Greg Hinz is our guest this week. The writer, columnist and blogger for Crain’s said he understands the demands that CTU is striking for on April 1, but he’s not sure the CTU will convince anybody, or will itself accept the tragic fiscal circumstances the schools face.
“I’m a believer in shared sacrifice,” he tells us, “But I’m not sure that message has quite sunk in to the membership level. Ergo, you have this big day of action which is designed to kind of have everybody march around and feel good and we’re tough and rally the troops and send a message, but I’m not sure the message is going to fall on any ears that are listening. I mean everybody from Chicago who is in the Springfield delegation is already for more money for Chicago public schools. Forrest Claypool, I think, has made a reasonable argument that hey, Chicago pays for statewide pensions but the State doesn’t pay for our pensions, that’s not right. But you know, downstate and suburban lawmakers, particularly other democrats, people are talking about how democrats have the super majority in Springfield and can do what they want, much of that super majority is out of the City of Chicago. A lot of those districts are in trouble too.”
Hinz says there’s no way out of this mess without finding more revenue.
“Ultimately,” he says, “The solution to this is going to have to be more tax money from somewhere, and it’s not all going to come from rich people and it’s not all going to come from TIF districts and trading fees on the commodity exchanges. It’s going to probably come from an income tax and sales tax or both on all of us because that’s where most of the money is, and that’s a tough sell right now.”
We also talk about the selection of, and the selection process for, Chicago’s new police Supe, and about the strange way in which Governor Rauner prefers to make Illinois’ unemployment numbers look worse than they actually are.
You can read the full transcript as a Word doc HERE: CN transcript March 31 2016
– or read the document in full below.
Ken: Well hi there, and welcome to Chicago Newsroom here on CAN TV. I’m Ken Davis with another week. Today we have to ask the question, it’s not as though this question hasn’t been asked a million times in other ways before, but let’s just suppose that one of those Islamic terrorists that Mr. Trump likes to frighten us about all the time came to Chicago and went downtown and shot 727 Chicagoans and left 135 of them on the street dead. Do you think we would make some national news on that? Do you think we would be the global focus of the world’s news media for a week or two?
Well of course as we know this is the reality that we live with in Chicago, is that it’s a little more slow motion in our case, but we do in fact do have as of today 727 people who have been shot, 135 people who are dead, and it’s way up. It’s perhaps according to the Tribune today the highest number this far into the year in 20 years. And our Mayor has got a lot of work to do to try to fix this with his police department and he thinks maybe he has found a fix and we have to help us today figure all of this out – Greg Hinz from Crain’s Chicago Business, Columnist, blogger, man about town, guy who knows pretty much everything.
Greg H: Hmm, I wish.
Ken: If only it were true, right. Glad to have you Greg. Thanks for doing the show today. So let’s start with this, brilliant move on the Mayor’s part to appoint Eddie Johnson to the interim position?
Greg H: Well, it depends how you measure. If you look at the public reaction yeah, it’s a brilliant move. I mean the police Union likes it because he’s an insider, the black aldermen and the Latino aldermen like it because they know the guy, they’ve worked with him. Now you know that might make you suspect that well maybe he’s too inside. On the other hand, Father Pfleger who nobody would [turn] to be an insider, says he’s worked with this guy for years and he’s wonderful. Cease Fire, another outside agitating group that is out in the streets say they’ve worked with this guy and he’s worked well. So the initial signs are good. He clearly is a low profile guy who kind of knows how to get along. I mean really frankly nobody to speak of had ever heard of this guy before the Mayor kind of plucked him out of obscurity.
Ken: Well I’m glad to hear you say that because I hardly consider myself to be an authority on the Chicago Police Department, but I mean I’ve been around for a while and I’ve never heard the name, so it was a complete surprise to me and I’m sure I’m not the only one.
Greg H: But the reality is forget all this initial applause, this is a job where we’re going to see how he performs. The proof has got to be in the results.
Ken: If you don’t mind my quoting you back to yourself I think you put this very succinctly when you said, I can make an argument both ways.” Certainly outsiders Weese and Garry McCarthy didn’t change the culture of the department enough to prevent the police from just standing and watching while one of their members murdered Laquan McDonald. But then they inherited that culture from insiders who didn’t change it either. So it’s kind of like it’s almost too easy to say well an outsider is better or an insider is better. It really is who is this person, right?
