicago's population fell by 8,638 residents between 2015 and 2016, to 2,704,958. The year before, it declined by 4,934.

The population of the greater Chicago area, defined by the Census Bureau as the city and suburbs extending into Wisconsin and Indiana, is also declining. Numbers made available in March showed a drop of 19,570 residents in 2016 — the greatest loss of any metropolitan area in the country.

Illinois' population fell by more than any other state in 2016, down 37,508 people, according to census data released in December.

Chicago's population plunge continues to be a result, mostly, of losing residents to other states. About 89,547 residents left Chicago and its surrounding suburbs for other states in 2016, a number that couldn't be offset by new residents and births, according to an analysis of census data released in March. The number of people leaving the Chicago region is the highest since at least 1990.

More than any other city, Chicago has depended on Mexican immigrants to balance the slow growth of its native-born population. During the 1990s, immigration accounted for most of Chicago's growth. After 2007, when Mexican-born populations began to fall across the nation's major metropolitan areas, most cities managed to make up for the loss with the growth of their native populations. Chicago couldn't.

http://www.chicagotribune.com/news/local/breaking/ct-chicago-census-met-20170524-story.html

"The fact that the State of Illinois is leading the nation in population loss and the loss of college students is a direct result of a lack of leadership by Governor Rauner and the instability he has created."

Eleni Demertzis, spokeswoman for Rauner, pointed to some factors specific to Chicago.

"Let's review what's happened in Chicago the past two years under Mayor Emanuel: The city's property taxes and fees have skyrocketed; it has surging violence; and it has threatened to close schools due to decades of fiscal mismanagement," she said.

https://www.dnainfo.com/chicago/20170525/south-loop/chicago-population-decrease-black-population-census

Though Chicago’s overall population fell for the third consecutive year in 2016, U.S. Census Bureau data shows new white residents are flocking to neighborhoods adjacent to downtown while black residents are fleeing some of the city’s most violent neighborhoods in droves.

“The decline in black population really accounts for a lot of the loss,” said Rob Paral, head of a Chicago-based demographic research and consulting firm. “The difference is that the white population is either growing or staying the same.”

The city’s overall black population has plunged since 2000. At the start of this century it was just over 1 million. Fifteen years later it was 840,188.

The white population also decreased in that time period, though not nearly as dramatically, falling from 907,166 to 874,876.

As a whole, the city went from about 2.9 million residents to 2.7 million in that time, data show.

https://chicago.suntimes.com/news/as-chicagos-black-population-plunges-whites-flock-to-near-downtown/

It would appear that Hispanics are sometimes called White in these studies

"In other words, there is a pending wealth tax. Either directly or indirectly, this will place fiscal burdens on Chicago land, the immobile factor."

Good luck with that. Impose enough of a wealth tax and the value of real-estate will drop accordingly -- even eventually to zero (and the declines, of course will frustrate efforts to raise revenues through the tax). This has happened in much of Detroit. You reach a point where land has no value because any building built on it would be worth less than the cost of construction. Even standing houses become worthless because the resale value would be less than the rehab costs. Think this can't happen in Chicago? Actually, it already has been:

http://www.chicagobusiness.com/assets/interactive/abProp/vacantResponsive.html

People like those of us who read MR have a misleading picture of the city because, if we go, we visit only downtown and wealthy, gentrified areas. But areas of concentrated poverty have been growing much faster than gentrified ones as the middle class areas have melted away:

https://www.citylab.com/life/2014/04/40-years-chicagos-rising-inequality-one-gif/8786/

Software engineers can make 3x in Chicago what they can make elsewhere in the country, and still they don't fill those jobs. Why? Because they're in Chicago, and no one wants to live in Chicago. This is a classic example of someone crunching stats, disconnected from the reality of the situation.

"Software engineers can make 3x in Chicago what they can make elsewhere in the country,"

I'm doubtful this is remotely true. Median US salary for computer programmers is $60K.

https://www.payscale.com/research/US/Job=Computer_Programmer/Salary

What you are saying is that a median computer programmer could make $180K per year in Chicago.

Not only that, said median programmer is not willing to work in Chicago for an extra $120,000 per year! I find it ludicrous.

