Sweden is a monarchy, a governmental structure very far from socialism and from the American ideal that all people are created equal.  Marx, of course, believed that his radical socialist ideal started with the violent overthrow of the bourgeoisie, which pretty much eliminates a monarchy. The United States was founded on the principle that people did not need a king because they could rule themselves. We might think that the trappings of a monarchy are pretty and that their personal lives are fascinating, but is anyone really excited about the prospects of Prince Charles replacing Barack Obama?

Marx’s version of socialism, Communism, failed everywhere it was tried. No one seriously advocates Communism anymore. Socialism is more complicated, but it is not what Barack Obama or anyone else in U.S. government advocates. (By the way, “The Communist Manifesto” is in the public domain, in English, and it is short.  There is no excuse for not reading it. Frederich von Hayek would be good to read, too, but his books have a lot more pages.)

Setting aside the fallout from a major overhaul in our national ideal, would being like Sweden be so terrible? Do we just blithely assume that ideal auto companies lose money, that something is wrong because Volvo is profitable?

The top tax rate in Sweden is 57%. But consider that in the United States, the top tax rate is 34%. Americans also pay state and local taxes, but those are deductible from Federal income taxes. In addition to income taxes, Americans pay into Social Security. That tax, 15%, is supposedly shared equally between employer and employee, but do you really think your employer pays it graciously? No, your employer reduces your wages. If we assign workers the full payroll tax burden, then our top tax rate is 49%. On top of that, we pay for health insurance. Exact estimates are hard to come by; the Kaiser Family Foundation puts it at 12.7%  of payroll. Add that to the income tax and Social Security burden, and it looks like Americans have a comparable marginal tax rate of 61.7%. I’m not entirely sure that high taxes are bad as long as we get something for them.

Would I be excited about paying a top tax of 57%? No. But is Sweden wallowing in the same misery as North Korea? Sweden’s life expectancy is 80.9 years, better than the U.S.. They have lower infant mortality too. Our poverty rate is 17.0%, Sweden’s is just 6.5%. Even the Heritage Institute admits that Sweden ranks high for its economic freedom.

And, what should be especially exciting to the American right, Sweden has a national religion, and it is Christianity! Not the weirdo Papist stuff, either, but good old-fashioned Lutheranism.

I’m not a fan of monarchy as anything other than a cultural curiousity. (As cultural curiousity, though, I’m fascinated, and I even own Princess Diana’s butler’s cookbook.) I’m amazed that the British people are willing to support the assorted members of the Mountbatten-Windsor clan. Surely, the American experience with two generations of Bushes should put aside any notion that basic competence is hereditary, if we had any doubt.

I also love the American commitment to diversity, which is very hard work at times. We have to manage school holidays, learn what to say, pronounce difficult last names, and generally accommodate people who are not like us. It pays off in the form of wonderful, rich experience. I live in Chicago, a city with an historic Swedish neighborhood. I am fond of a Swedish diner that has the most wonderful cinnamon rolls and is owned by a Chicago alderman who is also an out gay man. Many weekend afternoons, I go ice skating at a park district rink where it’s common to see high-school girls wearing jeans and headscarves; Mexican children who are overdressed for the cold clinging to the side walls; and Russian fathers barking advice to young boys on hockey skates. Assuming they were born in the U.S., any one of those skating kids could become president.

That, to me, is the strength and wonder of the United States. But some people don’t like radical democracy and upward mobility because it means that someone they do not like, who does not look at all like them, can become president. Not everyone here is all right with the kids complaining that the hielo es frio. America is more than its tax rates. Trying to figure out if our doctor is in the network in both her city and suburban offices or just the suburban one is not what makes this nation great. Changing our health care system will not turn us into Sweden – or North Korea.

This is a drawing of Annie Logue, no relation, a character in a comic novel by Mike Kennedy.

But the story is all about how there won’t be any more investigative journalism or how bloggers are sloppier than Judith Miller when they do their reporting.