Greg H: It is, and even beyond that you talk about a tight or high wire act, he clearly has to deal with this very widely-held perception in minority communities that police are disrespectful, that they are abusive, that they are quick to pull the trigger, and as a result of that they don’t cooperate with police. They consider police to be the enemy. On the other hand, you are asking men and women to go out and literally put their life on the line. If they think they are going to be tied down to bureaucratic whatever and cheap-shotted they’re not going to do their job. There’s some reason to think that police have backed off doing their job the first couple of months of this year. At the same time the shooting rate has gone back up, so you’ve got to inspire morale both inside and outside, and boy is that tough.
Ken: Well, that’s not something that should be passed over lightly either because Mark Konkol today in DNA is claiming that the number of stops is down 90%.
Greg H: That would strike me as a little high, but there’s no question that there’s been some new paperwork requirements that have slowed it down. But you know, if I was on the force and I saw what happened in the Laquan McDonald stuff. Sure, the officer involved screwed it up and sure that his buddies screwed it up, you have to think that in a close call, and a lot of these are close calls that people are going to have your back and your bosses are going to have your back and you’re not going to be dragged out in the mud needlessly. So yeah, they have to do the job the right way, but when they do they have to be supported and he’s got to inculcate both of those.
Ken: Is there any connection to Escalante? This dramatically drop in police activity seems to parallel while Escalante was in the chair.
Greg H: I wouldn’t blame Escalante for this. Escalante was clearly a short-term placeholder. He was just there to keep the place from blowing up until the real man was found, you know. I have nothing negative to say about the man. As far as I know he did a good job, but you know, he only had so much freedom to move.
Ken: Well, that’s true, and of course the same thing is probably going to be said about Eddie Johnson too. I just pulled some of the Second City Cop here today and that’s narrative. If I can condense it down, it’s sort of like yeah he’s a nice guy. Yeah, we like him, but I mean come on, he’s not the superintendent, it’s Rahm. Did you see him standing up there at the podium with Rahm standing behind him looking at where in the back he’s going to shove the knife? That kind of that narrative.
Greg H: Well, I’ll only take both men at their word. The Mayor said that he has the freedom to do the job the way he wants to do it and he says, “I’m going to do the job the way I want to do it.” We’ll see.
Ken: Well I mean you would have to say that if Rahm Emanuel is going to survive this he’s going to survive it by giving this guy a little bit of a longer leash than he’s given other people in his circle in the past. Because this guy is going to have to have some freedom of movement for the first few months to sort of figure out his footing, right.
Greg H: You know he does, but even if you give him freedom of movement there’s some things we’ve done here I’m sure that made it worse, but there are also some very intractable historic problems that go way back that we haven’t dealt with.
00:07:12 Gary McCarthy kept talking about guns and frankly he’s right. If you go back, I did, I didn’t actually the University of Chicago Crime Lab folks did, they went back and Chicago has had for the most part with a couple of small exceptions, has had a markedly higher murder rate than Los Angeles and New York all the way back to the Al Capone days. And one of the theories for that is that unlike New York and California which both have strong gun laws, anti-gun laws and the states around them have strong anti-gun laws, you know if you’re a would-be gang-banger here and you needed a gun you just go over to Indiana or send your buddy over to Indiana, or you go down to Missouri, and maybe that’s it, but there’s some stuff here that way predates anything, any [00:08:03].
Ken: Just as sort of kind of an amateur Chicago historian the history of Chicago is completely different to the history of New York and the history of LA, and just where Chicago is located. It’s this kind of shipping town. It’s this railroad town. It’s a place where lots of different people come together and congregate in ways that’s a little different than other cities. Every city is different from every other and so that does have something to do with it. But still, you just kind of have to ask the question why hasn’t anybody ever been able to get a handle on this before? Why is it so intractable?
Greg H: In no particular order it’s a combination I suspect of guns, latent racism in the City, extreme segregation, lack of economic opportunity, and a permissive attitude all mixed together in an…match.
Ken: And also just kind of a history of violent crime and also we have for some of those other reasons we have a history of street gangs that is very different from the history of street gangs in LA, New York, Houston, and places like that.
