Chicago, Illinois

Chicago, Illinois


Founded in 1837 as a small trading post, by 1883 Chicago had grown more than a hundredfold into one of America’s largest cities. Then, between 1883 and 1903 its population quadrupled. Over the course of its formative decades, the Windy City was the home of such technological and commercial innovations as the first refrigerated railroad car (1878), the first mail-order retailing corporations (Sears-Roebuck in 1893 and Montgomery Ward in 1872), and the first car radio manufacture (1920s). Also during the Twenties, new construction boomed throughout the city, punctuated by the completion in 1930 of such landmarks such as the Chicago Board of Trade Building and the famed Merchandise Mart (whose 4 million square feet of office space made it the world’s largest building at the time). The Great Depression and the diversion of resources into World War II subsequently stalled construction projects in Chicago for a number of years, but a postwar economic boom saw the development of huge housing tracts in the city’s Northwest and Southwest Sides.

“Chicagoland,” as the city is now sometimes called, was meant to conjure a zesty sense of urban uniqueness, but the term has instead become a synonym for corrupt power politics and urban malaise in the murder capital of the U.S. On the political front, Chicago has been led exclusively by Democratic mayors for the past 83 years, since 1931. Under the progressive policies of Richard J. Daley (1955-76), Michael Bilandic (1976-79), Jane Byrne (1979-83), and Harold Washington (1983-87), the city’s economic and social fabric deteriorated markedly during the 1960s, ’70s, and ’80s. According to urban analyst Aaron Renn, by 1976 Chicago was “a grim, decaying city” that “was failing on nearly every measure.” “The city,” Renn elaborates, “was losing people, losing businesses, and losing jobs…. Manufacturing was collapsing and the middle class was fleeing, leading to neighborhood decline and eroding the city’s tax base, which in turn degraded the city services residents had come to expect and demand. The decline in services and neighborhoods drove more people way, which led to further declines, perpetuating a vicious cycle.”

In a similar vein, Chicago Tribune correspondent Richard Longworth wrote a powerful front-page series in 1981 titled “A City on the Brink,” stating: “Chicago has become an economic invalid. The situation may be permanent.” The Economist, meanwhile, described the city as having little more than a “facade of downtown prosperity.” University of Illinois at Chicago Professor Pierre de Vise saw “very little hope for locating economic activities here again.” And a local business executive pondered, “Is the city being annihilated? It’s probably inevitable.” The economic malaise that plagued Chicago during this period was accompanied by a steep decline in the city’s population, which fell from 3.62 million in 1950 to 2.78 million by 1990.

Harold Washington, an African American whose mayoralty ran from 1983-87, was a particularly significant figure in Chicago politics. An icon of the city’s socialist Left, he had a profound influence on a rising young local activist (and future U.S. president) named Barack Obama. Moreover, Obama’s longtime pastor, the infamous black liberation theologian Jeremiah Wright, was intimately involved in helping to mobilize black and Hispanic voters in support of Washington’s electoral campaigns. Ideologically a socialist, Washington worked openly with the Chicago contingent of the Democratic Socialists of America. However, following a strategy that the leading socialists of that era had resolved to pursue, he never openly identified himself as a socialist. Rather, he calculated that he could most effectively advance his leftist agendas by calling himself a “liberal” and rising to positions of political influence under the aegis of the Democratic Party.

While Washington’s support among Chicago blacks was overwhelming, he could not possibly have won the 1983 mayor’s race without the indispensable help that socialist community organizations gave him in terms of delivering enough white votes to ensure victory. In conjunction with these organizations, Washington emphasized class-warfare themes to create what Stanley Kurtz, author and senior fellow at the Ethics and Public Policy Center, has characterized as “an economic, anti-business Populist movement which in fact [was] controlled by Socialists from behind.” “The idea,” Kurtz elaborates, “is you don’t actually say, ‘Hey, we’re Socialists; we have a movement for Socialism here.’ No. You call yourself Populist, you call yourself Communitarian, or you use Alinskyite terms like, ‘let’s democratize power.’ But when you look at what’s really going on, it comes down to Socialism, and the Socialists who ran these organizations knew it.” Kurtz explains that Washington rose to political prominence by assembling “a ‘rainbow’ coalition of blacks, Hispanics, and left-leaning whites” whose ultimate aim was to “pus[h] the Democrats to the left by polarizing the country along class lines.”