No one looks at the real tragedy: the death of the comics. The comic strip is an art form in its own right, but it is also one closely tied to newspapers.  As newspapers cut back, they often eliminate the page that introduces the paper to new readers in the first place.

$12 a week per paper? Shared equally with the syndicate? For a cartoon that’s run in 100 papers, that represents an income of $31,200 – which means you can’t quit your day job. Scott Adams, Garry Trudeau, and the estate of Charles Schultz may have a little negotiating power, but not many other cartoonists out there do. If the strip catches on, there are greater profit opportunities in the form of books, calendars, character licensing, and possibly television. If you look at your daily paper, though, how many of the strips are good enough to get you to rush out for the book?

The low syndication rates date from a time when a cartoonist would most likely be on staff.  The syndication money was meant to be a bonus, not the primary way that the cartoonist made a living. Comic strip writers would often be employed by a newspaper and also create political cartoons or draw illustrations for stories. Very few were completely independent, at least not when they started.

Sometimes I want to smack newspaper editors around. You get readers by running both Dear Abby and Ask Amy, not cutting one or the other. You add comics, not subtract them. What, you can’t afford another $1.00 per day? Syndicated material is cheap. But it has to be printed on paper, and for centuries, that paper was purchased with classified advertising.

Modern kids are learning about comics from books. They pass around Peanuts and Pearls Before Swine anthologies; even if their family still gets a morning paper, the comics sections have shrunk. But books have limitations. Publishers don’t take chance on unknown strips, and not all comics read well in books. Many comics follow a structure in which the five weekday strips have a story arc (even with a gag-a-day strip), the Saturday strip stands alone, and the Sunday strip is large format and completely different. That can be a bit jarring in book form. Moreover, the soap-opera strips like Mary Worth and Brenda Starr move so slowly that a book version would put everyone to sleep.

You can see comics online, of course. One of my favorites, Candorville, is not carried in either Chicago paper, so I have to go to the Web site. However, the Internet is a terrible medium for a comic strip. It’s a hassle going through and clicking the links to all of my favorite strips.

Last week, I saw Lynda Barry and Matt Groening talk about the art of and market for cartooning as part of the Chicago Humanities Festival. Although he could have afforded to retire a long time ago, Groening still does his weekly comic panel Life in Hell. Most of his alt-weekly brethren have lost steady outlets. Life in Hell is hilarious and accessible (even if not particularly alternative anymore), and so Groening gets to be the cartoonist who stays when budgets are cut. Lynda Barry stopped publishing her strip, Ernie Pook’s Comeek, when demand declined so much that only one paper carried it. She now puts it up online.

Lynda Barry talked about The Family Circus, her favorite comic. When she was a child in a screwed-up household, she loved how every day’s paper brought a little glimpse into a cute and normal family doing cute and normal things. She says it showed her not only a better life, but also how powerful these little drawings could be.

The funnies inspire people. They bring them into the newspaper. They show them how other people live, whether they be former high-school classmates in Northeast Ohio, Silicon Valley office drones, or students at an historically black college . People in the funnies come out of the closet, build transmogrifiers, are born and die on the funny pages. And it happens fast, while waiting for the toaster to pop or the el train to stop at State & Lake. We’ll all be worse off if we lose them.

A bargain at twice the price?

The latest trend in the “something for nothing on the Internet” game is the pay-to-bid auction site. The auction operator lets such items as cash and gift cards go at prices far below face value because all the bidders, even the losers, have paid to place their bids. Some of these sites claim to be helping people beat the recession. One, PsychoAuction.com, even has a complicated back story involving a founder, Nick Dickreuter, who was let go when Lehman Brothers failed. According to the PR version of the story, Dickreuter lost all respect for money and now gives things away online.

Except, of course, that Dickreuter clearly respects money. Hs site stands to make a lot of it from those who don’t understand how giveaway auctions work.  It’s not like Dickreuter took a vow of poverty and went out to serve the poor.

