When the president’s former Chief of Staff, Rahm Emanuel (D, Wilmette) became Mayor of Chicago, many expected him to use his many Washington contacts to bring some big business his way, and he delivered.
But Emanuel did indeed deliver, if on a slightly lesser scale: in his first year, he secured two big meetings for Chicago, the first, a G-20 conference, and the second, a NATO summit.
The G-20 meeting was quietly pulled, under cover of darkness, to be held at Camp David instead (good call!). But no matter, the NATO summit would still go on. Emanuel held in his fury and put on a positive face: we still have the NATO summit to put my city on the map. 52 world leaders and their motorcades will see Chicago and its highway system, up close and personal. That’s what counts.
They cheer when they win one; just think of all the hotel rooms we’ll fill, the visitors shopping at our malls, the business for taxi drivers and restaurants and theatres. What a thrill; this is nothing but good!
And they cry when they lose one. Just think of the vacant hotel rooms, the empty malls, the taxi drivers napping without fares, the restaurants with empty tables, the theatres with empty seats. How terrible that we’ve lost it.
This is all they see. Once a big deal has been announced, its cancellation reveals an imagined map of bare spots, of all these pockets of growth expected and now stillborn. But is that really a true picture of the situation at all? If we had never gotten our hopes up about this event, wouldn’t the normal day-to-day activity that these businesses enjoy have continued uninterrupted?
Economics in One Lesson
In his classic treatise exposing the errors of Keynesian (and now Krugmanite) teaching, Henry Hazlitt stated:
“…there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.” - from Economics in One Lesson, by Henry Hazlitt
Truer words were never spoken. Consider how politicians speak of their policies, their accomplishments, their events… and then consider how much they leave out.
When Mayor Emanuel talked up the benefits of the NATO summit, he dismissed the shortcomings as a minor inconvenience… and if they really were minor, they would be worth dismissing. But they aren’t minor.
And just as importantly, they dismiss the economic negatives that follow. Because of the NATO summit in Chicago, one weekend in May, there will be people who don’t go into town for a week or two, just to be safe. Suburbanites who normally come into the city to visit the Field Museum, the Shedd Aquarium, the Adler Planetarium… suburbanites and more distant neighbors, like those in southeast Wisconsin, northwest Indiana, and southwest Michigan, who like to spend a weekend in the big city to see a play or two, dine in Chicago’s great restaurants, shop in Chicago’s Loop or on the Magnificent Mile. May is when Chicago has the best weather for such a visit, but news of the NATO disruptions has discouraged a great deal of such planning, and rightly so.
The security plans for Chicago’s ill-advised hosting of a NATO summit include closing both I-55 and Lake Shore Drive near McCormick Place… closing train stations and stops on the South Shore Line and a couple of CTA lines… and rolling closures of the Kennedy Expressway as fifty to a hundred motorcades travel between O’Hare (one of the world’s busiest airports, remember?) and the summit site at McCormick Place, and back. Metra travelers have been warned of the possibility of security screening at some points, despite the fact that not one such station has the room or equipment to handle such screening properly.
All this, not to mention the usual local parking bans and minor street closures that accompany Chicago’s usual big events.
The mayor doesn’t mind; it’s nothing for him. He’ll probably be staying onsite with the international notables for the duration. It won’t affect him at all.
But it affects the rest of us. Yes, there is new commerce attached to such an event. New hotel rooms booked, new catering business that would not have taken place otherwise. Work for the drapers’ union and other workers at McCormick Place.
But as Henry Hazlitt warned us, a wise student of economics also looks at the business that is displaced. Restaurants, hotels, shopping and entertainment that is not attached to this summit will all suffer, some quite severely. Those whose only access routes are closed down will lose virtually all revenue for the day, for the weekend, in some cases, for the week. In as tender an economy as this current non-recession, non-recovery period, there are many businesses that cannot handle such a loss. They’re teetering on the brink as it is. Robbing these entrepreneurs and franchisees of a single weekend, particularly one that ought otherwise to have been a strong one, could be the final nail in the coffin.
Just as his old boss is responsible for hundreds of thousands of business closures and bankruptcies throughout his miserable tenure in the Oval Office, the former lieutenant may well be on the path to unwittingly joining him in such responsibility here at home, as some of the shops and restaurants of Chicago, already barely getting by, suffer one more inexcusably weak weekend that should have been strong, and eventually close their doors.
