That Sinking Feeling

CNBC just released its list of top 20 U.S. cities in the U.S. in which to start a business.  I search high and low, looked under the table and behind the cabinets.  I looked far and wide and checked the list numerous times and Chicago was not on it.  Of the 20 cities, 6 were in Texas.   Des Moines, Iowa made the list.  The Second City, City of the Big Shoulders, Hog Butcher for the World, home of the 3^rd busiest airport in America, two major world class universities, centrally located, with a magnificent lakefront was nowhere to be found.

Chicago and Illinois are dying and unless something dramatic happens soon, Chicago will become the next Detroit and the rest of Illinois will come tumbling down with it.  At every level….city, county, and state, the can kicked down the road is out of road.

A couple of years ago, I attended a general business roundtable of about 20 professionals in Chicago and the topic was the business climate in Chicago and Illinois.  When it came for my turn to speak, I simply asked the question, “If your child had job skill that would enable them to work anywhere they wanted, and you wanted them to have a happy and prosperous future, would you advise him or her to stay in Illinois?”  The question just elicited guffaws.  I followed up and asked, “Where would you advise them to go?”  The answer was unanimous---Texas.  It is not surprising that the CNBC list bears out what we have known for a long time.

Just the other night, another professional confided in me, “I really do not want to leave Chicago.  But I feel I am being forced out.”

At every turn and at every level, politicians are grabbing for dollars.  Toni Preckwinkle, President of the Cook County Board (after vowing not to) raised the state sales tax.  Cook county not only raised property tax rates but increased assessments.  Rahm Emmanuel is trying to get through a utility tax increase.  Mike Madigan is in a death match with Bruce Rauner in his attempt to raise taxes once again while Rauner is demanding systemic reforms.  Meanwhile, the state is buried under a mountain of unpaid bills and social services are being strangled.  The city, state and public school system bond rating are rated junk.  The state became a national joke when lottery winners were forced to sue to collect.  Let that sink in for a minute.

Why would you start a business here?

Or relocate here?                 

          

Or raise your children here?

GE took one look at Chicago as a potential home for its headquarters and quickly said, “Thank you, very much.  We’ll pass.”

Over the past few months, the news has gotten even more disturbing.  The Chicago Tribune published an article a few months ago that showed that working class, professional class, and entrepreneurial class African Americans are fleeing Illinois for the South.  The Illinois Policy Institute (illinoispolicy.org) recently posted statistics that showed that millennials are also fleeing the state.  If black and young people are fleeing, who will be left?  These are groups that are needed here to be the backbone of the city and state over the next decade. 

Yet, the politicians, Mike Madigan in particular, refuse to budge.  And the Democratic appointed judges resist ANY attempts to solve the problem.

The great economist Herbert Stein came up with something called Stein’s Law, which states: “If something cannot go on forever, it will stop.”

If there is any chance of halting the bleed out from Illinois, the elephant in the room needs to be confronted.   There is no solving the problem without dealing with the pension issue.  The pension issue is also driving the debt rating issue and it is getting bigger by the day. 

Most troubling was the issue raised by last week’s Crain’s Chicago Business. The financial crisis is so bad that it is pinching higher education.   Universities are struggling to attract and retain quality faculty and other universities are poaching our schools.    Faculty are leaving this great city because they are not sure they can get paid.

Education is about the future.  Pension payments are about the past.  Illinois is robbing from the future because they overcompensated workers in the past.   Young people know it and that is why, despite a tremendous geographic advantage, you would have to have a mental disorder to start a business in Chicago now. 

And when you add the violence on top of the dire fiscal situation, you can see why I believe the slide will accelerate as long as Mike Madigan remains in office.  And he is just hanging on until Dick Durbin and eventually, his daughter Lisa can get elected. 

I have spent a good portion of my professional career dealing with distressed entities.  In 100% of the cases, unless the entity makes fundamental, structural changes, it is doomed.  Mike Madigan and John Cullerton continue to pretend that we can fix these things with more tax increases.  It’s just not there.  People and businesses are voting with their feet.  Illinois and Chicago need to make dramatic changes now if there is any hope of reversing the slide and avoiding Detroit’s fate.  Once people leave and build a life elsewhere, they will not be coming back. 

This was a once great city and a great state.  It has been my home for my entire life and my family dates back to the Chicago Fire in this town.  But the fiscal catastrophe and the violence are making it harder and harder to stay and I can no longer tell young people that this is a great place to build a future.

Illinois is on a top 20 list, but it is is a list of deadbeat governmental units.

The Transcendentalists

While the nation has gone bonkers over the musical Hamilton, with tickets going for upwards of $1,000 on the secondary market, I saw a small production entitled Nature that featured a piece of Americana outdoors at the Morton Arboretum, a nature preserve just west of Chicago.  Nature was a celebration of the lives and works of Ralph Waldo Emerson and Henry David Thoreau.  Set in the outdoors, the play advertises itself as a “walking play” as patrons trudge off from station to station between acts with their folding chairs.  The walks are an integral part of the play and make the play an experience. 

Nature explored the ideas of both men and the Transcendental movement, a vital part of American intellectual and literary thought.  The play delved into the friendship and sometimes rivalry between the two men.  It roughly followed their lives chronologically, and even touched on the women transcendentalists—Mary Moody and Margaret Fuller.  The play was  at its best when it captured the tension between the themes of  nature and progress, an area in which Thoreau and Emerson disagreed and the play reached its climax with Thoreau’s famous importuning, “Simplify, simplify, simplify.”

Nature wonderfully used the outdoors as a perfect setting for the performance and even the sounds cooperated.  At one point, the dialogue referred to the “rustling of the leaves by the wind,” and as if on cue, the wind blew and rustled the tree leaves.  The sound and the music also carried very differently in an outdoor venue and added to the authenticity and feel of the play.  All of the music was period pieces and the costuming was magnificent—every element of the play was calibrated to capture the period.  Many of the actors stayed on afterwards for a Q&A session and we learned that the actor that played Emerson is actually the great great  great  great grandson of Ralph Waldo Emerson.

It also occurred to me that two of the greatest essayists and thinkers that had much to say about man and his relationship to society—George Orwell and Henry David Thoreau—both contracted tuberculosis and died in their mid 40’s, thus depriving mankind of decades of potential thought and writings.

The play was riveting and engrossing.   Thoreau and Emerson will always have a special place in my life.  During the summer before my senior year in college, I took an American Literature course from one of the country’s finest professors at The University of Chicago- Robert Streeter.   During July of that year, I went to Maine and wrote my paper on Thoreau and Emerson while sitting on a rock overlooking a calm pond in Maine.  It was one of life’s magic moments.  Nature brought these two enmeshed lives together for me again in a unique and inventive way.   And it reminded me that an actual visit to Walden Pond is definitely on my bucket list.

And as I write these words extolling the virtues of America’s greatest free thinkers, Yale is busy forming a committee to rid itself of “offensive” names.  Let that sink in.