PsychoAuction isn’t the only site following a pay-to-bid model. DFWbid.com is another that has been mentioned on different bargain-hunting Web sites. The pitch is that you can get a $25 gift card for $8; the reality is that a lot of people spend money to bid without winning.

These sites charge you for bids. Let’s say that a bid costs $1 each. Four people are bidding on a $25 gift card. The winning bid is $8, but six people placed a total of 20 bids until that price was reached.  The house profit is $3 – $20 in bid fees and $8 from the winner, less the $25 cost of the gift card. The house might make more if the winner has to pay a shipping and handling fee to get that card.

After all, shipping and handling is where the real money in auctions seems to be!

In a bidding situation, people will sometimes force the winning bid over the value of the object. This is known as the Winner’s Curse, and it’s surprisingly common.  It may even be rational, especially if you have to pay to participate in the auction. If you get caught in a bidding war over a $25 gift card and spent $25 to bid for it, winning the card with a $26 bid reduces your net loss from $25 to $1. The value of the card offsets your bid cost. The auction site can win if you get a bargain or if you overpay. Dickreuter is psycho like a fox.

We’re making the assumption that the products for auction on pay-to-bid sites are legitimate; some are, of course, but not all are. Surely everyone knows that if you pay $100 for a new Louis Vuitton purse on eBay, it is a fake. What about the $25 gift card – is it a free-and-clear win, or is it stolen? Who knows?

I expect a lot of interest in these sites in the next month or so as we get into the ridiculous holiday gift-giving frenzy in a down economy.  The idea of getting something for nothing is huge, and I’m always on the lookout for an angle.  However, I am staying clear of these sites. I’d rather give Toys R Us an extra $25 then spend my time and money strategizing on a gift-card deal.

No matter which of the many winter holidays you celebrate (Elvismas, on January 8, is a big holiday in my household), the best way to save money is to cut your gift list down. The fewer people you shop for, the less money you will spend.  I hate to tell you this, but it’s not like folks like what you get them. In 1993, Joel Waldfogel, an economist then at Yale University and now at the University of Pennsylvania, published an article in the American Economic Review entitled “The Deadweight Loss of Christmas.” He found that 10% to one-third of the value of gifts is lost because the giver gave the wrong item. We all have received items that weren’t quite what we wanted – a size, brand, color, or style that wasn’t quite right; something for the kitchen that is nice but not anything we need; some CDs that are pleasant but will never make it on our Desert Island lists.

That 10% to 33% loss makes paying $26 for a $25 gift card look like small potatoes, doesn’t it? Of course, you could take the lazy way out and just give everyone on your list gift cards.

Alleged Inside Trader

Even then, it does not seem to have helped him much. The Galleon Group of hedge funds, which Rajaratnam managed, has shut down in the wake of insider trading charges against Rajaratnam and several associates. However, it doesn’t look like the funds’ performance was all that great, so Rajaratnam and company may base their defense on the fact that they did not make excess profits. One of the charges is that Galleon made $500,000 trading in options in Google after receiving a tip from an employee of Google’s investor relations company that earnings would be lower than expected. To make that profit, an inside trader would have to identify informants, figure out how to reach them, compensate them, act on the information, and take the risk that it was good information. These steps involve time and expense that cut into the profits from insider trading. The profits have to be huge to overcome the costs, and they may not be big enough to compensate the inside traders for the risk. And then, of course, the information has to be good. A wise inside trader would probably sit on the first few tips just to see if the tipper has good information. But even a tipper with mostly good information will have a few duds.

All that, for a $500,000 profit (before expenses) in a group of funds with $3.7 billion in assets. That works out to a 0.01% return. A fund manager needs hundreds and thousands of these bets to beat the market. It would be easier to be legit.

This case has a few staples of insider trading cases. Two of people mentioned in the charges were junior staffers, one at Moody’s, another at Google’s investor relations firm. These are people for whom $10,000 or so is enough money (a sum mentioned in the SEC’s filing) to compromise their ethics; they may also not know how wrong it is. If an inside trader can find a weak person in these circumstances, there’s a nice profit to be made, at least on one or two trades.