While campaigning for mayor in 1983, Washington, who had once served a brief jail term for not filing his income taxes, said that he fully supported the principle of financial disclosure by public officials, which had become a popular post-Watergate reform. But once in office, he suggested that such a policy should only apply to other public officials, and that his own personal taxes were a private matter. Also during his ’83 campaign, Washington vowed to reduce regressive local taxes and rely more heavily on money from the State of Illinois. Once elected, however, he raised taxes on Chicagoans by hundreds of millions of dollars. Consequently, the city’s economy suffered. As one of his constituents later recalled: “He raised taxes too much. All he did was tax, tax, tax.”

Under Washington, whose mayoralty ended suddenly in November 1987 when he died of a heart attack just a few months into his second term, Chicago’s civic life deteriorated rapidly. One clear example involved the Chicago Housing Authority—a massive municipal agency that had been created to own and operate public housing built by the federal government—which was brought to the brink of insolvency by his appointees. The U.S. Secretary of Education in 1987 described the city’s school system—where students were mostly poor and nonwhite—as the very worst in America. Also during Mayor Washington’s tenure, crime rates in the city exploded: Between 1982 and 1987, the annual incidence of robbery rose by 44%, while the corresponding increases for other crimes included 37% for burglary, more than 20% for both larceny-theft and auto theft, over 40% for arson, and at least 300% for aggravated assault.

Because this unsafe environment was toxic to local retail and service establishments, many business owners simply picked up their roots and relocated to more welcoming places. All told, Chicago suffered a net loss of 45,000+ jobs during the ’80s—a period of great economic prosperity and employment growth for most of the country—and many of the Windy City’s job losses occurred on Mayor Washington’s watch. Likewise, Chicago’s overall population declined, on average, by more than 20,000 residents per year.

Under Mayor Richard M. Daley (1989-2011), Chicago rebounded a bit in the 1990s when it enjoyed a lower unemployment rate and stronger per-capita income growth than either New York or Los Angeles. It also added some 560,000 new jobs and gained more than 100,000 residents. During that same period, Chicago spent billions of dollars on a host of development projects including the construction of an elevated train line to Midway Airport, a wide-ranging street-beautification initiative, and the creation of impressive cultural facilities such as the $450 million Millennium Park.

But in the first decade of the 21st century, these successes faded. Fiscal mismanagement by the Daley administration began to manifest itself in Chicago’s economy, causing 7.1% of the city’s jobs to dry up and disappear. Chicago’s famous Loop, the second-largest central business district in the nation, was especially hard hit —losing fully 18.6% of its private-sector jobs. The city government, meanwhile, began incurring massive levels of debt, running an annual budget deficit of approximately $650 million.

Contributing heavily to these shortfalls were ever-escalating expenditures on lavish benefits for Chicago’s public-sector union employees, whose pensions were, by mandate of the Illinois state constitution, permanently immune to cutbacks. According to the Washington Post, Chicago today owes nearly $14 billion in outstanding General Obligation bond debt, and the city’s pension funds owe $27 billion in unfunded obligations to police, firefighters, teachers, and municipal employees. This shortfall amounts to more than $9,900 per city resident.
In Chicago’s fire department alone, unfunded liabilities exceed 650% of payroll, meaning that they total more than 6.5 times what the city spends each year to pay all of its active firefighters. Similarly, the Chicago police department’s unfunded liabilities amount to just above 600% of payroll.

In 2008 Mayor Daley sought to address his city’s budget deficit, in part, by means of a fundraising gimmick that, rather than promoting fiscal responsibility, succeeded only in squandering additional mountains of cash while saddling future generations of Chicagoans with an unprecedented debt burden. Specifically, Daley authorized his now-infamous parking-meter lease, whereby—in exchange for $1.1 billion up front—the city sold its right to 75 years worth of parking revenues to the private company Chicago Parking Meters LLC. Just two years into the deal, the city had already spent 84% of that $1.1 billion.

Also in typical Democrat fashion, Chicago politicos have repeatedly sought to balance their budgets by raising local property and sales taxes. Today Chicago has the nation’s highest sales tax rate, whose impact on the city is amplified by Illinois’ already-high state taxes. According to a March 2013 Wall Street Journal report, the state and local taxes currently paid by Chicagoans are higher than those paid by their counterparts in all but four other American cities. This oppressive tax climate has dealt a painful blow to Chicago’s residents and business owners alike.

In July 2013, Moody’s Investors Service—citing Chicago’s “very large and growing pension liabilities and accelerating budget pressures associated with those liabilites”—downgraded the city’s General Obligation (GO) and sales-tax ratings from AA3 to A3. Four months later, another major ratings agency—Fitch Ratings, Inc.—likewise downgraded Chicago’s debt worthiness after the Illinois legislature failed to pass a budget fix.

