Category Archives: The Weekly

Driving Me Crazy

driving me craxy

February 19, 2018

I was recently driving to see friends in Ocean City, New Jersey. The sign “Welcome to New Jersey” greeted me as I headed over the Walt Whitman bridge from Philadelphia. I was using Google Maps on my phone for directions. Looking down to check the recommended route, I manually enlarged the view on screen to make sure I was in the correct lane as I approached a junction. I glanced in the mirror to see a large police SUV right behind me. I assumed he was about to pass when suddenly the blue lights flashed on. A sinking feeling took hold of my stomach as I struggled to work out my crime.

Deciding that making a break for the State line was not the best idea, I pulled over and waited meekly. The State Trouper adjusted his hat before emerging from his car. His first request was for my driver’s license. Once he saw it was from Georgia he asked: “Do you know this is a hands-free State and I saw you using your fingers to dial a number?” I apologized for not knowing but explained that I was using Google Maps and not attempting to make a phone call. I even offered my phone for him to check. The trooper asked me to wait while he went back to his vehicle.

Returning five minutes later with my license, and a ticket, he announced: “I am going to be lenient. A ticket for using your phone other than hands-free is expensive and comes with points, but I have just given you a ticket for failure to indicate when I pulled you over”. I buried my outrage at this extortion, and accepted that paying the fine and moving on is the best outcome. The authorities have more time and power than me.

This incident got me thinking that traffic violations must provide an easy source of income for cash starved States. A bit of research into the finances of New Jersey confirmed my suspicions. Our tax-exempt bond manager stated that they are generally avoiding bonds issued by this State because of the decline in credit fundamentals, pension funding issues and headline risk. In fact, NJ has had substantial budget deficits the last several years, and has one of the lowest credit ratings of all States as ranked by S&P, Moody’s and Fitch. How long can that sort of financial ineptitude continue, or more to the point, how many traffic tickets do they have to write? In an act of seeming desperation they have even offered $7 billion in incentives to win Amazon’s new HQ2, and the associated tax revenues.

The new Tax Act will create additional pressure on State budgets as wealthier citizens decide if they really want to be residents of high income tax States now that those taxes will essentially have little to no deductibility in many cases. As budgetary mismanagement continues, be aware that you are a potential source of tax revenue when you are driving in a State like New Jersey!

Nick Hoffman

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Winning the Olympics?

PYEONGCHANG-GUN, SOUTH KOREA - FEBRUARY 10: Gold medalist Andreas Wellinger of Germany (C) celebrates on the podium alongside silver medalist Johann Andre Forfang of Norway (L) and bronze medalist Robert Johansson of Norway (R) during the victory ceremony for the Ski Jumping - Men's Normal Hill Individual Final on day one of the PyeongChang 2018 Winter Olympic Games at Alpensia Ski Jumping Center on February 10, 2018 in Pyeongchang-gun, South Korea. (Photo by Lars Baron/Getty Images)

February 12, 2018

The Olympic games are here again – this time in the frigid temperatures of South Korea. The immediate focus is on the spectacular exploits taking place on snow and ice, and the surprising cordiality between the two Koreas. What is less obvious is the enormous sum of money that has been spent to prepare for the Games. Let’s look more closely at what this has meant for South Korea.

These 2018 Winter Olympics are being held in PyeongChang, a mountainous county with just over 43,000 inhabitants. The cost of building the required buildings and infrastructure is estimated to be around $13 billion. For context, when bidding for the games South Korea estimated the cost would be half of this amount. I guess South Korea should consider itself lucky. The last Winter Olympics cost Sochi roughly about $50.0 billion as Russia sought to make a statement on the world stage.

Some of the huge ‘investment’ cost will be recouped. The IOC has contributed $880 million of the overall cost of the games. In addition there should be another $2 billion or so in revenue from ticket sales and other income. That still leaves a price tag of about $10 billion justified only by a hope that tourism, trade and foreign investment will increase in the long run.

Like all Olympic venues, PyeongChang will be faced with the question of what to do with all the venues and infrastructure after the games are over. Well, if you are a disciplined and cost conscious planner like Atlanta in 1996, you design and build facilities which the city can reuse after the games. A prime example is Georgia Tech’s North Avenue apartment complex which was once the Olympic Village that hosted over 10,000 athletes. Another example is the Centennial Olympic Stadium, which has already gone through “repurposing” twice; first as Turner Field and now as a stadium for Georgia State. In comparison, the last Summer Olympics host, Rio de Janeiro, spent $13.1 billion and many of the purpose built venues now lie unused. South Africa also fell in the same pattern back in 2010 when this country hosted the World Cup.

South Korea’s plan after the games is fairly simple: the country is expecting to downsize the $60 million, 35,000-seat stadium, to 5,000-10,000 capacity with a featured museum dedicated to the games. The country is expecting the rest of the infrastructure to go unused, especially given the small local population. PyeongChang will simply have an incredible, world class ski resort for the more experienced snowboarders and skiers.

It is safe to say that hosting the Olympics is neither easy nor cheap. At the same time we should not lose sight of what the games are really about. The opportunity to bring people from around the world together to compete at the highest level is priceless, and this particular games might have the unexpected bonus of bringing about a thaw in Korean relations.

Nirvanna Silva

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