The mayor claims this is good for Chicago, because the international news coverage will boost longterm tourism. Maybe, maybe… but maybe those stories will include tales of gridlock, of severe congestion, of how Chicago travel is a nightmare to be avoided like the plague. See what that reality does for tourism.
A Gold Medal Building Plan
Who remembers just a couple of years ago, when the previous mayor was pitching Chicago as a site for the 2016 Summer Olympics?
Mayor Daley was sure that it would be well worthwhile. It would put his city on the map again, worldwide, bringing tourism dollars in to make up for the local commerce that his family’s policies spent generations driving out.
Opponents of the plan reminded the public of the cost of such a building plan… of how cities that build Olympic villages nearly always lose billions on the endeavor, because the Olympic-scaled building plans cannot be translated into non-Olympic uses afterward. The world is littered with big cities that overbuilt to host an Olympics and wound up stuck with costly white elephants, dooming their citizens to decades of paying off bond issues and hitting their heads against the wall, asking themselves why on earth they let themselves be talked into it.
Those of us who opposed the Olympics reminded the public of Chicago traffic patterns. Even on a good day, a normal day, with clear skies and warm weather, the city of Chicago is a transportation disaster. The Kennedy and Eisenhower are parking lots for much of a normal day; not until late at night can a driver even approach the speed limit on most of Chicago’s highways.
It’s a big city; that much is to be expected. But add a single big event – a Cubs game or Sox game, a downtown festival like the Taste – and this very busy, very slow transportation system slows to a halt for hours or days.
For over a week, the weekend NATO summit will double or treble many of Chicago’s already sluggish transportation times. Imagine what an entire season of Olympics would do to it.
All our public discussion is about the entertainment and hospitality industries – the worlds of hotels, restaurants, shopping and theater. But Chicago’s economy is much more than that. It is accountants, lawyers, salesmen, clerks, managers, engineers, inventors, assemblers, manufacturers, distributors, and a host of other professionals, who travel to and from their offices, normally unaffected by the waxing and waning of the world of big events. For a game or festival, they adjust their schedules, adding half an hour to their commutes, allowing for more time to find parking.
But short events like the NATO summit, not to mention bigger ones like an Olympics, do far more damage than this to the local economy.
Doubling or trebling a transportation time means robbing businesses of the productivity of their workforces, robbing hourly employees of pay, robbing salesmen of the ability to make as many sales calls, robbing everyone on the highway of more and more gas money, as their idling cars get 0mpg for days or weeks.
These are the real effects of the big events that big city mayors like. They can make speeches, show off their public buildings and concert venues, personally immune to the effect of these disruptions upon the residential and corporate constituencies to whom they would owe their first loyalty, if they ever used their heads.
This is not to say that a city should never do anything big. Sometimes, a big event is a worthy catalyst for improvement. Two prior expositions, a century ago, led to the construction of some of Chicago’s grand museums. But that was a different time, and both the economics and the transportation network were very different in those days. There was more room for experiment, back before a single road closure cost thousands of businesses, and tens of thousands of people, their productivity for a day.
Cities need first to consider the negative impacts of their big ideas, to see whether changes can be made in their transportation system or their siting of the events so that the disruptions to a fragile economy can be eliminated first, or at least greatly minimized.
And all of us must learn Henry Hazlitt’s one key lesson: to look not only at the obvious, measurable results of government policy, but also at the unseen consequences, the missed opportunities, the might-have-beens that can now never occur because government has barred their way.
Too often, government stimulus programs and other big civic affairs are just new barriers to prosperity. They turn out to be tickets for inconvenience, bankruptcy, job loss, stagnation… flight out of city, out of county, out of state.
Whether contemplating the NATO summit as a microcosm or the Olympics as a macrocosm, you might say, the road to Greece is paved with good intentions.
Copyright 2012 John F. Di Leo
John F. Di Leo is a Chicago-based Customs broker and international trade compliance lecturer. While he reads the biographies of world leaders, and sometimes writes about them and their many doings, he prefers them at a distance, and wishes they didn’t descend on cities like Chicago at all, particularly when they travel in packs. Perhaps someone should tell them about Skype…
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