Can you please point us to the data showing this supposed 3x salary premium?

The parent comment is emotional hyperbole and is low on the truth quotient.

I live in Chicago.
1) Software engineers do not command such a premium in Chicago. If anything the salaries are average, but the affordability is relatively high compared to SF and NYC. If you are tech worker, chances are you'll live pretty well in Chicago.
2) Most companies in tech do not have engineering offices in Chicago. Those are usually concentrated in SF and NYC, and sometimes in places like Austin and Atlanta. This is the biggest problem with the tech industry in Chicago.
3) There is a large potential pool of tech talent due to proximity to great schools like Northwestern, UIUC, Wisconsin, Purdue, U of C etc. but most of the graduates of these schools are drawn to the big names on the coasts. Because they are courted.
4) Chicago is not (yet) a tech city. It is a highly diversified economy, with some concentration in finance and transportation, but tech is not particularly well-represented.
5) I don't deny the reputation for crime is liable to deter some transplants (I was one of them, but decided to take a chance), but the actual situation on the ground in much different. Chicago struggles with crime in some parts of the city, but it is overall pretty safe relative to many big cities. Think of Chicago as a NYC pre-Giuliani... maybe even a little better. The normalized stats bear this out. Most people had no trouble living in NYC in the 80s, when it was crime-infested.

The problem with tech in Chicago is that there isn't a strong ecosystem yet, and to build that ecosystem you need investment from tech companies. It's a bit of a chicken and egg situation.

Good summary of the Windy City, seems to me, not having ever visited except at the airport.

Bonus trivia: Chicago got it's first big break in the slaughterhouse industry, when due to the opening of the Erie canal / railroad and especially the linking of the Great Lakes / St. Lawrence seaway with the Mississippi river when an artificial levy connected the two, became a clearing house for exporting beef to the outside world.

This was also the beginning of the end for St. Louis.

It was the railroads wot did it.

Prior to the Civil War, the US Congress could not agree on a route for a transcontinental railroad to connect the United States to the territories annexed after the Mexican-American War. Should it be a northern or southern route? After the southern states seceded from the Union Congress voted for the northern route. That helped Chicago grow.

I’m surprised you would rank NYC ahead of Austin as a tech city. Dell, Apple, IBM, Oracle, Facebook, and many others all have hundreds (in some cases thousands) of people in Austin. Apple is building a significant campus (thousands). Pretty big tech hub for 25+ year. What’s in NYC?

Bloomberg, CA Technologies, ETrade, Infor, Buzzfeed, Business Insider, Yext, Etsy, AppNexus, MongoDB, Digital Ocean, Meetup, Foursquare, General Assembly, Stack Overflow, CB Insights. That's just the brand name tech companies headquartered in New York. Hundreds of other startups and small businesses.

Then there are also the mostly Bay Area headquartered big tech companies you listed that also have major offices in New York such as IBM (actually headquartered in NYC suburbs), Google, Facebook and Oracle.

Dell is the only homegrown Austin company you bring up. After all that, there are still all the finance companies (banks, hedge funds, exchanges, etc.) who employ tens of thousands of tech workers. Nasdaq, NYSE, Goldman Sachs, JP Morgan, Citi, Morgan Stanley, and countless quants at hedge funds, insurance companies and on and on and on...

Part of this is lack of talent (we're hiring, but picky). But the relative cost of living here should be a huge advantage. Our household income is 3/4 of our mortgage on a single-family home; I can't see that happening on the coasts.

If you don't want go full-bore on taxes, move to the greater Valparaiso area, or Joliet, or Naperville-ish. The commuter rail system is fine, although 15 minutes late today.

Chicago is interesting because of how little there, there is there. Compare it with, say, San Francisco - perhaps the most over-hyped American city. Everyone loves the idea of San Francisco. Whole movies have been made that are little more than love letters to the city. The best example might be Bullitt which could never be set anywhere else. Think of 48 Hours which goes out of its way to make it clear the film is set in San Francisco. As do some of the Dirty Harry films. Could Vertigo have been set anywhere else?

New York has a similar effect but it is more mixed. Clearly some people don't like New York even if most people do.