Another factor harming small businesses in Chicago is the system of “aldermanic privilege” that dominates the city’s politics and serves as a fertile breeding ground for corruption. As urban-affairs analyst Aaron Renn explains, Chicago’s aldermen—i.e., city council members—have “nearly dictatorial control over what happens in their wards, from zoning changes to sidewalk café permits.” “This,” says Renn, “dumps political risk onto the shoulders of every would-be entrepreneur, who knows that he must stay on the alderman’s good side to be in business. It’s also a recipe for sleaze: 31 aldermen have been convicted of corruption since 1970.” According to a University of Illinois report issued in 2012, Chicago is the most politically corrupt city in the United States, having averaged 51 public corruption convictions annually since 1976.

In Chicago’s sick political climate, failure to adhere dutifully to the demands of the mayor and his power structure typically spells doom for any business enterprise. As the City Journal puts it:

“[A]n even greater problem than outright corruption is Chicago’s culture of clout, a system of personal loyalty and influence radiating from city hall. Influencing the mayor, and influencing the influencers on down the line, is how you get things done…. One’s standing is generally not, as in most cities, the result of having an independent power base that others must respect; it is the result of personal favor from on high.”

Chicago’s entrepreneurs are further handicapped by the byzantine regulations and red tape that make it prohibitively expensive and complicated to run a business within the city’s confines. According to Chicagoland Chamber of Commerce CEO Jerry Roper, such “unnecessary and burdensome regulation” has placed Chicago “at a competitive disadvantage with other cities.” The U.S. Chamber of Commerce, for its part, has described the litigation environment of Cook County as the most unfair and unreasonable of any jurisdiction in the United States.

Chicago’s fiscal woes are compounded by the poor economic conditions that pervade much of Illinois, where egregious financial mismanagement has plunged a once-thriving state economy into virtual ruin. The state’s job-creation rate ranks a lowly 48th in the U.S., and its $9,624 in public debt per capita is second only to New York’s. Largely as a consequence of this runaway debt, two of the nation’s major credit-rating corporations, Moody’s and Standard & Poor’s, currently give Illinois the lowest credit rating of any state in the Union. Notably, Illinois is headed by a Democratic governor, a State Senate that is more than two-thirds Democrat, and a State House of Representatives that is 60% Democrat.

Yet another reality that has had a severely negative impact on life in Chicago is violent crime. Since the mid-1970s, the annual homicide tally within the Windy City has ranged between 435 and 970, with the trends and fluctuations more-or-less mirroring those observable nationwide. In 2012 and 2013 it led all U.S. cities in homicides, with a combined total of 931 during that two-year period—far more than any other American city. In 2012, approximately one in every 1,000 Chicagoans was shot (either fatally or non-fatally) at some point during that year—a rate 6 times higher than in New York City.

Whites, who constitute roughly 28% of Chicago’s population, commit about 4% of all homicides in the city. By contrast, African Americans, who are 35% of the population, are responsible for three-fourths of the homicides. The statistics for Chicago’s black youth in particular, many of whom have become involved in a culture of gang violence, are just as grim. Between 2003 and 2008, black youngsters accounted for 78% of all juvenile arrests in the city.

Driving the trend of stratospheric crime rates in Chicago’s black community is a high incidence of single motherhood. Indeed, between 75% and 80% of the city’s black children are born out-of-wedlock. For decades, empirical research has demonstrated conclusively that growing up without a father is a far better forecaster of a boy’s future criminality than either race or poverty. Indeed, regardless of race, 70% of all young people in state reform institutions were raised in fatherless homes, as were 60% of rapists, 72% of adolescent murderers, and 70% of long-term prison inmates.

In recent years, Chicago has been the scene of at least 50 incidents of black-on-white “flash mob” violence, as documented by the intrepid author Colin Flaherty. One of the most recent, high-profile incidents occurred at the end of March 2013, when some 500 blacks stormed the so-called Magnificent Mile, an upscale shopping area, randomly assaulting innocent people and wantonly destroying property.

Chicago leadership’s response to this type of criminality has been far less assertive than that of New York, for instance, where Republican Mayor Rudolph Giuliani and Police Chief William Bratton in the 1990s instituted a proactive, aggressive, and highly successful anti-crime strategy that incorporated “stop-and-frisk” policies and so-called “broken windows” law-enforcement measures. Their approach—which was subsequently continued, to similar effect, by Giuliani’s Republican successor Michael Bloomberg—reversed a long trend of escalating criminality that had plagued New York City in the pre-Giuliani years.