Greg H: Yeah, and I have to say I agree with Father Pfleger that the solution to a lot of this has to start in the minority community. Yes, a police has to be respectful. Yes, we have to offer more economic opportunity, but when your kids go out and start shooting at the kids next door and they kill the baby, the family and the people in that neighborhood have to stop that. The police can only do so much.
Ken: Is jobs one of the answers? Is there something the government can do if the government had the money to do it? Would it be a good idea to start employing people in these distressed communities and putting them to work, even if it’s artificially to clean the streets, I don’t know, the millions of jobs that we need to have done, would that help?
Greg H: I’m not a huge believer in make work jobs, maybe during the summers, but in today’s economy you’ve got to have an education, which means you’ve got to stay in school. Not only high school but college or a vocational school. And absolutely that’s necessary. I mean just look at unemployment rates in high crime areas and unemployment rates in north side or the northwest side. I mean you overlay high crime and high unemployment and they’re done I think.
Ken: Yeah, but of course as you say so much of it is historic. So much of it is the just latent racism of our City and the fact that we have massive areas of the City that have just been not invested in for generations.
Greg H: Well it’s that and lots of books have been written; we’re not breaking new ground here. I mean it’s a decline of the old [Rust Belt 00:11:01] industrial economy. I mean the days for the most part when somebody who had just a high school education, if that, could walk onto a job and providing you showed up and pushed the buttons in the right order you would make a really decent middle-class living, those days are over.
Ken: That’s the story of my parents and possibly yours too. It’s just sort of like cereal jobs in factories and you can always make a living driving a forklift or something, and those jobs just don’t exist to the same degree. To sum this up, did Rahm Emanuel buy himself some time here? Was this a brilliant tactical move to be able to get the chairs of both the black and Latino caucuses to stand up and say, “Hey look, we represent two-thirds of this counsel or more and we are for this, and we support what the Mayor did?”
Greg H: Yes. I think he bought himself some time in two different ways. One is this Mayor is still politically weakened. He has to be able to have a count of the majority of the City Council to get almost anything done, particularly dealing with the financial problems of the City. So yes, he definitely bought himself a lot of time there and some goodwill. How much time he bought with the [citizens] at large we’re going to have to see. It depends on the performance. If things now calm down and we have a “normal” summer with normal amounts of shooting…
Ken: Get it back down to normal amounts of shooting.
Greg H: On the other hand, in March things seem to have been a little bit better in March than they were in February and January relative to last year. On the other hand, if things explode again there’s going to be calls for take off his head again.
Ken: Well, I’ve always believed that, this is another exercise, one of these days, I have this list of things I want to do one day, and one of them is chart the shooting map to a weather map and just kind of chart it over the years and see like, because March was kind of a cold and rainy month and February was warmer than usual. I think we should exit this conversation by quoting a reading back the quote that Johnson gave Derrick Blakely over on Channel 2 yesterday. He said, “I’ve actually never encountered police misconduct, because you’ve got to understand officers that commit misconduct don’t do it in front of people they know they think are going to hold them accountable for it.” He said, “Now, I’m sitting in this chair, and if I come across it I will deal with it accordingly.”
Greg H: That’s an interesting comment. I’m just going to let it speak for itself.
Ken: You know, I was going to say that this guy got put into office so quickly and run into his new office and staff so quickly they didn’t even get to introduce him to his spin people and his handlers, because no one would have permitted him to make that comment if he had had a meeting before he went before the cameras. That’ just my reaction to that. You can’t say ‘I’ve never seen police misconduct.’
Greg H: It’s an odd comment. I’ll leave it at that.
Ken: [Laughs] All right. Greg Hinz is our guest today here on Chicago Newsroom from Crain’s Chicago Business, and of course the other parallel huge story is that we are recording this just hours before the big one-day strike begins, the CTU strike begins. We can’t predict how it’s going to go, but because a lot of our audience is on YouTube a fair number of them will be watching this knowing more than we do about how successful or how successful the strike was. So we’ll conduct ourselves by talking about the planning for it and the concept of it, and I would really like to get your take on the degree to which you think the [Rankin] file teachers are really behind this. Do you think they are?
Greg H: There’s been mixed signals. I mean I honestly don’t know. We will find out…
Ken: No one does.
