CHICAGO | General Discussions

[OrdoSeclorum]

Originally Posted by LouisVanDerWright

So you tell me, what caused displacement in my story VIA? Is it the big bad developer who saved and repaired 18 units of housing that were previously vacant on their way to being gone forever? Or is it the condition of poverty and disinvestment that caused continual rot of the housing stock spreading from one building to the next while encouraging crime and drug use?

This is almost certainly the correct sentiment. What's typically called "gentrification" isn't all good. But investment is generally good and disinvestment is generally bad. And who's going to develop if not developers?

[Vlajos]

Originally Posted by OrdoSeclorum

This is almost certainly the correct sentiment. What's typically called "gentrification" isn't all good. But investment is generally good and disinvestment is generally bad. And who's going to develop if not developers?

DSA morons think government is the best investor, even though we have millenia of history proving otherwise. Government can help, but in the end, it is the profit motive that is best for investment. There is very little the City of Chicago can do to help Englewood. The schools there are a reflection of the population. The streets aren't any worse than where I live. Maybe more police would help.

[Khantilever]

Originally Posted by LouisVanDerWright

This is the biggest fact that detractors ignore: poverty is already a high displacement condition.

Exactly. The problem is that it's very counter-intuitive to think about the dynamics of how people move over time and over their life-cycle, and it's hard to properly think through the various counterfactual scenarios of what would happen if gentrification did not occur.

In general, people tend to move a lot (all neighborhoods have a "churn" rate of say around 5%, with better neighborhoods churning less and bad neighborhoods churning more). And, in general, people tend to move to better neighborhoods over time, since they become wealthier or more skilled with age and learn about opportunities over time.

So imagine a poor family of five living in a bad neighborhood:

If the neighborhood didn't change in quality, this family would likely end up leaving in around 10 years for normal life-cycle reasons (e.g., kids grow up and leave, parents' make enough money to leave, random job or family moves, etc.). Meaning, these kids had to spend 10 years breathing the fumes of a harmful environment.

If the neighborhood were to get worse during this time, we would likely see the family move sooner and to a better neighborhood than the deteriorating one, but one nonetheless worse than the one they would have otherwise ended up in--due to the lasting impact of spending time in a bad place. Worse, the kids are significantly worse off due to the time they spent in a terrible location.

If the neighborhood were to gentrify during this time, empirically we would expect them to stay longer but eventually move to a worse neighborhood than the gentrified one--but, nonetheless, a neighborhood better than the one they would have otherwise ended up in. Meaning, yes they eventually get "priced out" of the nice area, but they would have 1) left anyway, and 2) ended up somewhere even worse if they hadn't spent time in a gentrifying area. Plus, the kids are much better off in the long-term due to spending time in a safer and better-educated environment.

What this pattern means is that we see people leaving gentrifying areas and going to worse ones, which makes for good news stories about the harms of gentrification. But that misses the fact that they would have ended up somewhere even worse had gentrification not occurred.

--

None of this is meant to suggest we shouldn't care about the poor or alleviating poverty, or even trying to help improve their neighborhoods and make them affordable. But good intentions don't justify bad policy, and a lot of the anti-gentrification policies (namely, limiting development) likely cause more harm than good to the very people they're supposed to help. These policies preserve the "neighborhood" at the expense of the people inhabiting it.

[moorhosj]

Originally Posted by Vlajos

There is very little the City of Chicago can do to help Englewood. The schools there are a reflection of the population.

How many people do you know who live in Englewood? I'm trying to understand where you developed your knowledge of the community.

Are you arguing that private money doesn't often follow public money? Certainly the public money that built the 606 and the Riverwalk helped lay the groundwork for significant private investments. In my experience, being near a CTA/Metra stop increases property value.

Statements like yours are just as useless as the idiocy DSA spews. You both act like there are only two options: All Government or No Government. Meanwhile, what history has really shown us is that public money does some things better than private money (healthcare, military, R&D, transportation and education). You can accept that and still be a capitalist.