Another staple is the person looking to impress someone else with their great information. A few of the tippers fit that bill, especially Roomy Kahn, a former Galleon employee who seems to have had financial trouble and wanted to be rehired.

Insider trading is also difficult to prove. Martha Stewart seems to have sold her Imclone stock after receiving a call from her broker, which he placed after receiving a call from the daughter of the Imclone CEO. But for all that, Stewart’s criminal charge was obstruction of justice because the Feds could not prove insider trading.

In the Galleon case, the allegations have been enough for the fund to close. The dishonest and honest alike have lost jobs. Many will have a hard time working again because of the taint of the case, even if they were not charged or are found not guilty. The people who have been implicated have to hire lawyers, and others may decide that it’s a good idea to have counsel now in case they need it later.

I’m not naïve; I believe that people trade on inside information. Why wouldn’t they? People buy and sell securities every day, and a few of them may have an edge some of the time. But do they have enough of an edge to produce consistently superior returns? That, I’m not sure about, but it seems unlikely.

The bottom line is that most people should just buy index funds. They won’t beat the market with them, but they’ll do better than most fund managers, and they’ll do it fair and square.

College students often take up causes, some of which they continue to pursue after graduation. A popular cause is the environment. Does student activism make a difference? The annual College Sustainability Report Card, released early this month, attempts to measure the influence of students and others in making campuses more sustainable. The report is prepared by the staff of the Responsible Endowments Institute, an organization that evaluated campus governance and endowment investing and is supported by Rockefeller Philanthropy Advisors. This is the third year of the study, which now tracks the 300 colleges with the largest endowments as well as another 32 campuses that asked to participate.

The study evaluates campus facilities, student life, and endowment policies to grade different schools. Campuses can pick up points for green buildings, bringing organic produce into the dining halls, or committing part of the endowment to investments in sustainable technologies. The researchers focus on the money for two reasons. First, it gives some clues about the administration’s approach to transparency and engagement. Second, the more money a college has, the more it can spend on such things as LEED-certified buildings and alternative-fuel shuttle buses. It’s not necessarily a surprise that Harvard has an A- (the highest possible grade this year) and Youngstown State University is a D+.

Being green should not be a luxury for the elite, but it is. Although there are cost-effective ways to be green (shopping at thrift stores, growing your own vegetables), these are not as attractive as shopping at Whole Foods and installing bamboo flooring. Likewise, a campus can do a lot by promoting reusable coffee cups and water bottles and by installing compact fluorescent lighting, but those won’t generate the accolades that come with new LEED-platinum certified buildings and a commitment to only use cage-free eggs in the cafeteria.

My family eats cage-free eggs at home, and it kills me because they cost three times what regular eggs do. And I know that the chickens aren’t really all that free. We should just give up eggs all together, but then what would I make for dinner on those really crazy days? My guilt and laziness offset my cheapness and cynicism. Also, we can afford the vegetarian-fed, certified cage-free eggs. Can a campus that is looking at rising expenses, state budget cuts, and less money in the endowment for financial aid afford to be profligate with its egg expenses?

The survey organizers expected to see a decrease in spending on sustainability initiatives this year because of the financial decline, and they did not. It may be that campuses have not fully absorbed the budget cuts following from last year’s market decline. Also, some of these programs are cost-effective, especially once they are up and running. Maybe not the cage-free eggs, but certainly improvements in lighting, heating, and cooling will pay off in the future.

I expect to the grade point averages fall in next year’s report card. Okay, Harvard students won’t have to eat eggs from cruel farmers, but that’s because they are now being served cold breakfast only. Eventually, campuses will cut have to cut back on capital spending projects, so buildings won’t be upgraded to become more fuel-efficient or replaced with modern, sustainable facilities. There will be less funding for student groups, so fewer reusable coffee mugs will be given away. You would hope that someone who really believes in sustainability would still bring the reusable cup and refillable water bottle, but not everyone has the commitment.