But Chicago? The only film set there that loves the city I can think of offhand is the Blues Brothers. Perhaps Ferris Bueller's Day Off is nice to Chicago. Perhaps not. It may be too long since I have seen it, but I don't recall anything much about The Man With the Golden Arm that suggested it was set in Chicago. But then Guess Who Is Coming to Dinner could have been set anywhere as well. Chicago just does not have a sense of place that the media will celebrate. Which suggests people are not proud of living there.

All three cities have their own forms of public transportation. Everyone knows about New York's trains. Everyone loves San Francisco's Cable Cars. Chicago has kept its Elevated Railway but it is hard to think of any love for the L in popular media. Even the Blues Brothers are not nice about it.

Off the top of my head, "The Sting" was set in Chicago.

Also "Eight Men Out", "The Fugitive", "The Untouchables", "The Saint Valentine's Day Massacre" and "Continental Divide" (parts).

Mayor Richard J Daley didn't want films made in Chicago. The TV show Streets of San Francisco was to be about Chicago but Daley didn't want it.

Mayor Jane Byrne reversed that and sought movie making in Chicago. You had John Hughes movies, Michael Mann Movies, When Harry Met Sally, Backdraft, The Fugitive, Barbershop, Cooley High, Risky Business, The Great McGinty, etc. Numerous TV shows. Current Mayor Emanuel, through his brother, has all sorts of production going on in Chicago.

But let's face it, the weather in Chicago doesn't favor a lot of filming. And costs are lower in Canada. Toronto is a frequent stand-in for Chicago on film.

"But let’s face it, the weather in Chicago doesn’t favor a lot of filming."

It's no worse than New York. And definitely better than Toronto.

costs are lower in Canada What part of that is hard to understand. If you want outdoor shots to set a scene etc and then go indoors to a studio, Toronto is much cheaper.

"And definitely better than Toronto."

Chicago actually has the same weather as Toronto (great lakes climate).

Uh, yes, Chicago weather is worse than NYC weather by general standards. It's colder in winter in Chicago. it's worse in spring and fall (colder and more rainy). Chicago gets more snow. Significantly more cloudy days in Chicago.

I should expand on that "colder in winter" bit. It's 9 degrees colder, on average. NYC is much closer to DC than Chicago in winter temperatures. NYC is closer to Richmond than Chicago in winter temperatures.

“Bob Newhart” was set in Chicago, and the opening credits had a shot of the Elevated Rail line. Was it actually shot there?

I’m in the Pacific Northwest. Here’s what I know about the Windy City: the University of Chicago was world class, and still might be. Chicago Democratic machine. Black crime especially murder rates. Deep dish pizza. Longtime failing sports franchises (hockey, baseball) good again but former successes on the skids (basketball, football). Working class (formerly predominantly Polish) areas in the balance, can go gentrified or can go slum.

All pretty superficial knowledge, sorry.

This comment is overthinking the issue. It is over-determined that Chicago would be less celebrated than SF and NYC. Chicago has bad weather, is almost totally flat, for most of its existence was dominated by huge, ugly and heavily polluting industrial plants (think stockyards and giant old steel plants), and is the central city of the Midwest (which is widely regarded as one of the most boring parts of the country). San Francisco has one of the most beautiful, hilly city settings in the world, has mild and pleasant weather (and if you leave the Peninsula, warm and sunny weather), was home to a negligible amount of industry by comparison to Chicago or New York, and happens to be located in California, which is arguably the wealthiest, most beautiful, best educated and culturally significant/dynamic state in the country. New York is New York: the most populous urban area in the country since 1800, the economic, social and cultural capital of the wealthiest country in the world (with the buildings, parks, museums and cultural resources to show for it), a great seaport set in one of the world's greatest natural harbors, which enjoys weathers substantially better than Chicago.

There is also *The Dark Knight*. I think of that film every time I'm driving on Lower Wacker Drive. Though it's true Chicago doesn't really have any distinctive iconic structures, apart from the Bean, Sears Tower, and the L. Chicago's media portrayals are definitely lacking. Though not compared to SF. If you really think about it, SF is rarely portrayed in the media either.

"Which suggests people are not proud of living there."