[the urban politician]

Originally Posted by moorhosj

How many people do you know who live in Englewood? I'm trying to understand where you developed your knowledge of the community.

Are you arguing that private money doesn't often follow public money? Certainly the public money that built the 606 and the Riverwalk helped lay the groundwork for significant private investments. In my experience, being near a CTA/Metra stop increases property value.

Statements like yours are just as useless as the idiocy DSA spews. You both act like there are only two options: All Government or No Government. Meanwhile, what history has really shown us is that public money does some things better than private money (healthcare, military, R&D, transportation and education). You can accept that and still be a capitalist.

Public money can spur private money in the right setting, yes.

But the huge swaths of vacant land surrounding Green Line stops on the south side (a HUGE public investment, btw) also shows that public investment is not necessarily enough.

There are other factors. And clearly the lack of those other factors likely explain why there hasn't been an explosion in private investment.

[OrdoSeclorum]

Originally Posted by Vlajos

DSA morons think government is the best investor, even though we have millenia of history proving otherwise. Government can help, but in the end, it is the profit motive that is best for investment. There is very little the City of Chicago can do to help Englewood. The schools there are a reflection of the population. The streets aren't any worse than where I live. Maybe more police would help.

There are dozens of ways where a government is the best or only plausible or practical investor: Research with greater than 10-year time horizons, infrastructure projects that span regions, public health initiatives, civil defense, public goods with a low rate of return. I don't know EXACTLY what the reason is, but there's IS a reason why there aren't any good for-profit universities turning out PhDs anywhere.

There are also areas where markets operate well, but can fail in ways that are agreed upon by economists of all stripes, and thus benefit from regulation or at least enforcement. Multipolar traps and the Tragedy of the Commons and whatnot.

Markets do have limits. But markets are usually rational and self organizing and self optimizing. And balancing the various competing considerations that could determine where people would prefer to have a house and what kind of house is the kind of thing markets are *very* useful for.

[Baronvonellis]

Originally Posted by OrdoSeclorum

There are dozens of ways where a government is the best or only plausible or practical investor: Research with greater than 10-year time horizons, infrastructure projects that span regions, public health initiatives, civil defense, public goods with a low rate of return. I don't know EXACTLY what the reason is, but there's IS a reason why there aren't any good for-profit universities turning out PhDs anywhere.

There are also areas where markets operate well, but can fail in ways that are agreed upon by economists of all stripes, and thus benefit from regulation or at least enforcement. Multipolar traps and the Tragedy of the Commons and whatnot.

Markets do have limits. But markets are usually rational and self organizing and self optimizing. And balancing the various competing considerations that could determine where people would prefer to have a house and what kind of house is the kind of thing markets are *very* useful for.

I think he was referring to government investment for developments in Englewood, not government investment in general.

The socialists would say government should be the developer for Englewood. The city should build grocery stores, restaurants, pharmacies, shops, schools, housing ect. All the while, the housing should be free, the food should be nearly free, while the jobs in the stores and shops should pay high wages with benefits, the schools should be free. The construction jobs should only hire local people ect. Many communist countries tried this in the 20th century, it doesn't work in reality.

[moorhosj]

Originally Posted by Baronvonellis

I think he was referring to government investment for developments in Englewood, not government investment in general.

The socialists would say government should be the developer for Englewood. The city should build grocery stores, restaurants, pharmacies, shops, schools, housing ect. All the while, the housing should be free, the food should be nearly free, while the jobs in the stores and shops should pay high wages with benefits, the schools should be free. The construction jobs should only hire local people ect. Many communist countries tried this in the 20th century, it doesn't work in reality.

I haven't heard this request, can you provide some links to people saying the city should build all these things?

Conversely, we do have an example of the city using public (TIF) funds to spur private investment in Englewood. It's called Englewood Square and has national brands like Whole Foods, Chipotle and Starbucks and a few local shops.

