Financially troubled Chicago has to pay out more to reimburse drivers for pothole damage

Chicago doesn’t have much money these days but it will have even less after reimbursing drivers for potholes:

Mayor Rahm Emanuel has ordered the Chicago Department of Transportation to assign all 30 of its pothole crews to main streets on Mondays and Fridays to address scores of potholes in blitzkrieg fashion using a grid system.

The Chicago Sun-Times reported last month that the cash-strapped city has been hit with a blizzard of damage to vehicle claims thanks to a relentless barrage of snow, cold and wild temperature swings that has turned city streets into the surface of the moon.

Since the New Year’s Eve storm that buried Chicago in 23 inches of snow before a record-setting cold snap, CDOT crews have filled roughly 240,000 potholes…

At last week’s City Council meeting alone, there were 543 pothole claims introduced, nearly double the 280 claims introduced last month. During the March City Council meeting last year, there were just 61 pothole claims introduced.

Between paying more to patch potholes plus pay out claims, the cold and snowing weather is costing Chicago more money. It’s too bad this story doesn’t have any monetary figures about the pothole claims. Plus, how much is budgeted each year to pay out these claims and what happens if there is an outlier year (like this year)? Mayor Emanuel is quoted in this story saying this is why the city is trying to pave more streets during warmer months – indeed, constructing streets in certain ways in the first place and maintaining them adequately will cut down on pothole problems down the road. In this case, paying more upfront for the infrastructure of good roads in Chicago could save the city money later.

File Chicago pothole claims here.

Chicago population loss among challenges for new Chicago mayor

As Chicago votes today, the Chicago Tribune pointed out the issues the new mayor faces, including a declining population and financial issues:

The U.S. Census Bureau gave Chicago a reality check last week. New data showed the city lost 200,000 residents in the last decade, a 6.9 percent decline. Chicago’s lost more than the entire population of Illinois’ second largest city, Aurora.

A Mexican immigration wave that fueled growth in the 1990s has subsided. Researchers expected those immigrants to bring more growth as they had children. Instead, immigrants are moving from Chicago to the suburbs or bypassing the city entirely. That 1990s influx looks like the exception to a long and steady rule. Chicago has lost population in five of the last six decades. It has fewer people now than it did in 1920.

The city government faces a yawning debt and unfunded pension obligations. It is spending beyond its means. A city that has fewer citizens has fewer potential wage-earners available to support it.

This is a big set of issues to face. But the Tribune seems to be fairly optimistic:

The good news: Chicago is far better positioned for the future than it was during its wrenching Rust Belt days of 1980. The city’s economy is more diverse, and its urban environment richer in the amenities that attract a talented work force, from parks to culture. As corporate headquarters scaled down across the country, Chicago became a global center for back-office operations and business services such as corporate law firms. Its central location and status as a transportation hub give it a crucial advantage going forward. That’s why we need to get the expansion of O’Hare International Airport back on track, pronto.

The city will need some new ideas as well as dealing with existing projects. This airport expansion idea has been in the works for years now and is a move that could bring in new business and opportunities.

And I wonder with an election like this, where there is no incumbent and we seem to have a cleaner break with the past, whether the new mayor really has to introduce massive projects or ideas at the start. Perhaps the first goal could be to improve how Chicagoans and those in the region feel about and view their city. For example, take a look at the crime rate: it has dropped and yet there is perception problem. A dose of optimism, trumpeting what is good about the city rather than what is going wrong, could be a good starting point. And then, something has to be done with the larger issues that the Tribune enumerates.

What to do with a sociology PhD: become the father of the hedge fund

A common question arises regarding sociology degrees: what can you do with that? The man behind the hedge fund, Alfred Winslow Jones, held a sociology PhD from Columbia University before going on to becoming a financial writer and inventor:

In fact, by the time the article hit the newsstands, Jones was already well in the process of setting up his own investment firm, A. W. Jones & Co. While reporting on the latest investment strategies, Jones had begun to contemplate a new approach, one that would include selling short some stocks in a portfolio as a way to protect against the market’s uncertainties.

Such a portfolio, Jones would explain to his investors, was a “hedged” fund..

In 1941, Jones received a sociology doctorate from Columbia University. For his research, he interviewed 1,705 residents of Akron, Ohio about their attitudes toward corporations and property. He found that, despite local labor unrest and political tensions, Akron was not divided rigidly along class lines. His dissertation was published as a book titled Life, Liberty, and Property, which became a much-used text in sociology circles…

Landau highlighted Jones as the man who had started this trend, noting however that the sociology Ph.D. “actually seems to be more interested in things other than finance,” including finding self-improvement alternatives to welfare and organizing a Reverse Peace Corps to bring foreigners to work with poor Americans. Jones was quoted complaining that “too many men don’t want to do something after they make money.” Many of Jones’s early investors, Landau wrote, were scholars, social workers and others whom Jones had met over the years and was trying to free from financial concerns.

Sounds like an interesting life. It would be fascinating to hear Jones talk about how his PhD in sociology helped push him toward his financial inventions and actions. Was it something about the way sociology views the world that helped him develop the idea of the “hedged fund”? Perhaps sociology gave him some unique insights into the operation of economic markets. Additionally, it sounds like Jones had some sociological thoughts about what one should do with an accumulated fortune: it should be put toward new social ideas and goals.

What matters in a hybrid: financial value or something else?

A recent study compared hybrid models to their traditional counterpart models and found that the hybrids are not a very good value:

Everyone knows hybrids get better fuel economy and emit less CO2 than their conventional counterparts, but they also cost more because of the added technology. And that makes them a lousy value because you won’t recoup that added cost in fuel savings.

So say the car gurus at CarGurus.com, who repeat a common argument against hybrids but back it up with some stats. They examined the purchase price and operating costs of 45 popular hybrid models and discovered the average gas-electric automobiles costs 25 percent more to own and operate than its gasoline-only sibling.

This may help explain why hybrids still are only a small part of the market – just under 3% according to this study.

But for those who currently drive hybrids, is financial value the primary reason? While this seems to be key to the larger market, I would guess there are a lot of current hybrid drivers who drive them for other reasons like being (or perhaps appearing) green. If more people truly wanted to be green or were worried about pollution from cars as opposed to saving money, then they would probably purchase more hybrids.

The inequalities in higher education

Christopher Shea takes a look at two books that call for reforms to the university and college system, reforms which would include possible reforms for the tenure system. After considering what these books have to say, Shea suggests the real issue is how universities and colleges are being split into two groups: those with considerable resources and those with few resources:

Here we have the frightening subtext of all the recent hand-wringing about higher education: the widening inequality among institutions of various types and the prospects of the students who attend them. While the financial crisis has demoted Ivy League institutions from super-rich to merely rich, public universities are being gutted. It is not news that America is a land of haves and have-nots. It is news that colleges are themselves dividing into haves and have-nots; they are becoming engines of inequality. And that — not whether some professors can afford to wear Marc Jacobs — is the real scandal.

This is an interesting observation though it isn’t just public schools that are struggling with finances: many schools with fewer resources have had to make changes. What would Shea (or others) suggest could be done about closing this gap between schools?