I wouldn't draw that conclusion from the above. It is somewhat true, though not because of the sense of place. The major complaint is really about Cook County taxes, the bad schools and the corrupt government. Most Chicagoans love Chicago and would love it more if the government was better.

"Though it’s true Chicago doesn’t really have any distinctive iconic structures, apart from the Bean, Sears Tower, and the L. Chicago’s media portrayals are definitely lacking."

I consider the draw bridges iconic. At least, I always notice them and know it's Chicago if I see them in a show.

http://www.outofchicago.com/wp-content/uploads/2016/05/Open-Gates-2048-1200x600.jpg

Although "Dark Knight Rises" was filmed in Toronto, as mentioned above, a cheaper stand-in for a fictitious city.

"Chicago has kept its Elevated Railway but it is hard to think of any love for the L in popular media"

Hmmm. I'm having a hard time thinking of any scene on a train in SF or NY comparable to this one:

https://www.youtube.com/watch?v=TDlTGhe3YoE

"The only film set there that loves the city I can think of offhand is the Blues Brothers"

Well, Risky Business comes to mind obviously. And The Fugitive. And, especially, High Fidelity.

Good one, but I think tghe train chase from Running Scared is more fun https://www.youtube.com/watch?v=wH4x412oz2k

The biggest misconception that outsiders have of Chicago is just looking at the crime stats and thinking the city is basically Detroit writ large.

Crime in the city is **highly** segregated. Someone living in the Gold Coast might as well be on a different planet from South Side's Chi-Raq. Being poor (and black) in Chicago is absolutely terrible. Being upper-middle class is much better than New York or the Bay Area. (Depending how much you dislike cold weather.) It's like making $1 million a year in NYC but only costs $250k. And then when you get super-rich, the utility probably inverts back to NY, SF, and LA.

+1

The very geography of chicago helps this. The industrial strip at the center cuts the north and south sides to the point travel between the two involves going through some traffic.

Map here: https://commons.wikimedia.org/wiki/File:Chicago_violent_crime_map.png

There's a lot of areas with a violent crime rate only a bit above or below the NYC average.

Well, that's the ultimate truth about Chicago. Chicago is a hundred towns that happen to be smashed together.

They haven't been making high-density cities in America for at least a century. Limited supply: NYC, Boston, Philly, Chicago, SF.

Yep, they became obsolete with the introduction of the affordable automobile.

Yep, and then they re-emerged from obsolescence when the population exceeded the capacity of the road system and traffic became an absolute nightmare in every sprawling city in America.

"...and traffic became an absolute nightmare in every sprawling city in America."

Say what? Most American cities don't suffer from an absolute nightmare of traffic. LA might be the worst and it's only occasionally nightmarish.

?? Try DC, Atlanta, Miami, any other sprawling sunbelt city, anywhere in CA, not just LA. Most American cities anyone can actually find a job in, yes, absolutely, the traffic is terrible because car travel runs into scale problems really fast.

I've driven around Atlanta extensively. It's bad during rush hour, but clearly the city functions just fine. Well enough that hardly anyone uses the subway.

The one time I drove through Atlanta, I got to the edge of the city at 7:30 pm on a summer day with perfect weather. Solid traffic jam.

I can't imagine living in a city where you don't want to drive anywhere before 9 pm

LOL, you guys are making good points.

New Yorkers who rely on public transit have the longest commute times in the country (but on the positive side, they can kick back, relax, stretch out, and meet so many friendly people on the subway).

For a city of its size and import, Chicago just doesn’t have that many billionaires, nor do I think a rational billionaire should consider moving there.

I'm not a billionaire or even a millionaire but I've thought about moving to Chicago and rejected it for its fiscal craziness: serious tax increases and/or municipal disruptions are on the way, and I don't want to build a life in a place where that is true.

I might have missed the point of this post, but the government is not the sole factor in what makes a place good or not. So the city and state are screwed up and have yuge fianacial problems. But that really does not matter for everything.

The most interesting part was the bit about having few billionaires and property values- I tend to believe it. I'd like to see how far it extends though. Is it chicago proper, or is our entire metro area? If it's just chicago, then there's the problem. If it's the metro area, then it's a state issue.

The Governor is a billionaire, and the front-runner to challenge him is a billionaire. It won't take long this campaign season that Illinois will want fewer billionaires.