Does that not fit the profile?

[Vlajos]

Originally Posted by Baronvonellis

I think he was referring to government investment for developments in Englewood, not government investment in general.

The socialists would say government should be the developer for Englewood. The city should build grocery stores, restaurants, pharmacies, shops, schools, housing ect. All the while, the housing should be free, the food should be nearly free, while the jobs in the stores and shops should pay high wages with benefits, the schools should be free. The construction jobs should only hire local people ect. Many communist countries tried this in the 20th century, it doesn't work in reality.

Exactly

[moorhosj]

Originally Posted by Vlajos

Exactly

I provided an example of government investment in Englewood bringing private dollars along with it.

Can you elaborate on how Englewood Square doesn't fit the model of private investment following public investment?

[Vlajos]

Originally Posted by moorhosj

I provided an example of government investment in Englewood bringing private dollars along with it.

Can you elaborate on how Englewood Square doesn't fit the model of private investment following public investment?

Englewood Square is a good example of what the City can do and a good example of TIF working. That strip mall is definitely good for the neighborhood, but it hasn't materially made a difference. At the end of the day, Englewood is still in decline with high crime and population loss.

[Buckman821]

Originally Posted by Steely Dan

no, the very NE corner lot is being reserved for this bad boy: CHICAGO | Site I (LSE) | 950 FT | 85 FLOORS

but who knows if it'll squeak through this cycle or not.

After watching financial news today, I'd be willing to bet money that it will not.

[moorhosj]

Originally Posted by Vlajos

Englewood Square is a good example of what the City can do and a good example of TIF working. That strip mall is definitely good for the neighborhood, but it hasn't materially made a difference. At the end of the day, Englewood is still in decline with high crime and population loss.

A far cry from your original comment:

Government can help, but in the end, it is the profit motive that is best for investment. There is very little the City of Chicago can do to help Englewood.

How can you claim it hasn't made a material difference? How many local residents are employed by Englewood Square? How many are eating healthier because of the new options available? You don't know the answers to these questions and neither do I.

Will this one development save an entire neighborhood, no. Then again, nobody ever claimed it would. It has, however, proven that private investment will follow public investment even in places like Englewood. Ranting about socialism (or trying to conflate it to communism, like Baronvonellis) doesn't really help anyone answer any of those questions and certainly doesn't help the people living in Englewood today.

[Vlajos]

Originally Posted by moorhosj

A far cry from your original comment:



How can you claim it hasn't made a material difference? How many local residents are employed by Englewood Square? How many are eating healthier because of the new options available? You don't know the answers to these questions and neither do I.

Will this one development save an entire neighborhood, no. Then again, nobody ever claimed it would. It has, however, proven that private investment will follow public investment even in places like Englewood. Ranting about socialism (or trying to conflate it to communism, like Baronvonellis) doesn't really help anyone answer any of those questions and certainly doesn't help the people living in Englewood today.

Reread my comment you quoted. To a limited extent TIF can help and it should be utilized. I never said otherwise. I have always been in favor of TIF. Big picture, City government will never solve Englewood's problems.

You're right that I don't know how many local residents are employed at Englewood Square (all 42,000 SF of it), but knowing retail, there are probably not that many, and a good portion are part time.

[LouisVanDerWright]

Originally Posted by Buckman821

After watching financial news today, I'd be willing to bet money that it will not.

Bond inversion is not a dead ringer predictor for recession and this is likely a lot of chaos coming out of China as they are having a hell of a time controlling capital flight right now. People are dumping cash in the US right now and that, not economic data, is causing the bond rally.

[BonoboZill4]

Originally Posted by Buckman821

After watching financial news today, I'd be willing to bet money that it will not.

Mostly depends on how the market reacts to the upcoming Presidential election tbh. Everything in between is fireworks

[Baronvonellis]

Originally Posted by moorhosj

A far cry from your original comment:



How can you claim it hasn't made a material difference? How many local residents are employed by Englewood Square? How many are eating healthier because of the new options available? You don't know the answers to these questions and neither do I.