Recessions are good for the environment because they force individuals to stay home, reduce, and reuse. But when it ends, most people will go back to their old ways. They’ll have a lot of pent-up demand to meet, and they’ll decide that they like Nordstrom better than the thrift store.

Organizations will pick up spending on the environment after the recession, if only because it’s popular with customers. They’ll also hope for the longer-term payoff in costs. But first, they’ll need to recover their capital bases, and that could take a lot of time. The environment remains a frill, a nice thing for Harvard but not something that a state commuter university should mess with.

The Author of this piece is pushing her own book, so no money changed hands.

Last week, the Federal Trade Commission announced it would fine bloggers as much as $11,000 for violating its guides to the use of testimonials in advertising. The rules are designed to ensure that customers have a fair basis for buying a product. The basic rules are that if someone is compensated, that should be made clear; if a celebrity endorses a product, he or she should actually use it. Most of us didn’t want to know about Bob Dole‘s Viagra prescription or Lita Ford’s favorite ball gag (NSFW), but at least we know they are telling the truth about their preferences. The full details are on the FTC Web site in all their bureaucratic glory.

This creates some sticky problems for people blogging about books, movies, and music. You know, folks like us here at Popdose and our readers, at least some of whom are artists looking to get attention for their work. I can’t speak for everyone involved with Popdose, as that is a job for Jeff Giles. But, yes, we receive books, MP3s, DVDs, and bottles of tequila to review. We also write reviews about things that we bought with our money. I write book reviews for Barron’s, and those books are usually sent to me through my editor. Sometimes, though, he has misplaced the book or can’t remember if the publicist sent him a copy, and he doesn’t want to ask the publicist to send out a new one, so I go to the bookstore and buy it.

Like most reviewers, I quickly end up with more free books than I can possibly read. I usually end up dropping these books off at random places through Bookcrossing or donating them to the thrift shop. Some reviewers sell their excess copies to used bookstores or online, turning them into cash that way, although I have heard tell of writers who use something close to their real name on Amazon being shunned by authors who feel cheated out of royalties.

Are these random books, CDs, and spirits enough to cloud our judgment? I don’t know. I’d like to say no, but I can’t promise you that.

The traditional media likes to promote a myth of objectivity that no one believes. There’s much blather about the separation of editorial from advertising, and much tsk-tsking over bloggers. And yet, you will never see a major parenting magazine do a story about how easy it is to make your own baby food. (Just mash bananas or overcooked vegetables with a fork, or throw cooked spaghetti in a blender.) A travel magazine’s staffers may wander the world anonymously and pick up their own checks, but the resulting stories are often laden with the brands of cars driven through the countryside, fancy carry-on luggage that fit into the overhead bin, or easy-to-pack designer clothes.  A beauty magazine may recommend a new face cream because the manufacturer is an advertiser and had a swanky launch luncheon with fancy goody bags for all the junior staffers. It’s probably safe to assume that the product didn’t cause an outbreak of contact dermatitis, but is it really the best? Finally, a reporter for the New York Times would never let her personal friendship with a source cause her to slant her case for sending American troops into harm’s way, unless her name was Judith Miller.

I’m also an author, and I want my books to be reviewed. Hence, my publisher and I send out copies to people we think might want to know about them.  The recipients don’t always write a review, and I understand (because, of course, I have a pile of books on the floor of my office that I won’t get around to reading.) Some bloggers have interviewed me but told me not to send a book because they already have too many. Not all the reviews are glowing, although there is the issue of what constitutes a bad review. One of the worst Amazon reviews of Day Trading for Dummies is headed “Not for Dummies.” I’m okay with that!