There are a decent number in the Wilmette through Lake Forest corridor along the lakefront north of the city, although I don't know if it makes up for the paucity in the city.

Well, yes and no. At least if you've got a choice. When last kid is through high school in a couple of years, spouse and I will probably relocate somewhere (flexible on location). Probably not interested in Chicago, but definitely will not buy property in any state or city where I think there's a looming fiscal crisis. Might rent though. I may be wrong, but I would expect crazy government decisions can affect property values faster than you can (or want to move).

Tyler's comment is fundamentally off base. "A pending wealth tax" is not the primary reason (but possibly secondary/tertiary) for the current moderate level of rents here (note that it isn't "affordable," but rather less than a comparable city on the coasts). It's (A) the supply of housing relative to the existing population *and* (B) the moderately easier housing permitting process. On point A, Chicago is a city built for 3 million people (i.e., for its post-WW2 population) but currently has 2.5 million residents (and declining). Read Saul Bellow's nonfiction and you'll see that even 60-80 years ago a sizable amount of fallow land could readily be put to use for housing and development. I won't explain point B but anything you read by Ed Glaeser is correct on this subject.

Chicago's rents will likely not increase as rapidly because it has no longer facilitated or cultivated opportunity as it once did (as demonstrated by migration, investment, job growth, household/business formation, and exports, to name a few items). It *was* a truly global city up until recent times, but now it no longer has comparative advantages in transportation, agriculture, manufacturing, and finance *relative to other North American and global cities* (e.g., NYC, DC, Dallas, Houston, and Toronto). The "relative" point is crucial. Chicago has always been a cold and remote interior city, but it had cheap, expansive land and superior jobs/opportunity/access to national and global markets. As its value proposition has waxed and waned over generations, so too have its prospects. They are now dire for the simple reason that the city is becoming less and less competitive on the global stage.

Moreover, averages for Chicago are sometimes misleading because, frankly, there is no "average neighborhood" in the city. As commenter Doug points out, neighborhoods like the Gold Coast and Lincoln Park are well-off (diverse amenities, low crime, proximity to the lake, and corresponding high rents) and South Side neighborhoods are not (poverty, crime, and corresponding low rents). Unless gentrification moves south and west from the Loop, rents will continue to increase to "coastal" levels. Do not be deceived by "average."

And contra the totally empirically vacuous statement of commenter CM, Chicago is quite a lovely, clean city. Its industrial clusters are located on its periphery, making it no different from most other North American cities. Chicago has a few big problems (cold weather, poor governance, economic stagnation, brutal racial segregation), but this isn't one of them.

I agree with most of what you said, except for no longer having comparative advantages in agriculture and finance. Chicago is still the agricultural hub of the US, and it still has the financial industry to support that. There's a reason it's the world leader in derivatives trading, and I don't think the move to electronic trading has really altered that fact. I'd also argue that Chicago's transit system is vastly superior to a lot of US cities, with easy access to almost all parts of the city, including 2 airports. Beyond that, it's a very drivable for a city of such a size.

You are wrong about the location of industry (check out the city planning map below and recall that a very dirty steel plant operated in Lincoln Park until a couple of years ago), and are misapprehending the larger point. Chicago today does have many pleasant and beautiful areas. But the cultural image of Chicago - which is what matters for the purpose of locating Hollywood fantasies - was formed in an earlier time when Chicago was the fastest growing industrial city in the world, smoke and soot blotted out the sun at 10 am, and 75% of the meat eaten in the US was slaughtered on a square mile near the geographic center of the city. "Chicago" is not a lovely clean city with peripheral industrial facilities and anyone with minimal knowledge of the city's history should know that. Start with Sandburg, Algren, Dreiser, Sinclair or Kipling (note how Kipling compares SF and Chicago) to get the literary take. Read William Cronon, Studs Terkel or Mike Royko to get a more academic for the journalistic approach. Now ask yourself - is this the setting for my mass-market escapist fantasy?

https://www.cityofchicago.org/content/dam/city/depts/dcd/general/CofCPlansAdotedbyCPCLM042612.pdf

You have made my point about "totally ***empirically*** vacuous" better than I could. So thank you! If you are only speaking to the *aesthetic image/perceptions* of Chicago in popular culture (using romanticized literature from the early to mid 20th century), or the journalistic approaches of Cronon/Turkel/Royko, then your arguments may have more mileage. You fail to mention any of Bellow's work, which is of course a lot more nuanced and descriptive of Chicago's lows *and* highs. Indulging certain myths and fantasies of Chicago during frank, honest conversations is a pernicious practice, most of all to those of us who actually dwell in the shadows of the city's (rather pleasant) skyline.