Greg H: On April 1st, although I’ve always seemed to recall reading a piece that said that the Union threatened to fine anybody that didn’t show up on the picket line.
Ken: Excommunicate them, yeah.
Greg H: Yeah. I mean I have a lot of sympathy for where CTU members and average teachers are. The Board of Education for years now has been spending money that it doesn’t have. It hasn’t been putting money into pensions. It’s been spending it instead on raises, and the bill has finally come due and it’s come due at a time when you have a republican governor who is not terribly inclined to be cooperative unless he gets what he wants as part of it.
Ken: That’s very moderately stated I must say.
Greg H: Yeah. And I understand why they don’t want to have to pay more toward their pension. I understand why they don’t want to give up the step and lane increases they get every year, why they want the regular inflation increase every year, but the money is just not there. I think Karen Lewis kind of realizes that and the leadership team at the Union. They actually agreed to submit to the membership a contact that had some pretty big concessions on it. They didn’t technically endorse it, but effectively…if you’re a leader you don’t bring this to your full crew unless…
Ken: And say we’re going to take this to a big bargaining committee.
Greg H: Like she got her imprimatur on it and she had her hat handed to her. The big bargaining committee unanimously rejected this proposal that she had cut up, which you know, leaves her at a time when she’s running for re-election. She’s up for re-election at the end of May.
Ken: Unopposed so far.
Greg H: So far, with a difficult row to hoe, because Springfield is in total gridlock. There’s no money there. Chicago public schools was able to stay open only by going to the markets and borrowing at usurious rates. What, it was 7½%, 85 for tax-free bonds in this environment is sinful. They are not going to be able to do that again because the price is going to keep going up if the markets open at all.
00:17:16 I’m a believer in shared sacrifice, but I’m not sure that message has quite sunk in to the membership level. Ergo, you have this big date of action which is designed to kind of have everybody march around and feel good and we’re tough and rally the troops and send a message, but I’m not sure the message is going to fall on any ears that are listening. I mean everybody from Chicago who is in the Springfield delegation is already for more money for Chicago public schools. Forest Claypool I think has made a reasonable argument that hey, Chicago pays for statewide pensions but the State doesn’t pay for our pensions, that’s not right. But you know, downstate and suburban lawmakers, particularly other democrats, people are talking about how democrats have the super majority in Springfield and can do what they want, much of that super majority is out of the City of Chicago. A lot of those districts are in trouble too.
Ken: Very much so, yeah.
Greg H: I was talking to Andy Manar, state senator from the Decatur area who is the sponsor of legislation to change the school aid formula. He’s had a first draft; there’s another draft coming soon. He was telling me about a district in his legislative district in which 40% of the staff has been laid off because they don’t have money, 40%. Now, you go to people like that facing realities among their voters, all the Chicago teachers don’t want to have to pay anything more than 2% toward their pensions and they’re marching around screaming. Do you think that’s going to convince them? I don’t think so.
Ken: It’s a very interesting issue, and I think that with respect to the one-day strike, which as I said many of you will know more about when you watch this than we do, the fear that I think I would have if I were in Karen Lewis’s position is that they’ve taken on practically every societal ill as part of their charge here. I mean they are talking about the city colleges. They’re talking about Chicago State University. They are talking about police brutality. They are putting everything on their plate, and if they don’t get thousands and thousands of teachers out there it’s going to look really thin.
Greg H: It is. I understand what she’s doing. I mean I happen to think that’s a rather smart tactic. I refer to this as kind of a mini general strike. She’s trying to expand her coalition and make this more than the greedy teachers asking for more money, but all press groups across the board who are being cheated by this bad governor I don’t think that’s a bad strategy. But you know, ultimately the solution to this is going to have to be more tax money from somewhere, and it’s not all going to come from rich people and it’s not all going to come from TIF districts and trading fees on the commodity exchanges. It’s going to probably come from an income tax and sales tax or both on all of us because that’s where most of the money is, and that’s a tough sell right now.
Ken: So, I had actually forgotten that one of the reasons that I wanted to have you hear to ask you about this, and I’m just springing this on you, but hey, it’s all right. I have tried to get a clear answer on this show for months from people who have an understanding of tax policies and so forth. Is there any logic at all to this transaction tax? Could it happen? I mean I’m not even asking you if you think it’s a good idea. I’m asking you from a logistical point of view, is it something that could be accomplished, and would it raise any serious amounts of money?