The FTC’s targets fall into a few categories. The first are personal bloggers who are in the business of getting free stuff. I subscribe to a few different lists for writers looking at sources, and there are often requests from bloggers looking for samples to review. Some more or less promise a good review in exchange for product. Finally, multi-level marketing and direct salespeople have been known to use blogs to promote their products, without disclosing either accurate information about the products or their own selling relationship.  And, there have been loopholes that held a company’s print advertising to a higher standard than its online marketing efforts, especially in the use of celebrity endorsements. A lot of the Facebook ads citing Oprah or Jennifer Aniston to sell vitamin preparations could not run in magazines.

The FTC has said that they will review the situation on a case-by-case basis. It doesn’t seem that they plan to run a red-light camera operation, sending out bills for $11,000 and asking questions later. I suspect that most bloggers have nothing to fear, nor do the authors and musicians looking for a bit of promotion. But a few folks do need to worry before they ruin it for everyone.

Shrewd Investor and Nasty Man

Given the massive Federal deficit, it’s a sure bet that taxes are going up sooner rather than later. Before the Teabaggaz start posting, I think we can all agree that cutting taxes while starting a war is a bad idea. Stuff costs money, whether we’re talking about body armor for our warfighters in Afghanistan or Under Armour shirts. But the problem is what to do about it, because we have to fund our deficit somehow. However, we also have a really fragile economy. If the government raises taxes, will it crowd out the investment and spending needed to create jobs?

The idea behind cutting taxes in the Reagan era was that if less money went to taxes, more would be used for private sector investing, and that the private-sector investing would generate so much economic growth that the loss in revenue from the tax cut would be short-lived. Eventually the economy would expand so much that more taxes would come in at the lower rate because of the larger base. Private-sector investing did increase; the U.S. remains the strongest capital market in the world. It didn’t increase by enough to offset the tax cuts, and part of Reagan’s economic legacy was an increased Federal deficit.

Money can be spent on taxes, consumption, savings, and investment. (Paying down debt is a form of savings.) Money that goes to one purpose cannot be used for another.  Money that the government takes in from taxes can also be used for consumption, savings, or investment. War and Medicare are examples of government consumption spending (which may be on behalf of citizens). Paying down debt is a form of savings, and goodness knows that the government at all levels has plenty of debt to pay off. The government invests when it spends money on bridges, schools, airports, and the like. For accounting purposes, this is handled like consumption.

When taxes are cut, some of the money that would have been spent on taxes goes to consumption instead. Increased spending can help build the economy, but a lot depends on what people buy. Buying fuel-efficient American cars creates jobs for American workers. The decreased energy consumption would put less pressure on our infrastructure and could even lead to a decreased U.S. military presence in the Middle East. Yeah, this is the stuff of Green Party utopia, but it also illustrates how some types of consumption spending function like investment spending.

By the way, one of the biggest investments that most individuals make is in their education. However, that is handled as consumption in national accounting, as though the money were spent on shoes and beer instead of tuition and textbooks. Some economists feel that this understates the rate of investment in our economy.

Andrew Carnegie believed that he was justified in denying raises to his workers even as he raked in the cash because the workers would just drink their pay raises away. Carnegie used the money to buy libraries and museums, universities and symphonies. His legacy is amazing, but is it fair? Does the launch of Sesame Street offset the murders during the Homestead strike?

Likewise, I hesitate to say that buying cheap consumer goods is wrong, but I wonder if that’s the best thing that we could be doing. If we are not going to invest, then maybe the government needs to do so on our behalf in order to stabilize the economy.  I’m not enthusiastic about paying more taxes, but I don’t see how people buying cheap goods made with low-cost Chinese labor sold by minimum wage employees at Wal-Mart is going to create the sustainable investment that this country needs.

I’m not thrilled about the prospect of paying higher taxes, but for whatever reason, we have proven to ourselves that individuals cannot invest and spend our way to national prosperity. Sweden is one example of a nation that has both high taxes and a high standard of living, so it’s possible. Can we do it? That, I’m just not sure of.