The Finkl plant you appear to be alluding did indeed close down a few years ago. It is not at all relevant to arguments about a "dirty image" of Chicago (seriously, I bike by the old plant 2-3 times per month, and it is far from impressionable). It was a very small, specialized operation that is no comparison to the industrial zones of East Chicago or northwest Indiana (i.e., on the city's periphery, per my earlier point). Much of Chicago's heavy industry moved to the south and southwest corners of the city in the mid-20th century and has been there since, albeit at a smaller scale than then.

The whole point was to say that Chicago's cultural image as a rough and corrupt industrial town, along with its flat topography, and bad weather, makes it a less romantic setting for film and television than SF and NYC.

As to the location of industry in Chicago, you are just wrong. Census.gov has a function that lets you map the location of various categories of work. A link is below. Play around with it and you will learn that there are more industrial employers and jobs in the industrial corridors on the west, southwest and northwest sides than on the peripheral East Side (that's the Chicago community area south and east of the Calumet River and north of Hegwisch where you can find the ruins of the Republic Steel plant that was the site of the Memorial Day Massacre), East Chicago, IN, or Gary, IN. Try googling steel plants and Chicago or manufacturing plants and Chicago and you'll see the same distribution. Industry is in the heart of Chicago (including, ironically, the neighborhood "Heart of Chicago").

Finally, with respect to Finkl, your response is disappointing. In 2015, Chicago's richest (or second richest neighborhood) was home to a 100+ year old steel plant that processed 100,000 tons of steel per year on 20+ acres and was Chicago's worst source of heavy metal air pollution. Try to imagine such a plant on the UES, Russian Hill or the west side of LA. But rather than see that as indicative the city's industrial heritage, you think it is insignificant because of impressions you formed while biking. That does not seem very rational.

https://onthemap.ces.census.gov/

Per your point about the zoning map, this is indeed valid, but doesn't describe the level of *industrial* that I have made, i.e., where the heavy industry is. The map *does* show the south and southwest corners that I allude to. If you come visit or do some Google searches, you'll see what I mean.

Stockyards closed in 1971 but they had been in decline for years. They peaked around WWI.

South Works, the large steel factory on SE side started shutting down in the 70's was gone by 1991

International Harvester and Wisconsin Steel basically closed around 1984.

But Chicago protected most of its lakefront from the beginning. It has a large park system and some of the most diverse architecture in America.

Chicago is not what it was. But you don't seem to have ever been there. The world of Dreiser et al are long gone. Chicago is almost as different from that era as they were from when Marquette visited.

For all it's faults, which are many, it is still better than many cities.

This is true (except for the lake front notion - much of the south lake front was marred by a rail causeway for the Illinois Central for the latter half of the 19th century) but it ignores the context of the point - why did SF and NYC find themselves portrayed more in film and television than Chicago? The original poster posited that this had something to do with the absence of a Chicago identity, that there was no there there. I think that's wrong. I think there is a simpler reason why SF and NYC seem to have a bigger film and TV presence. Most simply, SF and NYC are prettier, have better weather, and have their own unique cultural cachet that people are interested in. Chicago has much less photogenic topography, worse weather, and it's city-scape is chock-a-block with industry. In addition to those factors, Chicago's cultural story is more challenging and less upper-crusty. It was and is much more industrial on a per capita basis than NY or SF. It was and is famous for violence and corruption. The experience of having been the world's industrial wunderkind in the late 19th and early 20th century marked Chicago and the marks remain even as many plants and companies have moved on. Its marks are physical (like the city's numerous freight rail lines, canals, rail yards, steel plants in nice neighborhoods, grain elevators, brownfields, and hundreds of 1-2 story industrial buildings) and cultural (the "City that Works" and the "City of the Broad Shoulders"). It also suffers from being in the Midwest, which generally has less cachet than California and the Northeast.