Greg H: There are various forms of transaction taxes that exist in various parts of the world. They are talking about this in the European common market countries, but while it theoretically might be possible in a national basis, to think you can do it in one city or one state is just ridiculous, because it’s all electronic. You just move the computer or move the computer hook-up and run the transaction through Indiana or…
Ken: Melrose Park.
Greg H: Yeah, that’s the problem with it. Everybody wants to shake down the 1% and they need to be shook. There’s some provisions in the tax code like carried interest, which are awful, but in a competitive environment where Chicago needs to keep the [Mercantile 00:21:56] Exchange here, it needs to keep the Board of Trade here, they are competing with another group called ICE out of Atlanta. They are competing with people in Frankfurt and London and in New York. If you just say oh well, a nickel of trade or whatever in Chicago won’t make a difference, yes it will. You can move the computers. You can shift the trading platform and run it through somebody else’s computer somewhere else. A lot of these transactions are in very small amounts of money, and the guys make money not per trade, but by how many pieces of paper are trading at the same time. So yeah, I can see why people are salivating over it, but if it was really that easy somebody would have done it.
Ken: But you know, interestingly Mike Flannery was sitting in that chair a while back and he made a very interesting argument that I had not heard made before, which is that Chicago has one of the great installed bases of infrastructure on LaSalle Street. I mean it’s not just the trading floors. It’s the thousands of offices of public relations people and back office people and everything else that works in concert with the trading floors. And that it would be very difficult to move and/or replace that, and when you get right down to it it really doesn’t take much money out of the pockets of the trading companies themselves because they just bill their clients for it. So it’s entirely possible that this could be made to work.
Greg H: People in the business who know a lot more about this than I do say no it’s not, that this is a very… When you’re talking about electronic trades, you’re not talking about people going to the floor anymore, you’re talking about pushing computer buttons.
Ken: From home.
Greg H: You just use a different computer somewhere else.
Ken: There is a lot of money there though, right?
Greg H: Oh sure there’s a lot of money, which is why if you wanted to tax the income of the people involved I have no problem with that. I believe in income taxes. I believe in graduate income taxes, but this notion that you can get somebody else to pick up your tax bill, [we] don’t want to do it, I have problems with it.
Ken: Another one of these just broad impressionist questions that can’t really be answered, but do you have a reading, do you have a sense of what the public perception is of the CTU today as opposed to maybe 2012? Is it shifting?
Greg H: Not yet.
Greg H: I think when they walked out the first time they had a lot of public sympathy because Rahm Emanuel was the perfect foil. I mean he came across as this jerky little boss who cussed at Karen Lewis and did lots of stuff that gave them a lot of sympathy. For them to go out now though when clearly the system doesn’t have money and Rahm is clearly trying to do what he can in Springfield to get them money, I think they risk looking counterproductive. So I don’t know that anything has changed yet. I haven’t seen any polling data, but there’s the potential there.
Ken: But it could, yeah. Again, I had mentioned the aforementioned Second City Cop, a couple of days ago they posted this, this was regarding something else, ‘You know what also would send a message? Rahm firing each and every teacher that walks out. Not that we would ever wish evil on a group of people that sent pizzas to Ferguson or anything like that.” This is something that I see as a big change, because certainly in 2012 you got the sense that teachers and the police were really kind of [sympotical]. They agreed on this and now at least this voice anyway is saying you know, they’re not really even on our side anymore. They march with BYB 100 and that kind of thing.
Greg H: Well, my reaction to that is let’s change the language to fire every cop who is guilty of abuse.
Ken: Yeah, or fire every cop who is not filling out the paperwork or is laying down on the job.
Greg H: Yeah, see what Second City Cop has to say about that.
Ken: Right. I mean it’s interesting, but in a way it’s almost kind of its own little strike that’s going on right now too. We are all in trouble and we are all not sure how we’re going to handle this.
00:26:38 Can we talk for just a moment about the… We only have like two minutes left here, so how about this thing that you talked about, the new jobs in Illinois. This is a big piece that you wrote the other day that really kind of changes the way we think about…we all think that there’s no work in Illinois.