The problem is that Chicagoans are keenly aware of the costs of corruption. We have one former governor in prison and another who is likely to join him soon. We have a federal prosecutor issuing subpoenas and indictments left and right. Students have been admitted and received scholarships to the University of Illinois at Urbana-Champaign based on who they knew; a current grand jury investigation is looking into clout admissions at the city’s elite public high schools. Who knows how many businesses have put off expanding or relocating to Illinois because of the tax from the take? Graft has been accepted here because politicians used to be careful to deliver goodies to the neighborhoods, but that’s not happening. Consider that two city high school students were murdered this past weekend. One, who attended a magnet school, was shot by an unknown assailant; the other, who attended a regular neighborhood high school, was beaten to death after school by a mob of his fellow classmates.

But sadly, the legacy of corruption makes Chicago a good fit for the International Olympic Committee, which has its own history of taking theirs. The IOC does things the same way Chicago politicians do; Mike Royko used to say that the definition of an honest politician in Chicago is that when he is bought, he stays bought. Many people in town assume that the fix is already in.

The problem with the IOC is that it seems to have no interest in whether the Olympic Games are good for the host city. That’s why visitors to Montreal or Seoul can marvel at the remains. One of the requirements is that the host city have a stadium that seat at least 80,000 people. Soldier Field seats 61,500, and that’s not good enough. I’m not sure that U2 could fill a 80,000 seat stadium. The facilities for other sports have to be able to accommodate big crowds, too. Northwestern University, in the suburb of Evanston, has what may be the largest field hockey stadium in the country, seating a whopping 300 people. That’s hardly Olympic size. Dedicated facilities will have to built to handle large crowds for small sports, and then what? City kids want swimming pools, but they will get velodromes instead.

The deal killer, though, is this: host cities have to agree to pay whatever it costs. They can’t scale back any of the plans if they discover that the sponsors aren’t willing to cough up the deal. In essence, cities have to give the IOC a blank check. Why? So that Coca-Cola has a suitably exciting venue to promote its flavored sugar water to the world.

Chicago’s history with making no little plans is mixed. Our fancy Millennium Park had massive cost overruns. How much, no one in Chicago is sure, because expenses were buried in other parts of the city budget. And, strangely enough, fees for Park District teams and facilities use went up at the same time. It didn’t help that the city cut a generous contract for the concessions at Millennium Park with a bidder who just happened to be the father of the child of one of the people who evaluated bids for the Park District, an incident of corruption only slightly less surreal than selling a senate seat to the highest bidder.

We have a third reason for being scared. The American political system pushes incredible authority down to the local level. That’s mostly good, because it brings decisionmaking down to where the people are. In very few other places on earth could a city mayor, even the mayor of a city of three million people, enter into a multi-billion dollar contract on his own. The other finalists in the 2016 site race have financial backing from their national governments. Chicago is on its own, without even financial support from the State of Illinois (which is justified, because Illinois is broke.) If the Olympics have massive cost overruns, which it almost certainly will, the people of Chicago will end up paying for it.

I’m an Olympics junkie. Every two years, I plant myself in front of the TV and follow the events, and not just the girly ones like figure skating and gymnastics. I love the pageantry and the excitement. Until the International Olympic Committee is willing to do something good for the host cities like, say, let them stick to a budget, I’d prefer that the Olympics stay out of my back yard.

People ship items because they have received orders for them. The freight business in particular represents shipments between suppliers and manufacturers and then between manufacturers and retailers. The primary measure of economic growth, gross domestic product, measures the total amount of goods and services in the economy at the consumer level. That avoids double-counting, but it also means that producer activity will show changes before the GDP does.  That’s why the FedEx news is so exciting. If manufacturers are starting to order materials, then they must be seeing demand. If so, the recession that officially began in December of 2007 may finally be ending.

FedEx’s financial results will be a measure of economic performance as the business cycle unwinds. Overnight shipping via a private carrier is a luxury. The United States Postal Service has cheaper rates; it costs just 44 cents to send a first-class letter from Maine to Guam, although it probably won’t arrive the next day.  An increase in spending on FedEx indicates not only an improvement in the economy, but also a willingness to spend more for better service.

