Chicago: Still the City That Works

As a native Chicagoan, I don't mind that Chicago has missed out becoming the New Economy center of the U.S. (''Chicago Blues,'' Cover Story, Oct. 16). I can live without the urban sprawl, congestion, and skyrocketing costs of living in San Francisco and San Jose, which result from the technology boom in the Silicon Valley. In the meantime, Chicago benefits from being one of the most livable cities in America--with a strong infrastructure, an improving school system, and affordable housing. While my counterparts in Silicon Valley fight traffic each night on the way home, I will be barbecuing dinner on my roof deck or taking a jog along the lakefront.

Craig Bender
Chicago


Focusing on corporate headquarters as a measure of civic health and ''identity'' is about as out of date as eight-track tapes. Corporate headquarters have pretty much been on the decline as a source of employment since the 1970s. Indeed, it is links to one industry--heavy manufacturing--that led to Chicago's lagging performance in the past.

By contrast, Chicago's newfound diversity triggered its rise in the charts in the 1990s, and left others to being one-hit wonders. Chicago has generated more than half a million jobs since January, 1990, more than triple the pace of New York, Los Angeles, and Boston combined. Throw in San Francisco, and Chicago still beats the whole bunch by a substantial margin.

Those gains lend important context to your criticisms of the city's job and housing market. For much of the expansion, including today, Chicago's unemployment rate has been substantially below that of New York or Los Angeles. So, Chicago's recent slowdown in job growth reflects strength in the city's existing employment base, not shortcomings.

Chicago has seen more than 40% appreciation in its housing values since the start of the expansion, nearly triple that of New York, and even above that of San Francisco. Even so, Chicago real estate remains more affordable than those cities, which should continue to make it a draw for new business. (Have you tried to relocate workers to New York lately?)

Then, there is the issue of Chicago's prowess in the tourism and convention business. The Windy City is second only to Washington as a hub for associations, and Michigan Avenue has become one of the most sought-after retail destinations in the country.

Finally, it is the old-line industries of the Midwest and Chicago that will write the next hit in the e-commerce sweepstakes. The ultimate value of information technology rests almost entirely in the ability of these old-line industries to turn it to their advantage through business-to-business electronic commerce.

Blues is still music to my ears, and Chicago will win the Grammy in the next phase of this expansion.

Diane C. Swonk
Chief Economist
Bank One Corp.
Chicago


While I share your concern, particularly about the loss of corporate headquarters, you paint an inaccurate picture of the Chicago region's strength. Based on U.S. Census estimates, the Chicago population is growing far more robustly than other old cities. This is a great turnaround for Chicago, which saw population growth of only 2% per decade from 1970 to 1990.

Population growth is a more important indicator of health than growth in financial services. It reveals economic issues more fundamental than whether or not the economy is locally controlled or whether the city is the most important international financial center.

The argument about rises in housing prices is, as you recognized, two-edged. Low prices and low rates of gain are a problem in a global economy only to the extent that transferring executives cannot keep up their position in the housing market from city to city. Overall, our lower housing prices are a competitive advantage. The fact is they have been growing at or slightly above the rate of inflation consistently, reflecting a market able to sustain new construction and good resale values. Why, in a market economy, should overall prices grow faster than inflation if supply is not improperly constrained? This is evidence of a well-managed, healthy market, not of weakness.

What is going on in Chicago is far more important than can be measured simply by the number of corporate headquarters and the health of financial markets. Chicago is undergoing a transformation to become more globally competitive. The city and region are the capital of the Midwest. Young people from the surrounding states are drawn here by the dynamic economy and quality of life. Immigrants provide added entrepreneurial energy, and growth. The city itself has undergone a turnaround in housing, with permits issued for 4,800 units last year alone, the overwhelming majority of it market-rate and reaching into a wide range of neighborhoods and distinctly urban in character, building on our competitive strengths as a true city rather than simply annexing otherwise suburban territory.

Stephen B. Friedman
Chicago


Leaders of Chicago's futures exchanges were forewarned as early as the 1980s of the impending doom of the open-outcry system and imminent loss of market share. Yet they repeatedly disregarded the message and banished the messenger.

The Globex (electronic trading) system was labeled a threat to the power base of the autocratic exchange governance, which quickly branded it the means of vocational ruin for the pit scalper. The slightest defiance of this dominance meant expulsion from the tightly controlled fiefdom of pit trading.

Chicago seems destined to repeat the experience it had with railroads and meat-packing. We never adjust the rearview mirror. Oh well. Next time around maybe things will be different.

