The Wall Street Journal published an interesting story a couple of months ago about a company serving as a pawnshop for the rich. Specifically, they allow individuals with high – end assets such as luxury cars and expensive jewelry to borrow up to millions of dollars against these assets without credit checks, like a pawnshop. Of course, this type of borrowing is more expensive than borrowing from the bank with interest rates climbing near 25 percent in some cases.
The interesting thing about this business is that it took so long to establish something like it for the wealthy. As banks have become more sophisticated about credit decision making, the days when people with expensive assets can easily acquire a line of credit at a bank are probably long gone. This difficulty in obtaining large amounts of credit is probably doubly true for the growing number of self-employed consultants and technology entrepreneurs who face considerably uncertainty over when the next check is coming: three weeks or three months from now.
Of course, there is always those people for whom this new way for people to get in debt is a bad thing. But I say this is a considerable improvement over the past options — loan sharks and such — where the high interest was typically coupled with the specter of pain or more upon default. People of all backgrounds and stripes will always need short term loans. Where there is demand, there will undoubtably be someone to supply it.
After some time, I have decided to return to regular blogging. I’m in the throes of the two-sided coin that is summertime for an untenured academic: I have enormous amounts of unstructured time since I am not teaching or engaged in committee work; Unfortunately, almost all of it is spent working on research.
Hence, the blog — a useful respite from coding and writing if I am stuck in front of the computer anyway.
Something odd is going on at the Chicago Housing Authority (CHA). Apparently CHA, in a rare situation for a public agency, is running a surplus– after bolstering its pension funds.
Unfortunately, this development has been met with disappointment and even anger in some circles. This anger stems from a belief that the current administration does not care that Chicago has a serious public housing shortage and the CHA neither seems to be bringing new units on the market nor the filling existing units in some areas.
Ultimately, whether this a “bad” thing or not is a, is a matter of perspective. It is well-known from public goods theory in economics that such goods, in this case high – quality public housing, will likely be underprovisioned in part because it requires a fair bit of redistribution (via taxes) to match people’s preferences. Plus, the below market prices will generally induce a lot of people into the market leading to about who is entitled to it since you have taken away price as the chief rationing mechanism.
Certainly, the current situation is a bad thing if you have difficulty obtaining market-level housing as more units available means you have a higher probability of obtaining one and if there are negative externalities (more crime, disease, and so on) arise from housing shortages. Alternatively, using some of the money to bolster the pension fund and pay down debt probably contributes to the agency’s long-term solvency. Given that most public agencies, especially in Chicago, have little to no reserves and are running red and that expected future funding for public projects is probably declining, it makes sense. Plus, with respect to public housing in very desirable areas, a question arises with respect to allocative efficiency. Though the welfare of citizens who would live in places like the Lathrop Homes or places like them might be improved by the the prosperous neighborhoods around it, it comes not only at the direct cost of management and maintenance but at the opportunity cost of taxes on residential and commercial real estate lost because the projects are there. These funds could potentially contribute to improving quality of life and public goods in other parts of the city.
So many great Saturday mornings were spent listening to this man spar verbally with his brother. And I didn’t own a car until I turned 27.
Originally posted on Longreads Blog:
Tom Magliozzi, the popular co-host of the public radio show Car Talk, passed away today at the age of 77. In 1999, Tom and his brother Ray gave a commencement address at MIT. Tom talked to the graduating class of engineers about a Latin mantra, non impediti ratione cogitatonis, which means “unencumbered by the thought process.”
TOM: I was once trapped by the scientific, logic, left brain life. I graduated from here and I went to work as an engineer. And I will tell you about my defining moment. I was driving — I lived in Cambridge at the time — I was driving from Cambridge to my job in Foxboro, Massachusetts, and I was driving in a little MG. It weighed about 50 pounds and on Route 128 I was cut off by a semi and I almost, as they say, bought the farm. And as I…
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Ray Rice had his contract with the Baltimore Ravens terminated and was suspended indefinitely as a result of the release of video details the domestic violence incident that left his fiancee – now wife – unconscious. The video shows him striking her in the face and knocking her into the wall of the elevator — it is amazing she was not hurt more. After knocking her unconscious, in possibly the most disturbing part of the video, Rice dragged her out the elevator.
It is a harsh, though deserved punishment. A question arises, of course, as to why the NFL had to go through this twice. It doesn’t take much imagination to surmise what must have happened in the elevator as reports of Mrs. Rice being knocked unconscious were well known. If they thought the act merited serious punishment, they should have done it initially, not after this video surfaced; even if the concern was the public relations, they should have meted out strong punishment at first with the option of walking it back later when things were a little less hot, so to speak.
Instead, they have made a mess of it. Their actions in response to this video make them seem less concerned for Janay Rice than for the NFL. Many of its formal and informal spokespeople are outraged — now. Rather than making a point, they reinforced the cynical opinion of them that they only care about profits and image. Probably because it’s true.
The Chicago Tribune featured a story this morning about a Chicago police commander relieved of his duties pending indictments for aggravated battery and official misconduct. The commander, Glenn Evans, is accused of placing his gun in a suspect’s mouth during an interrogation.
While certainly unwelcome news for the CPD and its constituents, the case highlights why focusing solely on the incidence of interracial police brutality and excessive force cases misses the point. Excessive force and brutality by police is not purely a “white officer” problem; changing the composition of police forces in the absence of changing the underlying policing culture is unlikely to reduce the incidence of such claims. Police brutality is a law enforcement problem. While it is true that it often occurs in racialized settings, this observation is partly driven by the composition of the police force and the spatial concentration of enforcement. Rough treatment is not reserved solely for blacks and Hispanics. Recall, for example, the “don’t tase me bro” and University of California protest incidents in recent years. These incidents, ostensibly not driven by racial animus, reflect something that appears endemic among police forces: a belief that people that do not adhere perfectly to their commands should be punished severely.
In my experience, as a black male, I have been involved in as many negative situations with black policemen as I have had with white. In fact, the worst situation I have ever been in wherein a police officer forced my cousin and me to place our hands on the hot hood of his car while stood behind us with gun drawn instructing us that “if you move your hands off the f*cking car, I’ll blow your head off” involved a black police officer. What prompted this little brouhaha? He felt we didn’t give him “sufficient respect” when he rode by our perch on my cousin’s stoop; we were apparently supposed to signal our subordination by looking away or down when he passed. It ended ok, of course; neither my cousin nor I had warrants or criminal records so we were able to continue our visit — within the house.
If not only race, what then? First, policing is a very difficult. My uncle, who happens to be a retired policemen, has also suggested that (A) the set of people for whom policing is attractive has changed in recent years and (B) their is a lot more latent fear and stress that becomes aggression in frustrating situations. The latter wouldn’t be surprising to me. As the rewards and barriers to talent have changed, who actually signs for this potentially hard, dangerous, and relatively low paying job should change. We could fix this by raising pay and imposing stronger screening mechanisms. The latter, however, seems to be a bit more intractable as it is unclear what is driving these fears. On-the-job deaths and injuries among policemen have apparently dropped over the years. Violent crime, in general, has fallen as well.
What is clear, however, is that we need to figure it out before more tragedies like those seen in Ferguson, NYC, and Oakland occur.