The relationship between transportation and the economy is long and logical. The original Dow Jones averages were developed to sell newspapers and explain economic changes. Dow Jones & Co.’s first three indexes tracked transportation, utilities, and industrial companies. It continues to calculate all three, although only the Dow Jones Industrial Average is followed widely these days.  The underlying idea is that when the transportation companies started doing well, it was time to sell their stocks to buy industrial stocks. When the industrial companies got hot, it was time to sell them to buy safer stocks, namely utilities. When utilities were at their peak, it was time to sell them and buy industrial companies in anticipation of an economic turnaround.

These relationships made more sense decades ago when the nature of American business was very different. The Dow Jones Industrial Average now includes such non-industrial companies as Microsoft and McDonald’s, and that throws off the use of the Dow for business cycle prediction. Utilities are now competitive businesses that make as much money from trading power as from offering basic metered services. Transportation has a different role in a service economy than in an industrial one. FedEx, by the way, is in the Transportation Average, as it should be.

The stock market in general is a weak leading economic indicator. Some public companies are strong indicators, and not just FedEx. Most public companies will finish their third quarter at the end of September and then report their results in late October. Market prognosticators will be looking for evidence that business is picking up by looking at the results of companies that make parts, components, shipping materials, or office supplies. Then, everyone will wait like little kids in line for the bathroom to see what happens to holiday retail sales.

To put it another way: the Bush tax cuts did not trickle down, nor did they create a rising tide that lifted all the boats. All they did was increase the Federal deficit. (And people think Franklin Delano Roosevelt was a class traitor? FDR had nothing on GWB.)

Professor Richard Green at the University of Southern California, who follows the real estate market, combined the census data with his knowledge of the housing market, and he reached an interesting conclusion: Americans can’t afford the houses on the market now, so real estate prices have further to fall.

One trope trotted out at the beginning of every recession is the idea that certain businesses will do just fine either because the customers are so rich that they won’t be affected by the recession or that the price is so low that people will always be able to fit it into their budget. As the millions of American children who now eat store-brand macaroni and cheese with Hunt’s ketchup can attest, this is not always the case.  Price is not always in line with value.

Some high-end customers never were rich; they were spending money they did not have, possibly borrowed against their houses. Some rich people are not so rich anymore, and not just because they invested with Bernie Madoff. Some rich people are also very smart, so even though they have the money, they know that the Mercedes dealer is hurting and median housing values are falling and thus expect a deal. And some rich people don’t think it is wise to flaunt their wealth during a time when so many people are hurting.

Meanwhile, the tax cuts that were supposed to cure all, that many persist in believing will cure all, didn’t. The so-called Laffer Curve, known as the taxable income effect, says that at some increased level of taxation, government revenues fall because people have no incentive to work. But what tax level is that? Since the 2003 tax cut, the highest rate in the United States is 35%. In 1980, it was 70%.

One way to think about taxes is that it is the price of being employed in America. Of course there is a price; we want things that the government provides, ranging from national defense to national parks. This nation has more opportunities for employees and entrepreneurs than many others, and that comes with some cost. But what is that price? If you owned a retail store that sold jeans, you might try pricing them at $1000 per pair. But at that price, no one would buy them and your revenue would be zero. You could give the jeans away, but then your revenue would also be zero. But what price within that range would not only cover your costs, but maximize your profits? Is it $30 per pair? $300? Who knows? It will depend on who your customers are and what they want.

I’m not arguing that a tax increase would increase incomes, but I can’t rule it out. It’s possible that higher taxes might force people to work harder so that they have enough money to buy what they want after the government gets its cut. It’s also possible that a tax increase would trample on the tiny green shoots of recovery that we may be seeing now. But I do know this: the Bush tax cuts did not lead to prosperity. We are saddled with a deficit from the tax cuts and spending on two wars, made worse by a stimulus package needed to bring us out of a nasty recession.