Those industrial corridors are awfully misleading. The "industrial corridor" along the North Branch of the Chicago River includes several Home Depots, a Target, a Costco, Kohl's, a movie theater, a Whole Foods, a Fedex shipping center, a healthcare clinic, and Groupon's global headquarters. The South Branch of the River is much more "industrial." You really only have to go as far as Chinatown to start seeing that.

FWIW, I don't find the cold particularly bothersome anymore. Proper layering makes pretty much all weather endurable, regardless of the wind. I suppose if it dips to -40 with windchill again, I might have problems, but that's a pretty rare occurrence.

The snow can be bad, but the city and surrounding suburbs generally do a good job of keeping the streets clear. Chicago snow is not anywhere near as bad as the snowbelt.

https://upload.wikimedia.org/wikipedia/commons/5/53/United_states_average_annual_snowfall.jpg

The falls are beautiful and the summers tend to be mild.

Speaking of pending wealth tax, what does the nation's $20.6 trillion national debt portend?

It's easier to leave a state than it is to leave the country.

"Speaking of pending wealth tax, what does the nation’s $20.6 trillion national debt portend?"

At some point, the rate that the Treasury can sale bonds for will fall, and the interest rate they bear will go up. At that point, the US government won't be able to afford the interest payments & a growing SS burden & huge discretionary expenditures.

So, we'll probably try some combination of cutting services, raising taxes and ramping up inflation (implicit tax). As a nation, we tend to overestimate how bad the debt is. We can probably "fix" things by a combination of those 3 that equates to $1 trillion per year. Last year, the US Treasury collected $3.7 trillion.

The fix will involve the equivalent of raising taxes by 27%. Perhaps we can get by with an extra 15% in taxes and cuts in spending and inflation to make up the difference.

It's going to be painful, but not catastrophic. Of course the longer we spend adding to the deficit the worse it will be.

A VAT is coming. We could / should have gotten one with this round of tax reform, and likely would have had any democrats cooperated.

I'd expect one when the corporate tax and income tax rates are made permanent, as part of the political price of doing so.

I tend to agree that the most obvious solution is a VAT. Or at the very least, some kind of broad-based, flat tax. I think we can also assume that FICA taxes will go up to cover the short falls in SS and Medicare.

Plausibly. Perhaps they become even more means-tested than the currently are.

We'll likely see eligibility ages move up, which is one of the few spending cuts we seem to be able to really make. I wouldn't be shocked to see eligibility ages go up specifically for higher earners. I'm broadly against means testing these "savings" programs, but that move strikes me as less unfair than most.

Oh, baloney. We are as likely to enact a VAT as to go Communist under Comrade Sanders.

When the Republicans try hard to attach one to their "historic tax cut," you got to figure the odds are pretty good. I realize the border-adjusted tax didn't get there this time, but it was a near thing. And that's with the tax-cutters in charge.

Assuming there's either a Democrat in charge or even a slightly less hostile opposition when these rates comes up for extension in a few years, some form of VAT seems near certain. Because the one thing you can be sure of is they aren't re-raising most rates. Look at the outrage surrounding the SALT deduction, where the government had the audacity to limit an irrational subsidy to the profligacy of the richest states. Poor, poor Marin County...

The money needs to come from somewhere. VATs are mostly invisible, efficient, and broad. And we've shown none of the fortitude we'd need to enact spending cuts.

What would happen if the Fed printed $10 trillion, bought up a bunch of bonds, and burned them?

National debt cut in half, but what kind of a one-time across the board spike in prices would we see? 10%? 20%?

I prefer this to running deficits and increasing the debt, because under kick the can, all the old people who created this mess escape this veil of tears before we get our pound of flesh. Are you listening Millennials?

If we're richer than we think we are, let's adjust back toward reality now.

BD: "What would happen if the Fed printed $10 trillion ...what kind of a one-time across the board spike in prices would we see? 10%? 20%?"

I think you really underestimate the effect of printing an additional $10 trillion. We get blase about big numbers. But 10 Trillion is a really fricking big number and printing that much currency would have drastic effects.