Greg H: Yeah, well, the truth is that Illinois’ job growth has lagged the nation probably for 30 or 40 years. You know it’s the Rust Belt. Anybody heard that phrase? But Illinois is not unique in the sense that other Midwest states are in the same problem, because we all have the same core metal bending historic economy. Here enter Bruce Rauner who says, “I want to do what they’ve done in some other states and make the state much more business friendly. I want to limit these unions that ask for too much. I want to clean the public sector. I want to make things like Workers’ Compensation and unemployment insurance that are difficult for employers and raise the cost. I want to lower those costs, and to try to sell that notion, which is unpopular with the democrats because they don’t like it, he’s kind of exaggerated. Every time they put out a release or any time the governor shows up its oh we have the worst in the world and whatever, and he’s frankly kind of cherry-picking.
00:28:07 The fact is what prompted this was a press release from the Illinois Department of Employment Services talking about how unemployment had gone up in Illinois. Well yes, and that was actually a good sign because one thing economists will tell you is when unemployment goes up under certain circumstances it means that people are returning into the workforce, which happened. The workforce had grown because they sense that there’s jobs there. And while you don’t want that to go on for long but for a little while it’s a good sign.
Well buried in the same set of data, and they didn’t talk about it, it was in the little sentence in the fourth paragraph, was that oh, and by the way, we in the U.S. Department of Labor Statistics, Bureau of Labor Statistics have recalibrated last year’s data and we didn’t lose 3,000 jobs, we gained almost 60,000. So the point is its not great, but it’s not as bad as he says it is.
Ken: Isn’t that kind of counterintuitive? I mean usually politicians have press conferences to tout how well they’re doing and you don’t downplay the fact that you have all these new jobs.
Greg H: It is a little counterintuitive. On the other hand, Rauner clearly has his agenda and he’s trying to do what he thinks is going to pursue this agenda. My problem with it is is a lot of nuances are lost here that are really important. If you look at the picture a little closely Chicago and in particular the central area economy, the kind of folks who work downtown where there’s about 500,000 jobs give or take, is doing really well and has been for a while.
I did a piece last year about how unemployment in the central area appears to have broken through its records and is probably going to break through another record when the new set of data comes in. But in the industrial sector which affects the south and the west sides which we talked about a little bit, and heavily affects downstate there are real problems.
Ken: Where the factories were.
Greg H: Yeah. And when Rauner showed up at the City Council he said, “Well what you need in Chicago and what I need for the rest of the State are different.” He’s right, and that’s why some of this stuff about unemployment insurance or Workers’ Compensation is a good example. If you work for a Chicago law firm or an accounting firm or new media or whatever, they have Workers’ Compensation. It doesn’t really matter. You’re probably competing with somebody in San Francisco and New York and you’re cheap relative compared to them, so you don’t have a competitive advantage. On the other hand, if you work for a factory you’re competing with somebody right across in Indiana or worse somebody in Bangladesh or China where you know, that cost does make a difference. Somehow in Springfield they’ve got to figure out how to target the kind of relief, because there’s clearly something needed, but you know, politics is the business of brushstrokes and Rauner is just painting with too big of a brush here.
Ken: Well that’s something we’ve always talked about it is that Illinois is one of those weird states that’s really kind of two states. I mean it’s largely kind of a rural Alabama type state and then it’s got this city attached to it up in the top, so the differences between the needs are just, the things that the two need are just completely different and it can be really hard to govern that.
Greg H: Yep.
Ken: That’s why we should have attached ourselves to Milwaukee years ago and made that one big megalopolis and Wisconsin and Illinois could join together.
Greg H: Pierogi central, okay.
Ken: All right. I know we’ve got to let you go and I really do appreciate you spending some time with us today Greg. It’s always great talking to you, and thanks for being here.
Greg H: My pleasure.
Ken: Greg Hinz from Crain’s Chicago Business, and you have been watching Chicago Newsroom. It is a service of CAN TV and we’re glad that you’re watching. We will back next week and our hope next week is to have Karen Lewis. She has been confirmed, but of course who knows how busy she is going to be. We may or may not have her next week on this show, and we’re looking forward to it. Hope you come Karen Lewis. See you next week with another edition of Chicago Newsroom. I’m Ken Davis. Thanks.