Will this one development save an entire neighborhood, no. Then again, nobody ever claimed it would. It has, however, proven that private investment will follow public investment even in places like Englewood. Ranting about socialism (or trying to conflate it to communism, like Baronvonellis) doesn't really help anyone answer any of those questions and certainly doesn't help the people living in Englewood today.

Well yes this was built with public money. How successful are the businesses today? I don't go there so I'm legitimately asking how it's doing. I mean it's nice they built a whole foods, but the food there is very expensive. I have a middle class job and would never shop at whole foods. I don't know why they think people in poverty could afford to shop at whole foods. It would have been better to open a Jewel there. What private investment has followed this public investment in Englewood?

To make any great change in Englewood, it would have to be Communism. The leaders in those areas are asking the city to build everything for them.

[SamInTheLoop]

Originally Posted by LouisVanDerWright

Bond inversion is not a dead ringer predictor for recession and this is likely a lot of chaos coming out of China as they are having a hell of a time controlling capital flight right now. People are dumping cash in the US right now and that, not economic data, is causing the bond rally.

"This time is different." Be wary.

While the 10 yr - 2 yr is not a dead ringer (nothing is), it's a quite good predictor - among the best there is, and I would say just about on par at the top of predictive indicators with the output gap (which is also ringing alarm bells).

It's much more likely that this time will not in fact be different. The main question is one of timing - Time to onset of recession after inversion varies meaningfully. We really have likelyanywhere from as little as 6 months to as much as 2 years until we are officially in recession (and you do not officially know until well into recession - or potentially even after it's ended (when the NBER does the official dating).

The long-end bond rally is likely being driven by multiple factors. China is a factor, however in my view it is not a dominant one. Slowing global - and yes, US - growth (and increasing downside risk) is a major driving force. Keep in mind that bond markets - like other markets - are ever forward-looking. And long yields, at first approximation, reflect investors' expectations for future short-term (or policy) rates. Investors anticipate lower short term rates into the future because they think that - in large part - US growth and inflation will be lower in the quarters ahead (and thus the Fed will - in part in reaction, and in part in anticipation - lower its key policy rate.

Guaranteed second half 2019 US growth is going to slow measurably....however, we will likely not be in recession sometime in 2020 - or even potentially as far out as the first half of 2021. It will come though. In the meantime, we still have some expansion left to savor (we could have relative growth spurts in the interim, mind you). In terms of development, I believe we're looking at a last mini-wave of starts for the cycle, now through next spring or summer....

[SamInTheLoop]

Originally Posted by BonoboZill4

Mostly depends on how the market reacts to the upcoming Presidential election tbh. Everything in between is fireworks

In my view it's the opposite. The presidential election - and any related market moves - will be the fireworks. It's more about the underly real economy's development over the coming quarters.

[LouisVanDerWright]

Except this time it is different because central banks are buying and hording trillions of dollars of bonds, Europe's e tire yield curve is negative (wtf?!?), and there's a massive trade war going on with China now exporting massive deflationary signals. Those are all things that very much bear on the bond market that have never happened before. That's not to say there won't be a recession soon, but that is to say that yield curve inversion is not happening because a recession is imminent or expected. It's happening because investor expectations have been warped by a variety of events that may or may not be accompanied by two negative quarters of US GDP.


Personally I think the most similar expansion to this one we've ever seen in the US is the 1990s which was similar in duration and was largely juiced for the last three or so years by a yield curve inversion similar to this one that didn't actually indicate recession, but indicated implosion of the Asian financial markets causing capital flight to US safety. The curve inverted in 97 only to in invert for two years before inverting again at the end of 1999 which was the harbinger of the tech bubble bursting.

As I said before, this could be an indication the economy is about to shit the bed or, more likely in my opinion, it is indicating massive overseas financial turmoil that will force fed easing recession or not.