By contrast, Chicago’s politicians, community activists, and religious leaders alike have largely turned their backs on such policing philosophies. As a former Chicago deputy superintendent of police once observed: “We’d marvel at how the NYPD was getting mayoral support” during Giuliani’s tenure in office. “Mayor Daley [who served from 1989-2011] is not a cop supporter,” he elaborated. “It’s no secret that he rules the police department with an iron fist.”

Chicago’s failure to establish any appreciable measure of control over either its economy or its crime problem, is mirrored by the persistent inability of its lavishly funded public-school system to educate the city’s children. While spending more than $13,000 annually on the education-related expenses of each K-12 student in the city—an amount exceeding the national average by about 23%—there is little to show for the taxpayers’ financial outlays. In the 2013 National Assessment of Educational Progress (NAEP), standardized exams designed to measure students’ academic abilities:

  • Just 21% of Chicago fourth-graders performed well enough to be classified as “proficient” or better in grade-level reading—vs. 34% of fourth-graders nationally.
  • Only 27% of Chicago fourth-graders performed well enough to be classified as “proficient” or better in grade-level math—vs. 42% of fourth-graders nationally.
  • A mere 20% of Chicago eighth-graders performed well enough to be categorized as “proficient” or better in grade-level reading, vs. 35% of eighth-graders nationally.
  • Just 20% of Chicago eighth-graders performed well enough to be deemed “proficient” or better in grade-level math, vs. 34% of eighth-graders nationally.

Moreover, only 63% of Chicago’s public high-school students graduate on time (within four years)—a far cry from the national average of 78%.

Though most of Chicago’s public schools have languished for years on academic watch lists, Illinois lawmakers—beholden to the massive sums of money they receive from teachers unions—have failed to implement any sort of voucher program by which students could escape the city’s failing schools and be educated instead—at a more reasonable cost—in a superior private school. The Chicago Teachers Union (CTU)—a dependable supporter of city Democrats and their political campaigns—has consistently denounced voucher proposals.

In June 2013, CTU president Karen Lewis, a Democrat, attributed the failures of the Chicago Public Schools not to any shortcomings in the city’s educational apparatus, but rather to the “fact that rich white people think they know what’s in the best interest of children of African-Americans and Latinos, no matter what the parents’ income or education level.” “If you look at the majority of the tax base for property taxes in Chicago, they’re mostly white, who don’t have a real interest in paying for the education of poor black and brown children,” said Lewis. Citing the “poverty and racism and inequality that hinders the delivery of an education product in our school system,” Lewis complained: “It’s as if there were a concerted effort to make sure that these are not walkable, thriving, healthy communities.” By Lewis’s reckoning, vouchers would serve only to siphon much-needed funds away from the public schools, which presumably would be even more ineffective if they had to operate on anything less than their current $13,000-per-student. Notably, Lewis made no mention of the fact that Chicago’s public school teachers are the highest-paid members of their profession in America, earning, on average, $76,000 per year.

Following a pattern that is seen repeatedly in Democrat-controlled cities across the United States, the toxic brew of Chicago’s high taxes, out-of-control crime rates, failing schools, mounting public debt, and anti-business economic climate has driven away massive numbers of residents and entrepreneurs. After the city’s population peaked at 3.62 million in 1950, it underwent a half-century of decline that leveled off only temporarily in the 1990s. But immediately thereafter, some 200,000 people (including 175,000African Americans) moved out of Chicago during the first decade of the 21st century—an exodus exceeded in magnitude only by that of Detroit’s former residents. According to the U.S. Census Bureau, in 2021, Chicago’s population stood at 2,697,000—fewer than the 2.7 million who had lived there 90 years earlier.

This piece was posted in May 2014.

Additional Resources:

The Second-Rate City?
By Aaron Renn
Spring 2012

Chicago’s Real Crime Story
By Heather Mac Donald
Winter 2010

March Mayhem: Mayor “Never Waste a Crisis” Oversees Chicago Free-Fall
By Rich Baehr
April 2, 2013

Chicago Running Out of Euphemisms
By Colin Flaherty
April 4, 2013

As Chicago Backs off Policing, Its Murder Rate Skyrockets Ever Higher
By Heather Mac Donald
December 27, 2016

When Costs and Benefits Can’t Be Separated
By Charles Fain Lehman
January 12, 2023


The Fall of Chicago. There Will Be No Economic Recovery.
By Stefan Molyneux
July 31, 2015


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