Financial Ecosystems, Part I


Chicago’s 49th Ward

The participatory budgeting networks are abuzz with excitement about the participatory budgeting effort being introduced in the 49th Ward of Chicago.

The Watson Institute for International Studies at Brown University is in the lead on the Chicago effort as part of its Participatory Democracy Project under the direction of Watson Institute Associate Professor Gianpaolo Baiocchi. The Project’s research, supported in part by the Ford Foundation, will result in a book that takes stock of the “civil society agenda” today. Their efforts in the 49th Ward of Chicago reflect the invitation of Chicago Alderman Joe Moore.

For updates from Watson and Brown University on the effort in Chicago, see (1,2).

This is indeed exciting. Participatory budgeting has the potential to strike a much healthier relationship between citizenry and the creation and application of government credit, regulation and taxes. Developed originally in Brazil, it has not yet been tried in the United States.

The opportunities to re-engineer government resources in communities are much greater than many of us realize. When I became Assistant Secretary of Housing in the first Bush Administration, I was first inspired to look at the federal budget by neighborhood when the head of the Chicago Housing Authority requested permission to take public housing funds in projects spending $250,000 per unit to buy government foreclosed single family homes and rehab them for $50,000 per unit in the same Chicago neighborhood. On Wall Street, getting five for the price of one is what we call an “arbitrage.”

The request was denied. It was illegal to move housing funds from one federal housing program to another, regardless of whether it would create many more homes in the same neighborhood. When I suggested the same opportunity to one official in the Clinton Administration, she said, “but how would we generate fees for our friends?”

Alas, we have a significant challenge with many Americans and companies now dependent on billions in government programs developed through political considerations without professional investment standards and accountability for performance by county or place.

America is filled with such “community arbitrages.” They offer the potential to get much more for less if we approach change with a new concern for both people, natural resources and both public and private financial resources. To find and re-engineer these opportunities is a complex task; ideally done with citizen participation.

Unfortunately, the chances that such process will be used to justify another round of financial exploitation of communities and their assets are very real.

See Financial Ecosystems, Parts II and III

3 Comments

  1. As an ex-resident of the 49th Ward, I can’t help but wonder why Joe Moore has his hands in something like this. When he’s not pushing for a ban on foie gras, he serves as a reliable lackey for the Daley kleptocracy, collecting cash from politically-connected developers.

  2. On the topic of Chicago, this came in my email this morning, that I’m no longer surprised is disconcerting and wakes me up.
    …………..
    CHICAGO , CHICAGO !!!


    Cook County , Chicago ……Does “CHANGE” = CORRUPTION?
    Will ANYONE serving in the OBAMA administration, with a ‘clean’ record, PLEASE STEP
    FORWARD?!!!!!

    Why Doesn’t Rahm Emmanuel Pay Property Taxes???
    What’s next???

    According to the Cook County Assessor’s website, the Chicago home of four-term Democrat Congressman and new White House Chief of Staff, Rahm Emanuel, doesn’t exist. While the address of 4228 North Hermitage is listed as Emanuel’s residence on the Illinois State Board of Elections’ website, there seems to be no public record of Emanuel ever paying property taxes on this home.

    The Cook County Assessor’s and Cook County Treasurer’s online records indicate Emanuel’s Chicago neighbors pay between $3,500 and $7,000 annually. However, Illinois Review has been unable to locate any evidence that the former Clinton advisor and investment banker is paying his fair share of Cook County ‘s notoriously high tax burden.

    Why wouldn’t 4228 North Hermitage property owners Rahm Emanuel and wife Amy Rule pay property taxes? One reason may be because Emanuel and Rule declared their 4228 North Hermitage home as the office location for their personal non-profit foundation called the RAHM EMANUEL and AMY RULE CHARITABLE FOUNDATION. As the non-profit headquarters, their home could be exempt from paying property taxes.

    In January 2007, USA Today reported on Emanuel’s foundation:

    The Rahm Emanuel and Amy Rule Charitable Trust was formed in 2002, when the Chicago lawmaker was first elected. The former Clinton White House aide and his wife, Amy Rule, are its only donors. Emanuel was an investment banker after serving in the White House.

    The trust reported having $2,900 on hand at the end of 2005 after receiving $34,000 from Emanuel and donating more than $31,000 during the past three years, Emanuel’s charity gave nearly $25,000 to the Anshe Emet synagogue and school (a private school that the Rahm/Rule children attend) … and $15,000 to the foundation run by former president Bill Clinton. It also gave $14,000 to Marwen, a Chicago charity that provides art classes and other educational help to low-income children. Rule is on Marwen’s board.

    He doesn’t pay any property taxes and he gets income tax write-offs by donating $25,000 to the Synagogue and other amounts of money to his Foundation. This allows his kids to attend school tuition-free and allows him to expense a lot of personal expenses.

    What a racket! Take all your income and donate it back to yourself via tax-exempt organizations where you can spend it on expenses to operate your car, pay the electric and water bills, etc. I guess if you are a hypocritical “liberal” democrat who advocates raising taxes on everyone else, this is all permissible..

    Emanuel’s 4228 North Hermitage home is one of the largest in the neighborhood, with a side yard that appears to be a vacant lot, making the Emanuel’s property the largest portion on the block.

    Other North Hermitage homes on Emanuel’s block are valued in the $500,000 plus range. According to Cook County Treasurer’s website, the Chicago owners of nearby 118 year old 4222 North Hermitage pay almost $6800 annually. The family at 4224 North Heritage pays $6000 each year in property taxes.

    President Obama – himself a connected, Chicago insider who has benefited from questionable land deals – may find it difficult to explain why his very own Chicago-based chief of staff doesn’t pay property taxes like the “little guy” he claims to represent. Or perhaps allowing his wealthy friends to avoid taxes is part of Obama’s trickle down redistribution economics. It’s certainly the kind of “change” we Illinoisans can believe in … since we’re quite familiar with it here in the federal indictment land of Daley, Blagojevich, Madigan, Jones, Cellini, Rezko, etc…. Rahm Emmanuel ( former ballet dancer ) sure knows how to dance around the the truth.

    It just continues to go on and on and on…………….

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