Robert M. Pines
Chicago


As one born and raised in the Windy City but now living in Los Angeles, I can testify that the biggest obstacle facing Chicagoans is their hypersensitivity to criticism and their self-aggrandizement, which blocks any honest assessment of their city.

A few weeks back, my father flew from New York to Chicago to attend his 50th reunion at Hyde Park High School. Impressed with the renovated neighborhoods, great restaurants, and gleaming Michigan Avenue, my dad commented on ''the city's renaissance'' to a lifelong Chicagoan and retired head of a bank there. The banker retorted brusquely: ''Chicago never needed a renaissance, because it has always been the best!''

Andrew B. Hurvitz
Van Nuys, Calif.


You quote Robert Hamada, the dean of the University of Chicago's Business School, as saying: ''Having three separate exchanges in Chicago is absolutely stupid.'' The estimable dean is spot on. In the early 1990s, however, when Hamada was an outside director of the Chicago Board of Trade, he advised the exchange that its mission should be ''member opportunity'' rather than serving the market user (a.k.a. the customer) or embracing the then-apparent advance of screen-based trading. Please tell me how the introverted ''member opportunity'' mission pointed towards exchange consolidation. Credentials and all, he perpetuated the myopia.

Ed Donnellan
Chicago


Not everyone in Chicago has been singing the blues of late. Chicago's high-tech heritage in the telecom sector is largely responsible for the structural displacement in the financial sector. Telecom is also powering the formation of the global corporations affecting Chicago's business landscape.

You're right that Chicago is seeding the nation with innovators who leave the area in search of venture financing. The region is fertile ground for high-tech innovation, and Carl Sandburg would still recognize Chicago as a modern day ''tool maker for the world'' when it comes to telecom.

Donald Mulder
President and CEO
HyperEdge Corp.
Itasca, Ill.


Your closing paragraph made me think I should buy marshmallows and be prepared for the fall of Chicago. I suppose you can't find much fault with the economies of New York and Los Angeles. Being first doesn't always mean being best. This is the city that works. Chicago has risen to the challenges of change many times during its 100-plus year history and will continue to do so well into the future. Long after tumbleweed blows through Silicon Valley and New York files Chapter 11--again.

Len Carmichael
Chicago

The Dogfight between Superjumbos

The conclusion to ''Boeing gets blown sideways'' (News: Analysis & Commentary, Oct. 16) is wrong. For starters, the A3XX will operate at any airport a 747 serves today. Will some terminal modifications eventually be required? Yes, for those carriers planning double-deck loading. But to handle triple-rate growth over the next 20 years, airports find that a solution, not a problem.

Airbus Industrie, too, believes traffic between second-tier cities will grow. That's why we have developed new versions of the A340. Simultaneously, hub-to-hub traffic will grow, and there are limits to the numbers of aircraft that can be accommodated. Larger aircraft are the answer.

David C. Venz
Vice-President for Communications
Airbus Industrie of North America Inc.
Herndon, Va.


You should have mentioned that Airbus Industrie is not completely weaned from funds provided by the taxpayers from countries in the consortium and may have been able to offer finance terms to airlines that Boeing Co. can never match. Airbus will spend more than $14 billion of ''public'' funds to develop a new aircraft that will seat only 78 more passengers than Boeing's 747X--developed for only $4 billion by using the current Boeing 747 platform.

Apart from spending $25 million more for each Airbus A3XX, compared with the Boeing 747X, airlines and not cash-strapped airports will have to invest their own funds to upgrade terminals to support the A3XX. Had Airbus Industrie been a publicly traded stock company, shareholders would have been outraged at the enormous investment in the A3XX, while parity to the Boeing 747X may have been achieved at a much lower cost with a souped-up Airbus A340-600.

Jerome R. Bulkan
Coconut Creek, Fla.

SUVs Need Higher Pressure in the Rear Tires

''Making safer SUVs: It's not rocket science'' (News: Analysis & Commentary, Oct. 16) does not mention one of the most important factors in the handling of SUVs: higher tire pressure in the rear. This has been brought home to us by many years of driving station wagons and SUVs. When front and rear tire pressures are equal, such vehicles have a tendency to fishtail (or, less severely, to oversteer or wander slightly).

One such experience occurred years ago, when we bought new tires while on a trip to Denver. When we got on the highway, we experienced a disturbing, even frightening, tail wag in our station wagon. We found that the tire installers had put equal pressure (28 pounds per square inch) in all four tires. Adding 4 psi to the rear tires cured the problem, caused by the normal response of such vehicles to a load in the rear. We have found this to be the case--and the cure--for all of our station wagons and SUVs. The pressures recommended for our 1991 Ford Explorer are, in fact, 30 psi front and 35 psi rear.