Reference:
"As of July 2013, currency in circulation—that is, U.S. coins and paper currency in the hands of the public—totaled about $1.2 trillion dollars."

https://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

"Death of a President" has chase scenes ranging all over the Loop, of interest to those who know the local geography.

After watching The Untouchables TV Series years ago, I'm pretty sure most of Chicago's problems were caused by Frank Nitti.

For all the talk of "lack of culture," the Chicago Symphony Orchestra remains one of the best in the US, and one of the best in the world. And the Chicago Art Institute is wonderful.

A lot of people have been talking about "property prices" in connection with George, but he supported a land or site tax. Offhand I am unaware of anybody in Chicago proposing anything along such lines. The only US city that has had a higher tax rate for land than for sites has been Pittsburgh, where most stufdies have said it did what it was supposed to do.

As for the survey, what is Singapore doing down next to the bottom just ahead of Istanbul? Did they survey some people who got caned for spitting on a street? Weird. I happen to like Chicago, but it is hard to take a survey that has a city losing population as the best major city in the world to live in.

"higher tax rate for land (or sites) than for structures..." Sorry about typo.

I think Tyler is suggesting the high taxes with projected future increases may have an effect similar to a Georgist land tax. The city has the second highest cranes in operation in the U.S. (behind Seattle) So, its not as if property isn't being developed, and it may be that high tax levels are encouraging sales of underutilized property and maybe even more development?

(That latter is a bit shaky, but there is evidence that land assessment is overvaluing land in poorer neighborhoods and undervaluing it in richer neighborhoods, which might suggest that the land value is effectively more important than the improvements)

Methodologically, this survey is flawed. It is asking residents to rate their own city. A better tweet for this post might be, "Chicago ranked #1 in city pride for second year in a row."

I love Chicago, but I can easily see why billionaires would prefer to live in New York or California. Chicago has plenty of culture, but much of the best of it is experimental, grungy, or populist -- and I doubt billionaires would be into that sort of thing. Can you seriously imagine a billionaire showing up to the Empty Bottle for a Jamila Woods concert or walking up the stairs to a church attic for a Theater Y show? So yeah, billionaires should probably stick with New York when it comes to culture. And sure, LA and SF have better weather, though there's something beautiful about an apocalyptic snowstorm that they'll never see.

Lot of ridiculous comments about Chicago (former Chicago homeowner who now commutes from the 'burbs). I am a software engineer and the 3X salary number mentioned above is pretty accurate, for a certain level of experience. As far as tech jobs go, there is a lot of high paid work in finance technology. Not necessarily start ups, but small firms creating solutions for options trading, for instance. The food is good and there are world class museums. I love the people of Chicago. Suck it NY and San Francisco! :) Ok, we do have a long way to go when it comes racial segregation. African Americans are not made to feel very welcome in many north side neighborhoods, and when I visit clients there is often a sea of pale faces in the cubicles.

" I am a software engineer and the 3X salary number mentioned above is pretty accurate, for a certain level of experience."

So, you're a 5 year engineer making $180K or a 20 year guy making $300K then.

I've had plenty of friends come and go from Chicago (I've lived here for 8 years or so). I have never heard one of them cite "bad government" or "fiscal outlook" as the reason, but then again I don't spend any time with billionaires or land barons.

The city is losing population, but you wouldn't intuit that by walking around any neighborhood where a tourist (or even a modestly well-off person) would go. Poorer people are migrating to the suburbs (or out of state?) and well-off and young people are moving into the city.

There are around 48 skyscrapers currently under construction and many smaller apartment and multi-use buildings going up. Some neighborhoods, like the West Loop, are changing so fast that they look different every 3 months.

It's not a tech hub but there are a few unicorns here and tech salaries are good and the rent is very affordable here. You can be a starving artist without having seven roommates and two jobs, and if you've got a decent job you can live on your own in a nice 1BR or 2BR apartment in a good neighborhood. My rent is about 1/3rd of what it would be in NY or SF and I live in one of the most desirable neighborhoods.

Surprised no one has mentioned the one thing Americans far and wide know about Chicago ... It's most known and beloved cultural artifact and religious mecca ... Wrigley Field.

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