We understand that a number of SUV drivers have responded to an emergency situation such as a tread separation by overcorrecting, followed by fishtailing and rollover. It seems possible that many such disasters might be prevented by the use of higher pressure in the rear tires than in the front.

James Terrell
Los Alamos, N.M.

CEOs: Strategic Thinkers Who Understand Operations

After reading ''Long hours and long odds'' (The Corporation, Oct. 2), I was astonished by the suggestion that Robert L. Nardelli may not be enough of a ''strategic thinker'' to run General Electric Co. Nanette Byrnes seems to imply that if people are excellent operators, by definition, they cannot also be world-class strategists. In fact, it takes the combination of those two attributes --strategic thinking and operational excellence--together with leadership skills to achieve the type of results Nardelli has achieved.

The Power Systems story is a textbook case study of restrategizing the business from the market back, attracting the talent to implement the strategy, and then flawlessly executing it through acquisitions, technology investments, and global expansion.

William R. Iuso
Executive Vice-President
Michael Allen Co.
Westport, Conn.

''Opting Out'' of E-Mail Ads Isn't So Easy to Do

Re ''When e-mail ads aren't spam'' (Marketing, Oct 16): The author says the choice to opt out ensures that e-mail advertising is desired by the customer. But many factors considerably reduce this ''permission.'' On many Web sites, customers are given this choice in a location that most of them never see--where the customer has to click on a link or scroll down several paragraphs of boilerplate to find. Studies have shown that this rarely happens.

And when it does, the default is usually to opt in, and the language is often so ambiguous the customer doesn't know whether to check the box or not. When someone gets the resulting e-mail advertisement or newsletter, it's still spam, because the customer didn't want it and even tried to avoid it. We are starting to see that the resulting hit to customer loyalty and brand image is huge.

Even worse is the situation in which a customer opts in on one site and that site sells a list of ''opt-in'' e-mails to another company. The second company now feels empowered to send e-mail ads. But just because I want to get a newsletter about new IT technology from a highly respected vendor does not mean I want to get ads from offshore casinos. If I could find out who sold them my e-mail address, the original company I signed up with would lose all of my business.

Marc Resnick
Professor of Usability Engineering
Florida International University
Miami

Don't Let Debtor Nations Off the Hook

''Debt relief: The U.S. is badly in arrears'' (Economic Viewpoint, Oct. 16) reveals some well-meaning, yet misplaced, desires to let debtor nations off the hook. While author Robert Kuttner's premise of helping those in need is admirable, debt relief is not the answer. It sets a bad precedent and encourages further misuse and waste of future borrowings by debtor nations around the world. If the International Monetary Fund, the World Bank, and others are to provide any assistance, they should act like any other bank in similar circumstances. The assets of the bankrupt borrower become assets of the lender, which can manage them to attempt to recoup principal and interest owed.

A moral dilemma is created by bailing out mismanaged companies, and the same holds for countries. If there is to be relief, it should not be complete debt forgiveness but restructuring to be managed by the world lenders in order to push economic reform in those nations.

Michael Brace
Boston

When the Hirohito Myth Was First Shattered

Re ''Shattering the myth of Hirohito'' (Books, Oct. 16): Herbert Bix's Hirohito and the Making of Modern Japan is not the first book to expose the role of Emperor Hirohito in Japan's 20th century wars and war crimes. That credit goes to David Bergamini, the historian and author of Japan's Imperial Conspiracy: How Emperor Hirohito Led Japan into War against the West. That 1,612-page work was published in 1971 by William Morrow & Co. and contains numerous examples of Hirohito's direction of the wars against Manchuria, China, and the Western powers.

Bergamini's documentation requires 150 pages of notes, and it is obvious from his reporting that he reached participants of many Imperial planning sessions with Emperor Hirohito. Among other things, Bergamini documents how Hirohito named members of his own family to top military posts in order to execute his policies.

Sherwood Ross
Sturgis, S.D.

Uncle Sam Should Have to Crunch the Numbers, Too

The contention that ''cost is too tricky to measure''--before the government adopts multibillion-dollar regulations--is an invitation to all manner of mischief, to say nothing of better outcomes foregone (''Regulators: By whose authority?'' Legal Affairs, Oct. 16).

Were a chief financial officer to advocate a bold new initiative without first carefully assessing its costs, would the company's board take comfort in hearing that messy facts should not get in the way when the project's importance is so ''paramount''?

Thomas D. Hopkins
Dean, College of Business
Rochester Institute of Technology
Rochester, N.Y.